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Irs Tax Forms 2011

2012 Tax Form 1040ez1040 XIrs Free Tax FilingOnline 1040 EzHow To File 1040ez OnlineHttp Www Irs Gov FreefileFree Tax HelpIrs Free State File Tax ReturnFree State Tax Forms OnlineEz1040 FormTaxact 2009Tax ReturnsIrs 2011 Tax ReturnDo I File Back Taxes FreeTaxact 2011Taxslayer Com1040 Estimated Tax FormOnline Turbotax 2011Amended Return FormFree Tax Filing For Low IncomeIrs Forms 2011Amendment Tax FormFree Federal & State Tax FilingHelp Amending Tax Return2012 Tax Forms 1040 Ez1040ez WorksheetIrs Website For For 1040ezNj 1040 NrTurbotax For MilitaryState Tax Return For FreeWhere Can I File My 2011 TaxesFiling A Tax Amendment1040 Nr1040x Amended ReturnWhat Is A 1040nrI Filed My Taxes WrongFree State Filing Online2010 Federal Income Tax FormsFree Turbo Tax 2013Irs Refund

Irs Tax Forms 2011

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Audit Techniques Guides (ATGs)

These Audit Techniques Guides (ATGs) help IRS examiners during audits by providing insight into issues and accounting methods unique to specific industries. While ATGs are designed to provide guidance for IRS employees, they’re also useful to small business owners and tax professionals who prepare returns.

ATGs explain industry-specific examination techniques and include common, as well as, unique industry issues, business practices and terminology. Guidance is also provided on the examination of income, interview techniques and evaluation of evidence. So they may be helpful for business and tax planning purposes. To find out more about how these guides may be helpful to you, watch this short video.

Audit Techniques Guides are available here in Adobe PDF, or as Web pages, or both. The PDF versions must be viewed with the Acrobat Reader.

NOTE: These guides are current through the publication date. Since changes may have occurred after the publication date that would affect the accuracy of these documents, no guarantees are made concerning the technical accuracy after the publication date.


A B C D E F G H I J K L M N O P Q R S T U V W X Y Z


Aerospace Industry
Publication Date: 01/2005
The Service has prepared a comprehensive audit techniques guide to assist examiners in evaluating research credit in the aerospace industry. The guide focuses on the particular unique aspects of the industry and provides examiners tools and tests to utilize in evaluating and auditing research credit.


Air Transportation (PDF - 1.85MB)
Publication Date: 04/2008
Overview of excise tax paid for transportation of persons or property by air.


Architects and Landscape Architects (PDF - 378.27KB)
Publication Date:
08/2011
This audit technique guide (ATG) has been developed to provide guidance to taxpayers as well as to revenue agents and tax compliance officers conducting examinations in the architect and landscape architect service industries.


Art Galleries - Audit Technique Guide (PDF - 461KB)
Publication Date: 01/2012
This Audit Technique Guide (ATG) has been developed to provide guidance to taxpayers as well as to revenue agents and tax compliance officers conducting examinations of Art Galleries.


Attorneys Audit Technique Guide (PDF - 525.34KB)
Publication Date: 03/2011
The Attorneys Audit Techniques Guide is intended to provide guidance to the examiner who is auditing a taxpayer who is an attorney or an attorney firm and to provide tax related guidance to taxpayers and other professionals in this industry.


Business Consultants (PDF - 700KB)
Publication Date: 07/2011
The Business Consultants ATG now includes an income section that addresses the shifting or the assignment of income issue and the substance versus form issue an examiner may encounter when conducting an examination.


Capitalization v Repairs
Publication Date: 11/2010
The ATG provides techniques for reviewing and examining capitalization v repairs issues.


Cash Intensive Businesses
Publication Date: 04/2010
Businesses that have substantial cash transactions are included in the consolidated Cash Intensive Businesses Audit Techniques Guide. Some of these businesses include bail bonds, beauty shops, car washes, check cashing establishments, coin operated amusements, laundromats, scrap metal, some convenience stores and Taxicabs. Guidance is also provided on examination of income, interview techniques, and evaluation of evidence.


Child Care Provider (PDF - 220KB)
Publication Date: 3/30/2009
This Audit Techniques Guide will provide information on tax related issues pertaining to the child care providers industry. It provides guidance on accounting for income and deductions. Intended audiences are taxpayers, tax professionals and IRS examiners.


Coal Excise Tax (PDF - 471KB)
Publication Date: 05/2005
Provides excise tax agents with specific tools to examine issues relating to domestically produced coal.


Commercial Banking (PDF - 857KB)
Publication Date: 05/2001
Overview of the industry. Discusses potential issues and terminology unique to banking.


Conservation Easement (PDF - 926KB)
Publication Date: 11/2011
Audit Techniques Guide providing guidance on charitable contributions of conservation easements.


Construction Industry (PDF - 2.6MB)
Publication Date: 05/2009
Overview of the industry including a glossary. Discusses types of contracts; types of contractors; methods of accounting; and joint ventures. This updated guide includes the filing locations for Rev. Proc. 92-29 elections (Chpt 7); includes contractor square footage costs (Chpt. 11); and common errors in look-back interest filings (Chpt. 5). See also Examination and Closing Procedures Form 8697, Look-Back Interest, Publication Date: 05/2007, for general information regarding the application of Form 8697, Interest Computation Under the Look-Back Method for Completed Long-Term Contracts.


Continuation of Employee Healthcare Coverage (PDF - 360KB)
Publication Date: 03/2012
This audit techniques guide was developed to provide guidance to IRS employees and taxpayers concerning the Consolidated Omnibus Budget Reconciliation Act of 1985.


Cost Segregation
Publication Date: 01/14/2005
The Service has prepared a comprehensive audit techniques guide to assist examiners in evaluating cost segregation studies submitted by taxpayers in support of depreciation deductions. The guide is also beneficial for taxpayers and practitioners in preparing these studies.


Credit for Increasing Research Activities (i.e. Research Tax Credit) IRC § 41 (PDF -116KB)
Publication Date: 06/2005
This audit techniques guide sets forth the Research Credit Technical Advisors’ suggested guidelines for auditing research credit issues.


Excise Tax on Indoor Tanning Services (PDF - 469KB)
Publication Date: 12/2013

The Excise Tax on Indoor Tanning Services Audit Techniques Guide provides an overview of the indoor tanning tax and examination direction. Intended audiences are taxpayers, tax professionals and IRS examiners.


Executive Compensation - Fringe Benefits
Publication Date: 02/04/2005
Corporate executives often receive extraordinary fringe benefits that are not provided to other corporate employees. Any property or service that an executive receives in lieu of or in addition to regular taxable wages is a fringe benefit that may be subject to taxation.


Factoring of Receivables (PDF - 32KB)
Publication Date: 06/2006
This audit techniques guide focuses on a strategy in which multinational corporations use factoring of accounts receivable among related parties to avoid U.S. taxation by shifting income offshore and reducing U.S. income by deducting expenses related to the same income.


Farmers
Publication Date:
07/2006
The Farmers Audit Techniques Guide (ATG) focuses on developing highly trained examiners for the agricultural market segment. The Guide contain examination techniques, common and unique industry issues, business practices, industry terminology and other information to assist examiners in performing examinations. Some agricultural guides covered include cotton, raisin grapes, general livestock, livestock marketing/auction barns, grain, and tobacco.


Fishing Audit Technique Guide (PDF - 851KB)
Publication Date:
08/2011
This guide provides technical information and audit techniques for common issues in the fishing industry. The intended audience is fishermen, tax professionals and IRS examiners.


Foreign Insurance (PDF - 434KB)
Publication Date: 04/2008
This audit techniques guide was designed to assist the examiner in conducting audits where Excise Tax of Foreign Insurance transactions may be due.


Golden Parachute
Publication Date: 02/04/2005
The Service has prepared a comprehensive audit techniques guide to assist examiners in evaluating parachute examinations. The parachute examination can occur during the examination of either the corporation's or the individual's return.


Hardwood Timber Industry (PDF - 480KB)
Publication Date:
12/2012
This Industry Guide is intended for examiners conducting audits in the hardwood timber industry and as information for taxpayers and practitioners associated with the hardwood timber industry.


IC-DISC Audit Guide
Publication Date: 03/2012
This IC-DISC Audit Guide is intended to provide guidance to examiners who are auditing a Form 1120 IC-DISC and/or its related shareholder(s).


Inland Waterways (PDF - 607KB)
Publication Date: 12/2008
This audit techniques guide is intended to provide assistance to the examiner who is auditing a taxpayer for which the use of the Inland Waterways is an issue.


IRC 162(m) Salary Deduction Limitation
Publication Date: 02/04/2005
Every publicly held corporation maintains its executive compensation records differently. Likewise, every publicly held corporation maintains different methods for compensating its executives. As the examining agent, you must first learn the identity of the individual(s) within the corporation who are most familiar with how the executive compensation records are maintained.


IRC § 183: Activities Not Engaged in For Profit (PDF - 723KB)
Publication Date: 06/19/2009
This audit techniques guide (ATG) has been developed to provide guidance to Revenue Agents and Tax Compliance Officers in pursuing the application of IRC § 183, Activities Not Engaged in for Profit (sometimes referred to as the "hobby loss rule").


Lawsuits, Awards, and Settlements (PDF - 568 KB)
Publication Date: 05/2011
This guide focuses on taxability of lawsuits, awards and settlements.


Low-Income Housing Credit - Guide for Completing Form 8823 (PDF - 841 KB)
Publication Date: 01/2011
IRC 42, The Low-Income Housing Credit (LIHC) Program, is co-administered by the IRS and state housing credit agencies. As part of their administrative responsibilities, the agencies monitor the housing project for compliance with IRC 42 requirements and report any observed noncompliance to the IRS using Form 8823, Low-Income Housing Credit Agencies Report of Noncompliance or Building Disposition. This ATG provides state agencies with guidelines for evaluating taxpayer compliance and reporting noncompliance to the IRS.


Ministers (PDF - 243KB)
Publication Date: 04/23/2009
The Ministers Audit Techniques Guide is intended to provide guidance to the examiner who is auditing a taxpayer who is a minister and to provide tax related guidance to taxpayers and other professionals in this industry.


