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Taxes 2010

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Taxes 2010

Taxes 2010 Publication 598 - Introductory Material Table of Contents What's New Introduction Useful Items - You may want to see: What's New Federal tax deposits must be made by electronic funds transfer. Taxes 2010 Beginning January 1, 2011, you must use electronic funds transfer to make all federal tax deposits. Taxes 2010 Forms 8109 and 8109-B, Federal Tax Deposit Coupon, cannot be used after 2010. Taxes 2010 See Federal Tax Deposits Must be Made by Electronic Funds Transfer on page 3. Taxes 2010 For large corporations, special rules apply for estimated tax payments that are required to be made for the period that includes July, August, or September of 2012, and the period that immediately follows these months. Taxes 2010 See the instructions for line 12 on the 2012 Form 990-W (Worksheet), Estimated Tax on Unrelated Business Taxable Income for Tax-Exempt Organizations. Taxes 2010 The maximum cost of a low-cost article, for organizations eligible to receive charitable contributions, was increased to $9. Taxes 2010 70 for 2011. Taxes 2010 See Distribution of low-cost articles on page 8. Taxes 2010 The annual limit on associate member dues received by an agricultural or horticultural organization not treated as gross income was increased to $148 for 2011. Taxes 2010 See Exception under Dues of Agricultural Organizations and Business Leagues on page 10. Taxes 2010 The IRS has created a page on IRS. Taxes 2010 gov that includes information about Pub. Taxes 2010 598 at www. Taxes 2010 irs. Taxes 2010 gov/pub598. Taxes 2010 Introduction An exempt organization is not taxed on its income from an activity substantially related to the charitable, educational, or other purpose that is the basis for the organization's exemption. Taxes 2010 Such income is exempt even if the activity is a trade or business. Taxes 2010 However, if an exempt organization regularly carries on a trade or business not substantially related to its exempt purpose, except that it provides funds to carry out that purpose, the organization is subject to tax on its income from that unrelated trade or business. Taxes 2010 This publication covers the rules for the tax on unrelated business income of exempt organizations. Taxes 2010 It explains: Which organizations are subject to the tax (chapter 1), What the requirements are for filing a tax return (chapter 2), What an unrelated trade or business is (chapter 3), and How to figure unrelated business taxable income (chapter 4). Taxes 2010 All section references in this publication are to the Internal Revenue Code. Taxes 2010 Useful Items - You may want to see: Publication 557 Tax-Exempt Status for Your Organization Form (and Instructions) 990-T Exempt Organization Business Income Tax Return See chapter 5 for information about getting these publications and forms. Taxes 2010 Comments and suggestions. Taxes 2010   We welcome your comments about this publication and your suggestions for future editions. Taxes 2010   You can write to us at: Internal Revenue Service Individual Forms and Publications Branch SE:W:CAR:MP:T:I 1111 Constitution Ave. Taxes 2010 NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Taxes 2010 Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Taxes 2010   You can email us at taxforms@irs. Taxes 2010 gov. Taxes 2010 Please put “publications Comment” on the subject line. Taxes 2010 You can also send us comments from www. Taxes 2010 irs. Taxes 2010 gov/formspubs/, select “Comment on Tax Forms and Publications” under “Information about. Taxes 2010 ”   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. Taxes 2010 Prev  Up  Next   Home   More Online Publications
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Understanding Your CP32A Notice

Call us to request your refund check.


What you need to do

  • Call us at 1-800-829-0115 to request a replacement check.
  • If you have the expired check, please destroy it.

You may want to...

  • Call 1-800-TAX-FORM (1-800-829-3676) to order forms and publications.

Answers to Common Questions

When will I receive the replacement check?
After you call us, you should receive the replacement check within 30 days.

What do I need to do to get my refund through direct deposit next year?
When filing your tax return, complete the requested banking information in the "Refund" section of your tax form if you want to direct deposit the entire amount into one account. If you want to deposit into more than one account, you must file Form 8888, Direct Deposit of Refund to More Than One Account, with your return.

Can I request that you mail my refund check to an alternate address?
Refund checks are mailed only to the address of record, which is the address provided on the tax return or the result of a permanent address change request submitted after the return is filed.

I filed jointly, but my spouse and I are now divorced. Where will you send the refund? Can you send us two checks?
A refund check is mailed to the address of record, which is the address provided on the tax return or the result of a permanent address change request submitted after the return is filed. We will send one refund check listing both you and your spouse's names. If you wish to have the refund split and issued in two checks, you must return the uncashed refund check and a copy of your divorce decree showing how the refund is to be allocated.


Tips for next year

To receive your refund more quickly, consider requesting your refund through direct deposit. You can even request that your refund be distributed to separate accounts, such as checking, savings, or retirement accounts. To request this, use Form 8888, Direct Deposit of Refund to More Than One Account.

Consider filing your taxes electronically. Filing online can help you avoid mistakes and find credits and deductions that you may qualify for. In many cases you can file for free. Learn more about e-file.

