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Www irs gov app vita Publication 525 - Main Content Table of Contents Employee CompensationBabysitting. Www irs gov app vita Miscellaneous Compensation Fringe Benefits Retirement Plan Contributions Stock Options Restricted Property Special Rules for Certain EmployeesClergy Members of Religious Orders Foreign Employer Military Volunteers Business and Investment IncomeRents From Personal Property Royalties Partnership Income S Corporation Income Sickness and Injury BenefitsDisability Pensions Long-Term Care Insurance Contracts Workers' Compensation Other Sickness and Injury Benefits Miscellaneous IncomeBartering Canceled Debts Host or Hostess Life Insurance Proceeds Recoveries Survivor Benefits Unemployment Benefits Welfare and Other Public Assistance Benefits Other Income RepaymentsMethod 1. Www irs gov app vita Method 2. Www irs gov app vita How To Get Tax HelpLow Income Taxpayer Clinics Employee Compensation In most cases, you must include in gross income everything you receive in payment for personal services. Www irs gov app vita In addition to wages, salaries, commissions, fees, and tips, this includes other forms of compensation such as fringe benefits and stock options. Www irs gov app vita You should receive a Form W-2 from your employer or former employer showing the pay you received for your services. Www irs gov app vita Include all your pay on line 7 of Form 1040 or Form 1040A or on line 1 of Form 1040EZ, even if you do not receive Form W-2, or you receive a Form W-2 that does not include all pay that should be included on the Form W-2. Www irs gov app vita If you performed services, other than as an independent contractor, and your employer did not withhold social security and Medicare taxes from your pay, you must file Form 8919, Uncollected Social Security and Medicare Tax on Wages, with your Form 1040. Www irs gov app vita These wages must be included on line 7 of Form 1040. Www irs gov app vita See Form 8919 for more information. Www irs gov app vita Childcare providers. Www irs gov app vita   If you provide childcare, either in the child's home or in your home or other place of business, the pay you receive must be included in your income. Www irs gov app vita If you are not an employee, you are probably self-employed and must include payments for your services on Schedule C (Form 1040), Profit or Loss From Business, or Schedule C-EZ (Form 1040), Net Profit From Business. Www irs gov app vita You generally are not an employee unless you are subject to the will and control of the person who employs you as to what you are to do and how you are to do it. Www irs gov app vita Babysitting. Www irs gov app vita   If you babysit for relatives or neighborhood children, whether on a regular basis or only periodically, the rules for childcare providers apply to you. Www irs gov app vita Bankruptcy. Www irs gov app vita   If you filed for bankruptcy under Chapter 11 of the Bankruptcy Code, you must allocate your wages and withheld income tax. Www irs gov app vita Your W-2 will show your total wages and withheld income tax for the year. Www irs gov app vita On your tax return, you report the wages and withheld income tax for the period before you filed for bankruptcy. Www irs gov app vita Your bankruptcy estate reports the wages and withheld income tax for the period after you filed for bankruptcy. Www irs gov app vita If you receive other information returns (such as Form 1099-DIV, Dividends and Distributions, or 1099-INT, Interest Income) that report gross income to you, rather than to the bankruptcy estate, you must allocate that income. Www irs gov app vita   The only exception is for purposes of figuring your self-employment tax, if you are self-employed. Www irs gov app vita For that purpose, you must take into account all your self-employment income for the year from services performed both before and after the beginning of the case. Www irs gov app vita   You must file a statement with your income tax return stating you filed a Chapter 11 bankruptcy case. Www irs gov app vita The statement must show the allocation and describe the method used to make the allocation. Www irs gov app vita For a sample of this statement and other information, see Notice 2006-83, 2006-40 I. Www irs gov app vita R. Www irs gov app vita B. Www irs gov app vita 596, available at www. Www irs gov app vita irs. Www irs gov app vita gov/irb/2006-40_IRB/ar12. Www irs gov app vita html. Www irs gov app vita Miscellaneous Compensation This section discusses many types of employee compensation. Www irs gov app vita The subjects are arranged in alphabetical order. Www irs gov app vita Advance commissions and other earnings. Www irs gov app vita   If you receive advance commissions or other amounts for services to be performed in the future and you are a cash-method taxpayer, you must include these amounts in your income in the year you receive them. Www irs gov app vita    If you repay unearned commissions or other amounts in the same year you receive them, reduce the amount included in your income by the repayment. Www irs gov app vita If you repay them in a later tax year, you can deduct the repayment as an itemized deduction on your Schedule A (Form 1040), Itemized Deductions, or you may be able to take a credit for that year. Www irs gov app vita See Repayments , later. Www irs gov app vita Allowances and reimbursements. Www irs gov app vita    If you receive travel, transportation, or other business expense allowances or reimbursements from your employer, see Publication 463, Travel, Entertainment, Gift, and Car Expenses. Www irs gov app vita If you are reimbursed for moving expenses, see Publication 521, Moving Expenses. Www irs gov app vita Back pay awards. Www irs gov app vita   Include in income amounts you are awarded in a settlement or judgment for back pay. Www irs gov app vita These include payments made to you for damages, unpaid life insurance premiums, and unpaid health insurance premiums. Www irs gov app vita They should be reported to you by your employer on Form W-2. Www irs gov app vita Bonuses and awards. Www irs gov app vita    Bonuses or awards you receive for outstanding work are included in your income and should be shown on your Form W-2. Www irs gov app vita These include prizes such as vacation trips for meeting sales goals. Www irs gov app vita If the prize or award you receive is goods or services, you must include the fair market value of the goods or services in your income. Www irs gov app vita However, if your employer merely promises to pay you a bonus or award at some future time, it is not taxable until you receive it or it is made available to you. Www irs gov app vita Employee achievement award. Www irs gov app vita   If you receive tangible personal property (other than cash, a gift certificate, or an equivalent item) as an award for length of service or safety achievement, you generally can exclude its value from your income. Www irs gov app vita However, the amount you can exclude is limited to your employer's cost and cannot be more than $1,600 ($400 for awards that are not qualified plan awards) for all such awards you receive during the year. Www irs gov app vita Your employer can tell you whether your award is a qualified plan award. Www irs gov app vita Your employer must make the award as part of a meaningful presentation, under conditions and circumstances that do not create a significant likelihood of it being disguised pay. Www irs gov app vita   However, the exclusion does not apply to the following awards. Www irs gov app vita A length-of-service award if you received it for less than 5 years of service or if you received another length-of-service award during the year or the previous 4 years. Www irs gov app vita A safety achievement award if you are a manager, administrator, clerical employee, or other professional employee or if more than 10% of eligible employees previously received safety achievement awards during the year. Www irs gov app vita Example. Www irs gov app vita Ben Green received three employee achievement awards during the year: a nonqualified plan award of a watch valued at $250, and two qualified plan awards of a stereo valued at $1,000 and a set of golf clubs valued at $500. Www irs gov app vita Assuming that the requirements for qualified plan awards are otherwise satisfied, each award by itself would be excluded from income. Www irs gov app vita However, because the $1,750 total value of the awards is more than $1,600, Ben must include $150 ($1,750 − $1,600) in his income. Www irs gov app vita Differential wage payments. Www irs gov app vita   This is any payment made by an employer to an individual for any period during which the individual is, for a period of more than 30 days, an active duty member of the uniformed services and represents all or a portion of the wages the individual would have received from the employer for that period. Www irs gov app vita These payments are treated as wages and are subject to income tax withholding, but not FICA or FUTA taxes. Www irs gov app vita The payments are reported as wages on Form W-2. Www irs gov app vita Government cost-of-living allowances. Www irs gov app vita   Most payments received by U. Www irs gov app vita S. Www irs gov app vita Government civilian employees for working abroad are taxable. Www irs gov app vita However, certain cost-of-living allowances are tax free. Www irs gov app vita Publication 516, U. Www irs gov app vita S. Www irs gov app vita Government Civilian Employees Stationed Abroad, explains the tax treatment of allowances, differentials, and other special pay you receive for employment abroad. Www irs gov app vita Nonqualified deferred compensation plans. Www irs gov app vita   Your employer will report to you the total amount of deferrals for the year under a nonqualified deferred compensation plan. Www irs gov app vita This amount is shown on Form W-2, box 12, using code Y. Www irs gov app vita This amount is not included in your income. Www irs gov app vita   However, if at any time during the tax year, the plan fails to meet certain requirements, or is not operated under those requirements, all amounts deferred under the plan for the tax year and all preceding tax years are included in your income for the current year. Www irs gov app vita This amount is included in your wages shown on Form W-2, box 1. Www irs gov app vita It is also shown on Form W-2, box 12, using code Z. Www irs gov app vita Nonqualified deferred compensation plans of nonqualified entities. Www irs gov app vita   In most cases, any compensation deferred under a nonqualified deferred compensation plan of a nonqualified entity is included in gross income when there is no substantial risk of forfeiture of the rights to such compensation. Www irs gov app vita For this purpose, a nonqualified entity is: A foreign corporation unless substantially all of its income is: Effectively connected with the conduct of a trade or business in the United States, or Subject to a comprehensive foreign income tax. Www irs gov app vita A partnership unless substantially all of its income is allocated to persons other than: Foreign persons for whom the income is not subject to a comprehensive foreign income tax, and Tax-exempt organizations. Www irs gov app vita Note received for services. Www irs gov app vita   If your employer gives you a secured note as payment for your services, you must include the fair market value (usually the discount value) of the note in your income for the year you receive it. Www irs gov app vita When you later receive payments on the note, a proportionate part of each payment is the recovery of the fair market value that you previously included in your income. Www irs gov app vita Do not include that part again in your income. Www irs gov app vita Include the rest of the payment in your income in the year of payment. Www irs gov app vita   If your employer gives you a nonnegotiable unsecured note as payment for your services, payments on the note that are credited toward the principal amount of the note are compensation income when you receive them. Www irs gov app vita Severance pay. Www irs gov app vita   You must include in income amounts you receive as severance pay and any payment for the cancellation of your employment contract. Www irs gov app vita Accrued leave payment. Www irs gov app vita   If you are a federal employee and receive a lump-sum payment for accrued annual leave when you retire or resign, this amount will be included as wages on your Form W-2. Www irs gov app vita   If you resign from one agency and are reemployed by another agency, you may have to repay part of your lump-sum annual leave payment to the second agency. Www irs gov app vita You can reduce gross wages by the amount you repaid in the same tax year in which you received it. Www irs gov app vita Attach to your tax return a copy of the receipt or statement given to you by the agency you repaid to explain the difference between the wages on your return and the wages on your Forms W-2. Www irs gov app vita Outplacement services. Www irs gov app vita   If you choose to accept a reduced amount of severance pay so that you can receive outplacement services (such as training in résumé writing and interview techniques), you must include the unreduced amount of the severance pay in income. Www irs gov app vita    However, you can deduct the value of these outplacement services (up to the difference between the severance pay included in income and the amount actually received) as a miscellaneous deduction (subject to the 2%-of-adjusted-gross-income (AGI) limit) on Schedule A (Form 1040). Www irs gov app vita Sick pay. Www irs gov app vita   Pay you receive from your employer while you are sick or injured is part of your salary or wages. Www irs gov app vita In addition, you must include in your income sick pay benefits received from any of the following payers. Www irs gov app vita A welfare fund. Www irs gov app vita A state sickness or disability fund. Www irs gov app vita An association of employers or employees. Www irs gov app vita An insurance company, if your employer paid for the plan. Www irs gov app vita However, if you paid the premiums on an accident or health insurance policy, the benefits you receive under the policy are not taxable. Www irs gov app vita For more information, see Other Sickness and Injury Benefits under Sickness and Injury Benefits, later. Www irs gov app vita Social security and Medicare taxes paid by employer. Www irs gov app vita   If you and your employer have an agreement that your employer pays your social security and Medicare taxes without deducting them from your gross wages, you must report the amount of tax paid for you as taxable wages on your tax return. Www irs gov app vita The payment is also treated as wages for figuring your social security and Medicare taxes and your social security and Medicare benefits. Www irs gov app vita However, these payments are not treated as social security and Medicare wages if you are a household worker or a farm worker. Www irs gov app vita Stock appreciation rights. Www irs gov app vita   Do not include a stock appreciation right granted by your employer in income until you exercise (use) the right. Www irs gov app vita When you use the right, you are entitled to a cash payment equal to the fair market value of the corporation's stock on the date of use minus the fair market value on the date the right was granted. Www irs gov app vita You include the cash payment in income in the year you use the right. Www irs gov app vita Fringe Benefits Fringe benefits received in connection with the performance of your services are included in your income as compensation unless you pay fair market value for them or they are specifically excluded by law. Www irs gov app vita Abstaining from the performance of services (for example, under a covenant not to compete) is treated as the performance of services for purposes of these rules. Www irs gov app vita See Valuation of Fringe Benefits , later in this discussion, for information on how to determine the amount to include in income. Www irs gov app vita Recipient of fringe benefit. Www irs gov app vita   You are the recipient of a fringe benefit if you perform the services for which the fringe benefit is provided. Www irs gov app vita You are considered to be the recipient even if it is given to another person, such as a member of your family. Www irs gov app vita An example is a car your employer gives to your spouse for services you perform. Www irs gov app vita The car is considered to have been provided to you and not to your spouse. Www irs gov app vita   You do not have to be an employee of the provider to be a recipient of a fringe benefit. Www irs gov app vita If you are a partner, director, or independent contractor, you also can be the recipient of a fringe benefit. Www irs gov app vita Provider of benefit. Www irs gov app vita   Your employer or another person for whom you perform services is the provider of a fringe benefit regardless of whether that person actually provides the fringe benefit to you. Www irs gov app vita The provider can be a client or customer of an independent contractor. Www irs gov app vita Accounting period. Www irs gov app vita   You must use the same accounting period your employer uses to report your taxable noncash fringe benefits. Www irs gov app vita Your employer has the option to report taxable noncash fringe benefits by using either of the following rules. Www irs gov app vita The general rule: benefits are reported for a full calendar year (January 1–December 31). Www irs gov app vita The special accounting period rule: benefits provided during the last 