New Markets Tax Credit (PDF - 208KB)
Publication Date: 05/2010
The New Markets Tax Credit (NMTC) Program, enacted by Congress as part of the Community Renewal Tax Relief Act of 2000, is incorporated as section 45D of the Internal Revenue Code. This Code section permits individual and corporate taxpayers to receive a credit against federal income taxes for making Qualified Equity Investments (QEIs) in qualified community development entities (CDEs).


New Vehicle Dealership (PDF - 1.99 MB)
Publication Date: 1/2005
This guide will give you the key to a quick and competent closure of any new vehicle dealership examination which hinges on narrowing the scope of the examination to items that may prove productive.


Non-Qualified Deferred Compensation
Publication Date: 02/04/2005
The Service has prepared a comprehensive audit techniques guide to assist examiners in evaluating non-qualified deferred compensation. A nonqualified deferred compensation (NQDC) plan is any elective or nonelective plan, agreement, method, or arrangement between an employer and an employee (or service recipient and service provider) to pay the employee compensation some time in the future.


Obligations Not in Registered Form (PDF - 275KB)
Publication Date: 6/2006
Obligations Not in Registered Form


Obligations Not in Registered Form D (PDF - 84KB)
Publication Date: 06/2006
Obligations Not in Registered Form D


Oil and Gas Industry (PDF - 494KB)
Publication Date: 5/1996
Provides information on basic operations and common terminology. Includes reference to royalty owners and an introduction to financial products.


Ozone Depleting Chemicals (PDF - 412KB)
Publication Date: 9/2007
This is the audit techniques guide for Ozone Depleting Chemicals (ODC).


Partnerships
Publication Date: See Table of Contents for Publication/Revision Date of the Individual Chapters
The focus is on issues that fall within sections 701 through 761 of the Code (Subchapter K). Subchapter K deals primarily with the formation, operation, and termination of partnerships. Many issues arise during the initial or final year of the partnership.


Passive Activity Losses (PDF - 3437 KB)
Publication Date: 02/2005
Provides examiners with specific guidance on potential audit issues, issue identification and lead sheets and other job aids.


Placer Mining (PDF - 181KB)
Publication Date: 7/1999
Provides guidelines for the examination of taxpayers in this industry. Focuses on small mining operations represented as sole proprietorships on Schedule C, but can be adapted for partnership and corporate returns.


The Port Project (PDF - 282KB)
Publication Date: 8/1995
Provides examiners assistance in auditing industries related to coastal and inland waterways.


Reforestation Industry (PDF - 120KB)
Publication Date: 8/1995
Overview of the industry. Discusses some issues that may be encountered - including employment taxes; poor accounting records; etc.


Rehabilitation Tax Credit (PDF - 353KB)
Publication Date: 12/2002
Provides examiners with audit aids (i.e. issue checksheet, pro forma Information Document Request, and standardized audit reports, etc.) which assist in identifying and addressing common rehab tax credit issues.


Research Credit Claims: Credit for Increasing Research Activities § 41
Publication Date: See table of contents for publication/revision date for the individual chapters, exhibits, and letters & forms. This guide provides guidance on the handling and evaluation of research credit claims.


Retail Industry (PDF 785KB)
Publication Date: 2/2009
Overview of the Retail Industry.


Sections 48A and 48B - Advanced Coal and Gasification Project Credits
Publication Date: 5/2009
Section 46 provides that the amount of investment credit for purposes of § 38 for any taxable year is the sum of the credits listed in § 46. Section 1307(a) of the Energy Tax Incentives Act of 2005, Pub. L. 109-58, 119 Stat. 594 (August 8, 2005), amended § 46 to add two new credits to that list: The qualifying advanced coal project credit, (section 48A) and the qualifying gasification project credit, (section 48B).


Split Dollar Life Insurance
Publication Date: 03/07/2005
Split-dollar life insurance arrangements can be a key feature of executive compensation packages. Over the years, the Service has provided limited guidance regarding the taxation of these arrangements. Beginning in 2001, transitional guidance on the valuation of split-dollar life insurance arrangements was provided in the form of notices and proposed regulations in anticipation of final regulations.


Stock Based Compensation
Publication Date: 02/04/2005
The Service has prepared a comprehensive audit techniques guide to assist examiners in evaluating stock-based compensation. Stock-based compensation generally consists of either the transferring of stock or the issuance of stock options to an employee or independent contractor.


Structured Settlement Factoring (PDF - 282KB)
Publication Date: 11/2006
Structured Settlement Factoring


Timber Casualty Loss (PDF - 611KB)
Publication Date: 04/2011
The purpose of this Audit Technique Guide is to provide guidance on conducting income tax examinations with a Timber Casualty Loss.


Veterinary Medicine (PDF - 495KB)
Publication Date: 4/2005
Overview of industry includes discussion of types of business entities (especially personal service corporation); cash vs. accrual method of accounting; and inventory vs. supplies.


Wine Industry ATG (PDF - 354KB)
Publication Date: 05/2011
The Wine Industry Audit Technique Guide is designed to assist examiners in their compliance reviews of both winery and vineyard operations.