Printable samples of this notice (PDF)

Tax publications you may find useful

How to get help

Calling the 1-800 number listed on the top right corner of your notice is the fastest way to get your questions answered.

You can also authorize someone (such as an accountant) to contact the IRS on your behalf using this Power of Attorney and Declaration of Representative (Form 2848).

Or you may qualify for help from a Low Income Taxpayer Clinic.
 

Page Last Reviewed or Updated: 03-Mar-2014

The Taxes 2010

Taxes 2010 4. Taxes 2010   Filing U. Taxes 2010 S. Taxes 2010 Tax Returns Table of Contents Who Must FileFiling Requirement if Possession Income Is Excluded When To FileExtension of Time To File Where To File Special Rules for Completing Your U. Taxes 2010 S. Taxes 2010 Tax ReturnU. Taxes 2010 S. Taxes 2010 Armed Forces. Taxes 2010 Deductions if Possession Income Is Excluded Foreign Tax Credit if Possession Income Is Excluded Self-Employment Tax Additional Medicare Tax Net Investment Income Tax Paying Your TaxesEstimated Tax Double TaxationCompetent Authority Assistance The information in chapter 3 will tell you if a U. Taxes 2010 S. Taxes 2010 income tax return is required for your situation. Taxes 2010 If a U. Taxes 2010 S. Taxes 2010 return is required, your next step is to see if you meet the filing requirements. Taxes 2010 If you do meet the filing requirements, the information presented in this chapter will help you understand the special procedures involved. Taxes 2010 This chapter discusses: Filing requirements, When to file your return, Where to send your return, How to adjust your deductions and credits if you are excluding income from American Samoa or Puerto Rico, How to make estimated tax payments and pay self-employment tax, and How to request assistance in resolving instances of double taxation. Taxes 2010 Who Must File If you are not required to file a possession tax return that includes your worldwide income, you must generally file a U. Taxes 2010 S. Taxes 2010 income tax return if your gross income is at least the amount shown in Table 4-1, later, for your filing status and age. Taxes 2010 If you were a bona fide resident of American Samoa or Puerto Rico and are able to exclude your possession income from your U. Taxes 2010 S. Taxes 2010 tax return, your filing requirement may be less than the amount in Table 4-1. Taxes 2010 For details, see the information under Filing Requirement if Possession Income Is Excluded , later. Taxes 2010 Some individuals (such as those who can be claimed as a dependent on another person's return or who owe certain taxes, such as self-employment tax) must file a tax return even though the gross income is less than the amount shown in Table 4-1 for their filing status and age. Taxes 2010 For more information, see the Form 1040 instructions. Taxes 2010 Filing Requirement if Possession Income Is Excluded If you were a bona fide resident of American Samoa or Puerto Rico and qualify to exclude possession income on your U. Taxes 2010 S. Taxes 2010 tax return, you must determine your adjusted filing requirement. Taxes 2010 Generally, your filing requirement is based on the total of your (and your spouse's if filing a joint return) personal exemption(s) plus your standard deduction. Taxes 2010 Personal exemption. Taxes 2010   When figuring your filing requirement, your personal exemption is allowed in full. Taxes 2010 Do not reduce it for this purpose. Taxes 2010 Do not include exemptions for your dependents. Taxes 2010 Allowable standard deduction. Taxes 2010   Unless your filing status is married filing separately, the minimum income level at which you must file a return is based, in part, on the standard deduction for your filing status and age. Taxes 2010 Because the standard deduction applies to all types of income, it must be divided between your excluded income and income from other sources. Taxes 2010 Multiply the regular standard deduction for your filing status and age (this is zero if you are married filing a separate return; all others, see Form 1040 instructions) by the following fraction:      Gross income subject to U. Taxes 2010 S. Taxes 2010 income tax     Gross income from all sources (including excluded possession income)   Example. Taxes 2010 Barbara Spruce, a U. Taxes 2010 S. Taxes 2010 citizen, is single, under 65, and a bona fide resident of American Samoa. Taxes 2010 During 2013, she received $20,000 of income from American Samoa sources (qualifies for exclusion) and $8,000 of income from sources outside the possession (subject to U. Taxes 2010 S. Taxes 2010 income tax). Taxes 2010 Her allowable standard deduction for 2013 is figured as follows:   $8,000 $28,000 × $6,100 (regular standard deduction) = $1,743   Adjusted filing requirement. Taxes 2010   Figure your adjusted filing requirement by adding the amount of your allowable standard deduction to the amount of your personal exemption. Taxes 2010 You must file a U. Taxes 2010 S. Taxes 2010 income tax return if your gross income is at least the amount shown on line 3 of the following worksheet. Taxes 2010    1. Taxes 2010 Enter the allowable standard deduction you figured earlier under Allowable standard deduction . Taxes 2010 If your filing status is married filing separately, enter -0-   2. Taxes 