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Irs 1040ez 2010

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Irs 1040ez 2010

Irs 1040ez 2010 3. Irs 1040ez 2010   Savings Incentive Match Plans for Employees (SIMPLE) Table of Contents Introduction What Is a SIMPLE Plan?Eligible Employees How Are Contributions Made? How Much Can Be Contributed on Your Behalf?Matching contributions less than 3%. Irs 1040ez 2010 Traditional IRA mistakenly moved to SIMPLE IRA. Irs 1040ez 2010 When Can You Withdraw or Use Assets?Are Distributions Taxable? Introduction This chapter is for employees who need information about savings incentive match plans for employees (SIMPLE plans). Irs 1040ez 2010 It explains what a SIMPLE plan is, contributions to a SIMPLE plan, and distributions from a SIMPLE plan. Irs 1040ez 2010 Under a SIMPLE plan, SIMPLE retirement accounts for participating employees can be set up either as: Part of a 401(k) plan, or A plan using IRAs (SIMPLE IRA). Irs 1040ez 2010 This chapter only discusses the SIMPLE plan rules that relate to SIMPLE IRAs. Irs 1040ez 2010 See chapter 3 of Publication 560 for information on any special rules for SIMPLE plans that do not use IRAs. Irs 1040ez 2010 If your employer maintains a SIMPLE plan, you must be notified, in writing, that you can choose the financial institution that will serve as trustee for your SIMPLE IRA and that you can roll over or transfer your SIMPLE IRA to another financial institution. Irs 1040ez 2010 See Rollovers and Transfers Exception, later under When Can You Withdraw or Use Assets. Irs 1040ez 2010 What Is a SIMPLE Plan? A SIMPLE plan is a tax-favored retirement plan that certain small employers (including self-employed individuals) can set up for the benefit of their employees. Irs 1040ez 2010 See chapter 3 of Publication 560 for information on the requirements employers must satisfy to set up a SIMPLE plan. Irs 1040ez 2010 A SIMPLE plan is a written agreement (salary reduction agreement) between you and your employer that allows you, if you are an eligible employee (including a self-employed individual), to choose to: Reduce your compensation (salary) by a certain percentage each pay period, and Have your employer contribute the salary reductions to a SIMPLE IRA on your behalf. Irs 1040ez 2010 These contributions are called salary reduction contributions. Irs 1040ez 2010 All contributions under a SIMPLE IRA plan must be made to SIMPLE IRAs, not to any other type of IRA. Irs 1040ez 2010 The SIMPLE IRA can be an individual retirement account or an individual retirement annuity, described in chapter 1. Irs 1040ez 2010 Contributions are made on behalf of eligible employees. Irs 1040ez 2010 (See Eligible Employees below. Irs 1040ez 2010 ) Contributions are also subject to various limits. Irs 1040ez 2010 (See How Much Can Be Contributed on Your Behalf , later. Irs 1040ez 2010 ) In addition to salary reduction contributions, your employer must make either matching contributions or nonelective contributions. Irs 1040ez 2010 See How Are Contributions Made , later. Irs 1040ez 2010 You may be able to claim a credit for contributions to your SIMPLE plan. Irs 1040ez 2010 For more information, see chapter 4. Irs 1040ez 2010 Eligible Employees You must be allowed to participate in your employer's SIMPLE plan if you: Received at least $5,000 in compensation from your employer during any 2 years prior to the current year, and Are reasonably expected to receive at least $5,000 in compensation during the calendar year for which contributions are made. Irs 1040ez 2010 Self-employed individual. Irs 1040ez 2010   For SIMPLE plan purposes, the term employee includes a self-employed individual who received earned income. Irs 1040ez 2010 Excludable employees. Irs 1040ez 2010   Your employer can exclude the following employees from participating in the SIMPLE plan. Irs 1040ez 2010 Employees whose retirement benefits are covered by a collective bargaining agreement (union contract). Irs 1040ez 2010 Employees who are nonresident aliens and received no earned income from sources within the United States. Irs 1040ez 2010 Employees who would not have been eligible employees if an acquisition, disposition, or similar transaction had not occurred during the year. Irs 1040ez 2010 Compensation. Irs 1040ez 2010   For purposes of the SIMPLE plan rules, your compensation for a year generally includes the following amounts. Irs 1040ez 2010 