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The Irs Tax Forms 2011

Irs tax forms 2011 4. Irs tax forms 2011   Foreign Earned Income and Housing: Exclusion – Deduction Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: Who Qualifies for the Exclusions and the Deduction? RequirementsTax Home in Foreign Country Bona Fide Residence Test Physical Presence Test Waiver of Time Requirements U. Irs tax forms 2011 S. Irs tax forms 2011 Travel Restrictions Foreign Earned Income Foreign Earned Income ExclusionLimit on Excludable Amount Choosing the Exclusion Foreign Housing Exclusion and DeductionHousing Amount Foreign Housing Exclusion Foreign Housing Deduction Married Couples Form 2555 and Form 2555-EZForm 2555-EZ Form 2555 Topics - This chapter discusses: Who qualifies for the foreign earned income exclusion, the foreign housing exclusion, and the foreign housing deduction, The requirements that must be met to claim either exclusion or the deduction, How to figure the foreign earned income exclusion, and How to figure the foreign housing exclusion and the foreign housing deduction. Irs tax forms 2011 Useful Items - You may want to see: Publication 519 U. Irs tax forms 2011 S. Irs tax forms 2011 Tax Guide for Aliens 570 Tax Guide for Individuals With Income from U. Irs tax forms 2011 S. Irs tax forms 2011 Possessions 596 Earned Income Credit (EIC) Form (and Instructions) 1040X Amended U. Irs tax forms 2011 S. Irs tax forms 2011 Individual Income Tax Return 2555 Foreign Earned Income 2555-EZ Foreign Earned Income Exclusion See chapter 7 for information about getting these publications and forms. Irs tax forms 2011 Who Qualifies for the Exclusions and the Deduction? If you meet certain requirements, you may qualify for the foreign earned income and foreign housing exclusions and the foreign housing deduction. Irs tax forms 2011 If you are a U. Irs tax forms 2011 S. Irs tax forms 2011 citizen or a resident alien of the United States and you live abroad, you are taxed on your worldwide income. Irs tax forms 2011 However, you may qualify to exclude from income up to $97,600 of your foreign earnings. Irs tax forms 2011 In addition, you can exclude or deduct certain foreign housing amounts. Irs tax forms 2011 See Foreign Earned Income Exclusion and Foreign Housing Exclusion and Deduction, later. Irs tax forms 2011 You also may be entitled to exclude from income the value of meals and lodging provided to you by your employer. Irs tax forms 2011 See Exclusion of Meals and Lodging, later. Irs tax forms 2011 Requirements To claim the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction, you must meet all three of the following requirements. Irs tax forms 2011 Your tax home must be in a foreign country. Irs tax forms 2011 You must have foreign earned income. Irs tax forms 2011 You must be one of the following. Irs tax forms 2011 A U. Irs tax forms 2011 S. Irs tax forms 2011 citizen who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year. Irs tax forms 2011 A U. Irs tax forms 2011 S. Irs tax forms 2011 resident alien who is a citizen or national of a country with which the United States has an income tax treaty in effect and who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year. Irs tax forms 2011 A U. Irs tax forms 2011 S. Irs tax forms 2011 citizen or a U. Irs tax forms 2011 S. Irs tax forms 2011 resident alien who is physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months. Irs tax forms 2011 See Publication 519 to find out if you are a U. Irs tax forms 2011 S. Irs tax forms 2011 resident alien for tax purposes and whether you keep that alien status when you temporarily work abroad. Irs tax forms 2011 If you are a nonresident alien married to a U. Irs tax forms 2011 S. Irs tax forms 2011 citizen or resident alien, and both you and your spouse choose to treat you as a resident alien, you are a resident alien for tax purposes. Irs tax forms 2011 For information on making the choice, see the discussion in chapter 1 under Nonresident Alien Spouse Treated as a Resident . Irs tax forms 2011 Waiver of minimum time requirements. Irs tax forms 2011   The minimum time requirements for bona fide residence and physical presence can be waived if you must leave a foreign country because of war, civil unrest, or similar adverse conditions in that country. Irs tax forms 2011 This is fully explained under Waiver of Time Requirements , later. Irs tax forms 2011   See Figure 4-A and information in this chapter to determine if you are eligible to claim either exclusion or the deduction. Irs tax forms 2011 Tax Home in Foreign Country To qualify for the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction, your tax home must be in a foreign country throughout your period of bona fide residence or physical presence abroad. Irs tax forms 2011 Bona fide residence and physical presence are explained later. Irs tax forms 2011 Tax Home Your tax home is the general area of your main place of business, employment, or post of duty, regardless of where you maintain your family home. Irs tax forms 2011 Your tax home is the place where you are permanently or indefinitely engaged to work as an employee or self-employed individual. Irs tax forms 2011 Having a “tax home” in a given location does not necessarily mean that the given location is your residence or domicile for tax purposes. Irs tax forms 2011 If you do not have a regular or main place of business because of the nature of your work, your tax home may be the place where you regularly live. Irs tax forms 2011 If you have neither a regular or main place of business nor a place where you regularly live, you are considered an itinerant and your tax home is wherever you work. Irs tax forms 2011 You are not considered to have a tax home in a foreign country for any period in which your abode is in the United States. Irs tax forms 2011 However, your abode is not necessarily in the United States while you are temporarily in the United States. Irs tax forms 2011 Your abode is also not necessarily in the United States merely because you maintain a dwelling in the United States, whether or not your spouse or dependents use the dwelling. Irs tax forms 2011 “Abode” has been variously defined as one's home, habitation, residence, domicile, or place of dwelling. Irs tax forms 2011 It does not mean your principal place of business. Irs tax forms 2011 “Abode” has a domestic rather than a vocational meaning and does not mean the same as “tax home. Irs tax forms 2011 ” The location of your abode often will depend on where you maintain your economic, family, and personal ties. Irs tax forms 2011 Example 1. Irs tax forms 2011 You are employed on an offshore oil rig in the territorial waters of a foreign country and work a 28-day on/28-day off schedule. Irs tax forms 2011 You return to your family residence in the United States during your off periods. Irs tax forms 2011 You are considered to have an abode in the United States and do not satisfy the tax home test in the foreign country. Irs tax forms 2011 You cannot claim either of the exclusions or the housing deduction. Irs tax forms 2011 Example 2. Irs tax forms 2011 For several years, you were a marketing executive with a producer of machine tools in Toledo, Ohio. Irs tax forms 2011 In November of last year, your employer transferred you to London, England, for a minimum of 18 months to set up a sales operation for Europe. Irs tax forms 2011 Before you left, you distributed business cards showing your business and home addresses in London. Irs tax forms 2011 You kept ownership of your home in Toledo but rented it to another family. Irs tax forms 2011 You placed your car in storage. Irs tax forms 2011 In November of last year, you moved your spouse, children, furniture, and family pets to a home your employer rented for you in London. Irs tax forms 2011 Shortly after moving, you leased a car and you and your spouse got British driving licenses. Irs tax forms 2011 Your entire family got library cards for the local public library. Irs tax forms 2011 You and your spouse opened bank accounts with a London bank and secured consumer credit. Irs tax forms 2011 You joined a local business league and both you and your spouse became active in the neighborhood civic association and worked with a local charity. Irs tax forms 2011 Your abode is in London for the time you live there. Irs tax forms 2011 You satisfy the tax home test in the foreign country. Irs tax forms 2011 Please click here for the text description of the image. Irs tax forms 2011 Figure 4–A Can I Claim the Exclusion or Deduction? Temporary or Indefinite Assignment The location of your tax home often depends on whether your assignment is temporary or indefinite. Irs tax forms 2011 If you are temporarily absent from your tax home in the United States on business, you may be able to deduct your away-from-home expenses (for travel, meals, and lodging), but you would not qualify for the foreign earned income exclusion. Irs tax forms 2011 If your new work assignment is for an indefinite period, your new place of employment becomes your tax home and you would not be able to deduct any of the related expenses that you have in the general area of this new work assignment. Irs tax forms 2011 If your new tax home is in a foreign country and you meet the other requirements, your earnings may qualify for the foreign earned income exclusion. Irs tax forms 2011 If you expect your employment away from home in a single location to last, and it does last, for 1 year or less, it is temporary unless facts and circumstances indicate otherwise. Irs tax forms 2011 If you expect it to last for more than 1 year, it is indefinite. Irs tax forms 2011 If you expect it to last for 1 year or less, but at some later date you expect it to last longer than 1 year, it is temporary (in the absence of facts and circumstances indicating otherwise) until your expectation changes. Irs tax forms 2011 Once your expectation changes, it is indefinite. Irs tax forms 2011 Foreign Country To meet the bona fide residence test or the physical presence test, you must live in or be present in a foreign country. Irs tax forms 2011 A foreign country includes any territory under the sovereignty of a government other than that of the United States. Irs tax forms 2011 The term “foreign country” includes the country's airspace and territorial waters, but not international waters and the airspace above them. Irs tax forms 2011 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 tax forms 2011 The term “foreign country” does not include Antarctica or U. Irs tax forms 2011 S. Irs tax forms 2011 possessions such as Puerto Rico, Guam, the Commonwealth of the Northern Mariana Islands, the U. Irs tax forms 2011 S. Irs tax forms 2011 Virgin Islands, and Johnston Island. Irs tax forms 2011 For purposes of the foreign earned income exclusion, the foreign housing exclusion, and the foreign housing deduction, the terms “foreign,” “abroad,” and “overseas” refer to areas outside the United States and those areas listed or described in the previous sentence. Irs tax forms 2011 American Samoa, Guam, and the Commonwealth of the Northern Mariana Islands Residence or presence in a U. Irs tax forms 2011 S. Irs tax forms 2011 possession does not qualify you for the foreign earned income exclusion. Irs tax forms 2011 You may, however, qualify for an exclusion of your possession income on your U. Irs tax forms 2011 S. Irs tax forms 2011 return. Irs tax forms 2011 American Samoa. Irs tax forms 2011   There is a possession exclusion available to individuals who are bona fide residents of American Samoa for the entire tax year. Irs tax forms 2011 Gross income from sources within American Samoa may be eligible for this exclusion. Irs tax forms 2011 Income that is effectively connected with the conduct of a trade or business within American Samoa also may be eligible for this exclusion. Irs tax forms 2011 Use Form 4563, Exclusion of Income for Bona Fide Residents of American Samoa, to figure the exclusion. Irs tax forms 2011 Guam and the Commonwealth of the Northern Mariana Islands. Irs tax forms 2011   An exclusion will be available to residents of Guam and the Commonwealth of the Northern Mariana Islands if, and when, new implementation agreements take effect between the United States and those possessions. Irs tax forms 2011   For more information, see Publication 570. Irs tax forms 2011 Puerto Rico and U. Irs tax forms 2011 S. Irs tax forms 2011 Virgin Islands Residents of Puerto Rico and the U. Irs tax forms 2011 S. Irs tax forms 2011 Virgin Islands cannot claim the foreign earned income exclusion or the foreign housing exclusion. Irs tax forms 2011 Puerto Rico. Irs tax forms 2011   Generally, if you are a U. Irs tax forms 2011 S. Irs tax forms 2011 citizen who is a bona fide resident of Puerto Rico for the entire tax year, you are not subject to U. Irs tax forms 2011 S. Irs tax forms 2011 tax on income