2010 Personal exemption. Taxes 2010 If your filing status is married filing jointly, enter $7,800; if someone can claim you as a dependent, enter -0-; otherwise, enter $3,900   3. Taxes 2010 Add lines 1 and 2. Taxes 2010 You must file a U. Taxes 2010 S. Taxes 2010 income tax return if your gross income from sources outside the relevant possession is at least this amount   Table 4-1. Taxes 2010 2013 Filing Requirements Chart for Most Taxpayers IF your filing status is. Taxes 2010 . Taxes 2010 . Taxes 2010 AND at the end of 2013 you were*. Taxes 2010 . Taxes 2010 . Taxes 2010 THEN file a return if your gross income** was at least. Taxes 2010 . Taxes 2010 . Taxes 2010 single under 65 $10,000 65 or older $11,500 married filing jointly*** under 65 (both spouses) $20,000 65 or older (one spouse) $21,200 65 or older (both spouses) $22,400 married filing separately any age $3,900 head of household under 65 $12,850 65 or older $14,350 qualifying widow(er)  with dependent child under 65 $16,100 65 or older $17,300 * If you were born on January 1, 1949, you are considered to be age 65 at the end of 2013. Taxes 2010 ** Gross income means all income you received in the form of money, goods, property, and services that is not exempt from tax, including any income from sources outside the United States (even if you can exclude part or all of it). Taxes 2010 Do not include social security benefits unless (a) you are married filing a separate return and you lived with your spouse at any time during 2013, or (b) one-half of your social security benefits plus your other gross income is more than $25,000 ($32,000 if married filing jointly). Taxes 2010 If (a) or (b) applies, see the instructions for Form 1040 or Publication 915, Social Security and Equivalent Railroad Retirement Benefits, to figure the taxable part of social security benefits you must include in gross income. Taxes 2010 *** If you did not live with your spouse at the end of 2013 (or on the date your spouse died) and your gross income was at least $3,900 you must file a return regardless of your age. Taxes 2010 Example 1. Taxes 2010 James and Joan Thompson, one over 65, are U. Taxes 2010 S. Taxes 2010 citizens and bona fide residents of Puerto Rico during the entire tax year. Taxes 2010 They file a joint income tax return. Taxes 2010 During 2013, they received $35,000 of income from Puerto Rico sources (qualifies for exclusion) and $6,000 of income from sources outside Puerto Rico (subject to U. Taxes 2010 S. Taxes 2010 income tax). Taxes 2010 Their allowable standard deduction for 2013 is figured as follows:   $6,000 $41,000 × $13,400 ( standard deduction for 65 or older (one spouse) ) = $1,961   The Thompsons do not have to file a U. Taxes 2010 S. Taxes 2010 income tax return because their gross income subject to U. Taxes 2010 S. Taxes 2010 tax ($6,000) is less than their allowable standard deduction plus their personal exemptions ($1,961+ $7,800= $9,761). Taxes 2010 Example 2. Taxes 2010 Barbara Spruce (see Example under Allowable standard deduction, earlier), however, must file a U. Taxes 2010 S. Taxes 2010 income tax return because her gross income subject to U. Taxes 2010 S. Taxes 2010 tax ($8,000) is more than her allowable standard deduction plus her personal exemption ($1,743 + $3,900 = $5,643). Taxes 2010 If you must file a U. Taxes 2010 S. Taxes 2010 income tax return, you may be able to file a paperless return using IRS e-file. Taxes 2010 See your form instructions or visit our website at IRS. Taxes 2010 gov. Taxes 2010 When To File If you file on a calendar year basis, the due date for filing your U. Taxes 2010 S. Taxes 2010 income tax return is April 15 following the end of your tax year. Taxes 2010 If you use a fiscal year (a year ending on the last day of a month other than December), the due date is the 15th day of the 4th month after the end of your fiscal year. Taxes 2010 If any due date falls on a Saturday, Sunday, or legal holiday, your tax return is due on the next business day. Taxes 2010 For your 2013 tax return, the due date is April 15, 2014. Taxes 2010 If you mail your federal tax return, it is considered timely if it bears an official postmark dated on or before the due date, including any extensions. Taxes 2010 If you use a private delivery service designated by the IRS, generally the postmark date is the date the private delivery service records in its database or marks on the mailing label. Taxes 2010 See your form instructions for a list of designated private delivery services. Taxes 2010 Extension of Time To File You can get an extension of time to file your U. Taxes 2010 S. Taxes 2010 income tax return. Taxes 2010 Special rules apply for those living outside the United States. Taxes 2010 Automatic 6-Month Extension If you cannot file your 2013 return by the due date, you can get an automatic 6-month extension of time to file. Taxes 2010 Example. Taxes 2010 If your return must be filed by April 15, 2014, you will have until October 15, 2014, to file. Taxes 2010 Although you are not required to make a payment of the tax you estimate as due, Form 4868 does not extend the time to pay taxes. Taxes 2010 If you do not pay the amount due by the regular due date (generally April 15), you will owe interest on any unpaid tax from the original due