2 months of the calendar year (or any shorter period) are treated as paid during the following calendar year. Www irs gov app vita For example, each year your employer reports the value of benefits provided during the last 2 months of the prior year and the first 10 months of the current year. Www irs gov app vita Your employer does not have to use the same accounting period for each fringe benefit, but must use the same period for all employees who receive a particular benefit. Www irs gov app vita   You must use the same accounting period that you use to report the benefit to claim an employee business deduction (for use of a car, for example). Www irs gov app vita Form W-2. Www irs gov app vita   Your employer must include all taxable fringe benefits in box 1 of Form W-2 as wages, tips and other compensation and, if applicable, in boxes 3 and 5 as social security and Medicare wages. Www irs gov app vita Although not required, your employer may include the total value of fringe benefits in box 14 (or on a separate statement). Www irs gov app vita However, if your employer provided you with a vehicle and included 100% of its annual lease value in your income, the employer must separately report this value to you in box 14 (or on a separate statement). Www irs gov app vita Accident or Health Plan In most cases, the value of accident or health plan coverage provided to you by your employer is not included in your income. Www irs gov app vita Benefits you receive from the plan may be taxable, as explained, later, under Sickness and Injury Benefits . Www irs gov app vita For information on the items covered in this section, other than Long-term care coverage , see Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans. Www irs gov app vita Long-term care coverage. Www irs gov app vita   Contributions by your employer to provide coverage for long-term care services generally are not included in your income. Www irs gov app vita However, contributions made through a flexible spending or similar arrangement (such as a cafeteria plan) must be included in your income. Www irs gov app vita This amount will be reported as wages in box 1 of your Form W-2. Www irs gov app vita Archer MSA contributions. Www irs gov app vita    Contributions by your employer to your Archer MSA generally are not included in your income. Www irs gov app vita Their total will be reported in box 12 of Form W-2, with code R. Www irs gov app vita You must report this amount on Form 8853, Archer MSAs and Long-Term Care Insurance Contracts. Www irs gov app vita File the form with your return. Www irs gov app vita Health flexible spending arrangement (health FSA). Www irs gov app vita   If your employer provides a health FSA that qualifies as an accident or health plan, the amount of your salary reduction, and reimbursements of your medical care expenses, in most cases, are not included in your income. Www irs gov app vita   Health FSAs are subject to a $2,500 limit on salary reduction contributions for plan years beginning after 2012. Www irs gov app vita The $2,500 limit is subject to an inflation adjustment for plan years beginning after 2013. Www irs gov app vita For more information, see Notice 2012-40, 2012-26 I. Www irs gov app vita R. Www irs gov app vita B. Www irs gov app vita 1046, available at www. Www irs gov app vita irs. Www irs gov app vita gov/irb/2012-26 IRB/ar09. Www irs gov app vita html. Www irs gov app vita Health reimbursement arrangement (HRA). Www irs gov app vita   If your employer provides an HRA that qualifies as an accident or health plan, coverage and reimbursements of your medical care expenses generally are not included in your income. Www irs gov app vita Health savings accounts (HSA). Www irs gov app vita   If you are an eligible individual, you and any other person, including your employer or a family member, can make contributions to your HSA. Www irs gov app vita Contributions, other than employer contributions, are deductible on your return whether or not you itemize deductions. Www irs gov app vita Contributions made by your employer are not included in your income. Www irs gov app vita Distributions from your HSA that are used to pay qualified medical expenses are not included in your income. Www irs gov app vita Distributions not used for qualified medical expenses are included in your income. Www irs gov app vita See Publication 969 for the requirements of an HSA. Www irs gov app vita   Contributions by a partnership to a bona fide partner's HSA are not contributions by an employer. Www irs gov app vita The contributions are treated as a distribution of money and are not included in the partner's gross income. Www irs gov app vita Contributions by a partnership to a partner's HSA for services rendered are treated as guaranteed payments that are includible in the partner's gross income. Www irs gov app vita In both situations, the partner can deduct the contribution made to the partner's HSA. Www irs gov app vita   Contributions by an S corporation to a 2% shareholder-employee's HSA for services rendered are treated as guaranteed payments and are includible in the shareholder-employee's gross income. Www irs gov app vita The shareholder-employee can deduct the contribution made to the shareholder-employee's HSA. Www irs gov app vita Qualified HSA funding distribution. Www irs gov app vita   You can make a one-time distribution from your individual retirement account (IRA) to an HSA and you generally will not include any of the distribution in your income. Www irs gov app vita See Publication 590, Individual Retirement Arrangements (IRAs), for the requirements for these qualified HSA funding distributions. Www irs gov app vita Failure to maintain eligibility. Www irs gov app vita   If your HSA received qualified HSA distributions from a health FSA or HRA (discussed earlier) or a qualified HSA funding distribution, you must be an eligible individual for HSA purposes for the period beginning with the month in which the qualified distribution was made and ending on the last day of the 12th month following that month. Www irs gov app vita If you fail to be an eligible individual during this period, other than because of death or disability, you must include the distribution in your income for the tax year in which you become ineligible. Www irs gov app vita This income is also subject to an additional 10% tax. Www irs gov app vita Adoption Assistance You may be able to exclude from your income amounts paid or expenses incurred by your employer for qualified adoption expenses in connection with your adoption of an eligible child. Www irs gov app vita See Instructions for Form 8839, Qualified Adoption Expenses, for more information. Www irs gov app vita Adoption benefits are reported by your employer in box 12 of Form W-2 with code T. Www irs gov app vita They also are included as social security and Medicare wages in boxes 3 and 5. Www irs gov app vita However, they are not included as wages in box 1. Www irs gov app vita To determine the taxable and nontaxable amounts, you must complete Part III of Form 8839. Www irs gov app vita File the form with your return. Www irs gov app vita Athletic Facilities If your employer provides you with the free or low-cost use of an employer-operated gym or other athletic club on your employer's premises, the value is not included in your compensation. Www irs gov app vita The gym must be used primarily by employees, their spouses, and their dependent children. Www irs gov app vita If your employer pays for a fitness program provided to you at an off-site resort hotel or athletic club, the value of the program is included in your compensation. Www irs gov app vita De Minimis (Minimal) Benefits If your employer provides you with a product or service and the cost of it is so small that it would be unreasonable for the employer to account for it, the value is not included in your income. Www irs gov app vita In most cases, the value of benefits such as discounts at company cafeterias, cab fares home when working overtime, and company picnics are not included in your income. Www irs gov app vita Also see Employee Discounts , later. Www irs gov app vita Holiday gifts. Www irs gov app vita   If your employer gives you a turkey, ham, or other item of nominal value at Christmas or other holidays, do not include the value of the gift in your income. Www irs gov app vita However, if your employer gives you cash, a gift certificate, or a similar item that you can easily exchange for cash, you include the value of that gift as extra salary or wages regardless of the amount involved. Www irs gov app vita Dependent Care Benefits If your employer provides dependent care benefits under a qualified plan, you may be able to exclude these benefits from your income. Www irs gov app vita Dependent care benefits include: Amounts your employer pays directly to either you or your care provider for the care of your qualifying person while you work, and The fair market value of care in a daycare facility provided or sponsored by your employer. Www irs gov app vita The amount you can exclude is limited to the lesser of: The total amount of dependent care benefits you received during the year, The total amount of qualified expenses you incurred during the year, Your earned income, Your spouse's earned income, or $5,000 ($2,500 if married filing separately). Www irs gov app vita Your employer must show the total amount of dependent care benefits provided to you during the year under a qualified plan in box 10 of your Form W-2. Www irs gov app vita Your employer also will include any dependent care benefits over $5,000 in your wages shown in box 1 of your Form W-2. Www irs gov app vita To claim the exclusion, you must complete Part III of Form 2441, Child and Dependent Care Expenses. Www irs gov app vita See the Instructions for Form 2441 for more information. Www irs gov app vita Educational Assistance You can exclude from your income up to $5,250 of qualified employer-provided educational assistance. Www irs gov app vita For more information, see Publication 970. Www irs gov app vita Employee Discounts If your employer sells you property or services at a discount, you may be able to exclude the amount of the discount from your income. Www irs gov app vita The exclusion applies to discounts on property or services offered to customers in the ordinary course of the line of business in which you work. Www irs gov app vita However, it does not apply to discounts on real property or property commonly held for investment (such as stocks or bonds). Www irs gov app vita The exclusion is limited to the price charged nonemployee customers multiplied by the following percentage. Www irs gov app vita For a discount on property, your employer's gross profit percentage (gross profit divided by gross sales) on all property sold during the employer's previous tax year. Www irs gov app vita (Ask your employer for this percentage. Www irs gov app vita ) For a discount on services, 20%. Www irs gov app vita Financial Counseling Fees Financial counseling fees paid for you by your employer are included in your income and must be reported as part of wages. Www irs gov app vita If the fees are for tax or investment counseling, they can be deducted on Schedule A (Form 1040) as a miscellaneous deduction (subject to the 2%-of-AGI limit). Www irs gov app vita Qualified retirement planning services paid for you by your employer may be excluded from your income. Www irs gov app vita For more information, see Retirement Planning Services , later. Www irs gov app vita Group-Term Life Insurance In most cases, the cost of up to $50,000 of group-term life insurance coverage provided to you by your employer (or former employer) is not included in your income. Www irs gov app vita However, you must include in income the cost of employer-provided insurance that is more than the cost of $50,000 of coverage reduced by any amount you pay toward the purchase of the insurance. Www irs gov app vita For exceptions to this rule, see Entire cost excluded , and Entire cost taxed , later. Www irs gov app vita If your employer provided more than $50,000 of coverage, the amount included in your income is reported as part of your wages in box 1 of your Form W-2. Www irs gov app vita Also, it is shown separately in box 12 with code C. Www irs gov app vita Group-term life insurance. Www irs gov app vita   This insurance is term life insurance protection (insurance for a fixed period of time) that: Provides a general death benefit, Is provided to a group of employees, Is provided under a policy carried by the employer, and Provides an amount of insurance to each employee based on a formula that prevents individual selection. Www irs gov app vita Permanent benefits. Www irs gov app vita   If your group-term life insurance policy includes permanent benefits, such as a paid-up or cash surrender value, you must include in your income, as wages, the cost of the permanent benefits minus the amount you pay for them. Www irs gov app vita Your employer should be able to tell you the amount to include in your income. Www irs gov app vita Accidental death benefits. Www irs gov app vita   Insurance that provides accidental or other death benefits but does not provide general death benefits (travel insurance, for example) is not group-term life insurance. Www irs gov app vita Former employer. Www irs gov app vita   If your former employer provided more than $50,000 of group-term life insurance coverage during the year, the amount included in your income is reported as wages in box 1 of Form W-2. Www irs gov app vita Also, it is shown separately in box 12 with code C. Www irs gov app vita Box 12 also will show the amount of uncollected social security and Medicare taxes on the excess coverage, with codes M and N. Www irs gov app vita You must pay these taxes with your income tax return. Www irs gov app vita Include them on line 60, Form 1040, and follow the instructions forline 60. Www irs gov app vita For more information, see the Instructions for Form 1040. Www irs gov app vita Two or more employers. Www irs gov app vita   Your exclusion for employer-provided group-term life insurance coverage cannot exceed the cost of $50,000 of coverage, whether the insurance is provided by a single employer or multiple employers. Www irs gov app vita If two or more employers provide insurance coverage that totals more than $50,000, the amounts reported as wages on your Forms W-2 will not be correct. Www irs gov app vita You must figure how much to include in your income. Www irs gov app vita Reduce the amount you figure by any amount reported with code C in box 12 of your Forms W-2, add the result to the wages reported in box 1, and report the total on your return. Www irs gov app vita Figuring the taxable cost. Www irs gov app vita    Use the following worksheet to figure the amount to include in your income. Www irs gov app vita   If you pay any part of the cost of the insurance, your entire payment reduces, dollar for dollar, the amount you otherwise would include in your income. Www irs gov app vita However, you cannot reduce the amount to include in your income by: Payments for coverage in a different tax year, Payments for coverage through a cafeteria plan, unless the payments are after-tax contributions, or Payments for coverage not taxed to you because of the exceptions discussed later under Entire cost excluded . Www irs gov app vita Worksheet 1. Www irs gov app vita Figuring the Cost of Group-Term Life Insurance To Include in Income 1. Www irs gov app vita Enter the total amount of your insurance coverage from your employer(s) 1. Www irs gov app vita   2. Www irs gov app vita Limit on exclusion for employer-provided group-term life insurance coverage 2. Www irs gov app vita 50,000 3. Www irs gov app vita Subtract line 2 from line 1 3. Www irs gov app vita   4. Www irs gov app vita Divide line 3 by $1,000. Www irs gov app vita Figure to the nearest tenth 4. Www irs gov app vita   5. Www irs gov app vita Go to Table 1. Www irs gov app vita Using your age on the last day of the tax year, find your age group in the left column, and enter the cost from the column on the right for your age group 5. Www irs gov app vita   6. Www irs gov app vita Multiply line 4 by line 5 6. Www irs gov app vita     7. Www irs gov app vita Enter the number of full months of coverage at this cost 7. Www irs gov app vita   8. Www irs gov app vita Multiply line 6 by line 7 8. Www irs gov app vita   9. Www irs gov app vita Enter the premiums you paid per month 9. Www irs gov app vita       10. Www irs gov app vita Enter the number of months you paid the  premiums 10. Www irs gov app vita       11. Www irs gov app vita Multiply line 9 by line 10. Www irs gov app vita 11. Www irs gov app vita   12. Www irs gov app vita Subtract line 11 from line 8. Www irs gov app vita Include this amount in your income as wages 12. Www irs gov app vita   Table 1. Www irs gov app vita Cost of $1,000 of Group-Term Life Insurance for One Month   Age Cost     Under 25 $ . Www irs gov app vita 05     25 through 29 . Www irs gov app vita 06     30 through 34 . Www irs gov app vita 08     35 through 39 . Www irs gov app vita 09     40 through 44 . Www irs gov app vita 10     45 through 49 . Www irs gov app vita 15     50 through 54 . Www irs gov app vita 23     55 through 59 . Www irs gov app vita 43     60 through 64 . Www irs gov app vita 66     65 through 69 1. Www irs gov app vita 27     70 and older 2. Www irs gov app vita 06   Example. Www irs gov app vita You are 51 years old and work for employers A and B. Www irs gov app vita Both employers provide group-term life insurance coverage for you for the entire year. Www irs gov app vita Your coverage is $35,000 