Wages, tips, and other pay from your employer that is subject to income tax withholding. Irs 1040ez 2010 Deferred amounts elected under any 401(k) plans, 403(b) plans, government (section 457) plans, SEP plans, and SIMPLE plans. Irs 1040ez 2010 Self-employed individual compensation. Irs 1040ez 2010   For purposes of the SIMPLE plan rules, if you are self-employed, your compensation for a year is your net earnings from self-employment (Schedule SE (Form 1040), Section A, line 4, or Section B, line 6) before subtracting any contributions made to a SIMPLE IRA on your behalf. Irs 1040ez 2010   For these purposes, net earnings from self-employment include services performed while claiming exemption from self-employment tax as a member of a group conscientiously opposed to social security benefits. Irs 1040ez 2010 How Are Contributions Made? Contributions under a salary reduction agreement are called salary reduction contributions. Irs 1040ez 2010 They are made on your behalf by your employer. Irs 1040ez 2010 Your employer must also make either matching contributions or nonelective contributions. Irs 1040ez 2010 Salary reduction contributions. Irs 1040ez 2010   During the 60-day period before the beginning of any year, and during the 60-day period before you are eligible, you can choose salary reduction contributions expressed either as a percentage of compensation, or as a specific dollar amount (if your employer offers this choice). Irs 1040ez 2010 You can choose to cancel the election at any time during the year. Irs 1040ez 2010   Salary reduction contributions are also referred to as “elective deferrals. Irs 1040ez 2010 ”   Your employer cannot place restrictions on the contributions amount (such as by limiting the contributions percentage), except to comply with the salary reduction contributions limit, discussed under How Much Can Be Contributed on Your Behalf, later. Irs 1040ez 2010 Matching contributions. Irs 1040ez 2010   Unless your employer chooses to make nonelective contributions, your employer must make contributions equal to the salary reduction contributions you choose (elect), but only up to certain limits. Irs 1040ez 2010 See How Much Can Be Contributed on Your Behalf below. Irs 1040ez 2010 These contributions are in addition to the salary reduction contributions and must be made to the SIMPLE IRAs of all eligible employees (defined earlier) who chose salary reductions. Irs 1040ez 2010 These contributions are referred to as matching contributions. Irs 1040ez 2010   Matching contributions on behalf of a self-employed individual are not treated as salary reduction contributions. Irs 1040ez 2010 Nonelective contributions. Irs 1040ez 2010   Instead of making matching contributions, your employer may be able to choose to make nonelective contributions on behalf of all eligible employees. Irs 1040ez 2010 These nonelective contributions must be made on behalf of each eligible employee who has at least $5,000 of compensation from your employer, whether or not the employee chose salary reductions. Irs 1040ez 2010   One of the requirements your employer must satisfy is notifying the employees that the election was made. Irs 1040ez 2010 For other requirements that your employer must satisfy, see chapter 3 of Publication 560. Irs 1040ez 2010 How Much Can Be Contributed on Your Behalf? The limits on contributions to a SIMPLE IRA vary with the type of contribution that is made. Irs 1040ez 2010 Salary reduction contributions limit. Irs 1040ez 2010   Salary reduction contributions (employee-chosen contributions or elective deferrals) that your employer can make on your behalf under a SIMPLE plan are limited to $12,000 for 2013. Irs 1040ez 2010 The limitation remains at $12,000 for 2014. Irs 1040ez 2010 If you are a participant in any other employer plans during 2013 and you have elective salary reductions or deferred compensation under those plans, the salary reduction contributions under the SIMPLE plan also are included in the annual limit of $17,500 for 2013 on exclusions of salary reductions and other elective deferrals. Irs 1040ez 2010 You, not your employer, are responsible for monitoring compliance with these limits. Irs 1040ez 2010 Additional elective deferrals can be contributed to your SIMPLE plan if: You reached age 50 by the end of 2013, and No other elective deferrals can be made for you to the plan for the year because of limits or restrictions, such as the regular annual