date to the date you pay the tax. Taxes 2010 You may also be charged penalties (see the Instructions for Form 4868). Taxes 2010 How to get the automatic extension. Taxes 2010   You can get the automatic 6-month extension if you do one of the following by the due date for filing your return. Taxes 2010 E-file Form 4868 using your personal computer or a tax professional. Taxes 2010 E-file and pay by credit or debit card. Taxes 2010 Your payment must be at least $1. Taxes 2010 You may pay by phone or over the Internet. Taxes 2010 Do not file Form 4868. Taxes 2010 File a paper Form 4868. Taxes 2010 If you are a fiscal year taxpayer, you must file a paper Form 4868. Taxes 2010 See Form 4868 for information on getting an extension using these options. Taxes 2010 When to file. Taxes 2010   You must request the automatic extension by the due date for your return. Taxes 2010 You can file your return any time before the 6-month extension period ends. Taxes 2010 When you file your return. Taxes 2010   Enter any payment you made related to the extension of time to file on Form 1040, line 68. Taxes 2010 If you file Form 1040A, U. Taxes 2010 S. Taxes 2010 Individual Income Tax Return, or Form 1040EZ, Income Tax Return for Single and Joint Filers With No Dependents, include that payment in your total payments on Form 1040A, line 41, or Form 1040EZ, line 9. Taxes 2010 Also enter “Form 4868” and the amount paid in the space to the left of the entry space for line 41 or line 9. Taxes 2010 You cannot ask the Internal Revenue Service to figure your tax if you use the extension of time to file. Taxes 2010 Individuals Outside the United States and Puerto Rico You are allowed an automatic 2-month extension (until June 16, 2014, if you use the calendar year) to file your 2013 return and pay any federal income tax due if: You are a U. Taxes 2010 S. Taxes 2010 citizen or resident, and On the due date of your return: You are living outside of the United States and Puerto Rico, and your main place of business or post of duty is outside the United States and Puerto Rico, or You are in military or naval service on duty outside the United States and Puerto Rico. Taxes 2010 However, if you pay the tax due after the regular due date (generally April 15), interest will be charged from April 15 until the date the tax is paid. Taxes 2010 If you serve in a combat zone or qualified hazardous duty area, you may be eligible for a longer extension of time to file. Taxes 2010 For more information, see Publication 3, Armed Forces' Tax Guide. Taxes 2010 Married taxpayers. Taxes 2010   If you file a joint return, only one spouse has to qualify for this automatic extension. Taxes 2010 However, if you and your spouse file separate returns, this automatic extension applies only to the spouse who qualifies. Taxes 2010 How to get the extension. Taxes 2010   To use this special automatic extension, you must attach a statement to your return explaining what situation qualified you for the extension. Taxes 2010 (See the situations listed under (2), earlier. Taxes 2010 ) Extension beyond 2 months. Taxes 2010   If you cannot file your 2013 return within the automatic 2-month extension period, you can get an additional 4-month extension, for a total of 6 months. Taxes 2010 File Form 4868 by the end of the automatic extension period (June 16, 2014 for calendar year taxpayers). Taxes 2010 Be sure to check the box on Form 4868, line 8, if appropriate. Taxes 2010   In addition to this 6-month extension, taxpayers who are out of the country (as defined under (2) earlier) can request a discretionary 2-month additional extension of time to file their returns (to December 15 for calendar year taxpayers). Taxes 2010   To request this extension, you must send the IRS a letter explaining the reasons why you need the additional 2 months. Taxes 2010 Send the letter by the extended due date (October 15 for calendar year taxpayers) to:  Department of the Treasury Internal Revenue Service Austin, TX 73301-0215 USA   You will not receive any notification from the IRS unless your request is denied for being untimely. Taxes 2010 Where To File Use the addresses listed below if you have to file Form 1040 with the United States and you are excluding possession income from American Samoa or Puerto Rico. Taxes 2010 If you are not including a check or a money order, send your U. Taxes 2010 S. Taxes 2010 tax return and all attachments to:   Department of the Treasury Internal Revenue Service Austin, TX 73301-0215 USA If you are including a check or a money order, send your U. Taxes 2010 S. Taxes 2010 tax return and all attachments to:  Internal Revenue Service P. Taxes 2010 O. Taxes 2010 Box 1303 Charlotte, NC 28201-1303 USA Also send your U. Taxes 2010 S. Taxes 2010 return to these addresses if you are attaching Form 5074 or Form 8689. Taxes 2010 If you are not in either of the above categories, send your return to the address shown in the Form 1040 instructions for the possession or state in which you reside. Taxes 2010 Special Rules for Completing Your U. Taxes 2010 S. Taxes 2010 Tax Return If you are not excluding possession income from your U. Taxes 2010 S. Taxes 2010 tax return, follow the instructions for the specific forms you file. Taxes 2010 However, you may not qualify to claim the