with employer A and $45,000 with employer B. Www irs gov app vita You pay premiums of $4. Www irs gov app vita 15 a month under the employer B group plan. Www irs gov app vita You figure the amount to include in your income as follows. Www irs gov app vita   Worksheet 1. Www irs gov app vita Figuring the Cost of Group-Term Life Insurance To Include in Income—Illustrated 1. Www irs gov app vita Enter the total amount of your insurance coverage from your employer(s) 1. Www irs gov app vita 80,000 2. Www irs gov app vita Limit on exclusion for employer-provided group-term life insurance coverage 2. Www irs gov app vita 50,000 3. Www irs gov app vita Subtract line 2 from line 1 3. Www irs gov app vita 30,000 4. Www irs gov app vita Divide line 3 by $1,000. Www irs gov app vita Figure to the nearest tenth 4. Www irs gov app vita 30. Www irs gov app vita 0 5. Www irs gov app vita Go to Table 1. Www irs gov app vita Using your age on the last day of the tax year, find your age group in the left column, and enter the cost from the column on the right for your age group 5. Www irs gov app vita . Www irs gov app vita 23 6. Www irs gov app vita Multiply line 4 by line 5 6. Www irs gov app vita 6. Www irs gov app vita 90 7. Www irs gov app vita Enter the number of full months of coverage at this cost. Www irs gov app vita 7. Www irs gov app vita 12 8. Www irs gov app vita Multiply line 6 by line 7 8. Www irs gov app vita 82. Www irs gov app vita 80 9. Www irs gov app vita Enter the premiums you paid per month 9. Www irs gov app vita 4. Www irs gov app vita 15     10. Www irs gov app vita Enter the number of months you paid the premiums 10. Www irs gov app vita 12     11. Www irs gov app vita Multiply line 9 by line 10. Www irs gov app vita 11. Www irs gov app vita 49. Www irs gov app vita 80 12. Www irs gov app vita Subtract line 11 from line 8. Www irs gov app vita Include this amount in your income as wages 12. Www irs gov app vita 33. Www irs gov app vita 00 The total amount to include in income for the cost of excess group-term life insurance is $33. Www irs gov app vita Neither employer provided over $50,000 insurance coverage, so the wages shown on your Forms W-2 do not include any part of that $33. Www irs gov app vita You must add it to the wages shown on your Forms W-2 and include the total on your return. Www irs gov app vita Entire cost excluded. Www irs gov app vita   You are not taxed on the cost of group-term life insurance if any of the following circumstances apply. Www irs gov app vita You are permanently and totally disabled and have ended your employment. Www irs gov app vita Your employer is the beneficiary of the policy for the entire period the insurance is in force during the tax year. Www irs gov app vita A charitable organization to which contributions are deductible is the only beneficiary of the policy for the entire period the insurance is in force during the tax year. Www irs gov app vita (You are not entitled to a deduction for a charitable contribution for naming a charitable organization as the beneficiary of your policy. Www irs gov app vita ) The plan existed on January 1, 1984, and: You retired before January 2, 1984, and were covered by the plan when you retired, or You reached age 55 before January 2, 1984, and were employed by the employer or its predecessor in 1983. Www irs gov app vita Entire cost taxed. Www irs gov app vita   You are taxed on the entire cost of group-term life insurance if either of the following circumstances apply. Www irs gov app vita The insurance is provided by your employer through a qualified employees' trust, such as a pension trust or a qualified annuity plan. Www irs gov app vita You are a key employee and your employer's plan discriminates in favor of key employees. Www irs gov app vita Meals and Lodging You do not include in your income the value of meals and lodging provided to you and your family by your employer at no charge if the following conditions are met. Www irs gov app vita The meals are: Furnished on the business premises of your employer, and Furnished for the convenience of your employer. Www irs gov app vita The lodging is: Furnished on the business premises of your employer, Furnished for the convenience of your employer, and A condition of your employment. Www irs gov app vita (You must accept it in order to be able to properly perform your duties. Www irs gov app vita ) You also do not include in your income the value of meals or meal money that qualifies as a de minimis fringe benefit. Www irs gov app vita See De Minimis (Minimal) Benefits , earlier. Www irs gov app vita Faculty lodging. Www irs gov app vita   If you are an employee of an educational institution or an academic health center and you are provided with lodging that does not meet the three conditions given earlier, you still may not have to include the value of the lodging in income. Www irs gov app vita However, the lodging must be qualified campus lodging, and you must pay an adequate rent. Www irs gov app vita Academic health center. Www irs gov app vita   This is an organization that meets the following conditions. Www irs gov app vita Its principal purpose or function is to provide medical or hospital care or medical education or research. Www irs gov app vita It receives payments for graduate medical education under the Social Security Act. Www irs gov app vita One of its principal purposes or functions is to provide and teach basic and clinical medical science and research using its own faculty. Www irs gov app vita Qualified campus lodging. Www irs gov app vita   Qualified campus lodging is lodging furnished to you, your spouse, or one of your dependents by, or on behalf of, the institution or center for use as a home. Www irs gov app vita The lodging must be located on or near a campus of the educational institution or academic health center. Www irs gov app vita Adequate rent. Www irs gov app vita   The amount of rent you pay for the year for qualified campus lodging is considered adequate if it is at least equal to the lesser of: 5% of the appraised value of the lodging, or The average of rentals paid by individuals (other than employees or students) for comparable lodging held for rent by the educational institution. Www irs gov app vita If the amount you pay is less than the lesser of these amounts, you must include the difference in your income. Www irs gov app vita   The lodging must be appraised by an independent appraiser and the appraisal must be reviewed on an annual basis. Www irs gov app vita Example. Www irs gov app vita Carl Johnson, a sociology professor for State University, rents a home from the university that is qualified campus lodging. Www irs gov app vita The house is appraised at $200,000. Www irs gov app vita The average rent paid for comparable university lodging by persons other than employees or students is $14,000 a year. Www irs gov app vita Carl pays an annual rent of $11,000. Www irs gov app vita Carl does not include in his income any rental value because the rent he pays equals at least 5% of the appraised value of the house (5% × $200,000 = $10,000). Www irs gov app vita If Carl paid annual rent of only $8,000, he would have to include $2,000 in his income ($10,000 − $8,000). Www irs gov app vita Moving Expense Reimbursements In most cases, if your employer pays for your moving expenses (either directly or indirectly) and the expenses would have been deductible if you paid them yourself, the value is not included in your income. Www irs gov app vita See Publication 521 for more information. Www irs gov app vita No-Additional-Cost Services The value of services you receive from your employer for free, at cost, or for a reduced price is not included in your income if your employer: Offers the same service for sale to customers in the ordinary course of the line of business in which you work, and Does not have a substantial additional cost (including any sales income given up) to provide you with the service (regardless of what you paid for the service). Www irs gov app vita In most cases, no-additional-cost services are excess capacity services, such as airline, bus, or train tickets, hotel rooms, and telephone services. Www irs gov app vita Example. Www irs gov app vita You are employed as a flight attendant for a company that owns both an airline and a hotel chain. Www irs gov app vita Your employer allows you to take personal flights (if there is an unoccupied seat) and stay in any one of their hotels (if there is an unoccupied room) at no cost to you. Www irs gov app vita The value of the personal flight is not included in your income. Www irs gov app vita However, the value of the hotel room is included in your income because you do not work in the hotel business. Www irs gov app vita Retirement Planning Services If your employer has a qualified retirement plan, qualified retirement planning services provided to you (and your spouse) by your employer are not included in your income. Www irs gov app vita Qualified services include retirement planning advice, information about your employer's retirement plan, and information about how the plan may fit into your overall individual retirement income plan. Www irs gov app vita You cannot exclude the value of any tax preparation, accounting, legal, or brokerage services provided by your employer. Www irs gov app vita Also, see Financial Counseling Fees , earlier. Www irs gov app vita Transportation If your employer provides you with a qualified transportation fringe benefit, it can be excluded from your income, up to certain limits. Www irs gov app vita A qualified transportation fringe benefit is: Transportation in a commuter highway vehicle (such as a van) between your home and work place, A transit pass, Qualified parking, or Qualified bicycle commuting reimbursement. Www irs gov app vita Cash reimbursement by your employer for these expenses under a bona fide reimbursement arrangement is also excludable. Www irs gov app vita However, cash reimbursement for a transit pass is excludable only if a voucher or similar item that can be exchanged only for a transit pass is not readily available for direct distribution to you. Www irs gov app vita Exclusion limit. Www irs gov app vita   The exclusion for commuter vehicle transportation and transit pass fringe benefits cannot be more than $245 a month. Www irs gov app vita   The exclusion for the qualified parking fringe benefit cannot be more than $245 a month. Www irs gov app vita   The exclusion for qualified bicycle commuting in a calendar year is $20 multiplied by the number of qualified bicycle commuting months that year. Www irs gov app vita   If the benefits have a value that is more than these limits, the excess must be included in your income. Www irs gov app vita You are not entitled to these exclusions if the reimbursements are made under a compensation reduction agreement. Www irs gov app vita Commuter highway vehicle. Www irs gov app vita   This is a highway vehicle that seats at least six adults (not including the driver). Www irs gov app vita At least 80% of the vehicle's mileage must reasonably be expected to be: For transporting employees between their homes and work place, and On trips during which employees occupy at least half of the vehicle's adult seating capacity (not including the driver). Www irs gov app vita Transit pass. Www irs gov app vita   This is any pass, token, farecard, voucher, or similar item entitling a person to ride mass transit (whether public or private) free or at a reduced rate or to ride in a commuter highway vehicle operated by a person in the business of transporting persons for compensation. Www irs gov app vita Qualified parking. Www irs gov app vita   This is parking provided to an employee at or near the employer's place of business. Www irs gov app vita It also includes parking provided on or near a location from which the employee commutes to work by mass transit, in a commuter highway vehicle, or by carpool. Www irs gov app vita It does not include parking at or near the employee's home. Www irs gov app vita Qualified bicycle commuting. Www irs gov app vita   This is reimbursement based on the number of qualified bicycle commuting months for the year. Www irs gov app vita A qualified bicycle commuting month is any month you use the bicycle regularly for a substantial portion of the travel between your home and place of employment and you do not receive any of the other qualified transportation fringe benefits. Www irs gov app vita The reimbursement can be for expenses you incurred during the year for the purchase of a bicycle and bicycle improvements, repair, and storage. Www irs gov app vita Tuition Reduction You can exclude a qualified tuition reduction from your income. Www irs gov app vita This is the amount of a reduction in tuition: For education (below graduate level) furnished by an educational institution to an employee, former employee who retired or became disabled, or his or her spouse and dependent children. Www irs gov app vita For education furnished to a graduate student at an educational institution if the graduate student is engaged in teaching or research activities for that institution. Www irs gov app vita Representing payment for teaching, research, or other services if you receive the amount under the National Health Service Corps Scholarship Program or the Armed Forces Health Professions Scholarship and Financial Assistance program. Www irs gov app vita For more information, see Publication 970. Www irs gov app vita Working Condition Benefits If your employer provides you with a product or service and the cost of it would have been allowable as a business or depreciation deduction if you paid for it yourself, the cost is not included in your income. Www irs gov app vita Example. Www irs gov app vita You work as an engineer and your employer provides you with a subscription to an engineering trade magazine. Www irs gov app vita The cost of the subscription is not included in your income because the cost would have been allowable to you as a business deduction if you had paid for the subscription yourself. Www irs gov app vita Valuation of Fringe Benefits If a fringe benefit is included in your income, the amount included is generally its value determined under the general valuation rule or under the special valuation rules. Www irs gov app vita For an exception, see Group-Term Life Insurance , earlier. Www irs gov app vita General valuation rule. Www irs gov app vita   You must include in your income the amount by which the fair market value of the fringe benefit is more than the sum of: The amount, if any, you paid for the benefit, plus The amount, if any, specifically excluded from your income by law. Www irs gov app vita If you pay fair market value for a fringe benefit, no amount is included in your income. Www irs gov app vita Fair market value. Www irs gov app vita   The fair market value of a fringe benefit is determined by all the facts and circumstances. Www irs gov app vita It is the amount you would have to pay a third party to buy or lease the benefit. Www irs gov app vita This is determined without regard to: Your perceived value of the benefit, or The amount your employer paid for the benefit. Www irs gov app vita Employer-provided vehicles. Www irs gov app vita   If your employer provides a car (or other highway motor vehicle) to you, your personal use of the car is usually a taxable noncash fringe benefit. Www irs gov app vita   Under the general valuation rules, the value of an employer-provided vehicle is the amount you would have to pay a third party to lease the same or a similar vehicle on the same or comparable terms in the same geographic area where you use the vehicle. Www irs gov app vita An example of a comparable lease term is the amount of time the vehicle is available for your use, such as a 1-year period. Www irs gov app vita The value cannot be determined by multiplying a cents-per-mile rate times the number of miles driven unless you prove the vehicle could have been leased on a cents-per-mile basis. Www irs gov app vita Flights on employer-provided aircraft. Www irs gov app vita   Under the general valuation rules, if your flight on an employer-provided piloted aircraft is primarily personal and you control the use of the aircraft for the flight, the value is the amount it would cost to charter the flight from a third party. Www irs gov app vita   If there is more than one employee on the flight, the cost to charter the aircraft must be divided among those employees. Www irs gov app vita The division must be based on all the facts, including which employee or employees control the use of the aircraft. Www irs gov app vita Special valuation rules. Www irs gov app vita   You generally can use a special valuation rule for a fringe benefit only if your employer uses the rule. Www irs gov app vita If your employer uses a special valuation rule, you cannot use a different special rule to value that benefit. Www irs gov app vita You always can use the general valuation rule discussed earlier, based on facts and circumstances, even if your employer uses a special rule. Www irs gov app vita   If you and your employer use a special valuation rule, you must include in your income the amount your employer determines under the special rule minus the sum of: Any amount you repaid your employer, plus Any amount specifically excluded from income by law. Www irs gov app vita The special valuation rules are the following. Www irs gov app vita The automobile lease rule. Www irs gov app vita The vehicle cents-per-mile rule. Www irs gov app vita The commuting rule. Www irs gov app vita The unsafe conditions commuting rule. Www irs gov app vita The employer-operated eating-facility