limit. Irs 1040ez 2010 The most that can be contributed in additional elective deferrals to your SIMPLE plan is the lesser of the following two amounts. Irs 1040ez 2010 $2,500 for 2013, or Your compensation for the year reduced by your other elective deferrals for the year. Irs 1040ez 2010 The additional deferrals are not subject to any other contribution limit and are not taken into account in applying other contribution limits. Irs 1040ez 2010 The additional deferrals are not subject to the nondiscrimination rules as long as all eligible participants are allowed to make them. Irs 1040ez 2010 Matching employer contributions limit. Irs 1040ez 2010   Generally, your employer must make matching contributions to your SIMPLE IRA in an amount equal to your salary reduction contributions. Irs 1040ez 2010 These matching contributions cannot be more than 3% of your compensation for the calendar year. Irs 1040ez 2010 See Matching contributions less than 3% below. Irs 1040ez 2010 Example 1. Irs 1040ez 2010 In 2013, Joshua was a participant in his employer's SIMPLE plan. Irs 1040ez 2010 His compensation, before SIMPLE plan contributions, was $41,600 ($800 per week). Irs 1040ez 2010 Instead of taking it all in cash, Joshua elected to have 12. Irs 1040ez 2010 5% of his weekly pay ($100) contributed to his SIMPLE IRA. Irs 1040ez 2010 For the full year, Joshua's salary reduction contributions were $5,200, which is less than the $12,000 limit on these contributions. Irs 1040ez 2010 Under the plan, Joshua's employer was required to make matching contributions to Joshua's SIMPLE IRA. Irs 1040ez 2010 Because his employer's matching contributions must equal Joshua's salary reductions, but cannot be more than 3% of his compensation (before salary reductions) for the year, his employer's matching contribution was limited to $1,248 (3% of $41,600). Irs 1040ez 2010 Example 2. Irs 1040ez 2010 Assume the same facts as in Example 1 , except that Joshua's compensation for the year was $408,163 and he chose to have 2. Irs 1040ez 2010 94% of his weekly pay contributed to his SIMPLE IRA. Irs 1040ez 2010 In this example, Joshua's salary reduction contributions for the year (2. Irs 1040ez 2010 94% × $408,163) were equal to the 2013 limit for salary reduction contributions ($12,000). Irs 1040ez 2010 Because 3% of Joshua's compensation ($12,245) is more than the amount his employer was required to match ($12,000), his employer's matching contributions were limited to $12,000. Irs 1040ez 2010 In this example, total contributions made on Joshua's behalf for the year were $24,000 ($12,000 (Joshua's contributions) + $12,000 (matching contributions)), the maximum contributions permitted under a SIMPLE IRA for 2013. Irs 1040ez 2010 Matching contributions less than 3%. Irs 1040ez 2010   Your employer can reduce the 3% limit on matching contributions for a calendar year, but only if: The limit is not reduced below 1%, The limit is not reduced for more than 2 years out of the 5-year period that ends with (and includes) the year for which the election is effective, and Employees are notified of the reduced limit within a reasonable period of time before the 60-day election period during which they can enter into salary reduction agreements. Irs 1040ez 2010   For purposes of applying the rule in item (2) in determining whether the limit was reduced below 3% for the year, any year before the first year in which your employer (or a former employer) maintains a SIMPLE IRA plan will be treated as a year for which the limit was 3%. Irs 1040ez 2010 If your employer chooses to make nonelective contributions for a year, that year also will be treated as a year for which the limit was 3%. Irs 1040ez 2010 Nonelective employer contributions limit. Irs 1040ez 2010   If your employer chooses to make nonelective contributions, instead of matching contributions, to each eligible employee's SIMPLE IRA, contributions must be 2% of your compensation for the entire year. Irs 1040ez 2010 For 2013, only $255,000 of your compensation can be taken into account to figure the contribution limit. Irs 1040ez 2010   Your employer can substitute the 2% nonelective contribution for the matching contribution for a year if both of the following requirements are met. Irs 1040ez 2010 Eligible employees are notified that a 2% nonelective contribution will be made instead of a matching contribution. Irs 1040ez 2010 This notice is provided within a reasonable