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1040 Ez 2010 Pdf

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1040 Ez 2010 Pdf

1040 ez 2010 pdf Publication 517 - Main Content Table of Contents Social Security CoverageCoverage of Members of the Clergy Coverage of Religious Workers (Church Employees) U. 1040 ez 2010 pdf S. 1040 ez 2010 pdf Citizens and Resident and Nonresident Aliens Ministerial ServicesMinisters Members of Religious Orders Christian Science Practitioners and Readers Exemption From Self-Employment (SE) TaxMembers of the Clergy Members of Recognized Religious Sects Self-Employment Tax: Figuring Net EarningsRegular Method Nonfarm Optional Method Income Tax: Income and ExpensesIncome Items Expense Items Income Tax Withholding and Estimated Tax Filing Your Return Retirement Savings ArrangementsDeducting contributions to tax-sheltered annuity plans. 1040 ez 2010 pdf Full-time student. 1040 ez 2010 pdf Adjusted gross income. 1040 ez 2010 pdf More information. 1040 ez 2010 pdf Earned Income Credit Comprehensive ExampleForm W-2 From Church Form W-2 From College Schedule C-EZ (Form 1040) Form 2106-EZ Schedule A (Form 1040) Schedule SE (Form 1040) Form 1040 Attachment 1 Attachment 2 How To Get Tax HelpLow Income Taxpayer Clinics Social Security Coverage This section gives information about which system (SECA or FICA) is used to collect social security and Medicare taxes from members of the clergy (ministers, members of a religious order, and Christian Science practitioners and readers) and religious workers (church employees). 1040 ez 2010 pdf Coverage of Members of the Clergy The services you perform in the exercise of your ministry, of the duties required by your religious order, or of your profession as a Christian Science practitioner or reader are covered by social security and Medicare under SECA. 1040 ez 2010 pdf Your earnings for these ministerial services (defined later) are subject to self-employment (SE) tax unless one of the following applies. 1040 ez 2010 pdf You are a member of a religious order who has taken a vow of poverty. 1040 ez 2010 pdf You ask the Internal Revenue Service (IRS) for an exemption from SE tax for your services and the IRS approves your request. 1040 ez 2010 pdf See Exemption From Self-Employment (SE) Tax , later. 1040 ez 2010 pdf You are subject only to the social security laws of a foreign country under the provisions of a social security agreement between the United States and that country. 1040 ez 2010 pdf For more information, see Bilateral Social Security (Totalization) Agreements in Publication 54. 1040 ez 2010 pdf Your earnings that are not from ministerial services may be subject to social security tax under FICA or SECA according to the rules that apply to taxpayers in general. 1040 ez 2010 pdf See Ministerial Services , later. 1040 ez 2010 pdf Ministers If you are a minister of a church, your earnings for the services you perform in your capacity as a minister are subject to SE tax, even if you perform these services as an employee of that church. 1040 ez 2010 pdf However, you can request that the IRS grant you an exemption, as discussed under Exemption From Self-Employment (SE) Tax , later. 1040 ez 2010 pdf For the specific services covered, see Ministerial Services , later. 1040 ez 2010 pdf Ministers defined. 1040 ez 2010 pdf   Ministers are individuals who are duly ordained, commissioned, or licensed by a religious body constituting a church or church denomination. 1040 ez 2010 pdf Ministers have the authority to conduct religious worship, perform sacerdotal functions, and administer ordinances or sacraments according to the prescribed tenets and practices of that church or denomination. 1040 ez 2010 pdf   If a church or denomination ordains some ministers and licenses or commissions others, anyone licensed or commissioned must be able to perform substantially all the religious functions of an ordained minister to be treated as a minister for social security purposes. 1040 ez 2010 pdf Employment status for other tax purposes. 1040 ez 2010 pdf   Even though all of your income from performing ministerial services is subject to self-employment tax for social security tax purposes, you may be an employee for income tax or retirement plan purposes in performing those same services. 1040 ez 2010 pdf For income tax or retirement plan purposes, your income earned as an employee will be considered wages. 1040 ez 2010 pdf Common-law employee. 1040 ez 2010 pdf   Under common-law rules, you are considered either an employee or a self-employed person. 1040 ez 2010 pdf Generally, you are an employee if you perform services for someone who has the legal right to control both what you do and how you do it, even if you have considerable discretion and freedom of action. 1040 ez 2010 pdf For more information about the common-law rules, see Publication 15-A, Employer's Supplemental Tax Guide. 1040 ez 2010 pdf   If a congregation employs you and pays you a salary, you are generally a common-law employee and income from the exercise of your ministry is wages for income tax purposes. 