from Puerto Rican sources. Irs tax forms 2011 This does not include amounts paid for services performed as an employee of the United States. Irs tax forms 2011 However, you are subject to U. Irs tax forms 2011 S. Irs tax forms 2011 tax on your income from sources outside Puerto Rico. Irs tax forms 2011 In figuring your U. Irs tax forms 2011 S. Irs tax forms 2011 tax, you cannot deduct expenses allocable to income not subject to tax. Irs tax forms 2011 Bona Fide Residence Test You meet the bona fide residence test if you are a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year. Irs tax forms 2011 You can use the bona fide residence test to qualify for the exclusions and the deduction only if you are either: A U. Irs tax forms 2011 S. Irs tax forms 2011 citizen, or A U. Irs tax forms 2011 S. Irs tax forms 2011 resident alien who is a citizen or national of a country with which the United States has an income tax treaty in effect. Irs tax forms 2011 You do not automatically acquire bona fide resident status merely by living in a foreign country or countries for 1 year. Irs tax forms 2011 If you go to a foreign country to work on a particular job for a specified period of time, you ordinarily will not be regarded as a bona fide resident of that country even though you work there for 1 tax year or longer. Irs tax forms 2011 The length of your stay and the nature of your job are only two of the factors to be considered in determining whether you meet the bona fide residence test. Irs tax forms 2011 Bona fide residence. Irs tax forms 2011   To meet the bona fide residence test, you must have established a bona fide residence in a foreign country. Irs tax forms 2011   Your bona fide residence is not necessarily the same as your domicile. Irs tax forms 2011 Your domicile is your permanent home, the place to which you always return or intend to return. Irs tax forms 2011 Example. Irs tax forms 2011 You could have your domicile in Cleveland, Ohio, and a bona fide residence in Edinburgh, Scotland, if you intend to return eventually to Cleveland. Irs tax forms 2011 The fact that you go to Scotland does not automatically make Scotland your bona fide residence. Irs tax forms 2011 If you go there as a tourist, or on a short business trip, and return to the United States, you have not established bona fide residence in Scotland. Irs tax forms 2011 But if you go to Scotland to work for an indefinite or extended period and you set up permanent quarters there for yourself and your family, you probably have established a bona fide residence in a foreign country, even though you intend to return eventually to the United States. Irs tax forms 2011 You are clearly not a resident of Scotland in the first instance. Irs tax forms 2011 However, in the second, you are a resident because your stay in Scotland appears to be permanent. Irs tax forms 2011 If your residency is not as clearly defined as either of these illustrations, it may be more difficult to decide whether you have established a bona fide residence. Irs tax forms 2011 Determination. Irs tax forms 2011   Questions of bona fide residence are determined according to each individual case, taking into account factors such as your intention, the purpose of your trip, and the nature and length of your stay abroad. Irs tax forms 2011   To meet the bona fide residence test, you must show the Internal Revenue Service (IRS) that you have been a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year. Irs tax forms 2011 The IRS decides whether you are a bona fide resident of a foreign country largely on the basis of facts you report on Form 2555. Irs tax forms 2011 IRS cannot make this determination until you file Form 2555. Irs tax forms 2011 Statement to foreign authorities. Irs tax forms 2011   You are not considered a bona fide resident of a foreign country if you make a statement to the authorities of that country that you are not a resident of that country, and the authorities: Hold that you are not subject to their income tax laws as a resident, or Have not made a final decision on your status. Irs tax forms 2011 Special agreements and treaties. Irs tax forms 2011   An income tax exemption provided in a treaty or other international agreement will not in itself prevent you from being a bona fide resident of a foreign country. Irs tax forms 2011 Whether a treaty prevents you from becoming a bona fide resident of a foreign country is determined under all provisions of the treaty, including specific provisions relating to residence or privileges and immunities. Irs tax forms 2011 Example 1. Irs tax forms 2011 You are a U. Irs tax forms 2011 S. Irs tax forms 2011 citizen employed in the United Kingdom by a U. Irs tax forms 2011 S. Irs tax forms 2011 employer under contract with the U. Irs tax forms 2011 S. Irs tax forms 2011 Armed Forces. Irs tax forms 2011 You are not subject to the North Atlantic Treaty Status of Forces Agreement. Irs tax forms 2011 You may be a bona fide resident of the United Kingdom. Irs tax forms 2011 Example 2. Irs tax forms 2011 You are a U. Irs tax forms 2011 S. Irs tax forms 2011 citizen in the United Kingdom who qualifies as an “employee” of an armed service or as a member of a “civilian component” under the North Atlantic Treaty Status of Forces Agreement. Irs tax forms 2011 You are not a bona fide resident of the United Kingdom. Irs tax forms 2011 Example 3. Irs tax forms 2011 You are a U. Irs tax forms 2011 S. Irs tax forms 2011 citizen employed in Japan by a U. Irs tax forms 2011 S. Irs tax forms 2011 employer under contract with the U. Irs tax forms 2011 S. Irs tax forms 2011 Armed Forces. Irs tax forms 2011 You are subject to the agreement of the Treaty of Mutual Cooperation and Security between the United States and Japan. Irs tax forms 2011 Being subject to the agreement does not make you a bona fide resident of Japan. Irs tax forms 2011 Example 4. Irs tax forms 2011 You are a U. Irs tax forms 2011 S. Irs tax forms 2011 citizen employed as an “official” by the United Nations in Switzerland. Irs tax forms 2011 You are exempt from Swiss taxation on the salary or wages paid to you by the United Nations. Irs tax forms 2011 This does not prevent you from being a bona fide resident of Switzerland. Irs tax forms 2011 Effect of voting by absentee ballot. Irs tax forms 2011   If you are a U. Irs tax forms 2011 S. Irs tax forms 2011 citizen living abroad, you can vote by absentee ballot in any election held in the United States without risking your status as a bona fide resident of a foreign country. Irs tax forms 2011   However, if you give information to the local election officials about the nature and length of your stay abroad that does not match the information you give for the bona fide residence test, the information given in connection with absentee voting will be considered in determining your status, but will not necessarily be conclusive. Irs tax forms 2011 Uninterrupted period including entire tax year. Irs tax forms 2011   To meet the bona fide residence test, you must reside in a foreign country or countries for an uninterrupted period that includes an entire tax year. Irs tax forms 2011 An entire tax year is from January 1 through December 31 for taxpayers who file their income tax returns on a calendar year basis. Irs tax forms 2011   During the period of bona fide residence in a foreign country, you can leave the country for brief or temporary trips back to the United States or elsewhere for vacation or business. Irs tax forms 2011 To keep your status as a bona fide resident of a foreign country, you must have a clear intention of returning from such trips, without unreasonable delay, to your foreign residence or to a new bona fide residence in another foreign country. Irs tax forms 2011 Example 1. Irs tax forms 2011 You arrived with your family in Lisbon, Portugal, on November 1, 2011. Irs tax forms 2011 Your assignment is indefinite, and you intend to live there with your family until your company sends you to a new post. Irs tax forms 2011 You immediately established residence there. Irs tax forms 2011 You spent April of 2012 at a business conference in the United States. Irs tax forms 2011 Your family stayed in Lisbon. Irs tax forms 2011 Immediately following the conference, you returned to Lisbon and continued living there. Irs tax forms 2011 On January 1, 2013, you completed an uninterrupted period of residence for a full tax year (2012), and you meet the bona fide residence test. Irs tax forms 2011 Example 2. Irs tax forms 2011 Assume the same facts as in Example 1, except that you transferred back to the United States on December 13, 2012. Irs tax forms 2011 You would not meet the bona fide residence test because your bona fide residence in the foreign country, although it lasted more than a year, did not include a full tax year. Irs tax forms 2011 You may, however, qualify for the foreign earned income exclusion or the housing exclusion or deduction under the physical presence test (discussed later). Irs tax forms 2011 Bona fide resident for part of a year. Irs tax forms 2011   Once you have established bona fide residence in a foreign country for an uninterrupted period that includes an entire tax year, you are a bona fide resident of that country for the period starting with the date you actually began the residence and ending with the date you abandon the foreign residence. Irs tax forms 2011 Your period of bona fide residence can include an entire tax year plus parts of 2 other tax years. Irs tax forms 2011 Example. Irs tax forms 2011 You were a bona fide resident of Singapore from March 1, 2011, through September 14, 2013. Irs tax forms 2011 On September 15, 2013, you returned to the United States. Irs tax forms 2011 Since you were a bona fide resident of a foreign country for all of 2012, you were also a bona fide resident of a foreign country from March 1, 2011, through the end of 2011 and from January 1, 2013, through September 14, 2013. Irs tax forms 2011 Reassignment. Irs tax forms 2011   If you are assigned from one foreign post to another, you may or may not have a break in foreign residence between your assignments, depending on the circumstances. Irs tax forms 2011 Example 1. Irs tax forms 2011 You were a resident of Pakistan from October 1, 2012, through November 30, 2013. Irs tax forms 2011 On December 1, 2013, you and your family returned to the United States to wait for an assignment to another foreign country. Irs tax forms 2011 Your household goods also were returned to the United States. Irs tax forms 2011 Your foreign residence ended on November 30, 2013, and did not begin again until after you were assigned to another foreign country and physically entered that country. Irs tax forms 2011 Since you were not a bona fide resident of a foreign country for the entire tax year of 2012 or 2013 you do not meet the bona fide residence test in either year. Irs tax forms 2011 You may, however, qualify for the foreign earned income exclusion or the housing exclusion or deduction under the physical presence test, discussed later. Irs tax forms 2011 Example 2. Irs tax forms 2011 Assume the same facts as in Example 1, except that upon completion of your assignment in Pakistan you were given a new assignment to Turkey. Irs tax forms 2011 On December 1, 2013, you and your family returned to the United States for a month's vacation. Irs tax forms 2011 On January 2, 2014, you arrived in Turkey for your new assignment. Irs tax forms 2011 Because you did not interrupt your bona fide residence abroad, you meet the bona fide residence test. Irs tax forms 2011 Physical Presence Test You meet the physical presence test if you are physically present in a foreign country or countries 330 full days during a period of 12 consecutive months. Irs tax forms 2011 The 330 days do not have to be consecutive. Irs tax forms 2011 Any U. Irs tax forms 2011 S. Irs tax forms 2011 citizen or resident alien can use the physical presence test to qualify for the exclusions and the deduction. Irs tax forms 2011 The physical presence test is based only on how long you stay in a foreign country or countries. Irs tax forms 2011 This test does not depend on the kind of residence you establish, your intentions about returning, or the nature and purpose of your stay abroad. Irs tax forms 2011 330 full days. Irs tax forms 2011   Generally, to meet the physical presence test, you must be physically present in a foreign country or countries for at least 330 full days during a 12-month period. Irs tax forms 2011 You can count days you spent abroad for any reason. Irs tax forms 2011 You do not have to be in a foreign country only for employment purposes. Irs tax forms 2011 You can be on vacation. Irs tax forms 2011   You do not meet the physical presence test if illness, family problems, a vacation, or your employer's orders cause you to be present for less than the required amount of time. Irs tax