period during which employees can enter into salary reduction agreements. Irs 1040ez 2010 Example 3. Irs 1040ez 2010 Assume the same facts as in Example 2 , except that Joshua's employer chose to make nonelective contributions instead of matching contributions. Irs 1040ez 2010 Because his employer's nonelective contributions are limited to 2% of up to $255,000 of Joshua's compensation, his employer's contribution to Joshua's SIMPLE IRA was limited to $5,100. Irs 1040ez 2010 In this example, total contributions made on Joshua's behalf for the year were $17,100 (Joshua's salary reductions of $12,000 plus his employer's contribution of $5,100). Irs 1040ez 2010 Traditional IRA mistakenly moved to SIMPLE IRA. Irs 1040ez 2010   If you mistakenly roll over or transfer an amount from a traditional IRA to a SIMPLE IRA, you can later recharacterize the amount as a contribution to another traditional IRA. Irs 1040ez 2010 For more information, see Recharacterizations in chapter 1. Irs 1040ez 2010 Recharacterizing employer contributions. Irs 1040ez 2010   You cannot recharacterize employer contributions (including elective deferrals) under a SEP or SIMPLE plan as contributions to another IRA. Irs 1040ez 2010 SEPs are discussed in chapter 2 of Publication 560. Irs 1040ez 2010 SIMPLE plans are discussed in this chapter. Irs 1040ez 2010 Converting from a SIMPLE IRA. Irs 1040ez 2010   Generally, you can convert an amount in your SIMPLE IRA to a Roth IRA under the same rules explained in chapter 1 under Converting From Any Traditional IRA Into a Roth IRA . Irs 1040ez 2010    However, you cannot convert any amount distributed from the SIMPLE IRA during the 2-year period beginning on the date you first participated in any SIMPLE IRA plan maintained by your employer. Irs 1040ez 2010 When Can You Withdraw or Use Assets? Generally, the same distribution (withdrawal) rules that apply to traditional IRAs apply to SIMPLE IRAs. Irs 1040ez 2010 These rules are discussed in chapter 1. Irs 1040ez 2010 Your employer cannot restrict you from taking distributions from a SIMPLE IRA. Irs 1040ez 2010 Are Distributions Taxable? Generally, distributions from a SIMPLE IRA are fully taxable as ordinary income. Irs 1040ez 2010 If the distribution is an early distribution (discussed in chapter 1), it may be subject to the additional tax on early distributions. Irs 1040ez 2010 See Additional Tax on Early Distributions, later. Irs 1040ez 2010 Rollovers and Transfers Exception Generally, rollovers and trustee-to-trustee transfers are not taxable distributions. Irs 1040ez 2010 Two-year rule. Irs 1040ez 2010   To qualify as a tax-free rollover (or a tax-free trustee-to-trustee transfer), a rollover distribution (or a transfer) made from a SIMPLE IRA during the 2-year period beginning on the date on which you first participated in your employer's SIMPLE plan must be contributed (or transferred) to another SIMPLE IRA. Irs 1040ez 2010 The 2-year period begins on the first day on which contributions made by your employer are deposited in your SIMPLE IRA. Irs 1040ez 2010   After the 2-year period, amounts in a SIMPLE IRA can be rolled over or transferred tax free to an IRA other than a SIMPLE IRA, or to a qualified plan, a tax-sheltered annuity plan (section 403(b) plan), or deferred compensation plan of a state or local government (section 457 plan). Irs 1040ez 2010 Additional Tax on Early Distributions The additional tax on early distributions (discussed in chapter 1) applies to SIMPLE IRAs. Irs 1040ez 2010 If a distribution is an early distribution and occurs during the 2-year period following the date on which you first participated in your employer's SIMPLE plan, the additional tax on early distributions is increased from 10% to 25%. Irs 1040ez 2010 If a rollover distribution (or transfer) from a SIMPLE IRA does not satisfy the 2-year rule, and is otherwise an early distribution, the additional tax imposed because of the early distribution is increased from 10% to 25% of the amount distributed. Irs 1040ez 2010 Prev  Up  Next   Home   More Online Publications
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Tips for Leasing a Car

When you lease, you pay to drive someone else's vehicle. Monthly lease payments may be lower than loan payments, but at the end of the lease you have no ownership or equity in the car. To get the best deal, follow the advice below in addition to the general suggestions for buying a car.

