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Tax Amend Form

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Tax Amend Form

Tax amend form 6. Tax amend form   Insurance Table of Contents What's New Introduction Topics - This chapter discusses: Useful Items - You may want to see: Deductible PremiumsSelf-Employed Health Insurance Deduction Nondeductible Premiums Capitalized Premiums When To Deduct Premiums What's New Retiree drug subsidy. Tax amend form  Beginning in 2013, sponsors of certain qualified retiree prescription drug plans must account for the subsidy received by reducing the amount of qualified retiree prescription drug plans expense by the subsidy received (taking into account the taxpayer's accounting method). Tax amend form For more information, see the retiree drug subsidy frequently asked questions on IRS. Tax amend form gov. Tax amend form Introduction You generally can deduct the ordinary and necessary cost of insurance as a business expense if it is for your trade, business, or profession. Tax amend form However, you may have to capitalize certain insurance costs under the uniform capitalization rules. Tax amend form For more information, see Capitalized Premiums , later. Tax amend form Topics - This chapter discusses: Deductible premiums Nondeductible premiums Capitalized premiums When to deduct premiums Useful Items - You may want to see: Publication 15-B Employer's Tax Guide to Fringe Benefits 525 Taxable and Nontaxable Income 538 Accounting Periods and Methods 547 Casualties, Disasters, and Thefts Form (and Instructions) 1040 U. Tax amend form S. Tax amend form Individual Income Tax Return See chapter 12 for information about getting publications and forms. Tax amend form Deductible Premiums You generally can deduct premiums you pay for the following kinds of insurance related to your trade or business. Tax amend form Insurance that covers fire, storm, theft, accident, or similar losses. Tax amend form Credit insurance that covers losses from business bad debts. Tax amend form Group hospitalization and medical insurance for employees, including long-term care insurance. Tax amend form If a partnership pays accident and health insurance premiums for its partners, it generally can deduct them as guaranteed payments to partners. Tax amend form If an S corporation pays accident and health insurance premiums for its more-than-2% shareholder-employees, it generally can deduct them, but must also include them in the shareholder's wages subject to federal income tax withholding. Tax amend form See Publication 15-B. Tax amend form Liability insurance. Tax amend form Malpractice insurance that covers your personal liability for professional negligence resulting in injury or damage to patients or clients. Tax amend form Workers' compensation insurance set by state law that covers any claims for bodily injuries or job-related diseases suffered by employees in your business, regardless of fault. Tax amend form If a partnership pays workers' compensation premiums for its partners, it generally can deduct them as guaranteed payments to partners. Tax amend form If an S corporation pays workers' compensation premiums for its more-than-2% shareholder-employees, it generally can deduct them, but must also include them in the shareholder's wages. Tax amend form Contributions to a state unemployment insurance fund are deductible as taxes if they are considered taxes under state law. Tax amend form Overhead insurance that pays for business overhead expenses you have during long periods of disability caused by your injury or sickness. Tax amend form Car and other vehicle insurance that covers vehicles used in your business for liability, damages, and other losses. Tax amend form If you operate a vehicle partly for personal use, deduct only the part of the insurance premium that applies to the business use of the vehicle. Tax amend form If you use the standard mileage rate to figure your car expenses, you cannot deduct any car insurance premiums. Tax amend form Life insurance covering your officers and employees if you are not directly or indirectly a beneficiary under the contract. Tax amend form Business interruption insurance that pays for lost profits if your business is shut down due to a fire or other cause. Tax amend form Self-Employed Health Insurance Deduction You may be able to deduct premiums paid for medical and dental insurance and qualified long-term care insurance for yourself, your spouse, and your dependents. Tax amend form The insurance can also cover your child who was under age 27 at the end of 2013, even if the child was not your dependent. Tax amend form A child includes your son, daughter, stepchild, adopted child, or foster child. Tax amend form A foster child is any child placed with you by an authorized placement agency or by judgment, decree, or other order of any court of competent jurisdiction. Tax amend form One of the following statements must be true. Tax amend form You were self-employed and had a net profit for the year reported on Schedule C (Form 1040), Profit or Loss From Business; Schedule C-EZ (Form 1040), Net Profit From Business; or Schedule F (Form 1040), Profit or