forms 2011 Exception. Irs tax forms 2011   You can be physically present in a foreign country or countries for less than 330 full days and still meet the physical presence test if you are required to leave a country because of war or civil unrest. Irs tax forms 2011 See Waiver of Time Requirements, later. Irs tax forms 2011 Full day. Irs tax forms 2011   A full day is a period of 24 consecutive hours, beginning at midnight. Irs tax forms 2011 Travel. Irs tax forms 2011    When you leave the United States to go directly to a foreign country or when you return directly to the United States from a foreign country, the time you spend on or over international waters does not count toward the 330-day total. Irs tax forms 2011 Example. Irs tax forms 2011 You leave the United States for France by air on June 10. Irs tax forms 2011 You arrive in France at 9:00 a. Irs tax forms 2011 m. Irs tax forms 2011 on June 11. Irs tax forms 2011 Your first full day of physical presence in France is June 12. Irs tax forms 2011 Passing over foreign country. Irs tax forms 2011   If, in traveling from the United States to a foreign country, you pass over a foreign country before midnight of the day you leave, the first day you can count toward the 330-day total is the day following the day you leave the United States. Irs tax forms 2011 Example. Irs tax forms 2011 You leave the United States by air at 9:30 a. Irs tax forms 2011 m. Irs tax forms 2011 on June 10 to travel to Kenya. Irs tax forms 2011 You pass over western Africa at 11:00 p. Irs tax forms 2011 m. Irs tax forms 2011 on June 10 and arrive in Kenya at 12:30 a. Irs tax forms 2011 m. Irs tax forms 2011 on June 11. Irs tax forms 2011 Your first full day in a foreign country is June 11. Irs tax forms 2011 Change of location. Irs tax forms 2011   You can move about from one place to another in a foreign country or to another foreign country without losing full days. Irs tax forms 2011 If any part of your travel is not within any foreign country and takes less than 24 hours, you are considered to be in a foreign country during that part of travel. Irs tax forms 2011 Example 1. Irs tax forms 2011 You leave Ireland by air at 11:00 p. Irs tax forms 2011 m. Irs tax forms 2011 on July 6 and arrive in Sweden at 5:00 a. Irs tax forms 2011 m. Irs tax forms 2011 on July 7. Irs tax forms 2011 Your trip takes less than 24 hours and you lose no full days. Irs tax forms 2011 Example 2. Irs tax forms 2011 You leave Norway by ship at 10:00 p. Irs tax forms 2011 m. Irs tax forms 2011 on July 6 and arrive in Portugal at 6:00 a. Irs tax forms 2011 m. Irs tax forms 2011 on July 8. Irs tax forms 2011 Since your travel is not within a foreign country or countries and the trip takes more than 24 hours, you lose as full days July 6, 7, and 8. Irs tax forms 2011 If you remain in Portugal, your next full day in a foreign country is July 9. Irs tax forms 2011 In United States while in transit. Irs tax forms 2011   If you are in transit between two points outside the United States and are physically present in the United States for less than 24 hours, you are not treated as present in the United States during the transit. Irs tax forms 2011 You are treated as traveling over areas not within any foreign country. Irs tax forms 2011    Please click here for the text description of the image. Irs tax forms 2011 Figure 4-B How to figure the 12-month period. Irs tax forms 2011   There are four rules you should know when figuring the 12-month period. Irs tax forms 2011 Your 12-month period can begin with any day of the month. Irs tax forms 2011 It ends the day before the same calendar day, 12 months later. Irs tax forms 2011 Your 12-month period must be made up of consecutive months. Irs tax forms 2011 Any 12-month period can be used if the 330 days in a foreign country fall within that period. Irs tax forms 2011 You do not have to begin your 12-month period with your first full day in a foreign country or end it with the day you leave. Irs tax forms 2011 You can choose the 12-month period that gives you the greatest exclusion. Irs tax forms 2011 In determining whether the 12-month period falls within a longer stay in the foreign country, 12-month periods can overlap one another. Irs tax forms 2011 Example 1. Irs tax forms 2011 You are a construction worker who works on and off in a foreign country over a 20-month period. Irs tax forms 2011 You might pick up the 330 full days in a 12-month period only during the middle months of the time you work in the foreign country because the first few and last few months of the 20-month period are broken up by long visits to the United States. Irs tax forms 2011 Example 2. Irs tax forms 2011 You work in New Zealand for a 20-month period from January 1, 2012, through August 31, 2013, except that you spend 28 days in February 2012 and 28 days in February 2013 on vacation in the United States. Irs tax forms 2011 You are present in New Zealand for at least 330 full days during each of the following two 12-month periods: January 1, 2012 – December 31, 2012 and September 1, 2012 – August 31, 2013. Irs tax forms 2011 By overlapping the 12-month periods in this way, you meet the physical presence test for the whole 20-month period. Irs tax forms 2011 See Figure 4-B, on the previous page. Irs tax forms 2011 Waiver of Time Requirements Both the bona fide residence test and the physical presence test contain minimum time requirements. Irs tax forms 2011 The minimum time requirements can be waived, however, if you must leave a foreign country because of war, civil unrest, or similar adverse conditions in that country. Irs tax forms 2011 You must be able to show that you reasonably could have expected to meet the minimum time requirements if not for the adverse conditions. Irs tax forms 2011 To qualify for the waiver, you must actually have your tax home in the foreign country and be a bona fide resident of, or be physically present in, the foreign country on or before the beginning date of the waiver. Irs tax forms 2011 Early in 2014, the IRS will publish in the Internal Revenue Bulletin a list of the only countries that qualify for the waiver for 2013 and the effective dates. Irs tax forms 2011 If you left one of the countries on or after the date listed for each country, you can meet the bona fide residence test or physical presence test for 2013 without meeting the minimum time requirement. Irs tax forms 2011 However, in figuring your exclusion, the number of your qualifying days of bona fide residence or physical presence includes only days of actual residence or presence within the country. Irs tax forms 2011 U. Irs tax forms 2011 S. Irs tax forms 2011 Travel Restrictions If you are present in a foreign country in violation of U. Irs tax forms 2011 S. Irs tax forms 2011 law, you will not be treated as a bona fide resident of a foreign country or as physically present in a foreign country while you are in violation of the law. Irs tax forms 2011 Income that you earn from sources within such a country for services performed during a period of violation does not qualify as foreign earned income. Irs tax forms 2011 Your housing expenses within that country (or outside that country for housing your spouse or dependents) while you are in violation of the law cannot be included in figuring your foreign housing amount. Irs tax forms 2011 For 2013, the only country to which travel restrictions applied was Cuba. Irs tax forms 2011 The restrictions applied for the entire year. Irs tax forms 2011 However, individuals working at the U. Irs tax forms 2011 S. Irs tax forms 2011 Naval Base at Guantanamo Bay in Cuba are not in violation of U. Irs tax forms 2011 S. Irs tax forms 2011 law. Irs tax forms 2011 Personal service income earned by individuals at the base is eligible for the foreign earned income exclusion provided the other requirements are met. Irs tax forms 2011 Foreign Earned Income To claim the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction, you must have foreign earned income. Irs tax forms 2011 Foreign earned income generally is income you receive for services you perform during a period in which you meet both of the following requirements. Irs tax forms 2011 Your tax home is in a foreign country. Irs tax forms 2011 You meet either the bona fide residence test or the physical presence test. Irs tax forms 2011 To determine whether your tax home is in a foreign country, see Tax Home in Foreign Country, earlier. Irs tax forms 2011 To determine whether you meet either the bona fide residence test or the physical presence test, see Bona Fide Residence Test and Physical Presence Test, earlier. Irs tax forms 2011 Foreign earned income does not include the following amounts. Irs tax forms 2011 The value of meals and lodging that you exclude from your income because the meals and lodging were furnished for the convenience of your employer. Irs tax forms 2011 Pension or annuity payments you receive, including social security benefits (see Pensions and annuities, later). Irs tax forms 2011 Pay you receive as an employee of the U. Irs tax forms 2011 S. Irs tax forms 2011 Government. Irs tax forms 2011 (See U. Irs tax forms 2011 S. Irs tax forms 2011 Government Employees, later. Irs tax forms 2011 ) Amounts you include in your income because of your employer's contributions to a nonexempt employee trust or to a nonqualified annuity contract. Irs tax forms 2011 Any unallowable moving expense deduction that you choose to recapture as explained under Moving Expense Attributable to Foreign Earnings in 2 Years in chapter 5. Irs tax forms 2011 Payments you receive after the end of the tax year following the tax year in which you performed the services that earned the income. Irs tax forms 2011 Earned income. Irs tax forms 2011   This is pay for personal services performed, such as wages, salaries, or professional fees. Irs tax forms 2011 The list that follows classifies many types of income into three categories. Irs tax forms 2011 The column headed Variable Income lists income that may fall into either the earned income category, the unearned income category, or partly into both. Irs tax forms 2011 For more information on earned and unearned income, see Earned and Unearned Income, later. Irs tax forms 2011 Earned Income Unearned Income Variable Income Salaries and wages Dividends Business profits Commissions Interest Royalties Bonuses Capital gains Rents Professional fees Gambling winnings Scholarships and fellowships Tips Alimony     Social security benefits     Pensions     Annuities     In addition to the types of earned income listed, certain noncash income and allowances or reimbursements are considered earned income. Irs tax forms 2011 Noncash income. Irs tax forms 2011   The fair market value of property or facilities provided to you by your employer in the form of lodging, meals, or use of a car is earned income. Irs tax forms 2011 Allowances or reimbursements. Irs tax forms 2011   Earned income includes allowances or reimbursements you receive, such as the following amounts. Irs tax forms 2011    Cost-of-living allowances. Irs tax forms 2011 Overseas differential. Irs tax forms 2011 Family allowance. Irs tax forms 2011 Reimbursement for education or education allowance. Irs tax forms 2011 Home leave allowance. Irs tax forms 2011 Quarters allowance. Irs tax forms 2011 Reimbursement for moving or moving allowance (unless excluded from income as discussed later in Reimbursement of employee expenses under Earned and Unearned Income). Irs tax forms 2011 Source of Earned Income The source of your earned income is the place where you perform the services for which you received the income. Irs tax forms 2011 Foreign earned income is income you receive for working in a foreign country. Irs tax forms 2011 Where or how you are paid has no effect on the source of the income. Irs tax forms 2011 For example, income you receive for work done in Austria is income from a foreign source even if the income is paid directly to your bank account in the United States and your employer is located in New York City. Irs tax forms 2011 Example. Irs tax forms 2011 You are a U. Irs tax forms 2011 S. Irs tax forms 2011 citizen, a bona fide resident of Canada, and working as a mining engineer. Irs tax forms 2011 Your salary is $76,800 per year. Irs tax forms 2011 You also receive a $6,000 cost-of-living allowance, and a $6,000 education allowance. Irs tax forms 2011 Your employment contract did not indicate that you were entitled to these allowances only while outside the United States. Irs tax forms 2011 Your total income is $88,800. Irs tax forms 2011 You work a 5-day week, Monday through Friday. Irs tax forms 2011 After subtracting your vacation, you have a total of 240 workdays in the year. Irs tax forms 2011 You worked in the United States during the year for 6 weeks (30 workdays). Irs tax forms 2011 The following shows how to figure the part of your income