  • To help you compare leasing versus owning, the Consumer Leasing Act requires leasing companies to give you information on monthly payments and other charges. Check out Leaseguide.com, and Leasecompare.com for online information on leases including current lease deals.
  • Consider using an independent agent rather than the dealer. You might find a better deal. Most financial institutions that offer auto financing also offer leasing options.
  • Ask for details on wear and tear standards. Dings that you regard as normal wear and tear could be billed as significant damage at the end of your lease.
  • Find out how many miles you can drive in a year. Most leases allow 12,000 to 15,000 miles a year. Expect a charge of 10 to 25 cents for each additional mile.
  • Check the manufacturer's warranty. It should cover the entire lease term and the number of miles you are likely to drive.
  • Ask the dealer what happens if you give up the car before the end of your lease. There may be extra fees for doing so.
  • Ask what happens if the car is involved in an accident.
  • Get all the terms in writing. Everything included with the car should be listed on the lease to avoid being charged for "missing" equipment later.

The Federal Reserve Board of Governors offers a consumer guide to auto leasing.

Financing

Most car buyers today need some form of financing to purchase a new vehicle. Many use direct lending, that is, a loan from a finance company, bank, or credit union. In direct lending, a buyer agrees to pay the amount financed, plus an agreed-upon finance charge, over a specified period. Once a buyer and a vehicle dealership enter into a contract to purchase a vehicle, the buyer uses the loan proceeds from the direct lender to pay the dealership for the vehicle. Another common form is dealership financing, which offers convenience, financing options, and sometimes special, manufacturer-sponsored, low-rate deals. Before you make a financing decision, it's important to do your research:

  • Decide in advance how much you can afford to spend and stick to your limit.
  • Get a copy of your credit report and correct any errors before applying for a loan.
  • Check buying guides to identify price ranges and best available deals.

Credit and Sublease Brokers

Con artists often prey on people who have bad credit and who cannot get car loans. "Credit brokers" promise to get a loan for you in exchange for a high fee. In many cases, the "broker" takes the fee and disappears. "Sublease brokers" charge a fee to arrange for you to "sublease" or "take over" someone else's car lease or loan. Such deals usually violate the original loan or lease agreement. Your car can be repossessed even if you've made all of your payments. You also might have trouble insuring your car.

The Irs 1040ez 2010

Irs 1040ez 2010 3. Irs 1040ez 2010   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. Irs 1040ez 2010 Introduction Resident and nonresident aliens are allowed exclusions from gross income if they meet certain conditions. Irs 1040ez 2010 An exclusion from gross income is generally income you receive that is not included in your U. Irs 1040ez 2010 S. Irs 1040ez 2010 income and is not subject to U. Irs 1040ez 2010 S. Irs 1040ez 2010 tax. Irs 1040ez 2010 This chapter covers some of the more common exclusions allowed to resident and nonresident aliens. Irs 1040ez 2010 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. Irs 1040ez 2010 Useful Items - You may want to see: Publication 54 Tax Guide for U. Irs 1040ez 2010 S. Irs 1040ez 2010 Citizens and Resident Aliens Abroad 523 Selling Your Home See chapter 12 for information about getting these publications. Irs 1040ez 2010 Resident Aliens Resident aliens may be able to exclude the following items from their gross income. Irs 1040ez 2010 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. Irs 1040ez 2010 The exclusion is $97,600 in 2013. Irs 1040ez 2010 In addition, you may be able to exclude or deduct certain foreign housing amounts. Irs 1040ez 2010 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. Irs 1040ez 2010 For more information, see Publication 54. Irs 1040ez 2010 Foreign country. Irs 1040ez 2010    A foreign country is any territory under the sovereignty of a government other than that of the United States. Irs 1040ez 2010   