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Tax Form 1040ez

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Tax Form 1040ez

Tax form 1040ez 12. Tax form 1040ez   Business Deduction for Work-Related Education Table of Contents What's New Introduction Qualifying Work-Related EducationEducation Required by Employer or by Law Education To Maintain or Improve Skills Education To Meet Minimum Requirements Education That Qualifies You for a New Trade or Business What Expenses Can Be DeductedUnclaimed reimbursement. Tax form 1040ez Transportation Expenses Travel Expenses No Double Benefit Allowed How To Treat ReimbursementsAccountable Plans Nonaccountable Plans Deducting Business ExpensesSelf-Employed Persons Employees Performing Artists and Fee-Basis Officials Impairment-Related Work Expenses Recordkeeping Illustrated Example What's New Standard mileage rate. Tax form 1040ez  Generally, if you claim a business deduction for work-related education and you drive your car to and from school, the amount you can deduct for miles driven from January 1, 2013 through December 31, 2013, is 56. Tax form 1040ez 5 cents per mile. Tax form 1040ez For more information, see Transportation Expenses under What Expenses Can Be Deducted, later. Tax form 1040ez Introduction This chapter discusses work-related education expenses that you may be able to deduct as business expenses. Tax form 1040ez To claim such a deduction, you must: Itemize your deductions on Schedule A (Form 1040 or 1040NR) if you are an employee, File 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 if you are self-employed, and Have expenses for education that meet the requirements discussed under Qualifying Work-Related Education , later. Tax form 1040ez What is the tax benefit of taking a business deduction for work-related education. Tax form 1040ez   If you are an employee and can itemize your deductions, you may be able to claim a deduction for the expenses you pay for your work-related education. Tax form 1040ez Your deduction will be the amount by which your qualifying work-related education expenses plus other job and certain miscellaneous expenses (except for impairment-related work expenses of disabled individuals) is greater than 2% of your adjusted gross income. Tax form 1040ez An itemized deduction reduces the amount of your income subject to tax. Tax form 1040ez   If you are self-employed, you deduct your expenses for qualifying work-related education directly from your self-employment income. Tax form 1040ez This reduces the amount of your income subject to both income tax and self-employment tax. Tax form 1040ez   Your work-related education expenses may also qualify you for other tax benefits, such as the American opportunity and lifetime learning credits. Tax form 1040ez You may qualify for these other benefits even if you do not meet the requirements listed above. Tax form 1040ez   Also, your work-related education expenses may qualify you to claim more than one tax benefit. Tax form 1040ez Generally, you may claim any number of benefits as long as you use different expenses to figure each one. Tax form 1040ez Qualifying Work-Related Education You can deduct the costs of qualifying work-related education as business expenses. Tax form 1040ez This is education that meets at least one of the following two tests. Tax form 1040ez The education is required by your employer or the law to keep your present salary, status, or job. Tax form 1040ez The required education must serve a bona fide business purpose of your employer. Tax form 1040ez The education maintains or improves skills needed in your present work. Tax form 1040ez However, even if the education meets one or both of the above tests, it is not qualifying work-related education if it: Is needed to meet the minimum educational requirements of your present trade or business, or Is part of a program of study that will qualify you for a new trade or business. Tax form 1040ez You can deduct the costs of qualifying work-related education as a business expense even if the education could lead to a degree. Tax form 1040ez Use Figure 12-1, Does Your Work-Related Education Qualify as a quick check to see if your education qualifies. Tax form 1040ez Education Required by Employer or by Law Once you have met the minimum educational requirements for your job, your employer or the law may require you to get more education. Tax form 1040ez This additional education is qualifying work-related education if all three of the following requirements are met. Tax form 1040ez It is required for you to keep your present salary, status, or job, The requirement serves a bona fide business purpose of your employer, and The education is not part of a program that will qualify you for a new trade or business. Tax form 1040ez When you get more education than your employer or the law requires, the additional education can be qualifying work-related education only if it maintains or improves skills required in your present work. Tax form 1040ez See Education To Maintain or Improve Skills , later. Tax form 1040ez Example. Tax form 1040ez You are a teacher who has satisfied the minimum requirements for teaching. Tax form 1040ez Your employer requires you to take an additional college course each year to keep your teaching job. Tax form 1040ez If the courses will not qualify you for a new trade or business, they are qualifying work-related education even if you eventually receive a master's degree and an increase in salary because of this extra education. Tax form 1040ez This image is too large to be displayed in the current screen. Tax form 1040ez Please click the link to view the image. Tax form 1040ez Figure 12-1 Education To Maintain or Improve Skills If your education is not required by your employer or the law, it can be qualifying work-related education only if it maintains or improves skills needed in your present work. Tax form 1040ez This could include refresher courses, courses on current developments, and academic or vocational courses. Tax form 1040ez Example. Tax form 1040ez You repair televisions, radios, and stereo systems for XYZ Store. Tax form 1040ez To keep up with the latest changes, you take special courses in radio and stereo service. Tax form 1040ez These courses maintain and improve skills required in your work. Tax form 1040ez Maintaining skills vs. Tax form 1040ez qualifying for new job. Tax form 1040ez   Education to maintain or improve skills needed in your present work is not qualifying education if it will also qualify you for a new trade or business. Tax form 1040ez Education during temporary absence. Tax form 1040ez   If you stop working for a year or less in order to get education to maintain or improve skills needed in your present work and then return to the same general type of work, your absence is considered temporary. Tax form 1040ez Education that you get during a temporary absence is qualifying work-related education if it maintains or improves skills needed in your present work. Tax form 1040ez Example. Tax form 1040ez You quit your biology research job to become a full-time biology graduate student for 1 year. Tax form 1040ez If you return to work in biology research after completing the courses, the education is related to your present work even if you do not go back to work with the same employer. Tax form 1040ez Education during indefinite absence. Tax form 1040ez   If you stop work for more than a year, your absence from your job is considered indefinite. Tax form 1040ez Education during an indefinite absence, even if it maintains or improves skills needed in the work from which you are absent, is considered to qualify you for a new trade or business. Tax form 1040ez Therefore, it is not qualifying work-related education. Tax form 1040ez Education To Meet Minimum Requirements Education you need to meet the minimum educational requirements for your present trade or business is not qualifying work-related education. Tax form 1040ez The minimum educational requirements are determined by: Laws and regulations, Standards of your profession, trade, or business, and Your employer. Tax form 1040ez Once you have met the minimum educational requirements that were in effect when you were hired, you do not have to meet any new minimum educational requirements. Tax form 1040ez This means that if the minimum requirements change after you were hired, any education you need to meet the new requirements can be qualifying education. Tax form 1040ez You have not necessarily met the minimum educational requirements of your trade or business simply because you are already doing the work. Tax form 1040ez Example 1. Tax form 1040ez You are a full-time engineering student. Tax form 1040ez Although you have not received your degree or certification, you work part time as an engineer for a firm that will employ you as a full-time engineer after you finish college. Tax form 1040ez Although your college engineering courses improve your skills in your present job, they are also needed to meet the minimum job requirements for a full-time engineer. Tax form 1040ez The education is not qualifying work-related education. Tax form 1040ez Example 2. Tax form 1040ez You are an accountant and you have met the minimum educational requirements of your employer. Tax form 1040ez Your employer later changes the minimum educational requirements and requires you to take college courses to keep your job. Tax form 1040ez These additional courses can be qualifying work-related education because you have already satisfied the minimum requirements that were in effect when you were hired. Tax form 1040ez Requirements for Teachers States or school districts usually set the minimum educational requirements for teachers. Tax form 1040ez The requirement is the college degree or the minimum number of college hours usually required of a person hired for that position. Tax form 1040ez If there are no requirements, you will have met the minimum educational requirements when you become a faculty member. Tax form 1040ez The determination of whether you are a faculty member of an educational institution must be made on the basis of the particular practices of the institution. Tax form 1040ez You generally will be considered a faculty member when one or more of the following occurs. Tax form 1040ez You have tenure. Tax form 1040ez Your years of service count toward obtaining tenure. Tax form 1040ez You have a vote in faculty decisions. Tax form 1040ez Your school makes contributions for you to a retirement plan other than social security or a similar program. Tax form 1040ez Example 1. Tax form 1040ez The law in your state requires beginning secondary school teachers to have a bachelor's degree, including 10 professional education courses. Tax form 1040ez In addition, to keep the job a teacher must complete a fifth year of training within 10 years from the date of hire. Tax form 1040ez If the employing school certifies to the state Department of Education that qualified teachers cannot be found, the school can hire persons with only 3 years of college. Tax form 1040ez However, to keep their jobs, these teachers must get a bachelor's degree and the required professional education courses within 3 years. Tax form 1040ez Under these facts, the bachelor's degree, whether or not it includes the 10 professional education courses, is considered the minimum educational requirement for qualification as a teacher in your state. Tax form 1040ez If you have all the required education except the fifth year, you have met the minimum educational requirements. Tax form 1040ez The fifth year of training is qualifying work-related education unless it is part of a program of study that will qualify you for a new trade or business. Tax form 1040ez Example 2. Tax form 1040ez Assume the same facts as in Example 1 except that you have a bachelor's degree and only six professional education courses. Tax form 1040ez The additional four education courses can be qualifying work-related education. Tax form 1040ez Although you do not have all the required courses, you have already met the minimum educational requirements. Tax form 1040ez Example 3. Tax form 1040ez Assume the same facts as in Example 1 except that you are hired with only 3 years of college. Tax form 1040ez The courses you take that lead to a bachelor's degree (including those in education) are not qualifying work-related education. Tax form 1040ez They are needed to meet the minimum educational requirements for employment as a teacher. Tax form 1040ez Example 4. Tax form 1040ez You have a bachelor's degree and you work as a temporary instructor at a university. Tax form 1040ez At the same time, you take graduate courses toward an advanced degree. Tax form 1040ez The rules of the university state that you can become a faculty member only if you get a graduate degree. Tax form 1040ez Also, you can keep your job as an instructor only as long as you show satisfactory progress toward getting this degree. Tax form 1040ez You have not met the minimum educational requirements to qualify you as a faculty member. Tax form 1040ez The graduate courses are not qualifying work-related education. Tax form 1040ez Certification in a new state. Tax form 1040ez   Once you have met the minimum educational requirements for teachers for your state, you are considered to have met the minimum educational requirements in all states. Tax form 1040ez This is true even if you must get additional education to be certified in another state. Tax form 1040ez Any additional education you need is qualifying work-related education. Tax form 1040ez You have already met the minimum requirements for teaching. Tax form 1040ez Teaching in another state is not a new trade or business. Tax form 1040ez Example. Tax form 1040ez You hold a permanent teaching certificate in State A and are employed as a teacher in that state for several years. Tax form 1040ez You move to State B and are promptly hired as a teacher. Tax form 1040ez You are required, however, to complete certain prescribed courses to get a permanent teaching certificate in State B. Tax form 1040ez These additional courses are qualifying work-related education because the teaching position in State B involves the same general kind of work for which you were qualified in State A. Tax form 1040ez Education That Qualifies You for a New Trade or Business Education that is part of a program of study that will qualify you for a new trade or business is not qualifying work-related education. Tax form 1040ez This is true even if you do not plan to enter that trade or business. Tax form 1040ez If you are an employee, a change of duties that involves the same general kind of work is not a new trade or business. Tax form 1040ez Example 1. Tax form 1040ez You are an accountant. Tax form 1040ez Your employer requires you to get a law degree at your own expense. Tax form 1040ez You register at a law school for the regular curriculum that leads to a law degree. Tax form 1040ez Even if you do not intend to become a lawyer, the education is not qualifying because the law degree will qualify you for a new trade or business. Tax form 1040ez Example 2. Tax form 1040ez You are a general practitioner of medicine. Tax form 1040ez You take a 2-week course to review developments in several specialized fields of medicine. Tax form 1040ez The course does not qualify you for a new profession. Tax form 1040ez It is qualifying work- related education because it maintains or improves skills required in your present profession. Tax form 1040ez Example 3. Tax form 1040ez While working in the private practice of psychiatry, you enter a program to study and train at an accredited psychoanalytic institute. Tax form 1040ez The program will lead to qualifying you to practice psychoanalysis. Tax form 1040ez The psychoanalytic training does not qualify you for a new profession. Tax form 1040ez It is qualifying work-related education because it maintains or improves skills required in your present profession. Tax form 1040ez Bar or CPA Review Course Review courses to prepare for the bar examination or the certified public accountant (CPA) examination are not qualifying work-related education. Tax form 1040ez They are part of a program of study that can qualify you for a new profession. Tax form 1040ez Teaching and Related Duties All teaching and related duties are considered the same general kind of work. Tax form 1040ez A change in duties in any of the following ways is not considered a change to a new business. Tax form 1040ez Elementary school teacher to secondary school teacher. Tax form 1040ez Teacher of one subject, such as biology, to teacher of another subject, such as art. Tax form 1040ez Classroom teacher to guidance counselor. Tax form 1040ez Classroom teacher to school administrator. Tax form 1040ez What Expenses Can Be Deducted If your education meets the requirements described earlier under Qualifying Work-Related Education you can generally deduct your education expenses as business expenses. Tax form 1040ez If you are not self-employed, you can deduct business expenses only if you itemize your deductions. Tax form 1040ez You cannot deduct expenses related to tax-exempt and excluded income. Tax form 1040ez Deductible expenses. Tax form 1040ez   The following education expenses can be deducted. Tax form 1040ez Tuition, books, supplies, lab fees, and similar items. Tax form 1040ez Certain transportation and travel costs. Tax form 1040ez Other education expenses, such as costs of research and typing when writing a paper as part of an educational program. Tax form 1040ez Nondeductible expenses. Tax form 1040ez   You cannot deduct personal or capital expenses. Tax form 1040ez For example, you cannot deduct the dollar value of vacation time or annual leave you take to attend classes. Tax form 1040ez This amount is a personal expense. Tax form 1040ez Unclaimed reimbursement. Tax form 1040ez   If you do not claim reimbursement that you are entitled to receive from your employer, you cannot deduct the expenses that apply to that unclaimed reimbursement. Tax form 1040ez Example. Tax form 1040ez Your employer agrees to pay your education expenses if you file a voucher showing your expenses. Tax form 1040ez You do not file a voucher and you do not get reimbursed. Tax form 1040ez Because you did not file a voucher, you cannot deduct the expenses on your tax return. Tax form 1040ez Transportation Expenses If your education qualifies, you can deduct local transportation costs of going directly from work to school. Tax form 1040ez If you are regularly employed and go to school on a temporary basis, you can also deduct the costs of returning from school to home. Tax form 1040ez Temporary basis. Tax form 1040ez   You go to school on a temporary basis if either of the following situations applies to you. Tax form 1040ez Your attendance at school is realistically expected to last 1 year or less and does indeed last for 1 year or less. Tax form 1040ez Initially, your attendance at school is realistically expected to last 1 year or less, but at a later date your attendance is reasonably expected to last more than 1 year. Tax form 1040ez Your attendance is temporary up to the date you determine it will last more than 1 year. Tax form 1040ez If you are in either situation (1) or (2) above, your attendance is not temporary if facts and circumstances indicate otherwise. Tax form 1040ez Attendance not on a temporary basis. Tax form 1040ez   You do not go to school on a temporary basis if either of the following situations apply to you. Tax form 1040ez Your attendance at school is realistically expected to last more than 1 year. Tax form 1040ez It does not matter how long you actually attend. Tax form 1040ez Initially, your attendance at school is realistically expected to last 1 year or less, but at a later date your attendance is reasonably expected to last more than 1 year. Tax form 1040ez Your attendance is not temporary after the date you determine it will last more than 1 year. Tax form 1040ez Deductible Transportation Expenses If you are regularly employed and go directly from home to school on a temporary basis, you can deduct the round-trip costs of transportation between your home and school. Tax form 1040ez This is true regardless of the location of the school, the distance traveled, or whether you attend school on nonwork days. Tax form 1040ez Transportation expenses include the actual costs of bus, subway, cab, or other fares, as well as the costs of using your car. Tax form 1040ez Transportation expenses do not include amounts spent for travel, meals, or lodging while you are away from home overnight. Tax form 1040ez Example 1. Tax form 1040ez You regularly work in a nearby town, and go directly from work to home. Tax form 1040ez You also attend school every work night for 3 months to take a course that improves your job skills. Tax form 1040ez Since you are attending school on a temporary basis, you can deduct your daily round-trip transportation expenses in going between home and school. Tax form 1040ez This is true regardless of the distance traveled. Tax form 1040ez Example 2. Tax form 1040ez Assume the same facts as in Example 1 except that on certain nights you go directly from work to school and then home. Tax form 1040ez You can deduct your transportation expenses from your regular work site to school and then home. Tax form 1040ez Example 3. Tax form 1040ez Assume the same facts as in Example 1 except that you attend the school for 9 months on Saturdays, nonwork days. Tax form 1040ez Since you are attending school on a temporary basis, you can deduct your round-trip transportation expenses in going between home and school. Tax form 1040ez Example 4. Tax form 1040ez Assume the same facts as in Example 1 except that you attend classes twice a week for 15 months. Tax form 1040ez Since your attendance in school is not considered temporary, you cannot deduct your transportation expenses in going between home and school. Tax form 1040ez If you go directly from work to school, you can deduct the one-way transportation expenses of going from work to school. Tax form 1040ez If you go from work to home to school and return home, your transportation expenses cannot be more than if you had gone directly from work to school. Tax form 