that is for work done in Canada during the year. Irs tax forms 2011   Number of days worked in Canada during the year (210) × Total income ($88,800) = $77,700     Number of days of work during the year for which payment was made (240)   Your foreign source earned income is $77,700. Irs tax forms 2011 Earned and Unearned Income Earned income was defined earlier as pay for personal services performed. Irs tax forms 2011 Some types of income are not easily identified as earned or unearned income. Irs tax forms 2011 Some of these types of income are further explained here. Irs tax forms 2011 Income from a sole proprietorship or partnership. Irs tax forms 2011   Income from a business in which capital investment is an important part of producing the income may be unearned income. Irs tax forms 2011 If you are a sole proprietor or partner and your personal services are also an important part of producing the income, the part of the income that represents the value of your personal services will be treated as earned income. Irs tax forms 2011 Capital a factor. Irs tax forms 2011   If capital investment is an important part of producing income, no more than 30% of your share of the net profits of the business is earned income. Irs tax forms 2011   If you have no net profits, the part of your gross profit that represents a reasonable allowance for personal services actually performed is considered earned income. Irs tax forms 2011 Because you do not have a net profit, the 30% limit does not apply. Irs tax forms 2011 Example 1. Irs tax forms 2011 You are a U. Irs tax forms 2011 S. Irs tax forms 2011 citizen and meet the bona fide residence test. Irs tax forms 2011 You invest in a partnership based in Cameroon that is engaged solely in selling merchandise outside the United States. Irs tax forms 2011 You perform no services for the partnership. Irs tax forms 2011 At the end of the tax year, your share of the net profits is $80,000. Irs tax forms 2011 The entire $80,000 is unearned income. Irs tax forms 2011 Example 2. Irs tax forms 2011 Assume that in Example 1 you spend time operating the business. Irs tax forms 2011 Your share of the net profits is $80,000; 30% of your share of the profits is $24,000. Irs tax forms 2011 If the value of your services for the year is $15,000, your earned income is limited to the value of your services, $15,000. Irs tax forms 2011 Capital not a factor. Irs tax forms 2011   If capital is not an income-producing factor and personal services produce the business income, the 30% rule does not apply. Irs tax forms 2011 The entire amount of business income is earned income. Irs tax forms 2011 Example. Irs tax forms 2011 You and Lou Green are management consultants and operate as equal partners in performing services outside the United States. Irs tax forms 2011 Because capital is not an income- producing factor, all the income from the partnership is considered earned income. Irs tax forms 2011 Income from a corporation. Irs tax forms 2011   The salary you receive from a corporation is earned income only if it represents a reasonable allowance as compensation for work you do for the corporation. Irs tax forms 2011 Any amount over what is considered a reasonable salary is unearned income. Irs tax forms 2011 Example 1. Irs tax forms 2011 You are a U. Irs tax forms 2011 S. Irs tax forms 2011 citizen and an officer and stockholder of a corporation in Honduras. Irs tax forms 2011 You perform no work or service of any kind for the corporation. Irs tax forms 2011 During the tax year you receive a $10,000 “salary” from the corporation. Irs tax forms 2011 The $10,000 clearly is not for personal services and is unearned income. Irs tax forms 2011 Example 2. Irs tax forms 2011 You are a U. Irs tax forms 2011 S. Irs tax forms 2011 citizen and work full time as secretary-treasurer of your corporation. Irs tax forms 2011 During the tax year you receive $100,000 as salary from the corporation. Irs tax forms 2011 If $80,000 is a reasonable allowance as pay for the work you did, then $80,000 is earned income. Irs tax forms 2011 Stock options. Irs tax forms 2011   You may have earned income if you disposed of stock that you got by exercising a stock option granted to you under an employee stock purchase plan. Irs tax forms 2011   If your gain on the disposition of stock you got by exercising an option is treated as capital gain, your gain is unearned income. Irs tax forms 2011   However, if you disposed of the stock less than 2 years after you were granted the option or less than 1 year after you got the stock, part of the gain on the disposition may be earned income. Irs tax forms 2011 It is considered received in the year you disposed of the stock and earned in the year you performed the services for which you were granted the option. Irs tax forms 2011 Any part of the earned income that is due to work you did outside the United States is foreign earned income. Irs tax forms 2011   See Publication 525, Taxable and Nontaxable Income, for a discussion of the treatment of stock options. Irs tax forms 2011 Pensions and annuities. Irs tax forms 2011    For purposes of the foreign earned income exclusion, the foreign housing exclusion, and the foreign housing deduction, amounts received as pensions or annuities are unearned income. Irs tax forms 2011 Royalties. Irs tax forms 2011   Royalties from the leasing of oil and mineral lands and patents generally are a form of rent or dividends and are unearned income. Irs tax forms 2011   Royalties received by a writer are earned income if they are received: For the transfer of property rights of the writer in the writer's product, or Under a contract to write a book or series of articles. Irs tax forms 2011 Rental income. Irs tax forms 2011   Generally, rental income is unearned income. Irs tax forms 2011 If you perform personal services in connection with the production of rent, up to 30% of your net rental income can be considered earned income. Irs tax forms 2011 Example. Irs tax forms 2011 Larry Smith, a U. Irs tax forms 2011 S. Irs tax forms 2011 citizen living in Australia, owns and operates a rooming house in Sydney. Irs tax forms 2011 If he is operating the rooming house as a business that requires capital and personal services, he can consider up to 30% of net rental income as earned income. Irs tax forms 2011 On the other hand, if he just owns the rooming house and performs no personal services connected with its operation, except perhaps making minor repairs and collecting rents, none of his net income from the house is considered earned income. Irs tax forms 2011 It is all unearned income. Irs tax forms 2011 Professional fees. Irs tax forms 2011   If you are engaged in a professional occupation (such as a doctor or lawyer), all fees received in the performance of these services are earned income. Irs tax forms 2011 Income of an artist. Irs tax forms 2011   Income you receive from the sale of paintings you created is earned income. Irs tax forms 2011 Scholarships and fellowships. Irs tax forms 2011   Any portion of a scholarship or fellowship grant that is paid to you for teaching, research or other services is considered earned income if you must include it in your gross income. Irs tax forms 2011 If the payer of the grant is required to provide you with a Form W-2, Wage and Tax Statement, these amounts will be listed as wages. Irs tax forms 2011    Certain scholarship and fellowship income may be exempt under other provisions. Irs tax forms 2011 See Publication 970, Tax Benefits for Education, chapter 1. Irs tax forms 2011 Use of employer's property or facilities. Irs tax forms 2011   If you receive fringe benefits in the form of the right to use your employer's property or facilities, the fair market value of that right is earned income. Irs tax forms 2011 Fair market value is the price at which the property would change hands between a willing buyer and a willing seller, neither being required to buy or sell, and both having reasonable knowledge of all the necessary facts. Irs tax forms 2011 Example. Irs tax forms 2011 You are privately employed and live in Japan all year. Irs tax forms 2011 You are paid a salary of $6,000 a month. Irs tax forms 2011 You live rent-free in a house provided by your employer that has a fair rental value of $3,000 a month. Irs tax forms 2011 The house is not provided for your employer's convenience. Irs tax forms 2011 You report on the calendar-year, cash basis. Irs tax forms 2011 You received $72,000 salary from foreign sources plus $36,000 fair rental value of the house, or a total of $108,000 of earned income. Irs tax forms 2011 Reimbursement of employee expenses. Irs tax forms 2011   If you are reimbursed under an accountable plan (defined below) for expenses you incur on your employer's behalf and you have adequately accounted to your employer for the expenses, do not include the reimbursement for those expenses in your earned income. Irs tax forms 2011   The expenses for which you are reimbursed are not considered allocable (related) to your earned income. Irs tax forms 2011 If expenses and reimbursement are equal, there is nothing to allocate to excluded income. Irs tax forms 2011 If expenses are more than the reimbursement, the unreimbursed expenses are considered to have been incurred in producing earned income and must be divided between your excluded and included income in determining the amount of unreimbursed expenses you can deduct. Irs tax forms 2011 (See chapter 5. Irs tax forms 2011 ) If the reimbursement is more than the expenses, no expenses remain to be divided between excluded and included income and the excess reimbursement must be included in earned income. Irs tax forms 2011   These rules do not apply to the following individuals. Irs tax forms 2011 Straight-commission salespersons. Irs tax forms 2011 Employees who have arrangements with their employers under which taxes are not withheld on a percentage of the commissions because the employers consider that percentage to be attributable to the employees' expenses. Irs tax forms 2011 Accountable plan. Irs tax forms 2011   An accountable plan is a reimbursement or allowance arrangement that includes all three of the following rules. Irs tax forms 2011 The expenses covered under the plan must have a business connection. Irs tax forms 2011 The employee must adequately account to the employer for these expenses within a reasonable period of time. Irs tax forms 2011 The employee must return any excess reimbursement or allowance within a reasonable period of time. Irs tax forms 2011 Reimbursement of moving expenses. Irs tax forms 2011   Reimbursement of moving expenses may be earned income. Irs tax forms 2011 You must include as earned income: Any reimbursements of, or payments for, nondeductible moving expenses, Reimbursements that are more than your deductible expenses and that you do not return to your employer, Any reimbursements made (or treated as made) under a nonaccountable plan (any plan that does not meet the rules listed above for an accountable plan), even if they are for deductible expenses, and Any reimbursement of moving expenses you deducted in an earlier year. Irs tax forms 2011 This section discusses reimbursements that must be included in earned income. Irs tax forms 2011 Publication 521, Moving Expenses, discusses additional rules that apply to moving expense deductions and reimbursements. Irs tax forms 2011   The rules for determining when the reimbursement is considered earned or where the reimbursement is considered earned may differ somewhat from the general rules previously discussed. Irs tax forms 2011   Although you receive the reimbursement in one tax year, it may be considered earned for services performed, or to be performed, in another tax year. Irs tax forms 2011 You must report the reimbursement as income on your return in the year you receive it, even if it is considered earned during a different year. Irs tax forms 2011 Move from U. Irs tax forms 2011 S. Irs tax forms 2011 to foreign country. Irs tax forms 2011   If you move from the United States to a foreign country, your moving expense reimbursement is generally considered pay for future services to be performed at the new location. Irs tax forms 2011 The reimbursement is considered earned solely in the year of the move if you qualify for the exclusion for a period that includes at least 120 days during that tax year. Irs tax forms 2011   If you are neither a bona fide resident of nor physically present in a foreign country or countries for a period that includes 120 days during the year of the move, a portion of the reimbursement is considered earned in the year of the move and a portion is considered earned in the year following the year of the move. Irs tax forms 2011 To figure the amount earned in the year of the move, multiply the reimbursement by a fraction. Irs tax forms 2011 The numerator (top number) is the