The term “foreign country” includes the country's territorial waters and airspace, but not international waters and the airspace above them. Irs 1040ez 2010 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. Irs 1040ez 2010   The term “foreign country” does not include U. Irs 1040ez 2010 S. Irs 1040ez 2010 possessions or territories. Irs 1040ez 2010 It does not include the Antarctic region. Irs 1040ez 2010 Nonresident Aliens Nonresident aliens can exclude the following items from their gross income. Irs 1040ez 2010 Interest Income Interest income that is not connected with a U. Irs 1040ez 2010 S. Irs 1040ez 2010 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. Irs 1040ez 2010 State and local government obligations. Irs 1040ez 2010   Interest on obligations of a state or political subdivision, the District of Columbia, or a U. Irs 1040ez 2010 S. Irs 1040ez 2010 possession, generally is not included in income. Irs 1040ez 2010 However, interest on certain private activity bonds, arbitrage bonds, and certain bonds not in registered form is included in income. Irs 1040ez 2010 Portfolio interest. Irs 1040ez 2010   Interest and original issue discount that qualifies as portfolio interest is not subject to NRA withholding. Irs 1040ez 2010 To qualify as portfolio interest, the interest must be paid on obligations issued after July 18, 1984, and otherwise subject to NRA withholding. Irs 1040ez 2010 Note. Irs 1040ez 2010 For obligations issued after March 18, 2012, portfolio interest does not include interest paid on debt that is not in registered form. Irs 1040ez 2010 Before March 19, 2012, portfolio interest included interest on certain registered and nonregistered (bearer) bonds if the obligations meet the requirements described below. Irs 1040ez 2010 Obligations in registered form. Irs 1040ez 2010   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. Irs 1040ez 2010   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. Irs 1040ez 2010   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. Irs 1040ez 2010 For more information on whether obligations are considered to be in registered form, see Portfolio interest in Publication 515. Irs 1040ez 2010 Obligations not in registered form. Irs 1040ez 2010    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. Irs 1040ez 2010 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. Irs 1040ez 2010   Documentation is not required for interest on bearer obligations to qualify as portfolio interest. Irs 1040ez 2010 In some cases, however, you may need documentation for purposes of Form 1099 reporting and backup withholding. Irs 1040ez 2010 Interest that does not qualify as portfolio interest. Irs 1040ez 2010   Payments to certain persons and payments of contingent interest do not qualify as portfolio interest. Irs 1040ez 2010 You must withhold at the statutory rate on such payments unless some other exception, such as a treaty provision, applies. Irs 1040ez 2010 Contingent interest. Irs 1040ez 2010   Portfolio interest does not include contingent interest. Irs 1040ez 2010 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. Irs 1040ez 2010 For exceptions, see Internal Revenue Code section 871(h)(4)(C). Irs 1040ez 2010 Any other type of contingent interest that is identified by the Secretary of the Treasury in regulations. Irs 1040ez 2010 Related persons. Irs 1040ez 2010   Related persons include the following. Irs 1040ez 2010 Members of a family, including only brothers, sisters, half-brothers, half-sisters, spouse, ancestors (parents, grandparents, etc. Irs 1040ez 2010 ), and lineal descendants (children, grandchildren, etc. Irs 1040ez 2010 ). Irs 1040ez 2010 Any person who is a party to any arrangement undertaken for the purpose of avoiding the contingent interest rules. Irs 1040ez 2010 Certain corporations, partnerships, and other entities. Irs 1040ez 2010 For details, see Nondeductible Loss in chapter 2 of Publication 544. Irs 1040ez 2010 Exception for existing debt. Irs 1040ez 2010   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. Irs 1040ez 2010 Dividend Income The following dividend income is exempt from the 30% tax. Irs 1040ez 2010 Certain dividends paid by foreign corporations. Irs 1040ez 2010   There is no 30% tax on U. Irs 1040ez 2010 S. Irs 1040ez 2010 source dividends you receive from a