Loss From Farming. Tax amend form You were a partner with net earnings from self-employment for the year reported on Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc. Tax amend form , box 14, code A. Tax amend form You used one of the optional methods to figure your net earnings from self-employment on Schedule SE. Tax amend form You received wages in 2013 from an S corporation in which you were a more-than-2% shareholder. Tax amend form Health insurance premiums paid or reimbursed by the S corporation are shown as wages on Form W-2, Wage and Tax Statement. Tax amend form The insurance plan must be established, or considered to be established as discussed in the following bullets, under your business. Tax amend form For self-employed individuals filing a Schedule C, C-EZ, or F, a policy can be either in the name of the business or in the name of the individual. Tax amend form For partners, a policy can be either in the name of the partnership or in the name of the partner. Tax amend form You can either pay the premiums yourself or your partnership can pay them and report the premium amounts on Schedule K-1 (Form 1065) as guaranteed payments to be included in your gross income. Tax amend form However, if the policy is in your name and you pay the premiums yourself, the partnership must reimburse you and report the premium amounts on Schedule K-1 (Form 1065) as guaranteed payments to be included in your gross income. Tax amend form Otherwise, the insurance plan will not be considered to be established under your business. Tax amend form For more-than-2% shareholders, a policy can be either in the name of the S corporation or in the name of the shareholder. Tax amend form You can either pay the premiums yourself or your S corporation can pay them and report the premium amounts on Form W-2 as wages to be included in your gross income. Tax amend form However, if the policy is in your name and you pay the premiums yourself, the S corporation must reimburse you and report the premium amounts on Form W-2 as wages to be included in your gross income. Tax amend form Otherwise, the insurance plan will not be considered to be established under your business. Tax amend form Medicare premiums you voluntarily pay to obtain insurance in your name that is similar to qualifying private health insurance can be used to figure the deduction. Tax amend form If you previously filed returns without using Medicare premiums to figure the deduction, you can file timely amended returns to refigure the deduction. Tax amend form For more information, see Form 1040X, Amended U. Tax amend form S. Tax amend form Individual Income Tax Return. Tax amend form Amounts paid for health insurance coverage from retirement plan distributions that were nontaxable because you are a retired public safety officer cannot be used to figure the deduction. Tax amend form Take the deduction on Form 1040, line 29. Tax amend form Qualified long-term care insurance. Tax amend form   You can include premiums paid on a qualified long-term care insurance contract when figuring your deduction. Tax amend form But, for each person covered, you can include only the smaller of the following amounts. Tax amend form The amount paid for that person. Tax amend form The amount shown below. Tax amend form Use the person's age at the end of the tax year. Tax amend form Age 40 or younger–$360 Age 41 to 50–$680 Age 51 to 60–$1,360 Age 61 to 70–$3,640 Age 71 or older–$4,550 Qualified long-term care insurance contract. Tax amend form   A qualified long-term care insurance contract is an insurance contract that only provides coverage of qualified long-term care services. Tax amend form The contract must meet all the following requirements. Tax amend form It must be guaranteed renewable. Tax amend form It must provide that refunds, other than refunds on the death of the insured or complete surrender or cancellation of the contract, and dividends under the contract may be used only to reduce future premiums or increase future benefits. Tax amend form It must not provide for a cash surrender value or other money that can be paid, assigned, pledged, or borrowed. Tax amend form It generally must not pay or reimburse expenses incurred for services or items that would be reimbursed under Medicare, except where Medicare is a secondary payer or the contract makes per diem or other periodic payments without regard to expenses. Tax amend form Qualified long-term care services. Tax amend form   Qualified long-term care services are: Necessary diagnostic, preventive, therapeutic, curing, treating, mitigating, and rehabilitative services, and Maintenance or personal care services. Tax amend form The services must be required by a chronically ill individual and prescribed by a licensed health care practitioner. Tax amend form Worksheet 6-A. Tax amend form Self-Employed Health Insurance Deduction Worksheet Note. Tax amend form Use a separate worksheet for each trade or business under which an insurance plan is established. Tax amend form 1. Tax amend form Enter the total amount paid in 2013 for health insurance coverage established under your business for 2013 for you, your spouse, and your dependents. Tax