earned income credit (EIC). Taxes 2010 Earned income credit. Taxes 2010   Even if you maintain a household in one of the possessions discussed in this publication that is your main home and the home of your qualifying child, you cannot claim the earned income credit on your U. Taxes 2010 S. Taxes 2010 tax return. Taxes 2010 This credit is available only if you maintain the household in the United States or you are serving on extended active duty in the U. Taxes 2010 S. Taxes 2010 Armed Forces. Taxes 2010 U. Taxes 2010 S. Taxes 2010 Armed Forces. Taxes 2010   U. Taxes 2010 S. Taxes 2010 military personnel stationed outside the United States on extended active duty are considered to live in the United States during that duty period for purposes of the EIC. Taxes 2010 Extended active duty means you are called or ordered to duty for an indefinite period or for a period of more than 90 days. Taxes 2010 Once you begin serving your extended active duty, you are still considered to have been on extended active duty even if you do not serve more than 90 days. Taxes 2010 Income from American Samoa or Puerto Rico excluded. Taxes 2010   You will not be allowed to take deductions and credits that apply to the excluded income. Taxes 2010 The additional information you need follows. Taxes 2010 Deductions if Possession Income Is Excluded Deductions that specifically apply to your excluded possession income, such as employee business expenses, are not allowable on your U. Taxes 2010 S. Taxes 2010 income tax return. Taxes 2010 Deductions that do not specifically apply to any particular type of income must be divided between your excluded income from sources in the relevant possession and income from all other sources to find the part that you can deduct on your U. Taxes 2010 S. Taxes 2010 tax return. Taxes 2010 Examples of such deductions are alimony payments, the standard deduction, and certain itemized deductions (such as medical expenses, charitable contributions, real estate taxes, and mortgage interest on your home). Taxes 2010 Figuring the deduction. Taxes 2010   To find the part of a deduction that is allowable, multiply the deduction by the following fraction. Taxes 2010   Gross income subject to U. Taxes 2010 S. Taxes 2010 income tax     Gross income from all sources (including excluded possession income)   Adjustments to Income Your adjusted gross income equals your gross income minus certain deductions (adjustments). Taxes 2010 Moving expense deduction. Taxes 2010   Generally, expenses of a move to a possession are directly attributable to wages, salaries, and other earned income from that possession. Taxes 2010 Likewise, the expenses of a move back to the United States are generally attributable to U. Taxes 2010 S. Taxes 2010 earned income. Taxes 2010   If you are claiming expenses for a move to a relevant possession, how and where you will deduct the expenses depends on your status as a bona fide resident and if any of your possession income is excluded on your U. Taxes 2010 S. Taxes 2010 tax return. Taxes 2010 For more information, see Moving expense deduction in chapter 3 under the name of the relevant possession. Taxes 2010   If you are claiming expenses for a move from a U. Taxes 2010 S. Taxes 2010 possession to the United States, use Form 3903 to figure your deductible expenses and enter the amount on Form 1040, line 26. Taxes 2010 For purposes of deducting moving expenses, the possessions are considered part of the United States. Taxes 2010 See Publication 521, Moving Expenses, for information about what expenses are deductible. Taxes 2010 Self-employment tax deduction. Taxes 2010   Generally, if you are reporting self-employment income on your U. Taxes 2010 S. Taxes 2010 return, you can include the deductible part of your self-employment tax on Form 1040, line 27. Taxes 2010 This is an income tax deduction only; it is not a deduction in figuring net earnings from self-employment (for self-employment tax). Taxes 2010   However, if you are a bona fide resident of American Samoa or Puerto Rico and you exclude all of your self-employment income from gross income, you cannot take the deduction on Form 1040, line 27, because the deduction is related to excluded income. Taxes 2010   If only part of your self-employment income is excluded, the part of the deduction that is based on the nonexcluded income is allowed. Taxes 2010 This would happen if, for instance, you have two businesses and only the income from one of them is excludable. Taxes 2010   For purposes of the deduction only, figure the self-employment tax on the nonexcluded income by multiplying your total self-employment tax (from Schedule SE (Form 1040)), Self-Employment Tax) by the following fraction. Taxes 2010   Self-employment income subject to U. Taxes 2010 S. Taxes 2010 income tax     Total self-employment income (including excluded possession income)   The result is your self-employment tax on nonexcluded income. Taxes 2010 Include the deductible part of this amount on Form 1040, line 27. Taxes 2010 Individual retirement arrangement (IRA) deduction. Taxes 2010   Do not take excluded income into account when figuring your deductible IRA contribution. Taxes 2010 Standard Deduction The standard deduction is composed of the regular standard deduction amount