number of days in your qualifying period that fall within the year of the move, and the denominator (bottom number) is the total number of days in the year of the move. Irs tax forms 2011   The difference between the total reimbursement and the amount considered earned in the year of the move is the amount considered earned in the year following the year of the move. Irs tax forms 2011 The part earned in each year is figured as shown in the following example. Irs tax forms 2011 Example. Irs tax forms 2011 You are a U. Irs tax forms 2011 S. Irs tax forms 2011 citizen working in the United States. Irs tax forms 2011 You were told in October 2012 that you were being transferred to a foreign country. Irs tax forms 2011 You arrived in the foreign country on December 15, 2012, and you are a bona fide resident for the remainder of 2012 and all of 2013. Irs tax forms 2011 Your employer reimbursed you $2,000 in January 2013 for the part of the moving expense that you were not allowed to deduct. Irs tax forms 2011 Because you did not qualify for the exclusion under the bona fide residence test for at least 120 days in 2012 (the year of the move), the reimbursement is considered pay for services performed in the foreign country for both 2012 and 2013. Irs tax forms 2011 You figure the part of the reimbursement for services performed in the foreign country in 2012 by multiplying the total reimbursement by a fraction. Irs tax forms 2011 The fraction is the number of days during which you were a bona fide resident in 2012 (the year of the move) divided by 366. Irs tax forms 2011 The remaining part of the reimbursement is for services performed in the foreign country in 2013. Irs tax forms 2011 This computation is used only to determine when the reimbursement is considered earned. Irs tax forms 2011 You would include the amount of the reimbursement in income in 2013, the year you received it. Irs tax forms 2011 Move between foreign countries. Irs tax forms 2011   If you move between foreign countries, any moving expense reimbursement that you must include in income will be considered earned in the year of the move if you qualify for the foreign earned income exclusion for a period that includes at least 120 days in the year of the move. Irs tax forms 2011 Move to U. Irs tax forms 2011 S. Irs tax forms 2011   If you move to the United States, the moving expense reimbursement that you must include in income is generally considered to be U. Irs tax forms 2011 S. Irs tax forms 2011 source income. Irs tax forms 2011   However, if under either an agreement between you and your employer or a statement of company policy that is reduced to writing before your move to the foreign country, your employer will reimburse you for your move back to the United States regardless of whether you continue to work for the employer, the includible reimbursement is considered compensation for past services performed in the foreign country. Irs tax forms 2011 The includible reimbursement is considered earned in the year of the move if you qualify for the foreign earned income exclusion for a period that includes at least 120 days during that year. Irs tax forms 2011 Otherwise, you treat the includible reimbursement as received for services performed in the foreign country in the year of the move and the year immediately before the year of the move. Irs tax forms 2011   See the discussion under Move from U. Irs tax forms 2011 S. Irs tax forms 2011 to foreign country , earlier, to figure the amount of the includible reimbursement considered earned in the year of the move. Irs tax forms 2011 The amount earned in the year before the year of the move is the difference between the total includible reimbursement and the amount earned in the year of the move. Irs tax forms 2011 Example. Irs tax forms 2011 You are a U. Irs tax forms 2011 S. Irs tax forms 2011 citizen employed in a foreign country. Irs tax forms 2011 You retired from employment with your employer on March 31, 2013, and returned to the United States after having been a bona fide resident of the foreign country for several years. Irs tax forms 2011 A written agreement with your employer entered into before you went abroad provided that you would be reimbursed for your move back to the United States. Irs tax forms 2011 In April 2013, your former employer reimbursed you $4,000 for the part of the cost of your move back to the United States that you were not allowed to deduct. Irs tax forms 2011 Because you were not a bona fide resident of a foreign country or countries for a period that included at least 120 days in 2013 (the year of the move), the includible reimbursement is considered pay for services performed in the foreign country for both 2013 and 2012. Irs tax forms 2011 You figure the part of the moving expense reimbursement for services performed in the foreign country for 2013 by multiplying the total includible reimbursement by a fraction. Irs tax forms 2011 The fraction is the number of days of foreign residence during the year (90) divided by the number of days in the year (365). Irs tax forms 2011 The remaining part of the includible reimbursement is for services performed in the foreign country in 2012. Irs tax forms 2011 You report the amount of the includible reimbursement in 2013, the year you received it. Irs tax forms 2011    In this example, if you met the physical presence test for a period that included at least 120 days in 2013, the moving expense reimbursement would be considered earned entirely in the year of the move. Irs tax forms 2011 Storage expense reimbursements. Irs tax forms 2011   If you are reimbursed for storage expenses, the reimbursement is for services you perform during the period of time for which the storage expenses are incurred. Irs tax forms 2011 U. Irs tax forms 2011 S. Irs tax forms 2011 Government Employees For purposes of the foreign earned income exclusion, the foreign housing exclusion, and the foreign housing deduction, foreign earned income does not include any amounts paid by the United States or any of its agencies to its employees. Irs tax forms 2011 This includes amounts paid from both appropriated and nonappropriated funds. Irs tax forms 2011 The following organizations (and other organizations similarly organized and operated under United States Army, Navy, or Air Force regulations) are integral parts of the Armed Forces, agencies, or instrumentalities of the United States. Irs tax forms 2011 United States Armed Forces exchanges. Irs tax forms 2011 Commissioned and noncommissioned officers' messes. Irs tax forms 2011 Armed Forces motion picture services. Irs tax forms 2011 Kindergartens on foreign Armed Forces installations. Irs tax forms 2011 Amounts paid by the United States or its agencies to persons who are not their employees may qualify for exclusion or deduction. Irs tax forms 2011 If you are a U. Irs tax forms 2011 S. Irs tax forms 2011 Government employee paid by a U. Irs tax forms 2011 S. Irs tax forms 2011 agency that assigned you to a foreign government to perform specific services for which the agency is reimbursed by the foreign government, your pay is from the U. Irs tax forms 2011 S. Irs tax forms 2011 Government and does not qualify for exclusion or deduction. Irs tax forms 2011 If you have questions about whether you are an employee or an independent contractor, get Publication 15-A, Employer's Supplemental Tax Guide. Irs tax forms 2011 American Institute in Taiwan. Irs tax forms 2011   Amounts paid by the American Institute in Taiwan are not foreign earned income for purposes of the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction. Irs tax forms 2011 If you are an employee of the American Institute in Taiwan, allowances you receive are exempt from U. Irs tax forms 2011 S. Irs tax forms 2011 tax up to the amount that equals tax-exempt allowances received by civilian employees of the U. Irs tax forms 2011 S. Irs tax forms 2011 Government. Irs tax forms 2011 Allowances. Irs tax forms 2011   Cost-of-living and foreign-area allowances paid under certain acts of Congress to U. Irs tax forms 2011 S. Irs tax forms 2011 civilian officers and employees stationed in Alaska and Hawaii or elsewhere outside the 48 contiguous states and the District of Columbia can be excluded from gross income. Irs tax forms 2011 Post differentials are wages that must be included in gross income, regardless of the act of Congress under which they are paid. Irs tax forms 2011 More information. Irs tax forms 2011   Publication 516, U. Irs tax forms 2011 S. Irs tax forms 2011 Government Civilian Employees Stationed Abroad, has more information for U. Irs tax forms 2011 S. Irs tax forms 2011 Government employees abroad. Irs tax forms 2011 Exclusion of Meals and Lodging You do not include in your income the value of meals and lodging provided to you and your family by your employer at no charge if the following conditions are met. Irs tax forms 2011 The meals are furnished: On the business premises of your employer, and For the convenience of your employer. Irs tax forms 2011 The lodging is furnished: On the business premises of your employer, For the convenience of your employer, and As a condition of your employment. Irs tax forms 2011 If these conditions are met, do not include the value of the meals or lodging in your income, even if a law or your employment contract says that they are provided as compensation. Irs tax forms 2011 Amounts you do not include in income because of these rules are not foreign earned income. Irs tax forms 2011 If you receive a Form W-2, excludable amounts should not be included in the total reported in box 1 as wages. Irs tax forms 2011 Family. Irs tax forms 2011   Your family, for this purpose, includes only your spouse and your dependents. Irs tax forms 2011 Lodging. Irs tax forms 2011   The value of lodging includes the cost of heat, electricity, gas, water, sewer service, and similar items needed to make the lodging fit to live in. Irs tax forms 2011 Business premises of employer. Irs tax forms 2011   Generally, the business premises of your employer is wherever you work. Irs tax forms 2011 For example, if you work as a housekeeper, meals and lodging provided in your employer's home are provided on the business premises of your employer. Irs tax forms 2011 Similarly, meals provided to cowhands while herding cattle on land leased or owned by their employer are considered provided on the premises of their employer. Irs tax forms 2011 Convenience of employer. Irs tax forms 2011   Whether meals or lodging are provided for your employer's convenience must be determined from all the facts and circumstances. Irs tax forms 2011 Meals furnished at no charge are considered provided for your employer's convenience if there is a good business reason for providing them, other than to give you more pay. Irs tax forms 2011   On the other hand, if your employer provides meals to you or your family as a means of giving you more pay, and there is no other business reason for providing them, their value is extra income to you because they are not furnished for the convenience of your employer. Irs tax forms 2011 Condition of employment. Irs tax forms 2011   Lodging is provided as a condition of employment if you must accept the lodging to properly carry out the duties of your job. Irs tax forms 2011 You must accept lodging to properly carry out your duties if, for example, you must be available for duty at all times or you could not perform your duties if the lodging was not furnished. Irs tax forms 2011 Foreign camps. Irs tax forms 2011   If the lodging is in a camp located in a foreign country, the camp is considered part of your employer's business premises. Irs tax forms 2011 The camp must be: Provided for your employer's convenience because the place where you work is in a remote area where satisfactory housing is not available to you on the open market within a reasonable commuting distance, Located as close as reasonably possible in the area where you work, and Provided in a common area or enclave that is not available to the general public for lodging or accommodations and that normally houses at least ten employees. Irs tax forms 2011 Foreign Earned Income Exclusion If your tax home is in a foreign country and you meet the bona fide residence test or the physical presence test, you can choose to exclude from your income a limited amount of your foreign earned income. Irs tax forms 2011 Foreign earned income was defined earlier in this chapter. Irs tax forms 2011 You also can choose to exclude from your income a foreign housing amount. Irs tax forms 2011 This is explained later under Foreign Housing Exclusion. Irs tax forms 2011 If you choose to exclude a foreign housing amount, you must figure the foreign housing exclusion before you figure the foreign earned income exclusion. Irs tax forms 2011 Your foreign earned income exclusion is limited to your foreign earned income