rule. Www irs gov app vita   For more information on these rules, see Publication 15-B, Employer's Tax Guide to Fringe Benefits. Www irs gov app vita    For information on the non-commercial flight and commercial flight valuation rules, see sections 1. Www irs gov app vita 61-21(g) and 1. Www irs gov app vita 61-21(h) of the regulations. Www irs gov app vita Retirement Plan Contributions Your employer's contributions to a qualified retirement plan for you are not included in income at the time contributed. Www irs gov app vita (Your employer can tell you whether your retirement plan is qualified. Www irs gov app vita ) However, the cost of life insurance coverage included in the plan may have to be included. Www irs gov app vita See Group-Term Life Insurance , earlier, under Fringe Benefits. Www irs gov app vita If your employer pays into a nonqualified plan for you, you generally must include the contributions in your income as wages for the tax year in which the contributions are made. Www irs gov app vita However, if your interest in the plan is not transferable or is subject to a substantial risk of forfeiture (you have a good chance of losing it) at the time of the contribution, you do not have to include the value of your interest in your income until it is transferable or is no longer subject to a substantial risk of forfeiture. Www irs gov app vita For information on distributions from retirement plans, see Publication 575 (or Publication 721, Tax Guide to U. Www irs gov app vita S. Www irs gov app vita Civil Service Retirement Benefits, if you are a federal employee or retiree). Www irs gov app vita Elective Deferrals If you are covered by certain kinds of retirement plans, you can choose to have part of your compensation contributed by your employer to a retirement fund, rather than have it paid to you. Www irs gov app vita The amount you set aside (called an elective deferral) is treated as an employer contribution to a qualified plan. Www irs gov app vita An elective deferral, other than a designated Roth contribution (discussed later), is not included in wages subject to income tax at the time contributed. Www irs gov app vita However, it is included in wages subject to social security and Medicare taxes. Www irs gov app vita Elective deferrals include elective contributions to the following retirement plans. Www irs gov app vita Cash or deferred arrangements (section 401(k) plans). Www irs gov app vita The Thrift Savings Plan for federal employees. Www irs gov app vita Salary reduction simplified employee pension plans (SARSEP). Www irs gov app vita Savings incentive match plans for employees (SIMPLE plans). Www irs gov app vita Tax-sheltered annuity plans (403(b) plans). Www irs gov app vita Section 501(c)(18)(D) plans. Www irs gov app vita (But see Reporting by employer , later. Www irs gov app vita ) Section 457 plans. Www irs gov app vita Qualified automatic contribution arrangements. Www irs gov app vita   Under a qualified automatic contribution arrangement, your employer can treat you as having elected to have a part of your compensation contributed to a section 401(k) plan. Www irs gov app vita You are to receive written notice of your rights and obligations under the qualified automatic contribution arrangement. Www irs gov app vita The notice must explain: Your rights to elect not to have elective contributions made, or to have contributions made at a different percentage, and How contributions made will be invested in the absence of any investment decision by you. Www irs gov app vita   You must be given a reasonable period of time after receipt of the notice and before the first elective contribution is made to make an election with respect to the contributions. Www irs gov app vita Overall limit on deferrals. Www irs gov app vita   For 2013, in most cases, you should not have deferred more than a total of $17,500 of contributions to the plans listed in (1) through (3), earlier. Www irs gov app vita The specific plan limits for the plans listed in (4) through (7), earlier, are discussed later. Www irs gov app vita Amounts deferred under specific plan limits are part of the overall limit on deferrals. Www irs gov app vita   Your employer or plan administrator should apply the proper annual limit when figuring your plan contributions. Www irs gov app vita However, you are responsible for monitoring the total you defer to ensure that the deferrals are not more than the overall limit. Www irs gov app vita Catch-up contributions. Www irs gov app vita   You may be allowed catch-up contributions (additional elective deferrals) if you are age 50 or older by the end of your tax year. Www irs gov app vita For more information about catch-up contributions to 403(b) plans, see chapter 6 of Publication 571, Tax Sheltered Annuity Plans. Www irs gov app vita   For more information about additional elective deferrals to: SEPs (SARSEPs), see Salary Reduction Simplified Employee Pension in chapter 2 of Publication 560, Retirement Plans for Small Business. Www irs gov app vita SIMPLE plans, see How Much Can Be Contributed on Your Behalf? in chapter 3 of Publication 590. Www irs gov app vita Section 457 plans, see Limit for deferrals under section 457 plans , later. Www irs gov app vita Limit for deferrals under SIMPLE plans. Www irs gov app vita   If you are a participant in a SIMPLE plan, you generally should not have deferred more than $12,000 in 2013. Www irs gov app vita Amounts you defer under a SIMPLE plan count toward the overall limit ($17,500 for 2013) and may affect the amount you can defer under other elective deferral plans. Www irs gov app vita Limit for tax-sheltered annuities. Www irs gov app vita   If you are a participant in a tax-sheltered annuity plan (403(b) plan), the limit on elective deferrals for 2013 generally is $17,500. Www irs gov app vita However, if you have at least 15 years of service with a public school system, a hospital, a home health service agency, a health and welfare service agency, a church, or a convention or association of churches (or associated organization), the limit on elective deferrals is increased by the least of the following amounts. Www irs gov app vita $3,000, $15,000, reduced by the sum of: The additional pre-tax elective deferrals made in earlier years because of this rule, plus The aggregate amount of designated Roth contributions permitted for prior tax years because of this rule, or $5,000 times the number of your years of service for the organization, minus the total elective deferrals made by your employer on your behalf for earlier years. Www irs gov app vita   If you qualify for the 15-year rule, your elective deferrals under this limit can be as high as $20,500 for 2013. Www irs gov app vita   For more information, see Publication 571. Www irs gov app vita Limit for deferral under section 501(c)(18) plans. Www irs gov app vita   If you are a participant in a section 501(c)(18) plan (a trust created before June 25, 1959, funded only by employee contributions), you should have deferred no more than the lesser of $7,000 or 25% of your compensation. Www irs gov app vita Amounts you defer under a section 501(c)(18) plan count toward the overall limit ($17,500 in 2013) and may affect the amount you can defer under other elective deferral plans. Www irs gov app vita Limit for deferrals under section 457 plans. Www irs gov app vita   If you are a participant in a section 457 plan (a deferred compensation plan for employees of state or local governments or tax-exempt organizations), you should have deferred no more than the lesser of your includible compensation or $17,500 in 2013. Www irs gov app vita However, if you are within 3 years of normal retirement age, you may be allowed an increased limit if the plan allows it. Www irs gov app vita See Increased limit , later. Www irs gov app vita Includible compensation. Www irs gov app vita   This is the pay you received for the year from the employer who maintained the section 457 plan. Www irs gov app vita In most cases, it includes all the following payments. Www irs gov app vita Wages and salaries. Www irs gov app vita Fees for professional services. Www irs gov app vita The value of any employer-provided qualified transportation fringe benefit (defined under Transportation , earlier) that is not included in your income. Www irs gov app vita Other amounts received (cash or noncash) for personal services you performed, including, but not limited to, the following items. Www irs gov app vita Commissions and tips. Www irs gov app vita Fringe benefits. Www irs gov app vita Bonuses. Www irs gov app vita Employer contributions (elective deferrals) to: The section 457 plan. Www irs gov app vita Qualified cash or deferred arrangements (section 401(k) plans) that are not included in your income. Www irs gov app vita A salary reduction simplified employee pension (SARSEP). Www irs gov app vita A tax-sheltered annuity (section 403(b) plan). Www irs gov app vita A savings incentive match plan for employees (SIMPLE plan). Www irs gov app vita A section 125 cafeteria plan. Www irs gov app vita   Instead of using the amounts listed earlier to determine your includible compensation, your employer can use any of the following amounts. Www irs gov app vita Your wages as defined for income tax withholding purposes. Www irs gov app vita Your wages as reported in box 1 of Form W-2. Www irs gov app vita Your wages that are subject to social security withholding (including elective deferrals). Www irs gov app vita Increased limit. Www irs gov app vita   During any, or all, of the last 3 years ending before you reach normal retirement age under the plan, your plan may provide that your limit is the lesser of: Twice the annual limit ($35,000 for 2013), or The basic annual limit plus the amount of the basic limit not used in prior years (only allowed if not using age 50 or over catch-up contributions). Www irs gov app vita Catch-up contributions. Www irs gov app vita   You generally can have additional elective deferrals made to your governmental section 457 plan if: You reached age 50 by the end of the year, and No other elective deferrals can be made for you to the plan for the year because of limits or restrictions. Www irs gov app vita If you qualify, your limit can be the lesser of your includible compensation or $17,500, plus $5,500. Www irs gov app vita However, if you are within 3 years of retirement age and your plan provides the increased limit, discussed earlier, that limit may be higher. Www irs gov app vita Designated Roth contributions. Www irs gov app vita   Employers with section 401(k) and section 403(b) plans can create qualified Roth contribution programs so that you may elect to have part or all of your elective deferrals to the plan designated as after-tax Roth contributions. Www irs gov app vita Designated Roth contributions are treated as elective deferrals, except that they are included in income. Www irs gov app vita Your retirement plan must maintain separate accounts and recordkeeping for the designated Roth contributions. Www irs gov app vita   Qualified distributions from a Roth plan are not included in income. Www irs gov app vita In most cases, a distribution made before the end of the 5-tax-year period beginning with the first tax year for which you made a designated Roth contribution to the plan is not a qualified distribution. Www irs gov app vita Reporting by employer. Www irs gov app vita   Your employer generally should not include elective deferrals in your wages in box 1 of Form W-2. Www irs gov app vita Instead, your employer should mark the Retirement plan checkbox in box 13 and show the total amount deferred in box 12. Www irs gov app vita Section 501(c)(18)(D) contributions. Www irs gov app vita   Wages shown in box 1 of your Form W-2 should not have been reduced for contributions you made to a section 501(c)(18)(D) retirement plan. Www irs gov app vita The amount you contributed should be identified with code “H” in box 12. Www irs gov app vita You may deduct the amount deferred subject to the limits that apply. Www irs gov app vita Include your deduction in the total on Form 1040, line 36. Www irs gov app vita Enter the amount and “501(c)(18)(D)” on the dotted line next to line 36. Www irs gov app vita Designated Roth contributions. Www irs gov app vita    These contributions are elective deferrals but are included in your wages in box 1 of Form W-2. Www irs gov app vita Designated Roth contributions to a section 401(k) plan are reported using code AA in box 12, or, for section 403(b) plans, code BB in box 12. Www irs gov app vita Excess deferrals. Www irs gov app vita   If your deferrals exceed the limit, you must notify your plan by the date required by the plan. Www irs gov app vita If the plan permits, the excess amount will be distributed to you. Www irs gov app vita If you participate in more than one plan, you can have the excess paid out of any of the plans that permit these distributions. Www irs gov app vita You must notify each plan by the date required by that plan of the amount to be paid from that particular plan. Www irs gov app vita The plan then must pay you the amount of the excess, along with any income earned on that amount, by April 15 of the following year. Www irs gov app vita   You must include the excess deferral in your income for the year of the deferral unless you have an excess deferral of a designated Roth contribution. Www irs gov app vita File Form 1040 to add the excess deferral amount to your wages on line 7. Www irs gov app vita Do not use Form 1040A or Form 1040EZ to report excess deferral amounts. Www irs gov app vita Excess not distributed. Www irs gov app vita   If you do not take out the excess amount, you cannot include it in the cost of the contract even though you included it in your income. Www irs gov app vita Therefore, you are taxed twice on the excess deferral left in the plan—once when you contribute it, and again when you receive it as a distribution. Www irs gov app vita Excess distributed to you. Www irs gov app vita   If you take out the excess after the year of the deferral and you receive the corrective distribution by April 15 of the following year, do not include it in income again in the year you receive it. Www irs gov app vita If you receive it later, you must include it in income in both the year of the deferral and the year you receive it. Www irs gov app vita Any income on the excess deferral taken out is taxable in the tax year in which you take it out. Www irs gov app vita If you take out part of the excess deferral and the income on it, allocate the distribution proportionately between the excess deferral and the income. Www irs gov app vita    You should receive a Form 1099-R for the year in which the excess deferral is distributed to you. Www irs gov app vita Use the following rules to report a corrective distribution shown on Form 1099-R for 2013. Www irs gov app vita If the distribution was for a 2013 excess deferral, your Form 1099-R should have the code “8” in box 7. Www irs gov app vita Add the excess deferral amount to your wages on your 2013 tax return. Www irs gov app vita If the distribution was for a 2013 excess deferral to a designated Roth account, your Form 1099-R should have code “B” in box 7. Www irs gov app vita Do not add this amount to your wages on your 2013 return. Www irs gov app vita If the distribution was for a 2012 excess deferral, your Form 1099-R should have the code “P” in box 7. Www irs gov app vita If you did not add the excess deferral amount to your wages on your 2012 tax return, you must file an amended return on Form 1040X, Amended U. Www irs gov app vita S. Www irs gov app vita Individual Income Tax Return. Www irs gov app vita If you did not receive the distribution by April 15, 2013, you also must add it to your wages on your 2013 tax return. Www irs gov app vita If the distribution was for the income earned on an excess deferral, your Form 1099-R should have the code “8” in box 7. Www irs gov app vita Add the income amount to your wages on your 2013 income tax return, regardless of when the excess deferral was made. Www irs gov app vita Report a loss on a corrective distribution of an excess deferral in the year the excess amount (reduced by the loss) is distributed to you. Www irs gov app vita Include the loss as a negative amount on Form 1040, line 21 and identify it as “Loss on Excess Deferral Distribution. Www irs gov app vita ”    Even though a corrective distribution of excess deferrals is reported on Form 1099-R, it is not otherwise treated as a distribution from the plan. Www irs gov app vita It cannot be rolled over into another plan, and it is not subject to the additional tax on early distributions. Www irs gov app vita Excess Contributions If you are a highly compensated employee, the total of your elective deferrals and other contributions made for you for any year under a section 401(k) plan or SARSEP can be, as a percentage of pay, no more than 125% of the average deferral percentage (ADP) of all eligible non-highly compensated employees. Www irs gov app vita If the total contributed to the plan is more than the amount allowed under the ADP test, the excess contributions must be either distributed to you or recharacterized as after-tax employee contributions by treating them as distributed to you and then contributed by you to the plan. Www irs gov app vita You must include the excess contributions in your income as wages on Form 1040, line 7. Www irs gov app vita You cannot use Form 1040A or Form 1040EZ to report excess contribution amounts. Www irs gov app vita If you receive a corrective distribution of excess contributions (and allocable income), it is included in your income in the year of the