and the additional standard deduction for taxpayers who are blind or age 65 or over. Taxes 2010 To find the amount you can claim on Form 1040, line 40, first figure your full standard deduction according to the Instructions for Form 1040. Taxes 2010 Then multiply your full standard deduction by the following fraction. Taxes 2010   Gross income subject to U. Taxes 2010 S. Taxes 2010 income tax     Gross income from all sources (including excluded possession income)   In the space above line 40, enter “Standard deduction modified due to income excluded under section 931 (if American Samoa) or section 933 (if Puerto Rico). Taxes 2010 ” This calculation may not be the same as the one you used to determine if you need to file a U. Taxes 2010 S. Taxes 2010 tax return. Taxes 2010 Itemized Deductions Most itemized deductions do not apply to a particular type of income. Taxes 2010 However, itemized deductions can be divided into three categories. Taxes 2010 Those that apply specifically to excluded income, such as employee business expenses, are not deductible. Taxes 2010 Those that apply specifically to income subject to U. Taxes 2010 S. Taxes 2010 income tax, which might also be employee business expenses, are fully allowable under the Instructions for Schedule A (Form 1040), Itemized Deductions. Taxes 2010 Those that do not apply to specific income must be allocated between your gross income subject to U. Taxes 2010 S. Taxes 2010 income tax and your total gross income from all sources. Taxes 2010 The example given later shows how to figure the deductible part of each type of expense that is not related to specific income. Taxes 2010 Example. Taxes 2010 In 2013, you and your spouse are both under 65 and U. Taxes 2010 S. Taxes 2010 citizens who are bona fide residents of Puerto Rico during the entire tax year. Taxes 2010 You file a joint income tax return. Taxes 2010 During 2013, you earned $20,000 from Puerto Rican sources (excluded from U. Taxes 2010 S. Taxes 2010 gross income) and your spouse earned $60,000 from the U. Taxes 2010 S. Taxes 2010 Government. Taxes 2010 You have $16,000 of itemized deductions that do not apply to any specific type of income. Taxes 2010 These are medical expenses of $4,000, real estate taxes of $5,000, home mortgage interest of $6,000, and charitable contributions of $1,000 (cash contributions). Taxes 2010 You determine the amount of each deduction that you can claim on your Schedule A (Form 1040), Itemized Deductions, by multiplying the deduction by the fraction shown under Figuring the deduction , earlier under Deductions if Possession Income is Excluded. Taxes 2010   Medical Expenses   $60,000$80,000 × $4,000 = $3,000  (enter on line 1  of Schedule A)     Real Estate Taxes   $60,000$80,000 × $5,000 = $3,750  (enter on line 6  of Schedule A)     Home Mortgage Interest   $60,000$80,000 × $6,000 = $4,500  (enter on line 10 or 11 of  Schedule A)     Charitable Contributions (cash contributions)   $60,000$80,000 × $1,000 = $750  (enter on line 16 of Schedule A)   Enter on Schedule A (Form 1040) only the allowable portion of each deduction. Taxes 2010 Overall limitation on itemized deductions. Taxes 2010   If your adjusted gross income (discussed earlier) is over $300,000 if married filing jointly or qualifying widow(er); $275,000 if head of household; $250,000 if single; or $150,000 if married filing separately; see the Itemized Deductions Worksheet in the Instructions for Schedule A (Form 1040), to figure your itemized deductions. Taxes 2010 Personal Exemptions Personal exemptions are allowed in full even if excluding possession income. Taxes 2010 However, depending upon your adjusted gross income and filing status, the amount you can deduct may be reduced. Taxes 2010 See the Deduction for Exemptions Worksheet—Line 42 in the instructions for Form 1040. Taxes 2010 Foreign Tax Credit if Possession Income Is Excluded If you must report American Samoa or Puerto Rico source income on your U. Taxes 2010 S. Taxes 2010 tax return, you can claim a foreign tax credit for income taxes paid to the possession on that income. Taxes 2010 However, you cannot claim a foreign tax credit for taxes paid on possession income that is excluded on your U. Taxes 2010 S. Taxes 2010 tax return. Taxes 2010 The foreign tax credit is generally figured on Form 1116. Taxes 2010 If you have income, such as U. Taxes 2010 S. Taxes 2010 Government wages, that is not excludable, and you also have possession source income that is excludable, you must figure the credit by reducing your foreign taxes paid or accrued by the taxes based on the excluded income. Taxes 2010 You make this reduction for each separate income category. Taxes 2010 To find the amount of this reduction, use the following formula for each income category. Taxes 2010 Excluded income from possession sources less deductible expenses based on that income x Tax paid or accrued to the possession = Reduction in foreign taxes Total income subject to possession tax less deductible expenses based on that income Enter the amount of the reduction on Form 1116, line 12. Taxes 2010 For more information on the foreign tax credit, see Publication 514. Taxes 2010 Example. Taxes 2010 Jason and Lynn Reddy are U. Taxes 2010 S. Taxes 2010 citizens who were bona fide residents of