1040ez Using your car. Tax form 1040ez    If you use your car (whether you own or lease it) for transportation to school, you can deduct your actual expenses or use the standard mileage rate to figure the amount you can deduct. Tax form 1040ez The standard mileage rate for miles driven from January 1, 2013 through December 31, 2013, is 56. Tax form 1040ez 5 cents per mile. Tax form 1040ez Whichever method you use, you can also deduct parking fees and tolls. Tax form 1040ez See Publication 463, chapter 4, for information on deducting your actual expenses of using a car. Tax form 1040ez Travel Expenses You can deduct expenses for travel, meals (see 50% limit on meals , later), and lodging if you travel overnight mainly to obtain qualifying work-related education. Tax form 1040ez Travel expenses for qualifying work-related education are treated the same as travel expenses for other employee business purposes. Tax form 1040ez For more information, see chapter 1 of Publication 463. Tax form 1040ez You cannot deduct expenses for personal activities such as sightseeing, visiting, or entertaining. Tax form 1040ez Mainly personal travel. Tax form 1040ez   If your travel away from home is mainly personal, you cannot deduct all of your expenses for travel, meals, and lodging. Tax form 1040ez You can deduct only your expenses for lodging and 50% of your expenses for meals during the time you attend the qualified educational activities. Tax form 1040ez   Whether a trip's purpose is mainly personal or educational depends upon the facts and circumstances. Tax form 1040ez An important factor is the comparison of time spent on personal activities with time spent on educational activities. Tax form 1040ez If you spend more time on personal activities, the trip is considered mainly educational only if you can show a substantial nonpersonal reason for traveling to a particular location. Tax form 1040ez Example 1. Tax form 1040ez John works in Newark, New Jersey. Tax form 1040ez He traveled to Chicago to take a deductible 1-week course at the request of his employer. Tax form 1040ez His main reason for going to Chicago was to take the course. Tax form 1040ez While there, he took a sightseeing trip, entertained some friends, and took a side trip to Pleasantville for a day. Tax form 1040ez Since the trip was mainly for business, John can deduct his round-trip airfare to Chicago. Tax form 1040ez He cannot deduct his transportation expenses of going to Pleasantville. Tax form 1040ez He can deduct only the meals (subject to the 50% limit) and lodging connected with his educational activities. Tax form 1040ez Example 2. Tax form 1040ez Sue works in Boston. Tax form 1040ez She went to a university in Michigan to take a course for work. Tax form 1040ez The course is qualifying work-related education. Tax form 1040ez She took one course, which is one-fourth of a full course load of study. Tax form 1040ez She spent the rest of the time on personal activities. Tax form 1040ez Her reasons for taking the course in Michigan were all personal. Tax form 1040ez Sue's trip is mainly personal because three-fourths of her time is considered personal time. Tax form 1040ez She cannot deduct the cost of her round-trip train ticket to Michigan. Tax form 1040ez She can deduct one-fourth of the meals (subject to the 50% limit) and lodging costs for the time she attended the university. Tax form 1040ez Example 3. Tax form 1040ez Dave works in Nashville and recently traveled to California to take a 2-week seminar. Tax form 1040ez The seminar is qualifying work-related education. Tax form 1040ez While there, he spent an extra 8 weeks on personal activities. Tax form 1040ez The facts, including the extra 8-week stay, show that his main purpose was to take a vacation. Tax form 1040ez Dave cannot deduct his round-trip airfare or his meals and lodging for the 8 weeks. Tax form 1040ez He can deduct only his expenses for meals (subject to the 50% limit) and lodging for the 2 weeks he attended the seminar. Tax form 1040ez Cruises and conventions. Tax form 1040ez   Certain cruises and conventions offer seminars or courses as part of their itinerary. Tax form 1040ez Even if the seminars or courses are work related, your deduction for travel may be limited. Tax form 1040ez This applies to: Travel by ocean liner, cruise ship, or other form of luxury water transportation, and Conventions outside the North American area. Tax form 1040ez   For a discussion of the limits on travel expense deductions that apply to cruises and conventions, see Luxury Water Travel and Conventions in chapter 1 of Publication 463. Tax form 1040ez 50% limit on meals. Tax form 1040ez   You can deduct only 50% of the cost of your meals while traveling away from home to obtain qualifying work-related education. Tax form 1040ez If you were reimbursed for the meals, see How To Treat Reimbursements , later. Tax form 1040ez   Employees must use Form 2106 or Form 2106-EZ to apply the 50% limit. Tax form 1040ez Travel as Education You cannot deduct the cost of travel as a form of education even if it is directly related to your duties in your work or business. Tax form 1040ez Example. Tax form 1040ez You are a French language teacher. Tax form 1040ez While on sabbatical leave granted for travel, you traveled through France to improve your knowledge of the French language. Tax form 1040ez You chose your itinerary and most of your activities to improve your French language skills. Tax form 1040ez You cannot deduct your travel expenses as education expenses. Tax form 1040ez This is true even if you spent most of your time learning French by visiting French schools and families, attending movies or plays, and engaging in similar activities. Tax form 1040ez No Double Benefit Allowed You cannot do either of the following. Tax form 1040ez Deduct work-related education expenses as business expenses if you benefit from these expenses under any other provision of the law, for example, as a tuition and fees deduction. Tax form 1040ez Deduct work-related education expenses paid with tax-free scholarship, grant, or employer-provided educational assistance. Tax form 1040ez See Adjustments to Qualifying Work-Related Education Expenses, next. Tax form 1040ez Adjustments to Qualifying Work-Related Education Expenses If you pay qualifying work-related education expenses with certain tax-free funds, you cannot claim a deduction for those amounts. Tax form 1040ez You must reduce the qualifying expenses by the amount of such expenses allocable to the tax-free educational assistance. Tax form 1040ez Tax-free educational assistance. Tax form 1040ez   This includes: The tax-free part of scholarships and fellowships (see Tax-Free Scholarships and Fellowships in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Pell grants (see Pell Grants and Other Title IV Need-Based Education Grants in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions). Tax form 1040ez Employer-provided educational assistance (see chapter 11, Employer-Provided Educational Assistance ), Veterans' educational assistance (see Veterans' Benefits in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), and Any other nontaxable (tax-free) payments (other than gifts or inheritances) received as educational assistance. Tax form 1040ez Amounts that do not reduce qualifying work-related education expenses. Tax form 1040ez   Do not reduce the qualifying work-related education expenses by amounts paid with funds the student receives as: Payment for services, such as wages, A loan, A gift, An inheritance, or A withdrawal from the student's personal savings. Tax form 1040ez Also, do not reduce the qualifying work-related education expenses by any scholarship or fellowship reported as income on the student's return or any scholarship which, by its terms, cannot be applied to qualifying work-related education expenses. Tax form 1040ez How To Treat Reimbursements How you treat reimbursements depends on the arrangement you have with your employer. Tax form 1040ez There are two basic types of reimbursement arrangements—accountable plans and nonaccountable plans. Tax form 1040ez You can tell the type of plan you are reimbursed under by the way the reimbursement is reported on your Form W-2. Tax form 1040ez Note. Tax form 1040ez The following rules about reimbursement arrangements also apply to expense allowances received from your employer. Tax form 1040ez Accountable Plans To be an accountable plan, your employer's reimbursement arrangement must require you to meet all three of the following rules. Tax form 1040ez Your expenses must have a business connection. Tax form 1040ez This means your expenses must be deductible under the rules for qualifying work-related education explained earlier. Tax form 1040ez You must adequately account to your employer for your expenses within a reasonable period of time. Tax form 1040ez You must return any reimbursement or allowance in excess of the expenses accounted for within a reasonable period of time. Tax form 1040ez If you are reimbursed under an accountable plan, your employer should not include any reimbursement in your income in box 1 of your Form W-2. Tax form 1040ez If your employer included reimbursements in box 1 of your Form W-2 and you meet all three rules for accountable plans, ask your employer for a corrected Form W-2. Tax form 1040ez Accountable plan rules not met. Tax form 1040ez   Even though you are reimbursed under an accountable plan, some of your expenses may not meet all three rules for accountable plans. Tax form 1040ez Those expenses that fail to meet the three rules are treated as having been reimbursed under a Nonaccountable Plan (discussed later). Tax form 1040ez Expenses equal reimbursement. Tax form 1040ez   Under an accountable plan, if your expenses equal your reimbursement, you do not complete Form 2106 or 2106-EZ. Tax form 1040ez Because your expenses and reimbursements are equal, you do not have a deduction. Tax form 1040ez Excess expenses. Tax form 1040ez   If your expenses are more than your reimbursement, you can deduct your excess expenses. Tax form 1040ez This is discussed later, under Deducting Business Expenses . Tax form 1040ez Allocating your reimbursements for meals. Tax form 1040ez   Because your excess meal expenses are subject to the 50% limit, you must figure them separately from your other expenses. Tax form 1040ez If your employer paid you a single amount to cover both meals and other expenses, you must allocate the reimbursement so that you can figure your excess meal expenses separately. Tax form 1040ez Make the allocation as follows. Tax form 1040ez Divide your meal expenses by your total expenses. Tax form 1040ez Multiply your total reimbursement by the result from (1). Tax form 1040ez This is the allocated reimbursement for your meal expenses. Tax form 1040ez Subtract the amount figured in (2) from your total reimbursement. Tax form 1040ez The difference is the allocated reimbursement for your other expenses of qualifying work-related education. Tax form 1040ez Example. Tax form 1040ez Your employer paid you an expense allowance of $2,000 under an accountable plan. Tax form 1040ez The allowance was to cover all of your expenses of traveling away from home to take a 2-week training course for work. Tax form 1040ez There was no indication of how much of the reimbursement was for each type of expense. Tax form 1040ez Your actual expenses equal $2,500 ($425 for meals + $700 lodging + $150 transportation expenses + $1,225 for books and tuition). Tax form 1040ez Using the steps listed above, allocate the reimbursement between the $425 meal expenses and the $2,075 other expenses. Tax form 1040ez   1. Tax form 1040ez $425 meal expenses  $2,500 total expenses = . Tax form 1040ez 17   2. Tax form 1040ez $2,000 (reimbursement)×. Tax form 1040ez 17     =$340 (allocated reimbursement for meal expenses)   3. Tax form 1040ez $2,000 (reimbursement)−$340 (meals)     = $1,660 (allocated reimbursement for other qualifying work-related education expenses) Your excess meal expenses are $85 ($425 − $340) and your excess other expenses are $415 ($2,075 − $1,660). Tax form 1040ez After you apply the 50% limit to your meals, you have a deduction for work-related education expenses of $458 (($85 × 50%) + $415). Tax form 1040ez Nonaccountable Plans Your employer will combine the amount of any reimbursement or other expense allowance paid to you under a nonaccountable plan with your wages, salary, or other pay and report the total in box 1 of your Form W-2. Tax form 1040ez You can deduct your expenses regardless of whether they are more than, less than, or equal to your reimbursement. Tax form 1040ez This is discussed later under Deducting Business Expenses . Tax form 1040ez An illustrated example of a nonaccountable plan, using Form 2106-EZ, is shown at the end of this chapter. Tax form 1040ez Reimbursements for nondeductible expenses. Tax form 1040ez   Reimbursements you received for nondeductible expenses are treated as paid under a nonaccountable plan. Tax form 1040ez You must include them in your income. Tax form 1040ez For example, you must include in your income reimbursements your employer gave you for expenses of education that: You need to meet the minimum educational requirements for your job, or Is part of a program of study that can qualify you for a new trade or business. Tax form 1040ez   For more information on accountable and nonaccountable plans, see chapter 6 of Publication 463. Tax form 1040ez Deducting Business Expenses Self-employed persons and employees report their business expenses differently. Tax form 1040ez The following information explains what forms you must use to deduct the cost of your qualifying work-related education as a business expense. Tax form 1040ez Self-Employed Persons If you are self-employed, you must report the cost of your qualifying work-related education on the appropriate form used to report your business income and expenses (generally Schedule C (Form 1040), Schedule C-EZ (Form 1040), or Schedule F (Form 1040)). Tax form 1040ez If your education expenses include expenses for a car or truck, travel, or meals, report those expenses the same way you report other business expenses for those items. Tax form 1040ez See the instructions for the form you file for information on how to complete it. Tax form 1040ez Employees If you are an employee, you can deduct the cost of qualifying work-related education only if you: Did not receive (and were not entitled to receive) any reimbursement from your employer, Were reimbursed under a nonaccountable plan (amount is included in box 1 of Form W-2), or Received reimbursement under an accountable plan, but the amount received was less than your expenses for which you claimed reimbursement. Tax form 1040ez If either (1) or (2) applies, you can deduct the total qualifying cost. Tax form 1040ez If (3) applies, you can deduct only the qualifying costs that were more than your reimbursement. Tax form 1040ez In order to deduct the cost of your qualifying work-related education as a business expense, include the amount with your deduction for any other employee business expenses on Schedule A (Form 1040), line 21, or Schedule A (Form 1040NR), line 7. Tax form 1040ez (Special rules for expenses of certain performing artists and fee-basis officials and for impairment-related work expenses are explained later. Tax form 1040ez ) This deduction (except for impairment-related work expenses of disabled individuals) is subject to the 2%-of-adjusted-gross-income limit that applies to most miscellaneous itemized deductions. Tax form 1040ez Form 2106 or 2106-EZ. Tax form 1040ez   To figure your deduction for employee business expenses, including qualifying work-related education, you generally must complete Form 2106 or 2106-EZ. Tax form 1040ez Form not required. Tax form 1040ez   Do not complete either Form 2106 or 2106-EZ if: All reimbursements, if any, are included in box 1 of your Form W-2, and You are not claiming travel, transportation, meal, or entertainment expenses. Tax form 1040ez   If you meet both of these requirements, enter the expenses directly on Schedule A (Form 1040), line 21, or Schedule A (Form 1040NR), line 7. Tax form 1040ez (Special rules for expenses of certain Performing Artists and Fee-Basis Officials and for Impairment-Related Work Expenses are explained later. Tax form 1040ez ) Using Form 2106-EZ. Tax form 1040ez   This form is shorter and easier to use than Form 2106. Tax form 1040ez Generally, you can use this form if: All reimbursements, if any, are included in box 1 of your Form W-2, and You are using the standard mileage rate if you are claiming vehicle expenses. Tax form 1040ez   If you do not meet both of these requirements, use Form 2106. Tax form 1040ez Performing Artists and Fee-Basis Officials If you are a qualified performing artist, or a state (or local) government official who is paid in whole or in part on a fee basis, you can deduct the cost of your qualifying work-related education as an adjustment to gross income rather than as an itemized deduction. Tax form 1040ez Include the cost of your qualifying work-related education with any other employee business expenses on Form 1040, line 24, or Form 1040NR, line 35. Tax form 1040ez You do not have to itemize your deductions on Schedule A (Form 1040 or 1040NR), and, therefore, the deduction is not subject to the 2%-of-adjusted-gross-income limit. Tax form 1040ez You must complete Form 2106 or 2106-EZ to figure your deduction even if you meet the requirements described earlier under Form not required . Tax form 1040ez For more information on qualified performing artists, see chapter 6 of Publication 463. Tax form 1040ez Impairment-Related Work Expenses If you are disabled and have impairment-related work expenses that are necessary for you to be able to get qualifying work-related education, you can deduct these expenses on Schedule A (Form 1040), line 28, or Schedule A (Form 1040NR), line 14. Tax form 1040ez They are not subject to the 2%-of-adjusted-gross-income limit. Tax form 1040ez To deduct these expenses, you must complete Form 2106 or 2106-EZ even if you meet the requirements described earlier under Form not required . Tax form 1040ez For more information on impairment-related work expenses, see chapter 6 of Publication 463. Tax form 1040ez Recordkeeping You must keep records as proof of any deduction claimed on your tax return. Tax form 1040ez Generally, you should keep your records for 3 years from the date of filing the tax return and claiming the deduction. Tax form 1040ez If you are an employee who is reimbursed for expenses and you give your records and documentation to your employer, you do not have to keep duplicate copies of this information. Tax form 1040ez However, you should keep your records for a 3-year period if: You claim deductions for expenses that are more than your reimbursement, Your employer does not use adequate accounting procedures to verify expense accounts, You are related to your employer, or Your expenses are reimbursed under a nonaccountable plan. Tax form 1040ez Examples of records to keep. Tax form 1040ez   If any of the above cases apply to you, you must be able to prove that your expenses are deductible. Tax form 1040ez You should keep adequate records or have sufficient evidence that will support your expenses. Tax form 1040ez Estimates or approximations do not qualify as proof of an expense. Tax form 1040ez Some examples of what can be used to help prove your expenses are: Documents, such as transcripts, course descriptions, catalogs, etc. Tax form 1040ez , showing periods of enrollment in educational institutions, principal subjects studied, and descriptions of educational activity. Tax form 1040ez Canceled checks and receipts to verify amounts you spent for: Tuition and books, Meals and lodging while away from home overnight for educational purposes, Travel and transportation, and Other education expenses. Tax form 1040ez Statements from your employer explaining whether the education was necessary for you to keep your job, salary, or status; how the education helped maintain or improve skills needed in your job; how much reimbursement you received; and, if you are a teacher, the type of certificate and subjects taught. Tax form 1040ez Complete information about any scholarship or fellowship grants, including amounts you received during the year. Tax form 1040ez Illustrated Example Victor Jones teaches math at a private high school in North Carolina. Tax form 1040ez He was selected to attend a 3-week math seminar at a university in California. Tax form 1040ez The seminar will improve his skills in his current job and is qualifying work-related education. Tax form 1040ez He was reimbursed for his expenses under his employer's nonaccountable plan, so his reimbursement of $2,100 is included in the wages shown in box 1 of his Form W-2. Tax form 1040ez Victor will file Form 1040. Tax form 1040ez His actual expenses for the seminar are as follows:   Lodging   $1,050     Meals   526     Airfare   550     Taxi fares   50     Tuition and books   400     Total Expenses   $2,576   Victor files Form 2106-EZ with his tax return. Tax form 1040ez He shows his expenses for the seminar in Part I of the form. Tax form 1040ez He enters $1,650 ($1,050 + $550 + $50) on line 3 to account for his lodging, airfare, and taxi fares. Tax form 1040ez He enters $400 on line 4 for his tuition and books. Tax form 1040ez On the line provided for total meals and entertainment expenses, Victor enters $526 for meal expenses. Tax form 1040ez He multiplies that amount by 50% and enters the result, $263, on line 5. Tax form 1040ez On line 6, Victor totals the amounts from lines 3 through 5. Tax form 1040ez He carries the total, $2,313, to Schedule A (Form 1040), line 21. Tax form 1040ez Since he does not claim any vehicle expenses, Victor leaves Part II blank. Tax form 1040ez His filled-in form is shown on the next page. Tax form 1040ez This image is too large to be displayed in the current screen. Tax form 1040ez Please click the link to view the image. Tax form 1040ez Form 2106-EZ for V. Tax form 1040ez Jones Prev  Up  Next   Home   More Online Publications
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Tax Relief for Victims of Hurricane Sandy in Rhode Island