foreign corporation. Irs 1040ez 2010 See Second exception under Dividends in chapter 2 for how to figure the amount of U. Irs 1040ez 2010 S. Irs 1040ez 2010 source dividends. Irs 1040ez 2010 Certain interest-related dividends. Irs 1040ez 2010   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. Irs 1040ez 2010 The mutual fund will designate in writing which dividends are interest-related dividends. Irs 1040ez 2010 Certain short-term capital gain dividends. Irs 1040ez 2010   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. Irs 1040ez 2010 The mutual fund will designate in writing which dividends are short-term capital gain dividends. Irs 1040ez 2010 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. Irs 1040ez 2010 Services Performed for Foreign Employer If you were paid by a foreign employer, your U. Irs 1040ez 2010 S. Irs 1040ez 2010 source income may be exempt from U. Irs 1040ez 2010 S. Irs 1040ez 2010 tax, but only if you meet one of the situations discussed next. Irs 1040ez 2010 Employees of foreign persons, organizations, or offices. Irs 1040ez 2010   Income for personal services performed in the United States as a nonresident alien is not considered to be from U. Irs 1040ez 2010 S. Irs 1040ez 2010 sources and is tax exempt if you meet all three of the following conditions. Irs 1040ez 2010 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. Irs 1040ez 2010 S. Irs 1040ez 2010 corporation, a U. Irs 1040ez 2010 S. Irs 1040ez 2010 partnership, or a U. Irs 1040ez 2010 S. Irs 1040ez 2010 citizen or resident. Irs 1040ez 2010 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. Irs 1040ez 2010 Your pay for these services is not more than $3,000. Irs 1040ez 2010 If you do not meet all three conditions, your income from personal services performed in the United States is U. Irs 1040ez 2010 S. Irs 1040ez 2010 source income and is taxed according to the rules in chapter 4. Irs 1040ez 2010   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. Irs 1040ez 2010 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. Irs 1040ez 2010 If the advances or reimbursements are more than your expenses, include the excess in your pay for these services. Irs 1040ez 2010   A day means a calendar day during any part of which you are physically present in the United States. Irs 1040ez 2010 Example 1. Irs 1040ez 2010 During 2013, Henry Smythe, a nonresident alien from a nontreaty country, worked for an overseas office of a U. Irs 1040ez 2010 S. Irs 1040ez 2010 partnership. Irs 1040ez 2010 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. Irs 1040ez 2010 That office paid him a total gross salary of $2,800 for those services. Irs 1040ez 2010 During 2013, he was not engaged in a trade or business in the United States. Irs 1040ez 2010 The salary is not considered U. Irs 1040ez 2010 S. Irs 1040ez 2010 source income and is exempt from U. Irs 1040ez 2010 S. Irs 1040ez 2010 tax. Irs 1040ez 2010 Example 2. Irs 1040ez 2010 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. Irs 1040ez 2010 He received $2,875 in 2013, and $1,625 in 2014. Irs 1040ez 2010 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. Irs 1040ez 2010 Henry's salary is U. Irs 1040ez 2010 S. Irs 1040ez 2010 source income and is taxed under the rules in chapter 4. Irs 1040ez 2010 Crew members. Irs 1040ez 2010   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. Irs 1040ez 2010 S. Irs 1040ez 2010 possession is not U. Irs 1040ez 2010 S. Irs 1040ez 2010 source income and is exempt from U. Irs 1040ez 2010 S. Irs 1040ez 2010 tax. Irs 1040ez 2010 This exemption does not apply to compensation for services performed on foreign aircraft. Irs 1040ez 2010 Students and exchange visitors. Irs 1040ez 2010   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. Irs 1040ez 2010   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. Irs 1040ez 2010 It also includes the alien's spouse and minor children if they come with the alien or come later to join the alien. Irs 1040ez 2010   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. Irs 1040ez 2010 Foreign employer. Irs 1040ez 2010   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. Irs 1040ez 2010 S. Irs 1040ez 2010 possession by a U. Irs 1040ez 2010 S. Irs 1040ez 2010 corporation, a U. Irs 1040ez 2010 S. Irs 1040ez 2010 partnership, or an individual who