Puerto Rico during all of 2013. Taxes 2010 They file a joint tax return. Taxes 2010 The following table shows their excludable and taxable income for U. Taxes 2010 S. Taxes 2010 federal income tax purposes. Taxes 2010   Taxable   Excludable Jason's wages from  U. Taxes 2010 S. Taxes 2010 Government $25,000     Lynn's wages from Puerto Rico  corp. Taxes 2010     $15,000 Dividend from Puerto Rico corp. Taxes 2010 doing business in Puerto Rico     200 Dividend from U. Taxes 2010 S. Taxes 2010  corp. Taxes 2010 doing business  in U. Taxes 2010 S. Taxes 2010 * 1,000     Totals $26,000   $15,200 * Income from sources outside Puerto Rico is taxable. Taxes 2010   Jason and Lynn must file 2013 income tax returns with both Puerto Rico and the United States. Taxes 2010 They have gross income of $26,000 for U. Taxes 2010 S. Taxes 2010 tax purposes. Taxes 2010 They paid taxes to Puerto Rico of $4,000 ($3,980 on their wages and $20 on the dividend from the Puerto Rico corporation). Taxes 2010 They figure their foreign tax credit on two Forms 1116, which they must attach to their U. Taxes 2010 S. Taxes 2010 return. Taxes 2010 They fill out one Form 1116 for wages and one Form 1116 for the dividend. Taxes 2010 Jason and Lynn figure the Puerto Rico taxes on excluded income as follows. Taxes 2010   Wages: ($15,000 ÷ $40,000) × $3,980 = $1,493   Dividend: ($200 ÷ $200) × $20 = $20 They enter $1,493 on Form 1116, line 12, for wages and $20 on the second Form 1116, line 12, for the dividend. Taxes 2010 Self-Employment Tax Self-employment tax includes both social security and Medicare taxes for individuals who are self-employed. Taxes 2010 A U. Taxes 2010 S. Taxes 2010 citizen or resident alien who is self-employed must pay self-employment tax on net self-employment earnings of $400 or more. Taxes 2010 This rule applies whether or not the earnings are excludable from gross income (or whether or not a U. Taxes 2010 S. Taxes 2010 income tax return must otherwise be filed). Taxes 2010 Bona fide residents of the possessions discussed in this publication are considered U. Taxes 2010 S. Taxes 2010 residents for this purpose and are subject to the self-employment tax. Taxes 2010 Forms to file. Taxes 2010   If you have net self-employment income and are subject to self-employment tax, file one of the following with the United States. Taxes 2010 If you are required to file Form 1040 with the United States, complete Schedule SE (Form 1040) and attach it to your Form 1040. Taxes 2010 If you are not required to file Form 1040 with the United States and you are a bona fide resident of American Samoa, the CNMI, Guam, Puerto Rico, or the USVI, file Form 1040-SS. Taxes 2010 If you are a resident of Puerto Rico, you can file the Spanish-language Form 1040-PR instead. Taxes 2010 Do not file forms 1040-SS or 1040-PR with Form 1040. Taxes 2010 If you are required to pay Additional Medicare Tax (discussed later) on your self-employment income, attach Form 8959, Additional Medicare Tax to Form 1040, Form 1040-SS, or Form 1040-PR, as applicable. Taxes 2010 Chapter 11 Bankruptcy cases. Taxes 2010   While you are a debtor in a chapter 11 bankruptcy case, your net profit or loss from self-employment will be included on the income tax return (Form 1041, U. Taxes 2010 S. Taxes 2010 Income Tax Return for Estates and Trusts) of the bankruptcy estate. Taxes 2010 However, you—not the bankruptcy estate—are responsible for paying self-employment tax on your net earnings from self-employment. Taxes 2010   Use Schedule SE (Form 1040), Form 1040-SS, or Form 1040-PR, as determined above, to figure your correct amount of self-employment tax. Taxes 2010   For other reporting requirements, see Chapter 11 Bankruptcy Cases in the Instructions for Form 1040. Taxes 2010 Additional Medicare Tax Beginning in 2013, a 0. Taxes 2010 9% Additional Medicare Tax applies to Medicare wages, railroad retirement (RRTA) compensation, and self-employment income that are more than: $125,000 if married filing separately, $250,000 if married filing jointly, or $200,000 if single, head of household, or qualifying widow(er). Taxes 2010 Medicare wages and self-employment income are combined to determine if income exceeds the threshold. Taxes 2010 A self-employment loss should not be considered for purposes of this tax. Taxes 2010 RRTA compensation should be separately compared to the threshold. Taxes 2010 Your employer is responsible for withholding the 0. Taxes 2010 9% Additional Medicare Tax on Medicare wages or RRTA compensation it pays to you in excess of $200,000. Taxes 2010 You should consider this withholding, if applicable, in determining whether you need to make estimated tax payments. Taxes 2010 There are no special rules for U. Taxes 2010 S. Taxes 2010 citizens and nonresident aliens living abroad for purposes of this provision. Taxes 2010 Wages, RRTA compensation, and self-employment income that are subject to Medicare tax will also be subject to Additional Medicare Tax if in excess of the applicable threshold. Taxes 2010 For more information, see Form 8959, Additional Medicare Tax, and its instructions or visit www. Taxes 2010 irs. Taxes 2010 gov and enter the following words in the search box: Additional Medicare Tax. Taxes 2010 You cannot include the Additional Medicare Tax as a deductible