distribution. Www irs gov app vita The allocable income is the amount of gain or loss through the end of the plan year for which the contribution was made that is allocable to the excess contributions. Www irs gov app vita You should receive a Form 1099-R for the year the excess contributions are distributed to you. Www irs gov app vita Add the distribution to your wages for that year. Www irs gov app vita Even though a corrective distribution of excess contributions is reported on Form 1099-R, it is not otherwise treated as a distribution from the plan. Www irs gov app vita It cannot be rolled over into another plan, and it is not subject to the additional tax on early distributions. Www irs gov app vita Excess Annual Additions The amount contributed in 2013 to a defined contribution plan is generally limited to the lesser of 100% of your compensation or $51,000. Www irs gov app vita Under certain circumstances, contributions that exceed these limits (excess annual additions) may be corrected by a distribution of your elective deferrals or a return of your after-tax contributions and earnings from these contributions. Www irs gov app vita A corrective payment of excess annual additions consisting of elective deferrals or earnings from your after-tax contributions is fully taxable in the year paid. Www irs gov app vita A corrective payment consisting of your after-tax contributions is not taxable. Www irs gov app vita If you received a corrective payment of excess annual additions, you should receive a separate Form 1099-R for the year of the payment with the code “E” in box 7. Www irs gov app vita Report the total payment shown in box 1 of Form 1099-R on line 16a of Form 1040 or line 12a of Form 1040A. Www irs gov app vita Report the taxable amount shown in box 2a of Form 1099-R on line 16b of Form 1040 or line 12b of Form 1040A. Www irs gov app vita Even though a corrective distribution of excess annual additions is reported on Form 1099-R, it is not otherwise treated as a distribution from the plan. Www irs gov app vita It cannot be rolled over into another plan, and it is not subject to the additional tax on early distributions. Www irs gov app vita Stock Options If you receive an option to buy or sell stock or other property as payment for your services, you may have income when you receive the option (the grant), when you exercise the option (use it to buy or sell the stock or other property), or when you sell or otherwise dispose of the option or property acquired through exercise of the option. Www irs gov app vita The timing, type, and amount of income inclusion depend on whether you receive a nonstatutory stock option or a statutory stock option. Www irs gov app vita Your employer can tell you which kind of option you hold. Www irs gov app vita Nonstatutory Stock Options Grant of option. Www irs gov app vita   If you are granted a nonstatutory stock option, you may have income when you receive the option. Www irs gov app vita The amount of income to include and the time to include it depend on whether the fair market value of the option can be readily determined. Www irs gov app vita The fair market value of an option can be readily determined if it is actively traded on an established market. Www irs gov app vita    The fair market value of an option that is not traded on an established market can be readily determined only if all of the following conditions exist. Www irs gov app vita You can transfer the option. Www irs gov app vita You can exercise the option immediately in full. Www irs gov app vita The option or the property subject to the option is not subject to any condition or restriction (other than a condition to secure payment of the purchase price) that has a significant effect on the fair market value of the option. Www irs gov app vita The fair market value of the option privilege can be readily determined. Www irs gov app vita The option privilege for an option to buy is the opportunity to benefit during the option's exercise period from any increase in the value of property subject to the option without risking any capital. Www irs gov app vita For example, if during the exercise period the fair market value of stock subject to an option is greater than the option's exercise price, a profit may be realized by exercising the option and immediately selling the stock at its higher value. Www irs gov app vita The option privilege for an option to sell is the opportunity to benefit during the exercise period from a decrease in the value of the property subject to the option. Www irs gov app vita If you or a member of your family is an officer, director, or more-than-10% owner of an expatriated corporation, you may owe an excise tax on the value of nonstatutory options and other stock-based compensation from that corporation. Www irs gov app vita For more information on the excise tax, see Internal Revenue Code section 4985. Www irs gov app vita Option with readily determinable value. Www irs gov app vita   If you receive a nonstatutory stock option that has a readily determinable fair market value at the time it is granted to you, the option is treated like other property received as compensation. Www irs gov app vita See Restricted Property , later, for rules on how much income to include and when to include it. Www irs gov app vita However, the rule described in that discussion for choosing to include the value of property in your income for the year of the transfer does not apply to a nonstatutory option. Www irs gov app vita Option without readily determinable value. Www irs gov app vita   If the fair market value of the option is not readily determinable at the time it is granted to you (even if it is determined later), you do not have income until you exercise or transfer the option. Www irs gov app vita    Exercise or transfer of option. Www irs gov app vita   When you exercise a nonstatutory stock option, the amount to include in your income depends on whether the option had a readily determinable value. Www irs gov app vita Option with readily determinable value. Www irs gov app vita   When you exercise a nonstatutory stock option that had a readily determinable value at the time the option was granted, you do not have to include any amount in income. Www irs gov app vita Option without readily determinable value. Www irs gov app vita   When you exercise a nonstatutory stock option that did not have a readily determinable value at the time the option was granted, the restricted prope
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The Www Irs Gov App Vita

Www irs gov app vita 1. Www irs gov app vita   Nonresident Alien or Resident Alien? Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Nonresident Aliens Resident AliensGreen Card Test Substantial Presence Test Effect of Tax Treaties Dual-Status AliensFirst Year of Residency Choosing Resident Alien Status Last Year of Residency Nonresident Spouse Treated as a ResidentHow To Make the Choice Aliens From American Samoa or Puerto Rico Introduction You should first determine whether, for income tax purposes, you are a nonresident alien or a resident alien. Www irs gov app vita If you are both a nonresident and resident in the same year, you have a dual status. Www irs gov app vita Dual status is explained later. Www irs gov app vita Also explained later are a choice to treat your nonresident spouse as a resident and some other special situations. Www irs gov app vita Topics - This chapter discusses: How to determine if you are a nonresident, resident, or dual-status alien, and How to treat a nonresident spouse as a resident alien. Www irs gov app vita Useful Items - You may want to see: Form (and Instructions) 1040 U. Www irs gov app vita S. Www irs gov app vita Individual Income Tax Return 1040A U. Www irs gov app vita S. Www irs gov app vita Individual Income Tax Return 1040NR U. Www irs gov app vita S. Www irs gov app vita Nonresident Alien Income Tax Return 8833 Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b) 8840 Closer Connection Exception Statement for Aliens 8843 Statement for Exempt Individuals and Individuals With a Medical Condition See chapter 12 for information about getting these forms. Www irs gov app vita Nonresident Aliens If you are an alien (not a U. Www irs gov app vita S. Www irs gov app vita citizen), you are considered a nonresident alien unless you meet one of the two tests described next under Resident Aliens. Www irs gov app vita Resident Aliens You are a resident alien of the United States for tax purposes if you meet either the green card test or the substantial presence test for calendar year 2013 (January 1–December 31). Www irs gov app vita Even if you do not meet either of these tests, you may be able to choose to be treated as a U. Www irs gov app vita S. Www irs gov app vita resident for part of the year. Www irs gov app vita See First-Year Choice under Dual-Status Aliens, later. Www irs gov app vita Green Card Test You are a resident for tax purposes if you are a lawful permanent resident of the United States at any time during calendar year 2013. Www irs gov app vita (However, see Dual-Status Aliens , later. Www irs gov app vita ) This is known as the “green card” test. Www irs gov app vita You are a lawful permanent resident of the United States at any time if you have been given the privilege, according to the immigration laws, of residing permanently in the United States as an immigrant. Www irs gov app vita You generally have this status if the U. Www irs gov app vita S. Www irs gov app vita Citizenship and Immigration Services (USCIS) (or its predecessor organization) has issued you an alien registration card, also known as a “green card. Www irs gov app vita ” You continue to have resident status under this test unless the status is taken away from you or is administratively or judicially determined to have been abandoned. Www irs gov app vita Resident status taken away. Www irs gov app vita   Resident status is considered to have been taken away from you if the U. Www irs gov app vita S. Www irs gov app vita government issues you a final administrative or judicial order of exclusion or deportation. Www irs gov app vita A final judicial order is an order that you may no longer appeal to a higher court of competent jurisdiction. Www irs gov app vita Resident status abandoned. Www irs gov app vita   An administrative or judicial determination of abandonment of resident status may be initiated by you, the USCIS, or a U. Www irs gov app vita S. Www irs gov app vita consular officer. Www irs gov app vita    If you initiate the determination, your resident status is considered to be abandoned when you file either of the following with the USCIS or U. Www irs gov app vita S. Www irs gov app vita consular officer. Www irs gov app vita Your application for abandonment. Www irs gov app vita Your Alien Registration Receipt Card attached to a letter stating your intent to abandon your resident status. Www irs gov app vita You must file the letter by certified mail, return receipt requested. Www irs gov app vita You must keep a copy of the letter and proof that it was mailed and received. Www irs gov app vita    Until you have proof your letter was received, you remain a resident alien for tax purposes even if the USCIS would not recognize the validity of your green card because it is more than ten years old or because you have been absent from the United States for a period of time. Www irs gov app vita   If the USCIS or U. Www irs gov app vita S. Www irs gov app vita consular officer initiates this determination, your resident status will be considered to be abandoned when the final administrative order of abandonment is issued. Www irs gov app vita If you are granted an appeal to a federal court of competent jurisdiction, a final judicial order is required. Www irs gov app vita   Under U. Www irs gov app vita S. Www irs gov app vita immigration law, a lawful permanent resident who is required to file a tax return as a resident and fails to do so may be regarded as having abandoned status and may lose permanent resident status. Www irs gov app vita    A long-term resident who ceases to be a lawful permanent resident may be subject to special reporting requirements and tax provisions. Www irs gov app vita See Expatriation Tax in chapter 4. Www irs gov app vita Termination of residency after June 3, 2004, and before June 17, 2008. Www irs gov app vita   If you terminated your residency after June 3, 2004, and before June 17, 2008, you will still be considered a U. Www irs gov app vita S. Www irs gov app vita resident for tax purposes until you notify the Secretary of Homeland Security and file Form 8854, Initial and Annual Expatriation Statement. Www irs gov app vita Termination of residency after June 16, 2008. Www irs gov app vita   For information on your residency termination date, see Former long-term resident under Expatriation After June 16, 2008, in chapter 4. Www irs gov app vita Substantial Presence Test You will be considered a U. Www irs gov app vita S. Www irs gov app vita resident for tax purposes if you meet the substantial presence test for calendar year 2013. Www irs gov app vita To meet this test, you must be physically present in the United States on at least: 31 days during 2013, and 183 days during the 3-year period that includes 2013, 2012, and 2011, counting: All the days you were present in 2013, and 1/3 of the days you were present in 2012, and 1/6 of the days you were present in 2011. Www irs gov app vita Example. Www irs gov app vita You were physically present in the United States on 120 days in each of the years 2011, 2012, and 2013. Www irs gov app vita To determine if you meet the substantial presence test for 2013, count the full 120 days of presence in 2013, 40 days in 2012 (1/3 of 120), and 20 days in 2011 (1/6 of 120). Www irs gov app vita Because the total for the 3-year period is 180 days, you are not considered a resident under the substantial presence test for 2013. Www irs gov app vita The term United States includes the following areas. Www irs gov app vita All 50 states and the District of Columbia. Www irs gov app vita The territorial waters of the United States. Www irs gov app vita The seabed and subsoil of those submarine areas that are adjacent to U. Www irs gov app vita S. Www irs gov app vita territorial waters and over which the United States has exclusive rights under international law to explore and exploit natural resources. Www irs gov app vita The term does not include U. Www irs gov app vita S. Www irs gov app vita possessions and territories or U. Www irs gov app vita S. Www irs gov app vita airspace. Www irs gov app vita Days of Presence in the United States You are treated as present in the United States on any day you are physically present in the country at any time during the day. Www irs gov app vita However, there are exceptions to this rule. Www irs gov app vita Do not count the following as days of presence in the United States for the substantial presence test. Www irs gov app vita Days you commute to work in the United States from a residence in Canada or Mexico if you regularly commute from Canada or Mexico. Www irs gov app vita Days you are in the United States for less than 24 hours when you are in transit between two places outside the United States. Www irs gov app vita Days you are in the United States as a crew member of a foreign vessel. Www irs gov app vita Days you are unable to leave the United States because of a medical condition that arose while you are in the United States. Www irs gov app vita Days you are an exempt individual. Www irs gov app vita The specific rules that apply to each of these categories are discussed next. Www irs gov app vita Regular commuters from Canada or Mexico. Www irs gov app vita   Do not count the days on which you commute to work in the United States from your residence in Canada or Mexico if you regularly commute from Canada or Mexico. Www irs gov app vita You are considered to commute regularly if you commute to work in the United States on more than 75% of the workdays during your working period. Www irs gov app vita   For this purpose, “commute” means to travel to work and return to your residence within a 24-hour period. Www irs gov app vita “Workdays” are the days on which you work in the United States or Canada or Mexico. Www irs gov app vita “Working period” means the period beginning with the first day in the current year on which you are physically present in the United States to work and ending on the last day in the current year on which you are physically present in the United States to work. Www irs gov app vita If your work requires you to be present in the United States only on a seasonal or cyclical basis, your working period begins on the first day of the season or cycle on which you are present in the United States to work and ends on the last day of the season or cycle on which you are present in the United States to work. Www irs gov app vita You can have more than one working period in a calendar year, and your working period can begin in one calendar year and end in the following calendar year. Www irs gov app vita Example. Www irs gov app vita Maria Perez lives in Mexico and works for Compañía ABC in its office in Mexico. Www irs gov app vita She was assigned to her firm's office in the United States from February 1 through June 1. Www irs gov app vita On June 2, she resumed her employment in Mexico. Www irs gov app vita On 69 days, Maria commuted each morning from her home in Mexico to work in Compañía ABC's U. Www irs gov app vita S. Www irs gov app vita office. Www irs gov app vita She returned to her home in Mexico on each of those evenings. Www irs gov app vita On 7 days, she worked in her