amend form Your insurance can also cover your child who was under age 27 at the end of 2013, even if the child was not your dependent. Tax amend form But do not include the following. Tax amend form   Amounts for any month you were eligible to participate in a health plan subsidized by your or your spouse's employer or the employer of either your dependent or your child who was under the age of 27 at the end of 2013. Tax amend form Any amounts paid from retirement plan distributions that were nontaxable because you are a retired public safety officer. Tax amend form Any amounts you included on Form 8885, line 4. Tax amend form Any qualified health insurance premiums you paid to “U. Tax amend form S. Tax amend form Treasury-HCTC. Tax amend form ” Any health coverage tax credit advance payments shown in box 1 of Form 1099-H. Tax amend form Any payments for qualified long-term care insurance (see line 2) 1. Tax amend form   2. Tax amend form For coverage under a qualified long-term care insurance contract, enter for each person covered the smaller of the following amounts. Tax amend form       a) Total payments made for that person during the year. Tax amend form       b) The amount shown below. Tax amend form Use the person's age at the end of the tax year. Tax amend form         $360— if that person is age 40 or younger          $680— if age 41 to 50         $1,360— if age 51 to 60         $3,640— if age 61 to 70         $4,550— if age 71 or older         Do not include payments for any month you were eligible to participate in a long-term care insurance plan subsidized by your or your spouse’s employer or the employer of either your dependent or your child who was under the age of 27 at the end of 2013. Tax amend form If more than one person is covered, figure separately the amount to enter for each person. Tax amend form Then enter the total of those amounts 2. Tax amend form   3. Tax amend form Add lines 1 and 2 3. Tax amend form   4. Tax amend form Enter your net profit* and any other earned income** from the trade or business under which the insurance plan is established. Tax amend form Do not include Conservation Reserve Program payments exempt from self-employment tax. Tax amend form If the business is an S corporation, skip to line 11 4. Tax amend form   5. Tax amend form Enter the total of all net profits* from: Schedule C (Form 1040), line 31; Schedule C-EZ (Form 1040), line 3; Schedule F (Form 1040), line 34; or Schedule K-1 (Form 1065), box 14, code A; plus any other income allocable to the profitable businesses. Tax amend form Do not include Conservation Reserve Program payments exempt from self-employment tax. Tax amend form See the Instructions for Schedule SE (Form 1040). Tax amend form Do not include any net losses shown on these schedules. Tax amend form 5. Tax amend form   6. Tax amend form Divide line 4 by line 5 6. Tax amend form   7. Tax amend form Multiply Form 1040, line 27, by the percentage on line 6 7. Tax amend form   8. Tax amend form Subtract line 7 from line 4 8. Tax amend form   9. Tax amend form Enter the amount, if any, from Form 1040, line 28, attributable to the same trade or business in which the insurance plan is established 9. Tax amend form   10. Tax amend form Subtract line 9 from line 8 10. Tax amend form   11. Tax amend form Enter your Medicare wages (Form W-2, box 5) from an S corporation in which you are a more-than-2% shareholder and in which the insurance plan is established 11. Tax amend form   12. Tax amend form Enter any amount from Form 2555, line 45, attributable to the amount entered on line 4 or 11 above, or any amount from Form 2555-EZ, line 18, attributable to the amount entered on line 11 above 12. Tax amend form   13. Tax amend form Subtract line 12 from line 10 or 11, whichever applies 13. Tax amend form   14. Tax amend form Enter the smaller of line 3 or line 13 here and on Form 1040, line 29. Tax amend form Do not include this amount when figuring any medical expense deduction on Schedule A (Form 1040). Tax amend form 14. Tax amend form   * If you used either optional method to figure your net earnings from self-employment from any business, do not enter your net profit from the business. Tax amend form Instead, enter the amount attributable to that business from Schedule SE (Form 1040), Section B, line 4b. Tax amend form * *Earned income includes net earnings and gains from the sale, transfer, or licensing of property you created. Tax amend form However, it does not include capital gain income. Tax amend form Chronically ill individual. Tax amend form   A chronically ill individual is a person who has been certified as one of the following. Tax amend form An individual who has been unable, due to loss of functional capacity for at least 90 days, to perform at least two activities of daily living without substantial assistance from another individual. Tax amend form Activities of daily living are eating, toileting, transferring (general mobility), bathing, dressing, and continence. Tax amend form An individual who requires substantial supervision to be protected from threats to health and safety due to severe cognitive impairment. Tax amend form The