RI-2012-30, Nov. 15, 2012

BOSTON — Victims of Hurricane Sandy that began on Oct. 26, 2012 in parts of Rhode Island may qualify for tax relief from the Internal Revenue Service.

The President has declared Newport and Washington counties a federal disaster area. Individuals who reside or have a business in these counties may qualify for tax relief.

The declaration permits the IRS to postpone certain deadlines for taxpayers who reside or have a business in the disaster area. For instance, certain deadlines falling on or after Oct. 26, and on or before Feb. 1, have been postponed to Feb. 1, 2013.  

In addition, the IRS is waiving the failure-to-deposit penalties for employment and excise tax deposits due on or after Oct. 26, and on or before Nov. 26, as long as the deposits are made by Nov. 26, 2012.

If an affected taxpayer receives a penalty notice from the IRS, the taxpayer should call the telephone number on the notice to have the IRS abate any interest and any late filing or late payment penalties that would otherwise apply. Penalties or interest will be abated only for taxpayers who have an original or extended filing, payment or deposit due date, including an extended filing or payment due date, that falls within the postponement period.

The IRS automatically identifies taxpayers located in the covered disaster area and applies automatic filing and payment relief. But affected taxpayers who reside or have a business located outside the covered disaster area need to call the IRS disaster hotline at 866-562-5227 to request this tax relief.

For a full description of the relief being provided by the IRS to the victims of Hurricane Sandy, visit IRS.gov.

Covered Disaster Area

The counties above constitute a covered disaster area for purposes of Treas. Reg. § 301.7508A-1(d)(2) and are entitled to the relief detailed below.