firm's Mexico office. Www irs gov app vita For purposes of the substantial presence test, Maria does not count the days she commuted to work in the United States because those days equal more than 75% of the workdays during the working period (69 workdays in the United States divided by 76 workdays in the working period equals 90. Www irs gov app vita 8%). Www irs gov app vita Days in transit. Www irs gov app vita   Do not count the days you are in the United States for less than 24 hours and you are in transit between two places outside the United States. Www irs gov app vita You are considered to be in transit if you engage in activities that are substantially related to completing travel to your foreign destination. Www irs gov app vita For example, if you travel between airports in the United States to change planes en route to your foreign destination, you are considered to be in transit. Www irs gov app vita However, you are not considered to be in transit if you attend a business meeting while in the United States. Www irs gov app vita This is true even if the meeting is held at the airport. Www irs gov app vita Crew members. Www irs gov app vita   Do not count the days you are temporarily present in the United States as a regular crew member of a foreign vessel (boat or ship) engaged in transportation between the United States and a foreign country or a U. Www irs gov app vita S. Www irs gov app vita possession. Www irs gov app vita However, this exception does not apply if you otherwise engage in any trade or business in the United States on those days. Www irs gov app vita Medical condition. Www irs gov app vita   Do not count the days you intended to leave, but could not leave the United States because of a medical condition or problem that arose while you were in the United States. Www irs gov app vita Whether you intended to leave the United States on a particular day is determined based on all the facts and circumstances. Www irs gov app vita For example, you may be able to establish that you intended to leave if your purpose for visiting the United States could be accomplished during a period that is not long enough to qualify you for the substantial presence test. Www irs gov app vita However, if you need an extended period of time to accomplish the purpose of your visit and that period would qualify you for the substantial presence test, you would not be able to establish an intent to leave the United States before the end of that extended period. Www irs gov app vita   In the case of an individual who is judged mentally incompetent, proof of intent to leave the United States can be determined by analyzing the individual's pattern of behavior before he or she was judged mentally incompetent. Www irs gov app vita   If you qualify to exclude days of presence because of a medical condition, you must file a fully completed Form 8843 with the IRS. Www irs gov app vita See Form 8843 , later. Www irs gov app vita   You cannot exclude any days of presence in the United States under the following circumstances. Www irs gov app vita You were initially prevented from leaving, were then able to leave, but remained in the United States beyond a reasonable period for making arrangements to leave. Www irs gov app vita You returned to the United States for treatment of a medical condition that arose during a prior stay. Www irs gov app vita The condition existed before your arrival in the United States and you were aware of the condition. Www irs gov app vita It does not matter whether you needed treatment for the condition when you entered the United States. Www irs gov app vita Exempt individual. Www irs gov app vita   Do not count days for which you are an exempt individual. Www irs gov app vita The term “exempt individual” does not refer to someone exempt from U. Www irs gov app vita S. Www irs gov app vita tax, but to anyone in the following categories. Www irs gov app vita An individual temporarily present in the United States as a foreign government-related individual under an “A” or “G” visa. Www irs gov app vita A teacher or trainee temporarily present in the United States under a “J” or “Q” visa, who substantially complies with the requirements of the visa. Www irs gov app vita A student temporarily present in the United States under an “F,” “J,” “M,” or “Q” visa, who substantially complies with the requirements of the visa. Www irs gov app vita A professional athlete temporarily in the United States to compete in a charitable sports event. Www irs gov app vita   The specific rules for each of these four categories (including any rules on the length of time you will be an exempt individual) are discussed next. Www irs gov app vita Foreign government-related individuals. Www irs gov app vita   A foreign government-related individual is an individual (or a member of the individual's immediate family) who is temporarily present in the United States: As a full-time employee of an international organization, By reason of diplomatic status, or By reason of a visa (other than a visa that grants lawful permanent residence) that the Secretary of the Treasury determines represents full-time diplomatic or consular status. Www irs gov app vita Note. Www irs gov app vita You are considered temporarily present in the United States regardless of the actual amount of time you are present in the United States. Www irs gov app vita    An international organization is any public international organization that the President of the United States has designated by Executive Order as being entitled to the privileges, exemptions, and immunities provided for in the International Organizations Act. Www irs gov app vita An individual is a full-time employee if his or her work schedule meets the organization's standard full-time work schedule. Www irs gov app vita   An individual is considered to have full-time diplomatic or consular status if he or she: Has been accredited by a foreign government that is recognized by the United States, Intends to engage primarily in official activities for that foreign government while in the United States, and Has been recognized by the President, Secretary of State, or a consular officer as being entitled to that status. Www irs gov app vita Note. Www irs gov app vita If you are present in the United States under an “A” or “G” visa you are considered a foreign government-related individual (with full-time diplomatic or consular status). Www irs gov app vita None of your days count for purposes of the substantial presence test. Www irs gov app vita   Members of the immediate family include the individual's spouse and unmarried children (whether by blood or adoption) but only if the spouse's or unmarried children's visa statuses are derived from and dependent on the exempt individual's visa classification. Www irs gov app vita Unmarried children are included only if they: Are under 21 years of age, Reside regularly in the exempt individual's household, and Are not members of another household. Www irs gov app vita Teachers and trainees. Www irs gov app vita   A teacher or trainee is an individual, other than a student, who is temporarily in the United States under a “J” or “Q” visa and substantially complies with the requirements of that visa. Www irs gov app vita You are considered to have substantially complied with the visa requirements if you have not engaged in activities that are prohibited by U. Www irs gov app vita S. Www irs gov app vita immigration laws and could result in the loss of your visa status. Www irs gov app vita   Also included are immediate family members of exempt teachers and trainees. Www irs gov app vita See the definition of immediate family, earlier, under Foreign government-related individuals . Www irs gov app vita   You will not be an exempt individual as a teacher or trainee in 2013 if you were exempt as a teacher, trainee, or student for any part of 2 of the 6 preceding calendar years. Www irs gov app vita However, you will be an exempt individual if all of the following conditions are met. Www irs gov app vita You were exempt as a teacher, trainee, or student for any part of 3 (or fewer) of the 6 preceding calendar years, A foreign employer paid all of your compensation during 2013, and A foreign employer paid all of your compensation during each of the preceding 6 years you were present in the United States as a teacher or trainee. Www irs gov app vita A foreign employer includes an office or place of business of an American entity in a foreign country or a U. Www irs gov app vita S. Www irs gov app vita possession. Www irs gov app vita   If you qualify to exclude days of presence as a teacher or trainee, you must file a fully completed Form 8843 with the IRS. Www irs gov app vita See Form 8843 , later. Www irs gov app vita Example. Www irs gov app vita Carla was temporarily in the United States during the year as a teacher on a “J” visa. Www irs gov app vita Her compensation for the year was paid by a foreign employer. Www irs gov app vita Carla was treated as an exempt teacher for the previous 2 years but her compensation was not paid by a foreign employer. Www irs gov app vita She will not be considered an exempt individual for the current year because she was exempt as a teacher for at least 2 of the past 6 years. Www irs gov app vita If her compensation for the past 2 years had been paid by a foreign employer, she would be an exempt individual for the current year. Www irs gov app vita Students. Www irs gov app vita   A student is any individual who is temporarily in the United States on an “F,” “J,” “M,” or “Q” visa and who substantially complies with the requirements of that visa. Www irs gov app vita You are considered to have substantially complied with the visa requirements if you have not engaged in activities that are prohibited by U. Www irs gov app vita S. Www irs gov app vita immigration laws and could result in the loss of your visa status. Www irs gov app vita   Also included are immediate family members of exempt students. Www irs gov app vita See the definition of immediate family, earlier, under Foreign government-related individuals . Www irs gov app vita   You will not be an exempt individual as a student in 2013 if you have been exempt as a teacher, trainee, or student for any part of more than 5 calendar years unless you meet both of the following requirements. Www irs gov app vita You establish that you do not intend to reside permanently in the United States. Www irs gov app vita You have substantially complied with the requirements of your visa. Www irs gov app vita The facts and circumstances to be considered in determining if you have demonstrated an intent to reside permanently in the United States include, but are not limited to, the following. Www irs gov app vita Whether you have maintained a closer connection to a foreign country (discussed later). Www irs gov app vita Whether you have taken affirmative steps to change your status from nonimmigrant to lawful permanent resident as discussed later under Closer Connection to a Foreign Country . Www irs gov app vita   If you qualify to exclude days of presence as a student, you must file a fully completed Form 8843 with the IRS. Www irs gov app vita See Form 8843 , later. Www irs gov app vita Professional athletes. Www irs gov app vita   A professional athlete who is temporarily in the United States to compete in a charitable sports event is an exempt individual. Www irs gov app vita A charitable sports event is one that meets the following conditions. Www irs gov app vita The main purpose is to benefit a qualified charitable organization. Www irs gov app vita The entire net proceeds go to charity. Www irs gov app vita Volunteers perform substantially all the work. Www irs gov app vita   In figuring the days of presence in the United States, you can exclude only the days on which you actually competed in a sports event. Www irs gov app vita You cannot exclude the days on which you were in the United States to practice for the event, to perform promotional or other activities related to the event, or to travel between events. Www irs gov app vita   If you qualify to exclude days of presence as a professional athlete, you must file a fully completed Form 8843 with the IRS. Www irs gov app vita See Form 8843 , next. Www irs gov app vita Form 8843. Www irs gov app vita   If you exclude days of presence in the United States because you fall into any of the following categories, you must file a fully completed Form 8843. Www irs gov app vita You were unable to leave the United States as planned because of a medical condition or problem. Www irs gov app vita You were temporarily in the United States as a teacher or trainee on a “J” or “Q” visa. Www irs gov app vita You were temporarily in the United States as a student on an “F,” “J,” “M,” or “Q” visa. Www irs gov app vita You were a professional athlete competing in a charitable sports event. Www irs gov app vita Attach Form 8843 to your 2013 income tax return. Www irs gov app vita If you do not have to file a return, send Form 8843 to the Department of the Treasury, Internal Revenue Service Center, Austin, TX 73301-0215, by the due date for filing Form 1040NR or Form 1040NR-EZ. Www irs gov app vita The due date for filing is discussed in chapter 7. Www irs gov app vita If you do not timely file Form 8843, you cannot exclude the days you were present in the United States as a professional athlete or because of a medical condition that arose while you were in the United States. Www irs gov app vita This does not apply if you can show by clear and convincing evidence that you took reasonable actions to become aware of the filing requirements and significant steps to comply with those requirements. Www irs gov app vita Closer Connection to a Foreign Country Even if you meet the substantial presence test, you can be treated as a nonresident alien if you: Are present in the United States for less than 183 days during the year, Maintain a tax home in a foreign country during the year, and Have a closer connection during the year to one foreign country in which you have a tax home than to the United States (unless you have a closer connection to two foreign countries, discussed next). Www irs gov app vita Closer connection to two foreign countries. Www irs gov app vita   You can demonstrate that you have a closer connection to two foreign countries (but not more than two) if you meet all of the following conditions. Www irs gov app vita You maintained a tax home beginning on the first day of the year in one foreign country. Www irs gov app vita You changed your tax home during the year to a second foreign country. Www irs gov app vita You continued to maintain your tax home in the second foreign country for the rest of the year. Www irs gov app vita You had a closer connection to each foreign country than to the United States for the period during which you maintained a tax home in that foreign country. Www irs gov app vita You are subject to tax as a resident under the tax laws of either foreign country for the entire year or subject to tax as a resident in both foreign countries for the period during which you maintained a tax home in each foreign country. Www irs gov app vita Tax home. Www irs gov app vita   Your tax home is the general area of your main place of business, employment, or post of duty, regardless of where you maintain your family home. Www irs gov app vita Your tax home is the place where you permanently or indefinitely work as an employee or a self-employed individual. Www irs gov app vita If you do not have a regular or main place of business because of the nature of your work, then your tax home is the place where you regularly live. Www irs gov app vita If you do not fit either of these categories, you are considered an itinerant and your tax home is wherever you work. Www irs gov app vita   For determining whether you have a closer connection to a foreign country, your tax home must also be in existence for the entire current year, and must be located in the same foreign country to which you are claiming to have a closer connection. Www irs gov app vita Foreign country. Www irs gov app vita   In determining whether you have a closer connection to a foreign country, the term “foreign country” means: Any territory under the sovereignty of the United Nations or a government other than that of the United States, The territorial waters of the foreign country (determined under U. Www irs gov app vita S. Www irs gov app vita law), The seabed and subsoil of those submarine areas which are adjacent to the territorial waters of the foreign country and over which the foreign country has exclusive rights under international law to explore and exploit natural resources, and Possessions and territories of the United States. Www irs gov app vita Establishing a closer connection. Www irs gov app vita   You will be considered to have a closer connection to a foreign country than the United States if you or the IRS establishes that you have maintained more significant contacts with the foreign country than with the United States. Www irs gov app vita In determining whether you have maintained more significant contacts with the foreign country than with the United States, the facts and circumstances to be considered include, but are not limited to, the following. Www irs gov app vita The country of residence you designate on forms and documents. Www irs gov app vita The types of official forms and documents you file, such as Form W-9, Form W-8BEN, or Form W-8ECI. Www irs gov app vita The location of: Your permanent home, Your family, Your personal belongings, such as cars, furniture, clothing, and jewelry, Your current social, political, cultural, professional, or