certification must have been made by a licensed health care practitioner within the previous 12 months. Tax amend form Benefits received. Tax amend form   For information on excluding benefits you receive from a long-term care contract from gross income, see Publication 525. Tax amend form Other coverage. Tax amend form   You cannot take the deduction for any month you were eligible to participate in any employer (including your spouse's) subsidized health plan at any time during that month, even if you did not actually participate. Tax amend form In addition, if you were eligible for any month or part of a month to participate in any subsidized health plan maintained by the employer of either your dependent or your child who was under age 27 at the end of 2013, do not use amounts paid for coverage for that month to figure the deduction. Tax amend form   These rules are applied separately to plans that provide long-term care insurance and plans that do not provide long-term care insurance. Tax amend form However, any medical insurance payments not deductible on Form 1040, line 29, can be included as medical expenses on Schedule A (Form 1040), Itemized Deductions, if you itemize deductions. Tax amend form Effect on itemized deductions. Tax amend form   Subtract the health insurance deduction from your medical insurance when figuring medical expenses on Schedule A (Form 1040) if you itemize deductions. Tax amend form Effect on self-employment tax. Tax amend form   For tax years beginning before or after 2010, you cannot subtract the self-employed health insurance deduction when figuring net earnings for your self-employment tax from the business under which the insurance plan is established, or considered to be established as discussed earlier. Tax amend form For more information, see Schedule SE (Form 1040). Tax amend form How to figure the deduction. Tax amend form   Generally, you can use the worksheet in the Form 1040 instructions to figure your deduction. Tax amend form However, if any of the following apply, you must use Worksheet 6-A in this chapter. Tax amend form You had more than one source of income subject to self-employment tax. Tax amend form You file Form 2555, Foreign Earned Income, or Form 2555-EZ, Foreign Earned Income Exclusion. Tax amend form You are using amounts paid for qualified long-term care insurance to figure the deduction. Tax amend form If you are claiming the health coverage tax credit, complete Form 8885, Health Coverage Tax Credit, before you figure this deduction. Tax amend form Health coverage tax credit. Tax amend form   You may be able to take this credit only if you were an eligible trade adjustment assistance (TAA) recipient, alternative TAA (ATAA) recipient, reemployment trade adjustment assistance (RTAA) recipient, or Pension Benefit Guaranty Corporation (PBGC) pension recipient. Tax amend form Use Form 8885 to figure the amount, if any, of this credit. Tax amend form   When figuring the amount to enter on line 1 of Worksheet 6-A, do not include the following. Tax amend form Any amounts you included on Form 8885, line 4. Tax amend form Any qualified health insurance premiums you paid to “U. Tax amend form S. Tax amend form Treasury-HCTC. Tax amend form ” Any health coverage tax credit advance payments shown in box 1 of Form 1099-H, Health Coverage Tax Credit (HCTC) Advance Payments. Tax amend form More than one health plan and business. Tax amend form   If you have more than one health plan during the year and each plan is established under a different business, you must use separate worksheets (Worksheet 6-A) to figure each plan's net earnings limit. Tax amend form Include the premium you paid under each plan on line 1 or line 2 of that separate worksheet and your net profit (or wages) from that business on line 4 (or line 11). Tax amend form For a plan that provides long-term care insurance, the total of the amounts entered for each person on line 2 of all worksheets cannot be more than the appropriate limit shown on line 2 for that person. Tax amend form Nondeductible Premiums You cannot deduct premiums on the following kinds of insurance. Tax amend form Self-insurance reserve funds. Tax amend form You cannot deduct amounts credited to a reserve set up for self-insurance. Tax amend form This applies even if you cannot get business insurance coverage for certain business risks. Tax amend form However, your actual losses may be deductible. Tax amend form See Publication 547. Tax amend form Loss of earnings. Tax amend form You cannot deduct premiums for a policy that pays for lost earnings due to sickness or disability. Tax amend form However, see the discussion on overhead insurance, item (8), under Deductible Premiums , earlier. Tax amend form Certain life insurance and annuities. Tax amend form For contracts issued before June 9, 1997, you cannot deduct the premiums on a life insurance policy covering you, an employee, or any person with a financial interest in your business if you are directly or indirectly a beneficiary of the policy. Tax amend form You are included among possible beneficiaries of the policy if the policy owner is obligated to repay a loan from you using the