Affected Taxpayers

Taxpayers considered to be affected taxpayers eligible for the postponement of time to file returns, pay taxes and perform other time-sensitive acts are those taxpayers listed in Treas. Reg. § 301.7508A-1(d)(1), and include individuals who live, and businesses whose principal place of business is located, in the covered disaster area. Taxpayers not in the covered disaster area, but whose records necessary to meet a deadline listed in Treas. Reg. § 301.7508A-1(c) are in the covered disaster area, are also entitled to relief. In addition, all relief workers affiliated with a recognized government or philanthropic organization assisting in the relief activities in the covered disaster area and any individual visiting the covered disaster area who was killed or injured as a result of the disaster are entitled to relief.

Grant of Relief

Under section 7508A, the IRS gives affected taxpayers until Feb. 1 to file most tax returns (including individual, corporate, and estate and trust income tax returns; partnership returns, S corporation returns, and trust returns; estate, gift, and generation-skipping transfer tax returns; and employment and certain excise tax returns), or to make tax payments, including estimated tax payments, that have either an original or extended due date occurring on or after Oct. 26 and on or before Feb. 1.

The IRS also gives affected taxpayers until Feb. 1 to perform other time-sensitive actions described in Treas. Reg. § 301.7508A-1(c)(1) and Rev. Proc. 2007-56, 2007-34 I.R.B. 388 (Aug. 20, 2007), that are due to be performed on or after Oct. 26 and on or before Feb. 1.

This relief also includes the filing of Form 5500 series returns, in the manner described in section 8 of Rev. Proc. 2007-56. The relief described in section 17 of Rev. Proc. 2007-56, pertaining to like-kind exchanges of property, also applies to certain taxpayers who are not otherwise affected taxpayers and may include acts required to be performed before or after the period above.

The postponement of time to file and pay does not apply to information returns in the W-2, 1098, 1099 series, or to Forms 1042-S or 8027. Penalties for failure to timely file information returns can be waived under existing procedures for reasonable cause. Likewise, the postponement does not apply to employment and excise tax deposits. The IRS, however, will abate penalties for failure to make timely employment and excise tax deposits due on or after Oct. 26 and on or before Nov. 26 provided the taxpayer makes these deposits by Nov. 26.

Casualty Losses

Affected taxpayers in a federally declared disaster area have the option of claiming disaster-related casualty losses on their federal income tax return for either this year or last year. Claiming the loss on an original or amended return for last year will get the taxpayer an earlier refund, but waiting to claim the loss on this year’s return could result in a greater tax saving, depending on other income factors.

Individuals may deduct personal property losses that are not covered by insurance or other reimbursements. For details, see Form 4684 and its instructions.

Affected taxpayers claiming the disaster loss on last year’s return should put the Disaster Designation “Rhode Island/Hurricane Sandy” at the top of the form so that the IRS can expedite the processing of the refund.

Other Relief

The IRS will waive the usual fees and expedite requests for copies of previously filed tax returns for affected taxpayers. Taxpayers should put the assigned Disaster Designation in red ink at the top of Form 4506, Request for Copy of Tax Return, or Form 4506-T, Request for Transcript of Tax Return, as appropriate, and submit it to the IRS.

Affected taxpayers who are contacted by the IRS on a collection or examination matter should explain how the disaster impacts them so that the IRS can provide appropriate consideration to their case.

Taxpayers may download forms and publications from the official IRS website, irs.gov, or order them by calling 800-TAX-FORM (800-829-3676). The IRS toll-free number for general tax questions is 800-829-1040.

Related Information

Disaster Assistance and Emergency Relief for Individuals and Businesses

Recent IRS Disaster Relief Announcements

 