minus your foreign housing exclusion. Irs tax forms 2011 If you choose to exclude foreign earned income, you cannot deduct, exclude, or claim a credit for any item that can be allocated to or charged against the excluded amounts. Irs tax forms 2011 This includes any expenses, losses, and other normally deductible items allocable to the excluded income. Irs tax forms 2011 For more information about deductions and credits, see chapter 5 . Irs tax forms 2011 Limit on Excludable Amount You may be able to exclude up to $97,600 of your foreign earned income in 2013. Irs tax forms 2011 You cannot exclude more than the smaller of: $97,600, or Your foreign earned income (discussed earlier) for the tax year minus your foreign housing exclusion (discussed later). Irs tax forms 2011 If both you and your spouse work abroad and each of you meets either the bona fide residence test or the physical presence test, you can each choose the foreign earned income exclusion. Irs tax forms 2011 You do not both need to meet the same test. Irs tax forms 2011 Together, you and your spouse can exclude as much as $195,200. Irs tax forms 2011 Paid in year following work. Irs tax forms 2011   Generally, you are considered to have earned income in the year in which you do the work for which you receive the income, even if you work in one year but are not paid until the following year. Irs tax forms 2011 If you report your income on a cash basis, you report the income on your return for the year you receive it. Irs tax forms 2011 If you work one year, but are not paid for that work until the next year, the amount you can exclude in the year you are paid is the amount you could have excluded in the year you did the work if you had been paid in that year. Irs tax forms 2011 For an exception to this general rule, see Year-end payroll period, later. Irs tax forms 2011 Example. Irs tax forms 2011 You were a bona fide resident of Brazil for all of 2012 and 2013. Irs tax forms 2011 You report your income on the cash basis. Irs tax forms 2011 In 2012, you were paid $84,200 for work you did in Brazil during that year. Irs tax forms 2011 You excluded all of the $84,200 from your income in 2012. Irs tax forms 2011 In 2013, you were paid $117,300 for your work in Brazil. Irs tax forms 2011 $18,800 was for work you did in 2012 and $98,500 was for work you did in 2013. Irs tax forms 2011 You can exclude $10,900 of the $18,800 from your income in 2013. Irs tax forms 2011 This is the $95,100 maximum exclusion in 2012 minus the $84,200 actually excluded that year. Irs tax forms 2011 You must include the remaining $7,900 in income in 2013 because you could not have excluded that income in 2012 if you had received it that year. Irs tax forms 2011 You can exclude $97,600 of the $98,500 you were paid for work you did in 2013 from your 2013 income. Irs tax forms 2011 Your total foreign earned income exclusion for 2013 is $108,500 ($10,900 for work you did in 2012 and $97,600 for work you did in 2013). Irs tax forms 2011 You would include in your 2013 income $8,800 ($7,900 for the work you did in 2012 and $900 for the work you did in 2013). Irs tax forms 2011 Year-end payroll period. Irs tax forms 2011   There is an exception to the general rule that income is considered earned in the year you do the work for which you receive the income. Irs tax forms 2011 If you are a cash-basis taxpayer, any salary or wage payment you receive after the end of the year in which you do the work for which you receive the pay is considered earned entirely in the year you receive it if all four of the following apply. Irs tax forms 2011 The period for which the payment is made is a normal payroll period of your employer that regularly applies to you. Irs tax forms 2011 The payroll period includes the last day of your tax year (December 31 if you figure your taxes on a calendar-year basis). Irs tax forms 2011 The payroll period is not longer than 16 days. Irs tax forms 2011 The payday comes at the same time in relation to the payroll period that it would normally come and it comes before the end of the next payroll period. Irs tax forms 2011 Example. Irs tax forms 2011 You are paid twice a month. Irs tax forms 2011 For the normal payroll period that begins on the first of the month and ends on the fifteenth of the month, you are paid on the sixteenth day of the month. Irs tax forms 2011 For the normal payroll period that begins on the sixteenth of the month and ends on the last day of the month, you are paid on the first day of the following month. Irs tax forms 2011 Because all of the above conditions are met, the pay you received on January 1, 2013, is considered earned in 2013. Irs tax forms 2011 Income earned over more than 1 year. Irs tax forms 2011   Regardless of when you actually receive income, you must apply it to the year in which you earned it in figuring your excludable amount for that year. Irs tax forms 2011 For example, a bonus may be based on work you did over several years. Irs tax forms 2011 You determine the amount of the bonus that is considered earned in a particular year in two steps. Irs tax forms 2011 Divide the bonus by the number of calendar months in the period when you did the work that resulted in the bonus. Irs tax forms 2011 Multiply the result of (1) by the number of months you did the work during the year. Irs tax forms 2011 This is the amount that is subject to the exclusion limit for that tax year. Irs tax forms 2011 Income received more than 1 year after it was earned. Irs tax forms 2011   You cannot exclude income you receive after the end of the year following the year you do the work to earn it. Irs tax forms 2011 Example. Irs tax forms 2011   You were a bona fide resident of Sweden for 2011, 2012, and 2013. Irs tax forms 2011 You report your income on the cash basis. Irs tax forms 2011 In 2011, you were paid $69,000 for work you did in Sweden that year and in 2012 you were paid $74,000 for that year's work in Sweden. Irs tax forms 2011 You excluded all the income on your 2011 and 2012 returns. Irs tax forms 2011   In 2013, you were paid $92,000; $82,000 for your work in Sweden during 2013, and $10,000 for work you did in Sweden in 2011. Irs tax forms 2011 You cannot exclude any of the $10,000 for work done in 2011 because you received it after the end of the year following the year in which you earned it. Irs tax forms 2011 You must include the $10,000 in income. Irs tax forms 2011 You can exclude all of the $82,000 received for work you did in 2013. Irs tax forms 2011 Community income. Irs tax forms 2011   The maximum exclusion applies separately to the earnings of spouses. Irs tax forms 2011 Ignore any community property laws when you figure your limit on the foreign earned income exclusion. Irs tax forms 2011 Part-year exclusion. Irs tax forms 2011   If the period for which you qualify for the foreign earned income exclusion includes only part of the year, you must adjust the maximum limit based on the number of qualifying days in the year. Irs tax forms 2011 The number of qualifying days is the number of days in the year within the period on which you both: Have your tax home in a foreign country, and Meet either the bona fide residence test or the physical presence test. Irs tax forms 2011   For this purpose, you can count as qualifying days all days within a period of 12 consecutive months once you are physically present and have your tax home in a foreign country for 330 full days. Irs tax forms 2011 To figure your maximum exclusion, multiply the maximum excludable amount for the year by the number of your qualifying days in the year, and then divide the result by the number of days in the year. Irs tax forms 2011 Example. Irs tax forms 2011 You report your income on the calendar-year basis and you qualified for the foreign earned income exclusion under the bona fide residence test for 75 days in 2013. Irs tax forms 2011 You can exclude a maximum of 75/365 of $97,600, or $20,055, of your foreign earned income for 2013. Irs tax forms 2011 If you qualify under the bona fide residence test for all of 2014, you can exclude your foreign earned income up to the 2014 limit. Irs tax forms 2011 Physical presence test. Irs tax forms 2011   Under the physical presence test, a 12-month period can be any period of 12 consecutive months that includes 330 full days. Irs tax forms 2011 If you qualify for the foreign earned income exclusion under the physical presence test for part of a year, it is important to carefully choose the 12-month period that will allow the maximum exclusion for that year. Irs tax forms 2011 Example. Irs tax forms 2011 You are physically present and have your tax home in a foreign country for a 16-month period from June 1, 2012, through September 30, 2013, except for 16 days in December 2012 when you were on vacation in the United States. Irs tax forms 2011 You figure the maximum exclusion for 2012 as follows. Irs tax forms 2011 Beginning with June 1, 2012, count forward 330 full days. Irs tax forms 2011 Do not count the 16 days you spent in the United States. Irs tax forms 2011 The 330th day, May 12, 2013, is the last day of a 12-month period. Irs tax forms 2011 Count backward 12 months from May 11, 2013, to find the first day of this 12-month period, May 12, 2012. Irs tax forms 2011 This 12-month period runs from May 12, 2012, through May 11, 2013. Irs tax forms 2011 Count the total days during 2012 that fall within this 12-month period. Irs tax forms 2011 This is 234 days (May 12, 2012 – December 31, 2012). Irs tax forms 2011 Multiply $95,100 (the maximum exclusion for 2012) by the fraction 234/366 to find your maximum exclusion for 2012 ($60,802). Irs tax forms 2011 You figure the maximum exclusion for 2013 in the opposite manner. Irs tax forms 2011 Beginning with your last full day, September 30, 2013, count backward 330 full days. Irs tax forms 2011 Do not count the 16 days you spent in the United States. Irs tax forms 2011 That day, October 20, 2012, is the first day of a 12-month period. Irs tax forms 2011 Count forward 12 months from October 20, 2012, to find the last day of this 12-month period, October 19, 2013. Irs tax forms 2011 This 12-month period runs from October 20, 2012, through October 19, 2013. Irs tax forms 2011 Count the total days during 2013 that fall within this 12-month period. Irs tax forms 2011 This is 292 days (January 1, 2013 – October 19, 2013). Irs tax forms 2011 Multiply $97,600, the maximum limit, by the fraction 292/365 to find your maximum exclusion for 2013 ($78,080). Irs tax forms 2011 Choosing the Exclusion The foreign earned income exclusion is voluntary. Irs tax forms 2011 You can choose the exclusion by completing the appropriate parts of Form 2555. Irs tax forms 2011 When You Can Choose the Exclusion Your initial choice of the exclusion on Form 2555 or Form 2555-EZ generally must be made with one of the following returns. Irs tax forms 2011 A return filed by the due date (including any extensions). Irs tax forms 2011 A return amending a timely-filed return. Irs tax forms 2011 Amended returns generally must be filed by the later of 3 years after the filing date of the original return or 2 years after the tax is paid. Irs tax forms 2011 A return filed within 1 year from the original due date of the return (determined without regard to any extensions). Irs tax forms 2011 Filing after the above periods. Irs tax forms 2011   You can choose the exclusion on a return filed after the periods described above if you owe no federal income tax after taking into account the exclusion. Irs tax forms 2011 If you owe federal income tax after taking into account the exclusion, you can choose the exclusion on a return filed after the periods described earlier if you file before the IRS discovers that you failed to choose the exclusion. Irs tax forms 2011 Whether or not you owe federal income tax after taking the exclusion into account, if you file your return after the periods described earlier, you must type or legibly print at the top of the first page of the Form 1040 “Filed pursuant to section 1. Irs tax forms 2011 911-7(a)(2)(i)(D). Irs tax forms 2011 ” If you owe federal income tax after taking into account the foreign earned income exclusion and the IRS discovered that you failed to choose the exclusion, you may still be able to choose the exclusion. Irs tax forms 2011 You must request a private letter ruling under Income Tax Regulation 301. Irs tax forms 2011 9100-3 and Revenue Procedure 2013-1, 2013-1 I. Irs tax forms 2011 R. Irs tax forms 2011 B. Irs tax forms 2011 1, available at www. Irs tax forms 2011 irs. Irs tax forms 2011 gov/irb/2013-01_IRB/ar06. Irs tax forms 2011 html. Irs tax forms 2011 Effect of Choosing the Exclusion Once you choose to exclude your foreign earned income, that choice remains in effect for that year and all later years unless you revoke it. Irs tax forms 2011 Foreign tax credit or deduction. Irs tax forms 2011