is a U. Irs 1040ez 2010 S. Irs 1040ez 2010 citizen or resident. Irs 1040ez 2010   The term “foreign employer” does not include a foreign government. Irs 1040ez 2010 Pay from a foreign government that is exempt from U. Irs 1040ez 2010 S. Irs 1040ez 2010 income tax is discussed in chapter 10. Irs 1040ez 2010 Income from certain annuities. Irs 1040ez 2010   Do not include in income any annuity received under a qualified annuity plan or from a qualified trust exempt from U. Irs 1040ez 2010 S. Irs 1040ez 2010 income tax if you meet both of the following conditions. Irs 1040ez 2010 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 . Irs 1040ez 2010 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. Irs 1040ez 2010 S. Irs 1040ez 2010 citizens or residents. Irs 1040ez 2010   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. Irs 1040ez 2010 S. Irs 1040ez 2010 citizens and residents, or You are a resident of a beneficiary developing country under Title V of the Trade Act of 1974. Irs 1040ez 2010   If you are not sure whether the annuity is from a qualified annuity plan or qualified trust, ask the person who made the payment. Irs 1040ez 2010 Income affected by treaties. Irs 1040ez 2010   Income of any kind that is exempt from U. Irs 1040ez 2010 S. Irs 1040ez 2010 tax under a treaty to which the United States is a party is excluded from your gross income. Irs 1040ez 2010 Income on which the tax is only limited by treaty, however, is included in gross income. Irs 1040ez 2010 See chapter 9. Irs 1040ez 2010 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. Irs 1040ez 2010 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. Irs 1040ez 2010 If you are married and file a joint return, you may be able to exclude up to $500,000. Irs 1040ez 2010 For information on the requirements for this exclusion, see Publication 523. Irs 1040ez 2010 This exclusion does not apply to nonresident aliens who are subject to the expatriation tax rules discussed in chapter 4. Irs 1040ez 2010 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. Irs 1040ez 2010 The rules discussed here apply to both resident and nonresident aliens. Irs 1040ez 2010 If a nonresident alien receives a grant that is not from U. Irs 1040ez 2010 S. Irs 1040ez 2010 sources, it is not subject to U. Irs 1040ez 2010 S. Irs 1040ez 2010 tax. Irs 1040ez 2010 See Scholarships, Grants, Prizes, and Awards in chapter 2 to determine whether your grant is from U. Irs 1040ez 2010 S. Irs 1040ez 2010 sources. Irs 1040ez 2010 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. Irs 1040ez 2010 Candidate for a degree. Irs 1040ez 2010   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. Irs 1040ez 2010 Eligible educational institution. Irs 1040ez 2010   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. Irs 1040ez 2010 Qualified education expenses. Irs 1040ez 2010   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. Irs 1040ez 2010 These items must be required of all students in your course of instruction. Irs 1040ez 2010 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. Irs 1040ez 2010 Expenses that do not qualify. Irs 1040ez 2010   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. Irs 1040ez 2010 This is true even if the fee must be paid to the institution as a condition of enrollment or attendance. Irs 1040ez 2010 Scholarship or fellowship amounts used to pay these costs are taxable. Irs 1040ez 2010 Amounts used to pay expenses that do not qualify. Irs 1040ez 2010   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. Irs 1040ez 2010 Payment for services. Irs 1040ez 2010   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. Irs 1040ez 2010 This is true even if all candidates for a degree are required to perform the services as a condition for receiving the degree. Irs 1040ez 2010 Example. Irs 1040ez 2010 On January 7, Maria Gomez is notified of a scholarship of $2,500 for the spring semester. Irs 1040ez 2010 As a condition for receiving the scholarship, Maria must serve as a part-time teaching assistant. Irs 1040ez 2010 Of the $2,500 scholarship, $1,000 represents payment for her services. Irs 1040ez 2010 Assuming that Maria meets all other conditions, she can exclude no more than $1,500 from income as a qualified scholarship. Irs 1040ez 2010 Prev  Up  Next   Home   More Online Publications