Page Last Reviewed or Updated: 05-Nov-2013

The Tax Form 1040ez

Tax form 1040ez 4. Tax form 1040ez   How Income of Aliens Is Taxed Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Resident Aliens Nonresident AliensTrade or Business in the United States Effectively Connected Income The 30% Tax Income From Real Property Transportation Tax Interrupted Period of Residence Expatriation TaxExpatriation Before June 4, 2004 Expatriation After June 3, 2004, and Before June 17, 2008 Expatriation After June 16, 2008 Introduction Resident and nonresident aliens are taxed in different ways. Tax form 1040ez Resident aliens are generally taxed in the same way as U. Tax form 1040ez S. Tax form 1040ez citizens. Tax form 1040ez Nonresident aliens are taxed based on the source of their income and whether or not their income is effectively connected with a U. Tax form 1040ez S. Tax form 1040ez trade or business. Tax form 1040ez The following discussions will help you determine if income you receive during the tax year is effectively connected with a U. Tax form 1040ez S. Tax form 1040ez trade or business and how it is taxed. Tax form 1040ez Topics - This chapter discusses: Income that is effectively connected with a U. Tax form 1040ez S. Tax form 1040ez trade or business. Tax form 1040ez Income that is not effectively connected with a U. Tax form 1040ez S. Tax form 1040ez trade or business. Tax form 1040ez Interrupted period of residence. Tax form 1040ez Expatriation tax. Tax form 1040ez Useful Items - You may want to see: Publication 544 Sales and Other Dispositions of Assets 1212 List of Original Issue Discount Instruments Form (and Instructions) 6251 Alternative Minimum Tax—Individuals Schedule D (Form 1040) Capital Gains and Losses See chapter 12 for information about getting these publications and forms. Tax form 1040ez Resident Aliens Resident aliens are generally taxed in the same way as U. Tax form 1040ez S. Tax form 1040ez citizens. Tax form 1040ez This means that their worldwide income is subject to U. Tax form 1040ez S. Tax form 1040ez tax and must be reported on their U. Tax form 1040ez S. Tax form 1040ez tax return. Tax form 1040ez Income of resident aliens is subject to the graduated tax rates that apply to U. Tax form 1040ez S. Tax form 1040ez citizens. Tax form 1040ez Resident aliens use the Tax Table or Tax Computation Worksheets located in the Form 1040 instructions, which apply to U. Tax form 1040ez S. Tax form 1040ez citizens. Tax form 1040ez Nonresident Aliens A nonresident alien's income that is subject to U. Tax form 1040ez S. Tax form 1040ez income tax must be divided into two categories: Income that is effectively connected with a trade or business in the United States, and Income that is not effectively connected with a trade or business in the United States (discussed under The 30% Tax, later). Tax form 1040ez The difference between these two categories is that effectively connected income, after allowable deductions, is taxed at graduated rates. Tax form 1040ez These are the same rates that apply to U. Tax form 1040ez S. Tax form 1040ez citizens and residents. Tax form 1040ez Income that is not effectively connected is taxed at a flat 30% (or lower treaty) rate. Tax form 1040ez If you were formerly a U. Tax form 1040ez S. Tax form 1040ez citizen or resident alien, these rules may not apply. Tax form 1040ez See Expatriation Tax, later, in this chapter. Tax form 1040ez Trade or Business in the United States Generally, you must be engaged in a trade or business during the tax year to be able to treat income received in that year as effectively connected with that trade or business. Tax form 1040ez Whether you are engaged in a trade or business in the United States depends on the nature of your activities. Tax form 1040ez The discussions that follow will help you determine whether you are engaged in a trade or business in the United States. Tax form 1040ez Personal Services If you perform personal services in the United States at any time during the tax year, you usually are considered engaged in a trade or business in the United States. Tax form 1040ez Certain compensation paid to a nonresident alien by a foreign employer is not included in gross income. Tax form 1040ez For more information, see Services Performed for Foreign Employer in chapter 3. Tax form 1040ez Other Trade or Business Activities Other examples of being engaged in a trade or business in the United States follow. Tax form 1040ez Students and trainees. Tax form 1040ez   You are considered engaged in a trade or business in the United States if you are temporarily present in the United States as a nonimmigrant under an “F,” “J,” “M,” or “Q” visa. Tax form 1040ez A nonresident alien temporarily present in the United States under a “J” visa includes a nonresident alien individual admitted to the United States as an exchange visitor under the Mutual Educational and Cultural Exchange Act of 1961. Tax form 1040ez The taxable part of any scholarship or fellowship grant that is U. Tax form 1040ez S. Tax form 1040ez source income is treated as effectively connected with a trade or business in the United States. Tax form 1040ez Business operations. Tax form 1040ez   If you own and operate a business in the United States selling services, products, or merchandise, you are, with certain exceptions, engaged in a trade or business in the United States. Tax form 1040ez Partnerships. Tax form 1040ez   If you are a member of a partnership that at any time during the tax year is engaged in a trade or business in the United States, you are considered to be engaged in a trade or business in the United States. Tax form 1040ez Beneficiary of an estate or trust. Tax form 1040ez   If you are the beneficiary of an estate or trust that is engaged in a trade or business in the United States, you are treated as being engaged in the same trade or business. Tax form 1040ez Trading in stocks, securities, and commodities. Tax form 1040ez   If your only U. Tax form 1040ez S. Tax form 1040ez business activity is trading in stocks, securities, or commodities (including hedging transactions) through a U. Tax form 1040ez S. Tax form 1040ez resident broker or other agent, you are not engaged in a trade or business in the United States. Tax form 1040ez   For transactions in stocks or securities, this applies to any nonresident alien, including a dealer or broker in stocks and securities. Tax form 1040ez   For transactions in commodities, this applies to commodities that are usually traded on an organized commodity exchange and to transactions that are usually carried out at such an exchange. Tax form 1040ez   This discussion does not apply if you have a U. Tax form 1040ez S. Tax form 1040ez office or other fixed place of business at any time during the tax year through which, or by the direction of which, you carry out your transactions in stocks, securities, or commodities. Tax form 1040ez Trading for a nonresident alien's own account. Tax form 1040ez   You are not engaged in a trade or business in the United States if trading for your own account in stocks, securities, or commodities is your only U. Tax form 1040ez S. Tax form 1040ez business activity. Tax form 1040ez This applies even if the trading takes place while you are present in the United States or is done by your employee or your broker or other agent. Tax form 1040ez   This does not apply to trading for your own account if you are a dealer in stocks, securities, or commodities. Tax form 1040ez This does not necessarily mean, however, that as a dealer you are considered to be engaged in a trade or business in the United States. Tax form 1040ez Determine that based on the facts and circumstances in each case or under the rules given above in Trading in stocks, securities, and commodities . Tax form 1040ez Effectively Connected Income If you are engaged in a U. Tax form 1040ez S. Tax form 1040ez trade or business, all income, gain, or loss for the tax year that you get from sources within the United States (other than certain investment income) is treated as effectively connected income. Tax form 1040ez This applies whether or not there is any connection between the income and the trade or business being carried on in the United States during the tax year. Tax form 1040ez Two tests, described next under Investment Income, determine whether certain items of investment income (such as interest, dividends, and royalties) are treated as effectively connected with that business. Tax form 1040ez In limited circumstances, some kinds of foreign source income may be treated as effectively connected with a trade or business in the United States. Tax form 1040ez For a discussion of these rules, see Foreign Income , later. Tax form 1040ez Investment Income Investment income from U. Tax form 1040ez S. Tax form 1040ez sources that may or may not be treated as effectively connected with a U. Tax form 1040ez S. Tax form 1040ez trade or business generally falls into the following three categories. Tax form 1040ez Fixed or determinable income (interest, dividends, rents, royalties, premiums, annuities, etc. Tax form 1040ez ). Tax form 1040ez Gains (some of which are considered capital gains) from the sale or exchange of the following types of property. Tax form 1040ez Timber, coal, or domestic iron ore with a retained economic interest. Tax form 1040ez Patents, copyrights, and similar property on which you receive contingent payments after October 4, 1966. Tax form 1040ez Patents transferred before October 5, 1966. Tax form 1040ez Original issue discount obligations. Tax form 1040ez Capital gains (and losses). Tax form 1040ez Use the two tests, described next, to determine whether an item of U. Tax form 1040ez S. Tax form 1040ez source income falling in one of the three categories above and received during the tax year is effectively connected with your U. Tax form 1040ez S. Tax form 1040ez trade or business. Tax form 1040ez If the tests indicate that the item of income is effectively connected, you must include it with your other effectively connected income. Tax form 1040ez If the item of income is not effectively connected, include it with all other income discussed under The 30% Tax later, in this chapter. Tax form 1040ez Asset-use test. Tax form 1040ez   This test usually applies to income that is not directly produced by trade or business activities. Tax form 1040ez Under this test, if an item of income is from assets (property) used in, or held for use in, the trade or business in the United States, it is considered effectively connected. Tax form 1040ez   An asset is used in, or held for use in, the trade or business in the United States if the asset is: Held for the principal purpose of promoting the conduct of a trade or business in the United States, Acquired and held in the ordinary course of the trade or business conducted in the United States (for example, an account receivable or note receivable arising from that trade or business), or Otherwise held to meet the present needs of the trade or business in the United States and not its anticipated future needs. Tax form 1040ez Generally, stock of a corporation is not treated as an asset used in, or held for use in, a trade or business in the United States. Tax form 1040ez Business-activities test. Tax form 1040ez   This test usually applies when income, gain, or loss comes directly from the active conduct of the trade or business. Tax form 1040ez The business-activities test is most important when: Dividends or interest are received by a dealer in stocks or securities, Royalties are received in the trade or business of licensing patents or similar property, or Service fees are earned by a servicing business. Tax form 1040ez Under this test, if the conduct of the U. Tax form 1040ez S. Tax form 1040ez trade or business was a material factor in producing the income, the income is considered effectively connected. Tax form 1040ez Personal Service Income You usually are engaged in a U. Tax form 1040ez S. Tax form 1040ez trade or business when you perform personal services in the United States. Tax form 1040ez Personal service income you receive in a tax year in which you are engaged in a U. Tax form 1040ez S. Tax form 1040ez trade or business is effectively connected with a U. Tax form 1040ez S. Tax form 1040ez trade or business. Tax form 1040ez Income received in a year other than the year you performed the services is also effectively connected if it would have been effectively connected if received in the year you performed the services. Tax form 1040ez Personal service income includes wages, salaries, commissions, fees, per diem allowances, and employee allowances and bonuses. Tax form 1040ez The income may be paid to you in the form of cash, services, or property. Tax form 1040ez If you are engaged in a U. Tax form 1040ez S. Tax form 1040ez trade or business only because you perform personal services in the United States during the tax year, income and gains from assets, and gains and losses from the sale or exchange of capital assets are generally not effectively connected with your trade or business. Tax form 1040ez However, if there is a direct economic relationship between your holding of the asset and your trade or business of performing personal services, the income, gain, or loss is effectively connected. Tax form 1040ez Pensions. Tax form 1040ez   If you were a nonresident alien engaged in a U. Tax form 1040ez S. Tax form 1040ez trade or business after 1986 because you performed personal services in the United States, and you later receive a pension or retirement pay attributable to these services, such payments are effectively connected income in each year you receive them. Tax form 1040ez This is true whether or not you are engaged in a U. Tax form 1040ez S. Tax form 1040ez trade or business in the year you receive the retirement pay. Tax form 1040ez Transportation Income Transportation income (defined in chapter 2) is effectively connected if you meet both of the following conditions. Tax form 1040ez You had a fixed place of business in the United States involved in earning the income. Tax form 1040ez At least 90% of your U. Tax form 1040ez S. Tax form 1040ez source transportation income is attributable to regularly scheduled transportation. Tax form 1040ez “Fixed place of business” generally means a place, site, structure, or other similar facility through which you engage in a trade or business. Tax form 1040ez “Regularly scheduled transportation” means that a ship or aircraft follows a published schedule with repeated sailings or flights at regular intervals between the same points for voyages or flights that begin or end in the United States. Tax form 1040ez This definition applies to both scheduled and chartered air transportation. Tax form 1040ez If you do not meet the two conditions above, the income is not effectively connected and is taxed at a 4% rate. Tax form 1040ez See Transportation Tax, later, in this chapter. Tax form 1040ez Business Profits and Losses and Sales Transactions All profits or losses from U. Tax form 1040ez S. Tax form 1040ez sources that are from the operation of a business in the United States are effectively connected with a trade or business in the United States. Tax form 1040ez For example, profit from the sale in the United States of inventory property purchased either in this country or in a foreign country is effectively connected trade or business income. Tax form 1040ez A share of U. Tax form 1040ez S. Tax form 1040ez source profits or losses of a partnership that is engaged in a trade or business in the United States is also effectively connected with a trade or business in the United States. Tax form 1040ez Real Property Gain or Loss Gains and losses from the sale or exchange of U. Tax form 1040ez S. Tax form 1040ez real property interests (whether or not they are capital assets) are taxed as if you are engaged in a trade or business in the United States. Tax form 1040ez You must treat the gain or loss as effectively connected with that trade or business. Tax form 1040ez U. Tax form 1040ez S. Tax form 1040ez real property interest. Tax form 1040ez   This is any interest in real property located in the United States or the U. Tax form 1040ez S. Tax form 1040ez Virgin Islands or any interest (other than as a creditor) in a domestic corporation that is a U. Tax form 1040ez S. Tax form 1040ez real property holding corporation. Tax form 1040ez Real property includes the following. Tax form 1040ez Land and unsevered natural products of the land, such as growing crops and timber, and mines, wells, and other natural deposits. Tax form 1040ez Improvements on land, including buildings, other permanent structures, and their structural components. Tax form 1040ez Personal property associated with the use of real property, such as equipment used in farming, mining, forestry, or construction or property used in lodging facilities or rented office space, unless the personal property is: Disposed of more than one year before or after the disposition of the real property, or Separately sold to persons unrelated either to the seller or to the buyer of the real property. Tax form 1040ez U. Tax form 1040ez S. Tax form 1040ez real property holding corporation. Tax form 1040ez   A corporation is a U. Tax form 1040ez S. Tax form 1040ez real property holding corporation if the fair market value of the corporation's U. Tax form 1040ez S. Tax form 1040ez real property interests are at least 50% of the total fair market value of: The corporation's U. Tax form 1040ez S. Tax form 1040ez real property interests, plus The corporation's interests in real property located outside the United States, plus The corporation's other assets that are used in, or held for use in, a trade or