proceeds of the policy. Tax amend form A person has a financial interest in your business if the person is an owner or part owner of the business or has lent money to the business. Tax amend form For contracts issued after June 8, 1997, you generally cannot deduct the premiums on any life insurance policy, endowment contract, or annuity contract if you are directly or indirectly a beneficiary. Tax amend form The disallowance applies without regard to whom the policy covers. Tax amend form Partners. Tax amend form If, as a partner in a partnership, you take out an insurance policy on your own life and name your partners as beneficiaries to induce them to retain their investments in the partnership, you are considered a beneficiary. Tax amend form You cannot deduct the insurance premiums. Tax amend form Insurance to secure a loan. Tax amend form If you take out a policy on your life or on the life of another person with a financial interest in your business to get or protect a business loan, you cannot deduct the premiums as a business expense. Tax amend form Nor can you deduct the premiums as interest on business loans or as an expense of financing loans. Tax amend form In the event of death, the proceeds of the policy are generally not taxed as income even if they are used to liquidate the debt. Tax amend form Capitalized Premiums Under the uniform capitalization rules, you must capitalize the direct costs and part of the indirect costs for certain production or resale activities. Tax amend form Include these costs in the basis of property you produce or acquire for resale, rather than claiming them as a current deduction. Tax amend form You recover the costs through depreciation, amortization, or cost of goods sold when you use, sell, or otherwise dispose of the property. Tax amend form Indirect costs include premiums for insurance on your plant or facility, machinery, equipment, materials, property produced, or property acquired for resale. Tax amend form Uniform capitalization rules. Tax amend form   You may be subject to the uniform capitalization rules if you do any of the following, unless the property is produced for your use other than in a business or an activity carried on for profit. Tax amend form Produce real property or tangible personal property. Tax amend form For this purpose, tangible personal property includes a film, sound recording, video tape, book, or similar property. Tax amend form Acquire property for resale. Tax amend form However, these rules do not apply to the following property. Tax amend form Personal property you acquire for resale if your average annual gross receipts are $10 million or less for the 3 prior tax years. Tax amend form Property you produce if you meet either of the following conditions. Tax amend form Your indirect costs of producing the property are $200,000 or less. Tax amend form You use the cash method of accounting and do not account for inventories. Tax amend form More information. Tax amend form   For more information on these rules, see Uniform Capitalization Rules in Publication 538 and the regulations under Internal Revenue Code section 263A. Tax amend form When To Deduct Premiums You can usually deduct insurance premiums in the tax year to which they apply. Tax amend form Cash method. Tax amend form   If you use the cash method of accounting, you generally deduct insurance premiums in the tax year you actually paid them, even if you incurred them in an earlier year. Tax amend form However, see Prepayment , later. Tax amend form Accrual method. Tax amend form   If you use an accrual method of accounting, you cannot deduct insurance premiums before the tax year in which you incur a liability for them. Tax amend form In addition, you cannot deduct insurance premiums before the tax year in which you actually pay them (unless the exception for recurring items applies). Tax amend form For more information about the accrual method of accounting, see chapter 1. Tax amend form For information about the exception for recurring items, see Publication 538. Tax amend form Prepayment. Tax amend form   You cannot deduct expenses in advance, even if you pay them in advance. Tax amend form This rule applies to any expense paid far enough in advance to, in effect, create an asset with a useful life extending substantially beyond the end of the current tax year. Tax amend form   Expenses such as insurance are generally allocable to a period of time. Tax amend form You can deduct insurance expenses for the year to which they are allocable. Tax amend form Example. Tax amend form In 2013, you signed a 3-year insurance contract. Tax amend form Even though you paid the premiums for 2013, 2014, and 2015 when you signed the contract, you can only deduct the premium for 2013 on your 2013 tax return. Tax amend form You can deduct in 2014 and 2015 the premium allocable to those years. Tax amend form Dividends received. Tax amend form   If you receive dividends from business insurance and you deducted the premiums in prior years, at least part of the dividends generally are income. Tax amend form For more information, see Recovery of amount deducted (tax benefit rule) in chapter 1 under How Much Can I Deduct. Tax amend form Prev  Up  Next   Home   More Online Publications