1040 ez 2010 pdf However, amounts received directly from members of the congregation, such as fees for performing marriages, baptisms, or other personal services, are not wages; such amounts are self-employment income for both income tax purposes and social security tax purposes. 1040 ez 2010 pdf Example. 1040 ez 2010 pdf A church hires and pays you a salary to perform ministerial services subject to its control. 1040 ez 2010 pdf Under the common-law rules, you are an employee of the church while performing those services. 1040 ez 2010 pdf Form SS-8. 1040 ez 2010 pdf   If you are not certain whether you are an employee or a self-employed person, you can get a determination from the IRS by filing Form SS-8. 1040 ez 2010 pdf Members of Religious Orders If you are a member of a religious order who has not taken a vow of poverty, your earnings for ministerial services you perform as a member of the order are subject to SE tax. 1040 ez 2010 pdf See Ministerial Services , later. 1040 ez 2010 pdf However, you can request that the IRS grant you an exemption as discussed under Exemption From Self-Employment (SE) Tax , later. 1040 ez 2010 pdf Vow of poverty. 1040 ez 2010 pdf   If you are a member of a religious order and have taken a vow of poverty, you are already exempt from paying SE tax on your earnings for ministerial services you perform as an agent of your church or its agencies. 1040 ez 2010 pdf You do not need to request a separate exemption. 1040 ez 2010 pdf For income tax purposes, the earnings are tax free to you. 1040 ez 2010 pdf Your earnings are considered the income of the religious order. 1040 ez 2010 pdf Services covered under FICA at the election of the order. 1040 ez 2010 pdf   However, even if you have taken a vow of poverty, the services you perform for your church or its agencies may be covered under social security. 1040 ez 2010 pdf Your services are covered if your order, or an autonomous subdivision of the order, elects social security coverage for its current and future vow-of-poverty members. 1040 ez 2010 pdf   The order or subdivision elects coverage by filing Form SS-16. 1040 ez 2010 pdf The election may cover certain vow-of-poverty members for a retroactive period of up to 20 calendar quarters before the quarter in which it files the certificate. 1040 ez 2010 pdf If the election is made, the order or subdivision pays both the employer's and employee's share of the tax. 1040 ez 2010 pdf You do not pay any of the FICA tax. 1040 ez 2010 pdf Services performed outside the order. 1040 ez 2010 pdf   Even if you are a member of a religious order who has taken a vow of poverty and the order requires you to turn over amounts you earn, your earnings are subject to federal income tax and either SE tax or FICA tax (including estimated tax payments and/or withholding) if you: Are self-employed or an employee of an organization outside your religious community, and Perform work not required by, or done on behalf of, the order. 1040 ez 2010 pdf   In these cases, your income from self-employment or as an employee of that outside organization is taxable to you directly. 1040 ez 2010 pdf You may, however, be able to take a charitable deduction for the amount you turn over to the order. 1040 ez 2010 pdf See Publication 526, Charitable Contributions. 1040 ez 2010 pdf Rulings. 1040 ez 2010 pdf   Organizations and individuals may request rulings from the IRS on whether they are religious orders, or members of a religious order, respectively, for FICA tax, SE tax, and federal income tax withholding purposes. 1040 ez 2010 pdf To request a ruling, follow the procedures in Revenue Procedure 2014-1, 2014-1 I. 1040 ez 2010 pdf R. 1040 ez 2010 pdf B. 1040 ez 2010 pdf 1, available at www. 1040 ez 2010 pdf irs. 1040 ez 2010 pdf gov/irb/2014-1_IRB/ar05. 1040 ez 2010 pdf html. 1040 ez 2010 pdf Christian Science Practitioners and Readers Generally, your earnings from services you perform in your profession as a Christian Science practitioner or reader are subject to SE tax. 1040 ez 2010 pdf However, you can request an exemption as discussed under Exemption From Self-Employment (SE) Tax , later. 1040 ez 2010 pdf Practitioners. 1040 ez 2010 pdf   Christian Science practitioners are members in good standing of the Mother Church, The First Church of Christ, Scientist, in Boston, Massachusetts, who practice healing according to the teachings of Christian Science. 1040 ez 2010 pdf State law specifically exempts Christian Science practitioners from licensing requirements. 1040 ez 2010 pdf   Some Christian Science practitioners also are Christian Science teachers or lecturers. 1040 ez 2010 pdf Income from teaching or lecturing is considered the same as income from their work as practitioners. 1040 ez 2010 pdf Readers. 1040 ez 2010 pdf   For tax purposes, Christian Science readers are considered the same as ordained, commissioned, or licensed ministers. 1040 ez 2010 pdf Coverage of Religious Workers (Church Employees) If you are a religious worker (a church employee) and are not in one of the classes already discussed, your wages are generally subject to social security and Medicare tax under FICA, not SECA. 1040 ez 2010 pdf Some exceptions are discussed next. 1040 ez 2010 pdf Election by Church To Exclude Its Employees From FICA Coverage Churches and qualified church-controlled organizations (church organizations) that are opposed for religious reasons to the payment of social security and Medicare taxes can elect to exclude their employees from FICA coverage. 