business. Tax form 1040ez   Gain or loss on the sale of the stock in any domestic corporation is taxed as if you are engaged in a U. Tax form 1040ez S. Tax form 1040ez trade or business unless you establish that the corporation is not a U. Tax form 1040ez S. Tax form 1040ez real property holding corporation. Tax form 1040ez   A U. Tax form 1040ez S. Tax form 1040ez real property interest does not include a class of stock of a corporation that is regularly traded on an established securities market, unless you hold more than 5% of the fair market value of that class of stock. Tax form 1040ez An interest in a foreign corporation owning U. Tax form 1040ez S. Tax form 1040ez real property generally is not a U. Tax form 1040ez S. Tax form 1040ez real property interest unless the corporation chooses to be treated as a domestic corporation. Tax form 1040ez Qualified investment entities. Tax form 1040ez   Special rules apply to qualified investment entities (QIEs). Tax form 1040ez A QIE is any real estate investment trust (REIT) or any regulated investment company (RIC) that is a U. Tax form 1040ez S. Tax form 1040ez real property holding corporation. Tax form 1040ez    Generally, any distribution from a QIE to a shareholder that is attributable to gain from the sale or exchange of a U. Tax form 1040ez S. Tax form 1040ez real property interest is treated as a U. Tax form 1040ez S. Tax form 1040ez real property gain by the shareholder receiving the distribution. Tax form 1040ez A distribution by a QIE on stock regularly traded on an established securities market in the United States is not treated as gain from the sale or exchange of a U. Tax form 1040ez S. Tax form 1040ez real property interest if you did not own more than 5% of that stock at any time during the 1-year period ending on the date of the distribution. Tax form 1040ez A distribution that you do not treat as gain from the sale or exchange of a U. Tax form 1040ez S. Tax form 1040ez real property interest is included in your gross income as a regular dividend. Tax form 1040ez Note. Tax form 1040ez Beginning January 1, 2014 (unless extended by legislation), a RIC that is a U. Tax form 1040ez S. Tax form 1040ez real property holding corporation will only be treated as a QIE for certain distributions from the RIC that are directly or indirectly attributable to distributions received by the RIC from a REIT. Tax form 1040ez Domestically controlled QIE. Tax form 1040ez   The sale of an interest in a domestically controlled QIE is not the sale of a U. Tax form 1040ez S. Tax form 1040ez real property interest. Tax form 1040ez The entity is domestically controlled if at all times during the testing period less than 50% in value of its stock was held, directly or indirectly, by foreign persons. Tax form 1040ez The testing period is the shorter of (a) the 5-year period ending on the date of disposition, or (b) the period during which the entity was in existence. Tax form 1040ez Wash sale. Tax form 1040ez    If you dispose of an interest in a domestically controlled QIE in an applicable wash sale transaction, special rules apply. Tax form 1040ez An applicable wash sale transaction is one in which you: Dispose of an interest in the domestically controlled QIE during the 30-day period before the ex-dividend date of a distribution that you would (but for the disposition) have treated as gain from the sale or exchange of a U. Tax form 1040ez S. Tax form 1040ez real property interest, and Acquire, or enter into a contract or option to acquire, a substantially identical interest in that entity during the 61-day period that began on the first day of the 30-day period. Tax form 1040ez If this occurs, you are treated as having gain from the sale or exchange of a U. Tax form 1040ez S. Tax form 1040ez real property interest in an amount equal to the distribution made after June 15, 2006, that would have been treated as such gain. Tax form 1040ez This also applies to any substitute dividend payment. Tax form 1040ez   A transaction is not treated as an applicable wash sale transaction if: You actually receive the distribution from the domestically controlled QIE related to the interest disposed of, or acquired, in the transaction, or You dispose of any class of stock in a QIE that is regularly traded on an established securities market in the United States but only if you did not own more than 5% of that class of stock at any time during the 1-year period ending on the date of the distribution. Tax form 1040ez Alternative minimum tax. Tax form 1040ez   There may be a minimum tax on your net gain from the disposition of U. Tax form 1040ez S. Tax form 1040ez real property interests. Tax form 1040ez Figure the amount of this tax, if any, on Form 6251. Tax form 1040ez Withholding of tax. Tax form 1040ez   If you dispose of a U. Tax form 1040ez S. Tax form 1040ez real property interest, the buyer may have to withhold tax. Tax form 1040ez See the discussion of Tax Withheld on Real Property Sales in chapter 8. Tax form 1040ez Foreign Income You must treat three kinds of foreign source income as effectively connected with a trade or business in the United States if: You have an office or other fixed place of business in the United States to which the income can be attributed, That office or place of business is a material factor in producing the income, and The income is produced in the ordinary course of the trade or business carried on through that office or other fixed place of business. Tax form 1040ez An office or other fixed place of business is a material factor if it significantly contributes to, and is an essential economic element in, the earning of the income. Tax form 1040ez The three kinds of foreign source income are listed below. Tax form 1040ez Rents and royalties for the use of, or for the privilege of using, intangible personal property located outside the United States or from any interest in such property. Tax form 1040ez Included are rents or royalties for the use, or for the privilege of using, outside the United States, patents, copyrights, secret processes and formulas, goodwill, trademarks, trade brands, franchises, and similar properties if the rents or royalties are from the active conduct of a trade or business in the United States. Tax form 1040ez Dividends, interest, or amounts received for the provision of a guarantee of indebtedness issued after September 27, 2010, from the active conduct of a banking, financing, or similar business in the United States. Tax form 1040ez A substitute dividend or interest payment received under a securities lending transaction or a sale-repurchase transaction is treated the same as the amounts received on the transferred security. Tax form 1040ez Income, gain, or loss from the sale outside the United States, through the U. Tax form 1040ez S. Tax form 1040ez office or other fixed place of business, of: Stock in trade, Property that would be included in inventory if on hand at the end of the tax year, or Property held primarily for sale to customers in the ordinary course of business. Tax form 1040ez Item (3) will not apply if you sold the property for use, consumption, or disposition outside the United States and an office or other fixed place of business in a foreign country was a material factor in the sale. Tax form 1040ez Any foreign source income that is equivalent to any item of income described above is treated as effectively connected with a U. Tax form 1040ez S. Tax form 1040ez trade or business. Tax form 1040ez For example, foreign source interest and dividend equivalents are treated as U. Tax form 1040ez S. Tax form 1040ez effectively connected income if the income is derived by a foreign person in the active conduct of a banking, financing, or similar business within the United States. Tax form 1040ez Tax on Effectively Connected Income Income you receive during the tax year that is effectively connected with your trade or business in the United States is, after allowable deductions, taxed at the rates that apply to U. Tax form 1040ez S. Tax form 1040ez citizens and residents. Tax form 1040ez Generally, you can receive effectively connected income only if you are a nonresident alien engaged in trade or business in the United States during the tax year. Tax form 1040ez However, income you receive from the sale or exchange of property, the performance of services, or any other transaction in another tax year is treated as effectively connected in that year if it would have been effectively connected in the year the transaction took place or you performed the services. Tax form 1040ez Example. Tax form 1040ez Ted Richards, a nonresident alien, entered the United States in August 2012, to perform personal services in the U. Tax form 1040ez S. Tax form 1040ez office of his overseas employer. Tax form 1040ez He worked in the U. Tax form 1040ez S. Tax form 1040ez office until December 25, 2012, but did not leave this country until January 11, 2013. Tax form 1040ez On January 8, 2013, he received his final paycheck for services performed in the United States during 2012. Tax form 1040ez All of Ted's income during his stay here is U. Tax form 1040ez S. Tax form 1040ez source income. Tax form 1040ez During 2012, Ted was engaged in the trade or business of performing personal services in the United States. Tax form 1040ez Therefore, all amounts paid to him in 2012 for services performed in the United States during 2012 are effectively connected with that trade or business during 2012. Tax form 1040ez The salary payment Ted received in January 2013 is U. Tax form 1040ez S. Tax form 1040ez source income to him in 2013. Tax form 1040ez It is effectively connected with a trade or business in the United States because he was engaged in a trade or business in the United States during 2012 when he performed the services that earned the income. Tax form 1040ez Real property income. Tax form 1040ez   You may be able to choose to treat all income from real property as effectively connected. Tax form 1040ez See Income From Real Property , later, in this chapter. Tax form 1040ez The 30% Tax Tax at a 30% (or lower treaty) rate applies to certain items of income or gains from U. Tax form 1040ez S. Tax form 1040ez sources but only if the items are not effectively connected with your U. Tax form 1040ez S. Tax form 1040ez trade or business. Tax form 1040ez Fixed or Determinable Income The 30% (or lower treaty) rate applies to the gross amount of U. Tax form 1040ez S. Tax form 1040ez source fixed or determinable annual or periodic gains, profits, or income. Tax form 1040ez Income is fixed when it is paid in amounts known ahead of time. Tax form 1040ez Income is determinable whenever there is a basis for figuring the amount to be paid. Tax form 1040ez Income can be periodic if it is paid from time to time. Tax form 1040ez It does not have to be paid annually or at regular intervals. Tax form 1040ez Income can be determinable or periodic even if the length of time during which the payments are made is increased or decreased. Tax form 1040ez Items specifically included as fixed or determinable income are interest (other than original issue discount), dividends, dividend equivalent payments (defined in chapter 2), rents, premiums, annuities, salaries, wages, and other compensation. Tax form 1040ez A substitute dividend or interest payment received under a securities lending transaction or a sale-repurchase transaction is treated the same as the amounts received on the transferred security. Tax form 1040ez Other items of income, such as royalties, also may be subject to the 30% tax. Tax form 1040ez Some fixed or determinable income may be exempt from U. Tax form 1040ez S. Tax form 1040ez tax. Tax form 1040ez See chapter 3 if you are not sure whether the income is taxable. Tax form 1040ez Original issue discount (OID). Tax form 1040ez   If you sold, exchanged, or received a payment on a bond or other debt instrument that was issued at a discount after March 31, 1972, all or part of the original issue discount (OID) (other than portfolio interest) may be subject to the 30% tax. Tax form 1040ez The amount of OID is the difference between the stated redemption price at maturity and the issue price of the debt instrument. Tax form 1040ez The 30% tax applies in the following circumstances. Tax form 1040ez You received a payment on a debt instrument. Tax form 1040ez In this case, the amount of OID subject to tax is the OID that accrued while you held the debt instrument minus the OID previously taken into account. Tax form 1040ez But the tax on the OID cannot be more than the payment minus the tax on the interest payment on the debt instrument. Tax form 1040ez You sold or exchanged the debt instrument. Tax form 1040ez The amount of OID subject to tax is the OID that accrued while you held the debt instrument minus the amount already taxed in (1) above. Tax form 1040ez   Report on your return the amount of OID shown on Form 1042-S, Foreign Person's U. Tax form 1040ez S. Tax form 1040ez Source Income Subject to Withholding, if you bought the debt instrument at original issue. Tax form 1040ez However, you must recompute your proper share of OID shown on Form 1042-S if any of the following apply. Tax form 1040ez You bought the debt instrument at a premium or paid an acquisition premium. Tax form 1040ez The debt instrument is a stripped bond or a stripped coupon (including zero coupon instruments backed by U. Tax form 1040ez S. Tax form 1040ez Treasury securities). Tax form 1040ez The debt instrument is a contingent payment or inflation-indexed debt instrument. Tax form 1040ez For the definition of premium and acquisition premium and instructions on how to recompute OID, get Publication 1212. Tax form 1040ez   If you held a bond or other debt instrument that was issued at a discount before April 1, 1972, contact the IRS for further information. Tax form 1040ez See chapter 12. Tax form 1040ez Gambling Winnings In general, nonresident aliens are subject to the 30% tax on the gross proceeds from gambling won in the United States if that income is not effectively connected with a U. Tax form 1040ez S. Tax form 1040ez trade or business and is not exempted by treaty. Tax form 1040ez However, no tax is imposed on nonbusiness gambling income a nonresident alien wins playing blackjack, baccarat, craps, roulette, or big-6 wheel in the United States. Tax form 1040ez Nonresident aliens are taxed at graduated rates on net gambling income won in the United States that is effectively connected with a U. Tax form 1040ez S. Tax form 1040ez trade or business. Tax form 1040ez Social Security Benefits A nonresident alien must include 85% of any U. Tax form 1040ez S. Tax form 1040ez social security benefit (and the social security equivalent part of a tier 1 railroad retirement benefit) in U. Tax form 1040ez S. Tax form 1040ez source fixed or determinable annual or periodic income. Tax form 1040ez Social security benefits include monthly retirement, survivor, and disability benefits. Tax form 1040ez This income is exempt under some tax treaties. Tax form 1040ez See Table 1 in Publication 901, U. Tax form 1040ez S. Tax form 1040ez Tax Treaties, for a list of tax treaties that exempt U. Tax form 1040ez S. Tax form 1040ez social security benefits from U. Tax form 1040ez S. Tax form 1040ez tax. Tax form 1040ez Sales or Exchanges of Capital Assets These rules apply only to those capital gains and losses from sources in the United States that are not effectively connected with a trade or business in the United States. Tax form 1040ez They apply even if you are engaged in a trade or business in the United States. Tax form 1040ez These rules do not apply to the sale or exchange of a U. Tax form 1040ez S. Tax form 1040ez real property interest or to the sale of any property that is effectively connected with a trade or business in the United States. Tax form 1040ez See Real Property Gain or Loss , earlier, under Effectively Connected Income. Tax form 1040ez A capital asset is everything you own except: Inventory. Tax form 1040ez Business accounts or notes receivable. Tax form 1040ez Depreciable property used in a trade or business. Tax form 1040ez Real property used in a trade or business. Tax form 1040ez Supplies regularly used in a trade or business. Tax form 1040ez Certain copyrights, literary or musical or artistic compositions, letters or memoranda, or similar property. Tax form 1040ez Certain U. Tax form 1040ez S. Tax form 1040ez government publications. Tax form 1040ez Certain commodities derivative financial instruments held by a commodities derivatives dealer. Tax form 1040ez Hedging transactions. Tax form 1040ez A capital gain is a gain on the sale or exchange of a capital asset. Tax form 1040ez A capital loss is a loss on the sale or exchange of a capital asset. Tax form 1040ez If the sale is in foreign currency, for the purpose of determining gain, the cost and selling price of the property should be expressed in U. Tax form 1040ez S. Tax form 1040ez currency at the rate of exchange prevailing as of the date of the purchase and date of the sale, respectively. Tax form 1040ez You may want to read Publication 544. Tax form 1040ez However, use Publication 544 only to determine what is a sale or exchange of a capital asset, or what is treated as such. Tax form 1040ez Specific tax treatment that applies to U. Tax form 1040ez S. Tax form 1040ez citizens or residents generally does not apply to you. Tax form 1040ez The following gains are subject to the 30% (or lower treaty) rate without regard to the 183-day rule, discussed later. Tax form 1040ez Gains on the disposal of timber, coal, or domestic iron ore with a retained economic interest. Tax form 1040ez Gains on contingent payments received from the sale or exchange