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The Tax Amend Form

Tax amend form 5. Tax amend form   Illustrated Examples Table of Contents Illustrated Example of Form 4563Line 1. Tax amend form Line 2. Tax amend form Lines 3a and 3b. Tax amend form Lines 4a and 4b. Tax amend form Line 5. Tax amend form Line 6. Tax amend form Line 7. Tax amend form Line 9. Tax amend form Line 15. Tax amend form Illustrated Example of Form 5074Part I. Tax amend form Part II. Tax amend form Part III. Tax amend form Illustrated Example of Form 8689Part I. Tax amend form Part II. Tax amend form Part III. Tax amend form Part IV. Tax amend form Use the following examples to help you complete the correct attachment to your Form 1040. Tax amend form The completed form for each example is shown on the pages that follow. Tax amend form Illustrated Example of Form 4563 John Black is a U. Tax amend form S. Tax amend form citizen, single, and under 65. Tax amend form He was a bona fide resident of American Samoa during all of 2013. Tax amend form John must file Form 1040 because his gross income from sources outside the possessions ($10,000 of dividends from U. Tax amend form S. Tax amend form corporations) is more than his adjusted filing requirement for single filers under 65. Tax amend form (See Filing Requirement if Possession Income Is Excluded in chapter 4. Tax amend form ) Because he must file Form 1040 (not illustrated), he fills out Form 4563 to determine the amount of income from American Samoa he can exclude. Tax amend form See Bona Fide Resident of American Samoa in chapter 3. Tax amend form Completing Form 4563. Tax amend form   John enters his name and social security number at the top of the form. Tax amend form Line 1. Tax amend form   On Form 4563 (see later), John enters the date his bona fide residence began in American Samoa, June 2, 2012. Tax amend form Because he is still a bona fide resident, he enters “not ended” in the second blank space. Tax amend form Line 2. Tax amend form   He checks the box labeled “Rented house or apartment” to describe his type of living quarters in American Samoa. Tax amend form Lines 3a and 3b. Tax amend form   He checks “No” on line 3a because no family members lived with him. Tax amend form He leaves line 3b blank. Tax amend form Lines 4a and 4b. Tax amend form   He checks “No” on line 4a because he did not maintain a home outside American Samoa. Tax amend form He leaves line 4b blank. Tax amend form Line 5. Tax amend form   He enters the name and address of his employer, Samoa Products Co. Tax amend form It is a private American Samoa corporation. Tax amend form Line 6. Tax amend form   He enters the dates of his 2-week vacation to New Zealand from November 11 to November 25. Tax amend form That was his only trip outside American Samoa during the year. Tax amend form Line 7. Tax amend form   He enters the $24,000 in wages he received from Samoa Products Co. Tax amend form Line 9. Tax amend form   He received $220 in dividends from an American Samoa corporation, which he enters here. Tax amend form He also received $10,000 of dividends from a U. Tax amend form S. Tax amend form corporation, but he will enter that amount only on his Form 1040 because the U. Tax amend form S. Tax amend form dividends do not qualify for the possession exclusion. Tax amend form Line 15. Tax amend form   John totals the amounts on lines 7 and 9 to get the amount he can exclude from his gross income in 2013. Tax amend form He will not enter his excluded income on Form 1040. Tax amend form However, he will attach his completed Form 4563 to his Form 1040. Tax amend form Illustrated Example of Form 5074 Tracy Grey is a U. Tax amend form S. Tax amend form citizen who is a self-employed fisheries consultant with a tax home in New York. Tax amend form Her only income for 2013 was net self-employment income of $80,000. Tax amend form Of the $80,000, $20,000 was from consulting work in Guam and the rest was earned in the United States. Tax amend form Thinking she would owe tax to Guam on the $20,000, Tracy made estimated tax payments of $1,409 to Guam. Tax amend form She was not a bona fide resident of Guam during 2013. Tax amend form Tracy completes Form 1040 (not illustrated), reporting her worldwide income. Tax amend form Because the adjusted gross income on her Form 1040 was $50,000 or more and at least $5,000 of her gross income is from Guam, Tracy must file Form 5074 with her Form 1040. Tax amend form All amounts reported on Form 5074 are also reported on her Form 1040. Tax amend form See U. Tax amend form S. Tax amend form Citizen or Resident Alien (Other Than a Bona Fide Resident of Guam) in chapter 3. Tax amend form Completing Form 5074. Tax amend form   Tracy enters her name and social security number at the top of the form. Tax amend form Part I. Tax amend form   On Form 5074 (see later), Tracy enters her self-employment income from Guam ($20,000) on line 6. Tax amend form She has no other income from Guam, so the total on line 16 is $20,000. Tax amend form Part II. Tax amend form   Tracy's only adjustment in Part II is the