part of your self-employment tax. Taxes 2010 Net Investment Income Tax Beginning in 2013, the Net Investment Income Tax (NIIT) imposes a 3. Taxes 2010 8% tax on the lesser of an individual’s net investment income or the excess of the individual’s modified adjusted gross income over a specified threshold amount. Taxes 2010 Bona fide residents of Puerto Rico and American Samoa who may have a federal income tax return filing obligation may be liable for the NIIT if the taxpayer’s modified adjusted gross income from non-territory sources exceeds a specified threshold amount. Taxes 2010 The NIIT does not apply to any individual who is a nonresident alien with respect to the United States. Taxes 2010 Bona fide residents must take into account any additional tax liability associated with the NIIT when calculating your estimated tax payments. Taxes 2010 Forms to file. Taxes 2010   If you are a bona fide resident of American Samoa and Puerto Rico and you are required to pay the NIIT, you must file Form 1040 with the United States and attach Form 8960, Net Investment Income Tax—Individuals, Estates, and Trusts. Taxes 2010 For more information, see Form 8960 and its instructions. Taxes 2010 Paying Your Taxes You may find that not all of your income tax has been paid through withholding by either the United States or the possession. Taxes 2010 This is often true if you have income that is not subject to withholding, such as self-employment, interest, or rental income. Taxes 2010 In this situation, you may need to make estimated tax payments. Taxes 2010 Estimated Tax If your estimated income tax obligation is to the United States, use the worksheet in the Form 1040-ES package to figure your estimated tax, including self-employment tax. Taxes 2010 Include the Additional Medicare Tax and Net Investment Income Tax if applicable. Taxes 2010 If you are paying by check or money order, use the payment vouchers in the Form 1040-ES package. Taxes 2010 Or, you can make your payments electronically and not have to file any paper forms. Taxes 2010 See the Form 1040-ES instructions for information on making payments. Taxes 2010 Double Taxation Mutual agreement procedures exist to settle issues where there is inconsistent tax treatment between the IRS and the taxing authorities of the following possessions. Taxes 2010 American Samoa. Taxes 2010 The Commonwealth of Puerto Rico. Taxes 2010 The Commonwealth of the Northern Mariana Islands. Taxes 2010 Guam. Taxes 2010 The U. Taxes 2010 S. Taxes 2010 Virgin Islands. Taxes 2010 These issues usually involve allocations of income, deductions, credits, or allowances between related persons; determinations of residency; and determinations of the source of income and related expenses. Taxes 2010 Competent Authority Assistance The tax coordination agreements between the United States and the possession tax departments contain provisions allowing the competent authorities of the United States and the relevant possession to resolve, by mutual agreement, inconsistent tax treatment by the two jurisdictions. Taxes 2010 How to make your request. Taxes 2010   Your request for competent authority assistance must include all the information listed in Revenue Procedure 2006-23, 2006-20 I. Taxes 2010 R. Taxes 2010 B. Taxes 2010 900 available at www. Taxes 2010 irs. Taxes 2010 gov/pub/irs-irbs/irb06-49. Taxes 2010 pdf. Taxes 2010    Also, see Notice 2013-78, which provides proposed updates to the procedures for requesting U. Taxes 2010 S. Taxes 2010 competent authority assistance under tax treaties. Taxes 2010 As noted, an update to Revenue Procedure 2006-23 will be published in the future. Taxes 2010   Your request must be in the form of a letter addressed to the Deputy Commissioner (International) LB&I. Taxes 2010 It must contain a statement that competent authority assistance is requested under the mutual agreement procedure with the possession. Taxes 2010 You (or a person having authority to sign your federal return) must sign and date the request. Taxes 2010    Send your written request for U. Taxes 2010 S. Taxes 2010 assistance under this procedure to:   Deputy Commissioner (International) Large Business and International Division Internal Revenue Service 1111 Constitution Avenue, N. Taxes 2010 W. Taxes 2010  Routing: M4-365 Washington, DC 20224 (Attention: TAIT) Nonresident aliens generally must present their initial request for assistance to the relevant possession tax agency. Taxes 2010 Credit or Refund In addition to the tax assistance request, if you seek a credit or refund of any overpayment of U. Taxes 2010 S. Taxes 2010 tax paid on the income in question, you should file a claim on Form 1040X, Amended U. Taxes 2010 S. Taxes 2010 Individual Income Tax Return. Taxes 2010 Indicate on the form that a request for assistance under the mutual agreement procedure with the possession has been filed. Taxes 2010 Attach a copy of the request to the form. Taxes 2010 Also, you should take whatever steps must be taken under the possession tax code to prevent the expiration of the statutory period for filing a claim for credit or refund of a possession tax. Taxes 2010 See Revenue Procedure 2006-54 (or its successor), section 9, for complete information. Taxes 2010 Prev  Up  Next   Home   More Online Publications