religious affiliations, Your business activities (other than those that constitute your tax home), The jurisdiction in which you hold a driver's license, The jurisdiction in which you vote, and Charitable organizations to which you contribute. Www irs gov app vita It does not matter whether your permanent home is a house, an apartment, or a furnished room. Www irs gov app vita It also does not matter whether you rent or own it. Www irs gov app vita It is important, however, that your home be available at all times, continuously, and not solely for short stays. Www irs gov app vita When you cannot have a closer connection. Www irs gov app vita   You cannot claim you have a closer connection to a foreign country if either of the following applies: You personally applied, or took other steps during the year, to change your status to that of a permanent resident, or You had an application pending for adjustment of status during the current year. Www irs gov app vita Steps to change your status to that of a permanent resident include, but are not limited to, the filing of the following forms. Www irs gov app vita Form I-508, Waiver of Rights, Privileges, Exemptions and Immunities Form I-485, Application to Register Permanent Residence or Adjust Status Form I-130, Petition for Alien Relative, on your behalf Form I-140, Immigrant Petition for Alien Worker, on your behalf Form ETA-750, Application for Alien Employment Certification, on your behalf Form DS-230, Application for Immigrant Visa and Alien Registration Form 8840. Www irs gov app vita   You must attach a fully completed Form 8840 to your income tax return to claim you have a closer connection to a foreign country or countries. Www irs gov app vita   If you do not have to file a return, send the form to the Department of the Treasury, Internal Revenue Service Center, Austin, TX 73301-0215, by the due date for filing Form 1040NR or Form 1040NR-EZ. Www irs gov app vita The due date for filing is discussed later in chapter 7. Www irs gov app vita   If you do not timely file Form 8840, you cannot claim a closer connection to a foreign country or countries. Www irs gov app vita This does not apply if you can show by clear and convincing evidence that you took reasonable actions to become aware of the filing requirements and significant steps to comply with those requirements. Www irs gov app vita Effect of Tax Treaties The rules given here to determine if you are a U. Www irs gov app vita S. Www irs gov app vita resident do not override tax treaty definitions of residency. Www irs gov app vita If you are a dual-resident taxpayer, you can still claim the benefits under an income tax treaty. Www irs gov app vita A dual-resident taxpayer is one who is a resident of both the United States and another country under each country's tax laws. Www irs gov app vita The income tax treaty between the two countries must contain a provision that provides for resolution of conflicting claims of residence (tie-breaker rule). Www irs gov app vita If you are treated as a resident of a foreign country under a tax treaty, you are treated as a nonresident alien in figuring your U. Www irs gov app vita S. Www irs gov app vita income tax. Www irs gov app vita For purposes other than figuring your tax, you will be treated as a U. Www irs gov app vita S. Www irs gov app vita resident. Www irs gov app vita For example, the rules discussed here do not affect your residency time periods as discussed later under Dual-Status Aliens . Www irs gov app vita Information to be reported. Www irs gov app vita   If you are a dual-resident taxpayer and you claim treaty benefits, you must file a return by the due date (including extensions) using Form 1040NR or Form 1040NR-EZ, and compute your tax as a nonresident alien. Www irs gov app vita You must also attach a fully completed Form 8833 if you determine your residency under a tax treaty and receive payments or income items totaling more than $100,000. Www irs gov app vita You may also have to attach Form 8938 (discussed in chapter 7). Www irs gov app vita See Reporting Treaty Benefits Claimed in chapter 9 for more information on reporting treaty benefits. Www irs gov app vita Dual-Status Aliens You can be both a nonresident alien and a resident alien during the same tax year. Www irs gov app vita This usually occurs in the year you arrive in or depart from the United States. Www irs gov app vita Aliens who have dual status should see chapter 6 for information on filing a return for a dual-status tax year. Www irs gov app vita First Year of Residency If you are a U. Www irs gov app vita S. Www irs gov app vita resident for the calendar year, but you were not a U. Www irs gov app vita S. Www irs gov app vita resident at any time during the preceding calendar year, you are a U. Www irs gov app vita S. Www irs gov app vita resident only for the part of the calendar year that begins on the residency starting date. Www irs gov app vita You are a nonresident alien for the part of the year before that date. Www irs gov app vita Residency starting date under substantial presence test. Www irs gov app vita   If you meet the substantial presence test for a calendar year, your residency starting date is generally the first day you are present in the United States during that calendar year. Www irs gov app vita However, you do not have to count up to 10 days of actual presence in the United States if on those days you establish that: You had a closer connection to a foreign country than to the United States, and Your tax home was in that foreign country. Www irs gov app vita See Closer Connection to a Foreign Country , earlier. Www irs gov app vita   In determining whether you can exclude up to 10 days, the following rules apply. Www irs gov app vita You can exclude days from more than one period of presence as long as the total days in all periods are not more than 10. Www irs gov app vita You cannot exclude any days in a period of consecutive days of presence if all the days in that period cannot be excluded. Www irs gov app vita Although you can exclude up to 10 days of presence in determining your residency starting date, you must include those days when determining whether you meet the substantial presence test. Www irs gov app vita Example. Www irs gov app vita Ivan Ivanovich is a citizen of Russia. Www irs gov app vita He came to the United States for the first time on January 6, 2013, to attend a business meeting and returned to Russia on January 10, 2013. Www irs gov app vita His tax home remained in Russia. Www irs gov app vita On March 1, 2013, he moved to the United States and resided here for the rest of the year. Www irs gov app vita Ivan is able to establish a closer connection to Russia for the period January 6–10. Www irs gov app vita Thus, his residency starting date is March 1. Www irs gov app vita Statement required to exclude up to 10 days of presence. Www irs gov app vita   You must file a statement with the IRS if you are excluding up to 10 days of presence in the United States for purposes of your residency starting date. Www irs gov app vita You must sign and date this statement and include a declaration that it is made under penalties of perjury. Www irs gov app vita The statement must contain the following information (as applicable). Www irs gov app vita Your name, address, U. Www irs gov app vita S. Www irs gov app vita taxpayer identification number (if any), and U. Www irs gov app vita S. Www irs gov app vita visa number (if any). Www irs gov app vita Your passport number and the name of the country that issued your passport. Www irs gov app vita The tax year for which the statement applies. Www irs gov app vita The first day that you were present in the United States during the year. Www irs gov app vita The dates of the days you are excluding in figuring your first day of residency. Www irs gov app vita Sufficient facts to establish that you have maintained your tax home in and a closer connection to a foreign country during the period you are excluding. Www irs gov app vita   Attach the required statement to your income tax return. Www irs gov app vita If you are not required to file a return, send the statement to the Department of the Treasury, Internal Revenue Service Center, Austin, TX 73301-0215, on or before the due date for filing Form 1040NR or Form 1040NR-EZ. Www irs gov app vita The due date for filing is discussed in chapter 7. Www irs gov app vita   If you do not file the required statement as explained above, you cannot claim that you have a closer connection to a foreign country or countries. Www irs gov app vita Therefore, your first day of residency will be the first day you are present in the United States. Www irs gov app vita This does not apply if you can show by clear and convincing evidence that you took reasonable actions to become aware of the requirements for filing the statement and significant steps to comply with those requirements. Www irs gov app vita Residency starting date under green card test. Www irs gov app vita   If you meet the green card test at any time during a calendar year, but do not meet the substantial presence test for that year, your residency starting date is the first day in the calendar year on which you are present in the United States as a lawful permanent resident. Www irs gov app vita   If you meet both the substantial presence test and the green card test, your residency starting date is the earlier of the first day during the year you are present in the United States under the substantial presence test or as a lawful permanent resident. Www irs gov app vita Residency during the preceding year. Www irs gov app vita   If you were a U. Www irs gov app vita S. Www irs gov app vita resident during any part of the preceding calendar year and you are a U. Www irs gov app vita S. Www irs gov app vita resident for any part of the current year, you will be considered a U. Www irs gov app vita S. Www irs gov app vita resident at the beginning of the current year. Www irs gov app vita This applies whether you are a resident under the substantial presence test or green card test. Www irs gov app vita Example. Www irs gov app vita Robert Bach is a citizen of Switzerland. Www irs gov app vita He came to the United States as a U. Www irs gov app vita S. Www irs gov app vita resident for the first time on May 1, 2012, and remained until November 5, 2012, when he returned to Switzerland. Www irs gov app vita Robert came back to the United States on March 5, 2013, as a lawful permanent resident and still resides here. Www irs gov app vita In calendar year 2013, Robert's U. Www irs gov app vita S. Www irs gov app vita residency is deemed to begin on January 1, 2013, because he qualified as a resident in calendar year 2012. Www irs gov app vita First-Year Choice If you do not meet either the green card test or the substantial presence test for 2012 or 2013 and you did not choose to be treated as a resident for part of 2012, but you meet the substantial presence test for 2014, you can choose to be treated as a U. Www irs gov app vita S. Www irs gov app vita resident for part of 2013. Www irs gov app vita To make this choice, you must: Be present in the United States for at least 31 days in a row in 2013, and Be present in the United States for at least 75% of the number of days beginning with the first day of the 31-day period and ending with the last day of 2013. Www irs gov app vita For purposes of this 75% requirement, you can treat up to 5 days of absence from the United States as days of presence in the United States. Www irs gov app vita When counting the days of presence in (1) and (2) above, do not count the days you were in the United States under any of the exceptions discussed earlier under Days of Presence in the United States. Www irs gov app vita If you make the first-year choice, your residency starting date for 2013 is the first day of the earliest 31-day period (described in (1) above) that you use to qualify for the choice. Www irs gov app vita You are treated as a U. Www irs gov app vita S. Www irs gov app vita resident for the rest of the year. Www irs gov app vita If you are present for more than one 31-day period and you satisfy condition (2) above for each of those periods, your residency starting date is the first day of the first 31-day period. Www irs gov app vita If you are present for more than one 31-day period but you satisfy condition (2) above only for a later 31-day period, your residency starting date is the first day of the later 31-day period. Www irs gov app vita Note. Www irs gov app vita You do not have to be married to make this choice. Www irs gov app vita Example 1. Www irs gov app vita Juan DaSilva is a citizen of the Philippines. Www irs gov app vita He came to the United States for the first time on November 1, 2013, and was here on 31 consecutive days (from November 1 through December 1, 2013). Www irs gov app vita Juan returned to the Philippines on December 1 and came back to the United States on December 17, 2013. Www irs gov app vita He stayed in the United States for the rest of the year. Www irs gov app vita During 2014, Juan was a resident of the United States under the substantial presence test. Www irs gov app vita Juan can make the first-year choice for 2013 because he was in the United States in 2013 for a period of 31 days in a row (November 1 through December 1) and for at least 75% of the days following (and including) the first day of his 31-day period (46 total days of presence in the United States divided by 61 days in the period from November 1 through December 31 equals 75. Www irs gov app vita 4%). Www irs gov app vita If Juan makes the first-year choice, his residency starting date will be November 1, 2013. Www irs gov app vita Example 2. Www irs gov app vita The facts are the same as in Example 1, except that Juan was also absent from the United States on December 24, 25, 29, 30, and 31. Www irs gov app vita He can make the first-year choice for 2013 because up to 5 days of absence are considered days of presence for purposes of the 75% requirement. Www irs gov app vita Statement required to make the first-year choice for 2013. Www irs gov app vita   You must attach a statement to Form 1040 to make the first-year choice for 2013. Www irs gov app vita The statement must contain your name and address and specify the following. Www irs gov app vita That you are making the first-year choice for 2013. Www irs gov app vita That you were not a resident in 2012. Www irs gov app vita That you are a resident under the substantial presence test in 2014. Www irs gov app vita The number of days of presence in the United States during 2014. Www irs gov app vita The date or dates of your 31-day period of presence and the period of continuous presence in the United States during 2013. Www irs gov app vita The date or dates of absence from the United States during 2013 that you are treating as days of presence. Www irs gov app vita You cannot file Form 1040 or the statement until you meet the substantial presence test for 2014. Www irs gov app vita If you have not met the test for 2014 as of April 15, 2014, you can request an extension of time for filing your 2013 Form 1040 until a reasonable period after you have met that test. Www irs gov app vita To request an extension to file until October 15, 2014, use Form 4868, Application for Automatic Extension of Time To File U. Www irs gov app vita S. Www irs gov app vita Individual Income Tax Return. Www irs gov app vita You can file the paper form or use one of the electronic filing options explained in the Form 4868 instructions. Www irs gov app vita You should pay with this extension the amount of tax you expect to owe for 2013 figured as if you were a nonresident alien the entire year. Www irs gov app vita You can use Form 1040NR or Form 1040NR-EZ to figure the tax. Www irs gov app vita Enter the tax on Form 4868. Www irs gov app vita If you do not pay the tax due, you will be charged interest on any tax not paid by the regular due date of your return, and you may be charged a penalty on the late payment. Www irs gov app vita   Once you make the first-year choice, you may not revoke it without the approval of the Internal Revenue Service. Www irs gov app vita   If you do not follow the procedures discussed here for making the first-year choice, you will be treated as a nonresident alien for all of 2013. Www irs gov app vita However, this does not apply if you can show by clear and convincing evidence that you took reasonable actions to become aware of the filing procedures and significant steps to comply with the procedures. Www irs gov app vita Choosing Resident Alien Status If you are a dual-status alien, you can choose to be treated as a U. Www irs gov app vita S. Www irs gov app vita resident for the entire year if all of the following apply. Www irs gov app vita You were a nonresident alien at the beginning of the year. Www irs gov app vita You are a resident alien or U. Www irs gov app vita S. Www irs gov app vita citizen at the end of the year. Www irs gov app vita You are married to a U. Www irs gov app vita S. Www irs gov app vita citizen or resident alien at the end of the year. Www irs gov app vita Your spouse joins you in making the choice. Www irs gov app vita This includes situations in which both you and your spouse were nonresident aliens at the beginning of the tax year and both of you are resident aliens at the end of the tax year. Www irs gov app vita Note. Www irs gov app vita If you are single at the end of the year, you cannot make this choice. Www irs gov app vita If you make this choice, the following rules apply. Www irs gov app vita You and your spouse are treated as U. Www irs gov app vita S. Www irs gov app