of patents, copyrights, and similar property after October 4, 1966. Tax form 1040ez Gains on certain transfers of all substantial rights to, or an undivided interest in, patents if the transfers were made before October 5, 1966. Tax form 1040ez Gains on the sale or exchange of original issue discount obligations. Tax form 1040ez Gains in (1) are not subject to the 30% (or lower treaty) rate if you choose to treat the gains as effectively connected with a U. Tax form 1040ez S. Tax form 1040ez trade or business. Tax form 1040ez See Income From Real Property , later. Tax form 1040ez 183-day rule. Tax form 1040ez   If you were in the United States for 183 days or more during the tax year, your net gain from sales or exchanges of capital assets is taxed at a 30% (or lower treaty) rate. Tax form 1040ez For purposes of the 30% (or lower treaty) rate, net gain is the excess of your capital gains from U. Tax form 1040ez S. Tax form 1040ez sources over your capital losses from U. Tax form 1040ez S. Tax form 1040ez sources. Tax form 1040ez This rule applies even if any of the transactions occurred while you were not in the United States. Tax form 1040ez   To determine your net gain, consider the amount of your gains and losses that would be recognized and taken into account only if, and to the extent that, they would be recognized and taken into account if you were in a U. Tax form 1040ez S. Tax form 1040ez trade or business during the year and the gains and losses were effectively connected with that trade or business during the tax year. Tax form 1040ez   In arriving at your net gain, do not take the following into consideration. Tax form 1040ez The four types of gains listed earlier. Tax form 1040ez The deduction for a capital loss carryover. Tax form 1040ez Capital losses in excess of capital gains. Tax form 1040ez Exclusion for gain from the sale or exchange of qualified small business stock (section 1202 exclusion). Tax form 1040ez Losses from the sale or exchange of property held for personal use. Tax form 1040ez However, losses resulting from casualties or thefts may be deductible on Schedule A (Form 1040NR). Tax form 1040ez See Itemized Deductions in chapter 5. Tax form 1040ez   If you are not engaged in a trade or business in the United States and have not established a tax year for a prior period, your tax year will be the calendar year for purposes of the 183-day rule. Tax form 1040ez Also, you must file your tax return on a calendar-year basis. Tax form 1040ez   If you were in the United States for less than 183 days during the tax year, capital gains (other than gains listed earlier) are tax exempt unless they are effectively connected with a trade or business in the United States during your tax year. Tax form 1040ez Reporting. Tax form 1040ez   Report your gains and losses from the sales or exchanges of capital assets that are not effectively connected with a trade or business in the United States on page 4 of Form 1040NR. Tax form 1040ez Report gains and losses from sales or exchanges of capital assets (including real property) that are effectively connected with a trade or business in the United States on a separate Schedule D (Form 1040), Form 4797, or both. Tax form 1040ez Attach them to Form 1040NR. Tax form 1040ez Income From Real Property If you have income from real property located in the United States that you own or have an interest in and hold for the production of income, you can choose to treat all income from that property as income effectively connected with a trade or business in the United States. Tax form 1040ez The choice applies to all income from real property located in the United States and held for the production of income and to all income from any interest in such property. Tax form 1040ez This includes income from rents, royalties from mines, oil or gas wells, or other natural resources. Tax form 1040ez It also includes gains from the sale or exchange of timber, coal, or domestic iron ore with a retained economic interest. Tax form 1040ez You can make this choice only for real property income that is not otherwise effectively connected with your U. Tax form 1040ez S. Tax form 1040ez trade or business. Tax form 1040ez If you make the choice, you can claim deductions attributable to the real property income and only your net income from real property is taxed. Tax form 1040ez This choice does not treat a nonresident alien, who is not otherwise engaged in a U. Tax form 1040ez S. Tax form 1040ez trade or business, as being engaged in a trade or business in the United States during the year. Tax form 1040ez Example. Tax form 1040ez You are a nonresident alien and are not engaged in a U. Tax form 1040ez S. Tax form 1040ez trade or business. Tax form 1040ez You own a single-family house in the United States that you rent out. Tax form 1040ez Your rental income for the year is $10,000. Tax form 1040ez This is your only U. Tax form 1040ez S. Tax form 1040ez source income. Tax form 1040ez As discussed earlier under The 30% Tax, the rental income is subject to a tax at a 30% (or lower treaty) rate. Tax form 1040ez You received a Form 1042-S showing that your tenants properly withheld this tax from the rental income. Tax form 1040ez You do not have to file a U. Tax form 1040ez S. Tax form 1040ez tax return (Form 1040NR) because your U. Tax form 1040ez S. Tax form 1040ez tax liability is satisfied by the withholding of tax. Tax form 1040ez If you make the choice discussed earlier, you can offset the $10,000 income by certain rental expenses. Tax form 1040ez (See Publication 527, Residential Rental Property, for information on rental expenses. Tax form 1040ez ) Any resulting net income is taxed at graduated rates. Tax form 1040ez If you make this choice, report the rental income and expenses on Schedule E (Form 1040) and attach the schedule to Form 1040NR. Tax form 1040ez For the first year you make the choice, also attach the statement discussed next. Tax form 1040ez Making the choice. Tax form 1040ez   Make the initial choice by attaching a statement to your return, or amended return, for the year of the choice. Tax form 1040ez Include the following in your statement. Tax form 1040ez That you are making the choice. Tax form 1040ez Whether the choice is under Internal Revenue Code section 871(d) (explained earlier) or a tax treaty. Tax form 1040ez A complete list of all your real property, or any interest in real property, located in the United States. Tax form 1040ez Give the legal identification of U. Tax form 1040ez S. Tax form 1040ez timber, coal, or iron ore in which you have an interest. Tax form 1040ez The extent of your ownership in the property. Tax form 1040ez The location of the property. Tax form 1040ez A description of any major improvements to the property. Tax form 1040ez The dates you owned the property. Tax form 1040ez Your income from the property. Tax form 1040ez Details of any previous choices and revocations of the real property income choice. Tax form 1040ez   This choice stays in effect for all later tax years unless you revoke it. Tax form 1040ez Revoking the choice. Tax form 1040ez   You can revoke the choice without IRS approval by filing Form 1040X, Amended U. Tax form 1040ez S. Tax form 1040ez Individual Income Tax Return, for the year you made the choice and for later tax years. Tax form 1040ez You must file Form 1040X within 3 years from the date your return was filed or 2 years from the time the tax was paid, whichever is later. Tax form 1040ez If this time period has expired for the year of choice, you cannot revoke the choice for that year. Tax form 1040ez However, you may revoke the choice for later tax years only if you have IRS approval. Tax form 1040ez For information on how to get IRS approval, see Regulation section 1. Tax form 1040ez 871-10(d)(2). Tax form 1040ez Transportation Tax A 4% tax rate applies to transportation income that is not effectively connected because it does not meet the two conditions listed earlier under Transportation Income . Tax form 1040ez If you receive transportation income subject to the 4% tax, you should figure the tax and show it on line 57 of Form 1040NR. Tax form 1040ez Attach a statement to your return that includes the following information (if applicable). Tax form 1040ez Your name, taxpayer identification number, and tax year. Tax form 1040ez A description of the types of services performed (whether on or off board). Tax form 1040ez Names of vessels or registration numbers of aircraft on which you performed the services. Tax form 1040ez Amount of U. Tax form 1040ez S. Tax form 1040ez source transportation income derived from each type of service for each vessel or aircraft for the calendar year. Tax form 1040ez Total amount of U. Tax form 1040ez S. Tax form 1040ez source transportation income derived from all types of services for the calendar year. Tax form 1040ez This 4% tax applies to your U. Tax form 1040ez S. Tax form 1040ez source gross transportation income. Tax form 1040ez This only includes transportation income that is treated as derived from sources in the United States if the transportation begins or ends in the United States. Tax form 1040ez For transportation income from personal services, the transportation must be between the United States and a U. Tax form 1040ez S. Tax form 1040ez possession. Tax form 1040ez For personal services of a nonresident alien, this only applies to income derived from, or in connection with, an aircraft. Tax form 1040ez Interrupted Period of Residence You are subject to tax under a special rule if you interrupt your period of U. Tax form 1040ez S. Tax form 1040ez residence with a period of nonresidence. Tax form 1040ez The special rule applies if you meet all of the following conditions. Tax form 1040ez You were a U. Tax form 1040ez S. Tax form 1040ez resident for a period that includes at least 3 consecutive calendar years. Tax form 1040ez You were a U. Tax form 1040ez S. Tax form 1040ez resident for at least 183 days in each of those years. Tax form 1040ez You ceased to be treated as a U. Tax form 1040ez S. Tax form 1040ez resident. Tax form 1040ez You then again became a U. Tax form 1040ez S. Tax form 1040ez resident before the end of the third calendar year after the end of the period described in (1) above. Tax form 1040ez Under this special rule, you are subject to tax on your U. Tax form 1040ez S. Tax form 1040ez source gross income and gains on a net basis at the graduated rates applicable to individuals (with allowable deductions) for the period you were a nonresident alien, unless you would be subject to a higher tax under the 30% tax (discussed earlier) on income not connected with a U. Tax form 1040ez S. Tax form 1040ez trade or business. Tax form 1040ez For information on how to figure the special tax, see How To Figure the Expatriation Tax (If You Expatriated Before June 17, 2008) under Expatriation Tax , below. Tax form 1040ez Example. Tax form 1040ez John Willow, a citizen of New Zealand, entered the United States on April 1, 2008, as a lawful permanent resident. Tax form 1040ez On August 1, 2010, John ceased to be a lawful permanent resident and returned to New Zealand. Tax form 1040ez During his period of residence, he was present in the United States for at least 183 days in each of three consecutive years (2008, 2009, and 2010). Tax form 1040ez He returned to the United States on October 5, 2013, as a lawful permanent resident. Tax form 1040ez He became a resident before the close of the third calendar year (2013) beginning after the end of his first period of residence (August 1, 2010). Tax form 1040ez Therefore, he is subject to tax under the special rule for the period of nonresidence (August 2, 2010, through October 4, 2013) if it is more than the tax that would normally apply to him as a nonresident alien. Tax form 1040ez Reporting requirements. Tax form 1040ez   If you are subject to this tax for any year in the period you were a nonresident alien, you must file Form 1040NR for that year. Tax form 1040ez The return is due by the due date (including extensions) for filing your U. Tax form 1040ez S. Tax form 1040ez income tax return for the year that you again become a U. Tax form 1040ez S. Tax form 1040ez resident. Tax form 1040ez If you already filed returns for that period, you must file amended returns. Tax form 1040ez You must attach a statement to your return that identifies the source of all of your U. Tax form 1040ez S. Tax form 1040ez and foreign gross income and the items of income subject to this special rule. Tax form 1040ez Expatriation Tax The expatriation tax provisions apply to U. Tax form 1040ez S. Tax form 1040ez citizens who have renounced their citizenship and long-term residents who have ended their residency. Tax form 1040ez The rules that apply are based on the dates of expatriation, which are described in the following sections. Tax form 1040ez Expatriation Before June 4, 2004. Tax form 1040ez Expatriation After June 3, 2004, and Before June 17, 2008. Tax form 1040ez Expatriation After June 16, 2008. Tax form 1040ez Long-term resident defined. Tax form 1040ez   You are a long-term resident if you were a lawful permanent resident of the United States in at least 8 of the last 15 tax years ending with the year your residency ends. Tax form 1040ez In determining if you meet the 8-year requirement, do not count any year that you are treated as a resident of a foreign country under a tax treaty and do not waive treaty benefits. Tax form 1040ez Expatriation Before June 4, 2004 If you expatriated before June 4, 2004, the expatriation rules apply if one of the principal purposes of the action is the avoidance of U. Tax form 1040ez S. Tax form 1040ez taxes. Tax form 1040ez Unless you received a ruling from the IRS that you did not expatriate to avoid U. Tax form 1040ez S. Tax form 1040ez taxes, you are presumed to have tax avoidance as a principal purpose if: Your average annual net income tax for the last 5 tax years ending before the date of your action to relinquish your citizenship or terminate your residency was more than $100,000, or Your net worth on the date of your action was $500,000 or more. Tax form 1040ez The amounts above are adjusted for inflation if your expatriation action is after 1997 (see Table 4-1). Tax form 1040ez Table 4-1. Tax form 1040ez Inflation-Adjusted Amounts for Expatriation Actions Before June 4, 2004 IF you expatriated during . Tax form 1040ez . Tax form 1040ez . Tax form 1040ez   THEN the rules outlined on this page apply if . Tax form 1040ez . Tax form 1040ez . Tax form 1040ez     Your 5-year average annual net income tax was more than . Tax form 1040ez . Tax form 1040ez . Tax form 1040ez OR Your net worth equaled or exceeded . Tax form 1040ez . Tax form 1040ez . Tax form 1040ez 1999   110,000   552,000 2000   112,000   562,000 2001   116,000   580,000 2002   120,000   599,000 2003   122,000   608,000 2004 (before June 4)*   124,000   622,000 *If you expatriated after June 3, 2004, see Expatriation After June 3, 2004, and Before June 17, 2008 or Expatriation After June 16, 2008. Tax form 1040ez Reporting requirements. Tax form 1040ez   If you lost your U. Tax form 1040ez S. Tax form 1040ez citizenship, you should have filed Form 8854 with a consular office or a federal court at the time of loss of citizenship. Tax form 1040ez If you ended your long-term residency, you should have filed Form 8854 with the Internal Revenue Service when you filed your dual-status tax return for the year your residency ended. Tax form 1040ez   Your U. Tax form 1040ez S. Tax form 1040ez residency is considered to have ended when you ceased to be a lawful permanent resident or you began to be treated as a resident of another country under a tax treaty and do not waive treaty benefits. Tax form 1040ez Penalties. Tax form 1040ez   If you failed to file Form 8854, you may have to pay a penalty equal to the greater of 5% of the expatriation tax or $1,000. Tax form 1040ez The penalty will be assessed for each year of the 10-year period beginning on the date of expatriation during which your failure to file continues. Tax form 1040ez The penalty will not be imposed if you can show that the failure is due to reasonable cause and not willful neglect. Tax form 1040ez Expatriation tax. Tax form 1040ez   The expatriation tax applies to the 10-year period following the date of expatriation or termination of residency. Tax form 1040ez It is figured in the same way as for those expatriating after June 3, 2004, and before June 17, 2008. Tax form 1040ez See How To Figure the Expatriation Tax (If You Expatriated Before June 17, 2008) in the next section. Tax form 1040ez Expatriation After June 3, 2004, and Before June 17, 2008 If you expatriated after June 3, 2004, and before June 17, 2008, the expatriation rules apply to you if any of the following statements apply. Tax form 1040ez Your average annual net income tax for the 5 tax years ending before the date of expatriation or termination of residency is more than: $124,000 if you expatriated or terminated residency in 2004. Tax form 1040ez $127,000 if you expatriated or terminated residency in 2005. Tax form 1040ez $131,000 if you expatriated or terminated residency in 2006. Tax form 1040ez $136,000 if you expatriated or terminated residency in 2007. Tax form 1040ez $139,000 if you expatriated or terminated residency in 2008. Tax form 1040ez Your net worth is $2 million or more on the date of your expatriation or termination of residency. Tax form 1040ez You fail to certify on Form 8854 that you have complied with all U. Tax form 1040ez S. Tax form 1040ez federal tax obligations for the 5 tax years preceding the date of your expatriation or termination of residency. Tax form 1040ez Exception for dual-citizens and