deductible part of the self-employment tax on her net income earned in Guam. Tax amend form She enters $1,413 on line 21 and line 28. Tax amend form Her adjusted gross income on line 29 is $18,587. Tax amend form Part III. Tax amend form   Tracy made estimated tax payments of $1,409. Tax amend form She enters this amount on line 30, and again on line 34 as the total payments. Tax amend form Illustrated Example of Form 8689 Juan and Carla Moreno live and work in the United States. Tax amend form In 2013, they received $14,400 in income from the rental of a condominium they own in the U. Tax amend form S. Tax amend form Virgin Islands (USVI). Tax amend form The rental income was deposited in a bank in the USVI and they received $500 of interest on this income. Tax amend form They were not bona fide residents of the USVI during the entire tax year. Tax amend form The Morenos complete Form 1040 (not illustrated), reporting their income from all sources, including their interest income and the income and expenses from their USVI rental property (reported on Schedule E (Form 1040)). Tax amend form The Morenos take the standard deduction for married filing jointly, both are under 65, and they have no dependents. Tax amend form The Morenos also complete Form 8689 to determine how much of their U. Tax amend form S. Tax amend form tax shown on Form 1040, line 61 (with certain adjustments), must be paid to the U. Tax amend form S. Tax amend form Virgin Islands. Tax amend form See U. Tax amend form S. Tax amend form Citizen or Resident Alien (Other Than a Bona Fide Resident of the USVI) in chapter 3. Tax amend form The Morenos file their Form 1040, attaching Form 8689 and all other schedules, with the Internal Revenue Service. Tax amend form At the same time, they send a copy of their Form 1040 with all attachments, including Form 8689, to the Virgin Islands Bureau of Internal Revenue. Tax amend form The Virgin Islands Bureau of Internal Revenue will process this copy. Tax amend form Completing Form 8689. Tax amend form   Juan and Carla enter their names and Juan's social security number at the top of the form. Tax amend form Part I. Tax amend form   The Morenos enter their income from the USVI in Part I (see later). Tax amend form The interest income is entered on line 2 and the net rental income of $6,200 ($14,400 of rental income minus $8,200 of rental expenses) is entered on line 11. Tax amend form The Morenos' total USVI income of $6,700 is entered on line 16. Tax amend form Part II. Tax amend form   The Morenos have no adjustments to their USVI income, so they enter zero (-0-) on line 28, and $6,700 on line 29. Tax amend form Their USVI adjusted gross income (AGI) is $6,700. Tax amend form Part III. Tax amend form   On line 30, the Morenos enter the amount from Form 1040, line 61 ($4,539). Tax amend form Their Form 1040 does not show any entries required on line 31, so they leave that line blank and enter $4,539 on line 32. Tax amend form   The Morenos enter their worldwide AGI, $54,901 (Form 1040, line 38), on line 33. Tax amend form Next, they find what percentage of their AGI is from USVI sources ($6,700 ÷ $54,901 = 0. Tax amend form 122) and enter that as a decimal on line 34. Tax amend form They then apply that percentage to the U. Tax amend form S. Tax amend form tax entered on line 32 to find the amount of U. Tax amend form S. Tax amend form tax allocated to USVI income ($4,539 x 0. Tax amend form 122 = $554), and enter that amount on line 35. Tax amend form Part IV. Tax amend form   Part IV is used to show payments of income tax to the USVI only. Tax amend form The Morenos had no tax withheld by the U. Tax amend form S. Tax amend form Virgin Islands, but made estimated tax payments to the USVI of $400, which they entered on lines 37 and 39. Tax amend form They include this amount ($400) in the total payments on Form 1040, line 72. Tax amend form On the dotted line next to the entry space for line 72, they enter “Form 8689” and show the amount. Tax amend form The Morenos do not complete Form 1116 because they receive credit on Form 1040, line 72, for the tax paid to the USVI. Tax amend form   The income tax they owe to the USVI ($154) is shown on Form 8689, line 44. Tax amend form They enter this amount on line 45. Tax amend form They also include this additional amount ($154) on the dotted line next to the entry space and in the total on Form 1040, line 72. Tax amend form The Morenos will pay their USVI tax at the same time they file the copy of their U. Tax amend form S. Tax amend form income tax return with the U. Tax amend form S. Tax amend form Virgin Islands. Tax amend form This image is too large to be displayed in the current screen. Tax amend form Please click the link to view the image. Tax amend form Form 4563, page 1 for John Black This image is too large to be displayed in the current screen. Tax amend form Please click the link to view the image. Tax amend form Form 5074, for Tracy Grey This image is too large to be displayed in the current screen. Tax amend form Please click the link to view the image. Tax amend form Form 8689, page 1 for Juan and Carla Moreno Prev  Up  Next   Home   More Online Publications