vita residents for the entire year for income tax purposes. Www irs gov app vita You and your spouse are taxed on worldwide income. Www irs gov app vita You and your spouse must file a joint return for the year of the choice. Www irs gov app vita Neither you nor your spouse can make this choice for any later tax year, even if you are separated, divorced, or remarried. Www irs gov app vita The special instructions and restrictions for dual-status taxpayers in chapter 6 do not apply to you. Www irs gov app vita Note. Www irs gov app vita A similar choice is available if, at the end of the tax year, one spouse is a nonresident alien and the other spouse is a U. Www irs gov app vita S. Www irs gov app vita citizen or resident. Www irs gov app vita See Nonresident Spouse Treated as a Resident , later. Www irs gov app vita If you previously made that choice and it is still in effect, you do not need to make the choice explained here. Www irs gov app vita Making the choice. Www irs gov app vita   You should attach a statement signed by both spouses to your joint return for the year of the choice. Www irs gov app vita The statement must contain the following information. Www irs gov app vita A declaration that you both qualify to make the choice and that you choose to be treated as U. Www irs gov app vita S. Www irs gov app vita residents for the entire tax year. Www irs gov app vita The name, address, and taxpayer identification number (SSN or ITIN) of each spouse. Www irs gov app vita (If one spouse died, include the name and address of the person who makes the choice for the deceased spouse. Www irs gov app vita )   You generally make this choice when you file your joint return. Www irs gov app vita However, you also can make the choice by filing Form 1040X, Amended U. Www irs gov app vita S. Www irs gov app vita Individual Income Tax Return. Www irs gov app vita Attach Form 1040, Form 1040A, or Form 1040EZ and print “Amended” across the top of the corrected return. Www irs gov app vita If you make the choice with an amended return, you and your spouse must also amend any returns that you may have filed after the year for which you made the choice. Www irs gov app vita   You generally must file the amended joint return within 3 years from the date you filed your original U. Www irs gov app vita S. Www irs gov app vita income tax return or 2 years from the date you paid your income tax for that year, whichever is later. Www irs gov app vita Last Year of Residency If you were a U. Www irs gov app vita S. Www irs gov app vita resident in 2013 but are not a U. Www irs gov app vita S. Www irs gov app vita resident during any part of 2014, you cease to be a U. Www irs gov app vita S. Www irs gov app vita resident on your residency termination date. Www irs gov app vita Your residency termination date is December 31, 2013, unless you qualify for an earlier date as discussed next. Www irs gov app vita Earlier residency termination date. Www irs gov app vita   You may qualify for a residency termination date that is earlier than December 31. Www irs gov app vita This date is: The last day in 2013 that you are physically present in the United States, if you met the substantial presence test, The first day in 2013 that you are no longer a lawful permanent resident of the United States, if you met the green card test, or The later of (1) or (2), if you met both tests. Www irs gov app vita You can use this date only if, for the remainder of 2013, your tax home was in a foreign country and you had a closer connection to that foreign country. Www irs gov app vita See Closer Connection to a Foreign Country , earlier. Www irs gov app vita    A long-term resident who ceases to be a lawful permanent resident may be subject to special reporting requirements and tax provisions. Www irs gov app vita See Expatriation Tax in chapter 4. Www irs gov app vita Termination of residency. Www irs gov app vita   For information on your residency termination date, see Former long-term resident under Expatriation After June 16, 2008, in chapter 4. Www irs gov app vita De minimis presence. Www irs gov app vita   If you are a U. Www irs gov app vita S. Www irs gov app vita resident because of the substantial presence test and you qualify to use the earlier residency termination date, you can exclude up to 10 days of actual presence in the United States in determining your residency termination date. Www irs gov app vita In determining whether you can exclude up to 10 days, the following rules apply. Www irs gov app vita You can exclude days from more than one period of presence as long as the total days in all periods are not more than 10. Www irs gov app vita You cannot exclude any days in a period of consecutive days of presence if all the days in that period cannot be excluded. Www irs gov app vita Although you can exclude up to 10 days of presence in determining your residency termination date, you must include those days when determining whether you meet the substantial presence test. Www irs gov app vita Example. Www irs gov app vita Lola Bovary is a citizen of Malta. Www irs gov app vita She came to the United States for the first time on March 1, 2013, and resided here until August 25, 2013. Www irs gov app vita On December 12, 2013, Lola came to the United States for vacation and stayed here until December 16, 2013, when she returned to Malta. Www irs gov app vita She is able to establish a closer connection to Malta for the period December 12–16. Www irs gov app vita Lola is not a U. Www irs gov app vita S. Www irs gov app vita resident for tax purposes during 2014 and can establish a closer connection to Malta for the rest of calendar year 2013. Www irs gov app vita Lola is a U. Www irs gov app vita S. Www irs gov app vita resident under the substantial presence test for 2013 because she was present in the United States for 183 days (178 days for the period March 1 to August 25 plus 5 days in December). Www irs gov app vita Lola's residency termination date is August 25, 2013. Www irs gov app vita Residency during the next year. Www irs gov app vita   If you are a U. Www irs gov app vita S. Www irs gov app vita resident during any part of 2014 and you are a resident during any part of 2013, you will be treated as a resident through the end of 2013. Www irs gov app vita This applies whether you have a closer connection to a foreign country than the United States during 2013, and whether you are a resident under the substantial presence test or green card test. Www irs gov app vita Statement required to establish your residency termination date. Www irs gov app vita   You must file a statement with the IRS to establish your residency termination date. Www irs gov app vita You must sign and date this statement and include a declaration that it is made under penalties of perjury. Www irs gov app vita The statement must contain the following information (as applicable). Www irs gov app vita Your name, address, U. Www irs gov app vita S. Www irs gov app vita taxpayer identification number (if any), and U. Www irs gov app vita S. Www irs gov app vita visa number (if any). Www irs gov app vita Your passport number and the name of the country that issued your passport. Www irs gov app vita The tax year for which the statement applies. Www irs gov app vita The last day that you were present in the United States during the year. Www irs gov app vita Sufficient facts to establish that you have maintained your tax home in, and that you have a closer connection to, a foreign country following your last day of presence in the United States during the year or following the abandonment or rescission of your status as a lawful permanent resident during the year. Www irs gov app vita The date that your status as a lawful permanent resident was abandoned or rescinded. Www irs gov app vita Sufficient facts (including copies of relevant documents) to establish that your status as a lawful permanent resident has been abandoned or rescinded. Www irs gov app vita If you can exclude days under the de minimis presence rule, discussed earlier, include the dates of the days you are excluding and sufficient facts to establish that you have maintained your tax home in and that you have a closer connection to a foreign country during the period you are excluding. Www irs gov app vita   Attach the required statement to your income tax return. Www irs gov app vita If you are not required to file a return, send the statement to the Department of the Treasury, Internal Revenue Service Center, Austin, TX 73301-0215, on or before the due date for filing Form 1040NR or Form 1040NR-EZ. Www irs gov app vita The due date for filing is discussed in chapter 7. Www irs gov app vita   If you do not file the required statement as explained above, you cannot claim that you have a closer connection to a foreign country or countries. Www irs gov app vita This does not apply if you can show by clear and convincing evidence that you took reasonable actions to become aware of the requirements for filing the statement and significant steps to comply with those requirements. Www irs gov app vita Nonresident Spouse Treated as a Resident If, at the end of your tax year, you are married and one spouse is a U. Www irs gov app vita S. Www irs gov app vita citizen or a resident alien and the other spouse is a nonresident alien, you can choose to treat the nonresident spouse as a U. Www irs gov app vita S. Www irs gov app vita resident. Www irs gov app vita This includes situations in which one spouse is a nonresident alien at the beginning of the tax year, but a resident alien at the end of the year, and the other spouse is a nonresident alien at the end of the year. Www irs gov app vita If you make this choice, you and your spouse are treated for income tax purposes as residents for your entire tax year. Www irs gov app vita Neither you nor your spouse can claim under any tax treaty not to be a U. Www irs gov app vita S. Www irs gov app vita resident. Www irs gov app vita You are both taxed on worldwide income. Www irs gov app vita You must file a joint income tax return for the year you make the choice, but you and your spouse can file joint or separate returns in later years. Www irs gov app vita If you file a joint return under this provision, the special instructions and restrictions for dual-status taxpayers in chapter 6 do not apply to you. Www irs gov app vita Example. Www irs gov app vita Bob and Sharon Williams are married and both are nonresident aliens at the beginning of the year. Www irs gov app vita In June, Bob became a resident alien and remained a resident for the rest of the year. Www irs gov app vita Bob and Sharon both choose to be treated as resident aliens by attaching a statement to their joint return. Www irs gov app vita Bob and Sharon must file a joint return for the year they make the choice, but they can file either joint or separate returns for later years. Www irs gov app vita How To Make the Choice Attach a statement, signed by both spouses, to your joint return for the first tax year for which the choice applies. Www irs gov app vita It should contain the following information. Www irs gov app vita A declaration that one spouse was a nonresident alien and the other spouse a U. Www irs gov app vita S. Www irs gov app vita citizen or resident alien on the last day of your tax year, and that you choose to be treated as U. Www irs gov app vita S. Www irs gov app vita residents for the entire tax year. Www irs gov app vita The name, address, and identification number of each spouse. Www irs gov app vita (If one spouse died, include the name and address of the person making the choice for the deceased spouse. Www irs gov app vita ) Amended return. Www irs gov app vita   You generally make this choice when you file your joint return. Www irs gov app vita However, you can also make the choice by filing a joint amended return on Form 1040X. Www irs gov app vita Attach Form 1040, Form 1040A, or Form 1040EZ and print “Amended” across the top of the corrected return. Www irs gov app vita If you make the choice with an amended return, you and your spouse must also amend any returns that you may have filed after the year for which you made the choice. Www irs gov app vita   You generally must file the amended joint return within 3 years from the date you filed your original U. Www irs gov app vita S. Www irs gov app vita income tax return or 2 years from the date you paid your income tax for that year, whichever is later. Www irs gov app vita Suspending the Choice The choice to be treated as a resident alien is suspended for any tax year (after the tax year you made the choice) if neither spouse is a U. Www irs gov app vita S. Www irs gov app vita citizen or resident alien at any time during the tax year. Www irs gov app vita This means each spouse must file a separate return as a nonresident alien for that year if either meets the filing requirements for nonresident aliens discussed in chapter 7. Www irs gov app vita Example. Www irs gov app vita Dick Brown was a resident alien on December 31, 2010, and married to Judy, a nonresident alien. Www irs gov app vita They chose to treat Judy as a resident alien and filed joint 2010 and 2011 income tax returns. Www irs gov app vita On January 10, 2012, Dick became a nonresident alien. Www irs gov app vita Judy had remained a nonresident alien throughout the period. Www irs gov app vita Dick and Judy could have filed joint or separate returns for 2012 because Dick was a resident alien for part of that year. Www irs gov app vita However, because neither Dick nor Judy is a resident alien at any time during 2013, their choice is suspended for that year. Www irs gov app vita If either meets the filing requirements for nonresident aliens discussed in chapter 7, they must file separate returns as nonresident aliens for 2013. Www irs gov app vita If Dick becomes a resident alien again in 2014, their choice is no longer suspended. Www irs gov app vita Ending the Choice Once made, the choice to be treated as a resident applies to all later years unless suspended (as explained earlier under Suspending the Choice ) or ended in one of the following ways. Www irs gov app vita If the choice is ended in one of the following ways, neither spouse can make this choice in any later tax year. Www irs gov app vita Revocation. Www irs gov app vita Either spouse can revoke the choice for any tax year, provided he or she makes the revocation by the due date for filing the tax return for that tax year. Www irs gov app vita The spouse who revokes the choice must attach a signed statement declaring that the choice is being revoked. Www irs gov app vita The statement must include the name, address, and identification number of each spouse. Www irs gov app vita (If one spouse dies, include the name and address of the person who is revoking the choice for the deceased spouse. Www irs gov app vita ) The statement also must include a list of any states, foreign countries, and possessions that have community property laws in which either spouse is domiciled or where real property is located from which either spouse receives income. Www irs gov app vita File the statement as follows. Www irs gov app vita If the spouse revoking the choice must file a return, attach the statement to the return for the first year the revocation applies. Www irs gov app vita If the spouse revoking the choice does not have to file a return, but does file a return (for example, to obtain a refund), attach the statement to the return. Www irs gov app vita If the spouse revoking the choice does not have to file a return and does not file a claim for refund, send the statement to the Internal Revenue Service Center where you filed the last joint return. Www irs gov app vita Death. Www irs gov app vita The death of either spouse ends the choice, beginning with the first tax year following the year the spouse died. Www irs gov app vita However, if the surviving spouse is a U. Www irs gov app vita S. Www irs gov app vita citizen or resident and is entitled to the joint tax rates as a surviving spouse, the choice will not end until the close of the last year for which these joint rates may be used. Www irs gov app vita If both spouses die in the same tax year, the choice ends on the first day after the close of the tax year in which the spouses died. Www irs gov app vita Legal separation. Www irs gov app vita A legal separation under a decree of divorce or separate maintenance ends the choice as of the beginning of the tax year in which the legal separation occurs. Www irs gov app vita Inadequate records. Www irs gov app vita The Internal Revenue Service can end the choice for any tax year that either spouse has failed to keep adequate books, records, and other information necessary to determine the correct income tax liability, or to provide adequate access to those records. Www irs gov app vita Aliens From American Samoa or Puerto Rico If you are a nonresident alien in the United States and a bona fide resident of American Samoa or Puerto Rico during the entire tax year, you are taxed, with certain exceptions, according to the rules for resident aliens of the United States. Www irs gov app vita For more information, see Bona Fide Residents of American Samoa or Puerto Rico in chapter 5. Www irs gov app vita If you are a nonresident alien from American Samoa or Puerto Rico who does not qualify as a bona fide resident of American Samoa or Puerto Rico for the entire tax year, you are taxed as a nonresident alien. Www irs gov app vita Resident aliens who formerly were bona fide residents of American Samoa or Puerto Rico are taxed according to the rules for resident aliens. Www irs gov app vita Prev  Up  Next   Home   More Online Publications