certain minors. Tax form 1040ez   Certain dual-citizens and certain minors (defined next) are not subject to the expatriation tax even if they meet (1) or (2) earlier. Tax form 1040ez However, they still must provide the certification required in (3). Tax form 1040ez Certain dual-citizens. Tax form 1040ez   You may qualify for the exception described above if all of the following apply. Tax form 1040ez You became at birth a U. Tax form 1040ez S. Tax form 1040ez citizen and a citizen of another country and you continue to be a citizen of that other country. Tax form 1040ez You were never a resident alien of the United States (as defined in chapter 1). Tax form 1040ez You never held a U. Tax form 1040ez S. Tax form 1040ez passport. Tax form 1040ez You were present in the United States for no more than 30 days during any calendar year that is 1 of the 10 calendar years preceding your loss of U. Tax form 1040ez S. Tax form 1040ez citizenship. Tax form 1040ez Certain minors. Tax form 1040ez   You may qualify for the exception described above if you meet all of the following requirements. Tax form 1040ez You became a U. Tax form 1040ez S. Tax form 1040ez citizen at birth. Tax form 1040ez Neither of your parents was a U. Tax form 1040ez S. Tax form 1040ez citizen at the time of your birth. Tax form 1040ez You expatriated before you were 18½. Tax form 1040ez You were present in the United States for not more than 30 days during any calendar year that is 1 of the 10 calendar years preceding your expatriation. Tax form 1040ez Tax consequences of presence in the United States. Tax form 1040ez   The following rules apply if you do not meet the exception above for dual-citizens and certain minors and the expatriation rules would otherwise apply to you. Tax form 1040ez   The expatriation tax does not apply to any tax year during the 10-year period if you are physically present in the United States for more than 30 days during the calendar year ending in that year. Tax form 1040ez Instead, you are treated as a U. Tax form 1040ez S. Tax form 1040ez citizen or resident and taxed on your worldwide income for that tax year. Tax form 1040ez You must file Form 1040, 1040A, or 1040EZ and figure your tax as prescribed in the instructions for those forms. Tax form 1040ez   When counting the number of days of presence during a calendar year, count any day you were physically present in the United States at any time during the day. Tax form 1040ez However, do not count any days (up to a limit of 30 days) on which you performed personal services in the United States for an employer who is not related to you if either of the following apply. Tax form 1040ez You have ties with other countries. Tax form 1040ez You have ties with other countries if: You became (within a reasonable period after your expatriation or termination of residency) a citizen or resident of the country in which you, your spouse, or either of your parents were born, and You became fully liable for income tax in that country. Tax form 1040ez You were physically present in the United States for 30 days or less during each year in the 10-year period ending on the date of expatriation or termination of residency. Tax form 1040ez Do not count any day you were an exempt individual or were unable to leave the United States because of a medical condition that arose while you were in the United States. Tax form 1040ez See Exempt individual and Medical condition in chapter 1 under Substantial Presence Test, but disregard the information about Form 8843. Tax form 1040ez Related employer. Tax form 1040ez   If your employer in the United States is any of the following, then your employer is related to you. Tax form 1040ez You must count any days you performed services in the United States for that employer as days of presence in the United States. Tax form 1040ez Members of your family. Tax form 1040ez This includes only your brothers and sisters, half-brothers and half-sisters, spouse, ancestors (parents, grandparents, etc. Tax form 1040ez ), and lineal descendants (children, grandchildren, etc. Tax form 1040ez ). Tax form 1040ez A partnership in which you directly or indirectly own more than 50% of the capital interest or the profits interest. Tax form 1040ez A corporation in which you directly or indirectly own more than 50% in value of the outstanding stock. Tax form 1040ez (See Publication 550, chapter 4, Constructive ownership of stock, for how to determine whether you directly or indirectly own outstanding stock. Tax form 1040ez ) A tax-exempt charitable or educational organization that is directly or indirectly controlled, in any manner or by any method, by you or by a member of your family, whether or not this control is legally enforceable. Tax form 1040ez Date of tax expatriation. Tax form 1040ez   For purposes of U. Tax form 1040ez S. Tax form 1040ez tax rules, the date of your expatriation or termination of residency is the later of the dates on which you perform the following actions. Tax form 1040ez You notify either the Department of State or the Department of Homeland Security (whichever is appropriate) of your expatriating act or termination of residency. Tax form 1040ez You file Form 8854 in accordance with the form instructions. Tax form 1040ez Annual return. Tax form 1040ez   If the expatriation tax applies to you, you must file Form 8854 each year during the 10-year period following the date of expatriation. Tax form 1040ez You must file this form even if you owe no U. Tax form 1040ez S. Tax form 1040ez tax. Tax form 1040ez Penalty. Tax form 1040ez   If you fail to file Form 8854 for any tax year, fail to include all information required to be shown on the form, or include incorrect information, you may have to pay a penalty of $10,000. Tax form 1040ez You will not have to pay a penalty if you show that the failure is due to reasonable cause and not to willful neglect. Tax form 1040ez How To Figure the Expatriation Tax (If You Expatriated Before June 17, 2008) If the expatriation tax applies to you, you are generally subject to tax on your U. Tax form 1040ez S. Tax form 1040ez source gross income and gains on a net basis at the graduated rates applicable to individuals (with allowable deductions) unless you would be subject to a higher tax under the 30% tax (discussed earlier) on income not connected with a U. Tax form 1040ez S. Tax form 1040ez trade or business. Tax form 1040ez For this purpose, U. Tax form 1040ez S. Tax form 1040ez source gross income (defined in chapter 2) includes gains from the sale or exchange of: Property (other than stock or debt obligations) located in the United States, Stock issued by a U. Tax form 1040ez S. Tax form 1040ez domestic corporation, and Debt obligations of U. Tax form 1040ez S. Tax form 1040ez persons or of the United States, a state or political subdivision thereof, or the District of Columbia. Tax form 1040ez U. Tax form 1040ez S. Tax form 1040ez source income also includes any income or gain derived from stock in certain controlled foreign corporations if you owned, or were considered to own, at any time during the 2-year period ending on the date of expatriation, more than 50% of: The total combined voting power of all classes of that corporation's stock, or The total value of the stock. Tax form 1040ez The income or gain is considered U. Tax form 1040ez S. Tax form 1040ez source income only to the extent of your share of earnings and profits earned or accumulated before the date of expatriation and during the periods you met the ownership requirements discussed above. Tax form 1040ez Any exchange of property is treated as a sale of the property at its fair market value on the date of the exchange and any gain is treated as U. Tax form 1040ez S. Tax form 1040ez source gross income in the tax year of the exchange unless you enter into a gain recognition agreement under Notice 97-19. Tax form 1040ez Other information. Tax form 1040ez   For more information on the expatriation tax provisions, including exceptions to the tax and special U. Tax form 1040ez S. Tax form 1040ez source rules, see section 877 of the Internal Revenue Code. Tax form 1040ez Expatriation Tax Return If you expatriated or terminated your U. Tax form 1040ez S. Tax form 1040ez residency, or you are subject to the expatriation tax, you must file Form 8854, Initial and Annual Expatriation Statement. Tax form 1040ez Attach it to Form 1040NR if you are required to file that form. Tax form 1040ez If you are present in the United States following your expatriation and are subject to tax as a U. Tax form 1040ez S. Tax form 1040ez citizen or resident, file Form 8854 with Form 1040. Tax form 1040ez Expatriation After June 16, 2008 If you expatriated after June 16, 2008, the expatriation rules apply to you if you meet any of the following conditions. Tax form 1040ez Your average annual net income tax for the 5 years ending before the date of expatriation or termination of residency is more than: $139,000 if you expatriated or terminated residency in 2008. Tax form 1040ez $145,000 if you expatriated or terminated residency in 2009 or 2010. Tax form 1040ez $147,000 if you expatriated or terminated residency in 2011. Tax form 1040ez $151,000 if you expatriated or terminated residency in 2012. Tax form 1040ez $155,000 if you expatriated or terminated residency in 2013. Tax form 1040ez Your net worth is $2 million or more on the date of your expatriation or termination of residency. Tax form 1040ez You fail to certify on Form 8854 that you have complied with all U. Tax form 1040ez S. Tax form 1040ez federal tax obligations for the 5 years preceding the date of your expatriation or termination of residency. Tax form 1040ez Exception for dual-citizens and certain minors. Tax form 1040ez   Certain dual-citizens and certain minors (defined next) are not subject to the expatriation tax even if they meet (1) or (2) above. Tax form 1040ez However, they still must provide the certification required in (3) above. Tax form 1040ez Certain dual-citizens. Tax form 1040ez   You may qualify for the exception described above if both of the following apply. Tax form 1040ez You became at birth a U. Tax form 1040ez S. Tax form 1040ez citizen and a citizen of another country and you continue to be a citizen of, and are taxed as a resident of, that other country. Tax form 1040ez You have been a resident of the United States for not more than 10 years during the 15-year tax period ending with the tax year during which the expatriation occurs. Tax form 1040ez For the purpose of determining U. Tax form 1040ez S. Tax form 1040ez residency, use the substantial presence test described in chapter 1. Tax form 1040ez Certain minors. Tax form 1040ez   You may qualify for the exception described earlier if you meet both of the following requirements. Tax form 1040ez You expatriated before you were 18½. Tax form 1040ez You have been a resident of the United States for not more than 10 tax years before the expatriation occurs. Tax form 1040ez For the purpose of determining U. Tax form 1040ez S. Tax form 1040ez residency, use the substantial presence test described in chapter 1. Tax form 1040ez Expatriation date. Tax form 1040ez   Your expatriation date is the date you relinquish U. Tax form 1040ez S. Tax form 1040ez citizenship (in the case of a former citizen) or terminate your long-term residency (in the case of a former U. Tax form 1040ez S. Tax form 1040ez resident). Tax form 1040ez Former U. Tax form 1040ez S. Tax form 1040ez citizen. Tax form 1040ez   You are considered to have relinquished your U. Tax form 1040ez S. Tax form 1040ez citizenship on the earliest of the following dates. Tax form 1040ez The date you renounced U. Tax form 1040ez S. Tax form 1040ez citizenship before a diplomatic or consular officer of the United States (provided that the voluntary renouncement was later confirmed by the issuance of a certificate of loss of nationality). Tax form 1040ez The date you furnished to the State Department a signed statement of voluntary relinquishment of U. Tax form 1040ez S. Tax form 1040ez nationality confirming the performance of an expatriating act (provided that the voluntary relinquishment was later confirmed by the issuance of a certificate of loss of nationality). Tax form 1040ez The date the State Department issued a certificate of loss of nationality. Tax form 1040ez The date that a U. Tax form 1040ez S. Tax form 1040ez court canceled your certificate of naturalization. Tax form 1040ez Former long-term resident. Tax form 1040ez   You are considered to have terminated your long-term residency on the earliest of the following dates. Tax form 1040ez The date you voluntarily relinquished your lawful permanent resident status by filing Department of Homeland Security Form I-407 with a U. Tax form 1040ez S. Tax form 1040ez consular or immigration officer, and the Department of Homeland Security determined that you have, in fact, abandoned your lawful permanent resident status. Tax form 1040ez The date you became subject to a final administrative order for your removal from the United States under the Immigration and Nationality Act and you actually left the United States as a result of that order. Tax form 1040ez If you were a dual resident of the United States and a country with which the United States has an income tax treaty, the date you began to be treated as a resident of that country and you determined that, for purposes of the treaty, you are a resident of the treaty country and notify the IRS of that treatment on Forms 8833 and 8854. Tax form 1040ez See Effect of Tax Treaties in chapter 1 for more information about dual residents. Tax form 1040ez How To Figure the Expatriation Tax (If You Expatriate After June 16, 2008) In the year you expatriate, you are subject to income tax on the net unrealized gain (or loss) in your property as if the property had been sold for its fair market value on the day before your expatriation date (“mark-to-market tax”). Tax form 1040ez This applies to most types of property interests you held on the date of relinquishment of citizenship or termination of residency. Tax form 1040ez But see Exceptions , later. Tax form 1040ez Gains arising from deemed sales must be taken into account for the tax year of the deemed sale without regard to other U. Tax form 1040ez S. Tax form 1040ez internal revenue laws. Tax form 1040ez Losses from deemed sales must be taken into account to the extent otherwise provided under U. Tax form 1040ez S. Tax form 1040ez internal revenue laws. Tax form 1040ez However, Internal Revenue Code section 1091 (relating to the disallowance of losses on wash sales of stock and securities) does not apply. Tax form 1040ez The net gain that you otherwise must include in your income is reduced (but not below zero) by: $600,000 if you expatriated or terminated residency before January 1, 2009. Tax form 1040ez $626,000 if you expatriated or terminated residency in 2009. Tax form 1040ez $627,000 if you expatriated or terminated residency in 2010. Tax form 1040ez $636,000 if you expatriated or terminated residency in 2011. Tax form 1040ez $651,000 if you expatriated or terminated residency in 2012. Tax form 1040ez $668,000 if you expatriated or terminated residency in 2013. Tax form 1040ez Exceptions. Tax form 1040ez   The mark-to-market tax does not apply to the following. Tax form 1040ez Eligible deferred compensation items. Tax form 1040ez Ineligible deferred compensation items. Tax form 1040ez Interests in nongrantor trusts. Tax form 1040ez Specified tax deferred accounts. Tax form 1040ez Instead, items (1) and (3) may be subject to withholding at source. Tax form 1040ez In the case of item (2), you are treated as receiving the present value of your accrued benefit as of the day before the expatriation date. Tax form 1040ez In the case of item (4), you are treated as receiving a distribution of your entire interest in the account on the day before your expatriation date. Tax form 1040ez See paragraphs (d), (e), and (f) of section 877A for more information. Tax form 1040ez Expatriation Tax Return If you expatriated or terminated your U. Tax form 1040ez S. Tax form 1040ez residency, or you are subject to the expatriation rules (as discussed earlier in the first paragraph under Expatriation After June 16, 2008), you must file Form 8854. Tax form 1040ez Attach it to Form 1040 or Form 1040NR if you are required to file either of those forms. Tax form 1040ez Deferral of payment of mark-to-market tax. Tax form 1040ez   You can make an irrevocable election to defer payment of the mark-to-market tax imposed on the deemed sale of property. Tax form 1040ez If you make this election, the following rules apply. Tax form 1040ez You can make the election on a property-by-property basis. Tax form 1040ez The deferred tax attributable to a particular property is due on the return for the tax year in which you dispose of the property. Tax form 1040ez Interest is charged for the period the tax is deferred. Tax form 1040ez The due date for the payment of the deferred tax cannot be extended beyond the earlier of the following dates. Tax form 1040ez The due date of the return required for the year of death. Tax form 1040ez The time that the security provided for the property fails to be adequate. Tax form 1040ez See item (6) below. Tax form 1040ez You make the election on Form 8854. Tax form 1040ez You must provide adequate security (such as a bond). Tax form 1040ez You must make an irrevocable waiver of any right under any treaty of the United States which would preclude assessment or collection of the mark-to-market tax. Tax form 1040ez   For more information about the deferral of payment, see the Instructions for Form 8854. Tax form 1040ez Prev  Up  Next   Home   More Online Publications