1040 ez 2010 pdf If your employer makes this election, it does not pay the employer's portion of the FICA taxes or withhold from your pay your portion of the FICA taxes. 1040 ez 2010 pdf Instead, your wages are subject to SECA and you must pay SE tax on your wages if they exceed $108. 1040 ez 2010 pdf 28 during the tax year. 1040 ez 2010 pdf However, you can request an exemption from SE tax if you are a member of a recognized religious sect, as discussed below. 1040 ez 2010 pdf Churches and church organizations make this election by filing two copies of Form 8274. 1040 ez 2010 pdf For more information about making this election, see Form 8274. 1040 ez 2010 pdf Election by Certain Church Employees Who Are Opposed to Social Security and Medicare You may be able to choose to be exempt from social security and Medicare taxes, including the SE tax, if you are a member of a recognized religious sect or division and work for a church (or church-controlled nonprofit division) that does not pay the employer's part of the social security tax on wages. 1040 ez 2010 pdf This exemption does not apply to your service, if any, as a minister of a church or as a member of a religious order. 1040 ez 2010 pdf Make this choice by filing Form 4029. 1040 ez 2010 pdf See Requesting Exemption—Form 4029 , later, under Members of Recognized Religious Sects. 1040 ez 2010 pdf U. 1040 ez 2010 pdf S. 1040 ez 2010 pdf Citizens and Resident and Nonresident Aliens To be covered under the SE tax provisions (SECA), individuals generally must be citizens or resident aliens of the United States. 1040 ez 2010 pdf Nonresident aliens are not covered under SECA unless a social security agreement in effect between the United States and the foreign country determines that you are covered under the U. 1040 ez 2010 pdf S. 1040 ez 2010 pdf social security system. 1040 ez 2010 pdf To determine your alien status, see Publication 519, U. 1040 ez 2010 pdf S. 1040 ez 2010 pdf Tax Guide for Aliens. 1040 ez 2010 pdf Residents of Puerto Rico, the U. 1040 ez 2010 pdf S. 1040 ez 2010 pdf Virgin Islands, Guam, the CNMI, and American Samoa. 1040 ez 2010 pdf   If you are a resident of one of these U. 1040 ez 2010 pdf S. 1040 ez 2010 pdf possessions but not a U. 1040 ez 2010 pdf S. 1040 ez 2010 pdf citizen, for SE tax purposes you are treated the same as a citizen or resident alien of the United States. 1040 ez 2010 pdf For information on figuring the tax, see Self-Employment Tax: Figuring Net Earnings , later. 1040 ez 2010 pdf Ministerial Services Ministerial services, in general, are the services you perform in the exercise of your ministry, in the exercise of your duties as required by your religious order, or in the exercise of your profession as a Christian Science practitioner or reader. 1040 ez 2010 pdf Income you receive for performing ministerial services is subject to SE tax unless you have an exemption as explained later. 1040 ez 2010 pdf Even if you have an exemption, only the income you receive for performing ministerial services is exempt. 1040 ez 2010 pdf The exemption does not apply to any other income. 1040 ez 2010 pdf The following discussions provide more detailed information on ministerial services of ministers, members of a religious order, and Christian Science practitioners and readers. 1040 ez 2010 pdf Ministers Most services you perform as a minister, priest, rabbi, etc. 1040 ez 2010 pdf , are ministerial services. 1040 ez 2010 pdf These services include: Performing sacerdotal functions, Conducting religious worship, and Controlling, conducting, and maintaining religious organizations (including the religious boards, societies, and other integral agencies of such organizations) that are under the authority of a religious body that is a church or denomination. 1040 ez 2010 pdf You are considered to control, conduct, and maintain a religious organization if you direct, manage, or promote the organization's activities. 1040 ez 2010 pdf A religious organization is under the authority of a religious body that is a church or denomination if it is organized for and dedicated to carrying out the principles of a faith according to the requirements governing the creation of institutions of the faith. 1040 ez 2010 pdf Services for nonreligious organizations. 1040 ez 2010 pdf   Your services for a nonreligious organization are ministerial services if the services are assigned or designated by your church. 1040 ez 2010 pdf Assigned or designated services qualify even if they do not involve performing sacerdotal functions or conducting religious worship. 1040 ez 2010 pdf   If your services are not assigned or designated by your church, they are ministerial services only if they involve performing sacerdotal functions or conducting religious worship. 1040 ez 2010 pdf Services that are not part of your ministry. 1040 ez 2010 pdf   Income from services you perform as an employee that are not ministerial services is subject to social security and Medicare tax withholding under FICA (not SECA) under the rules that apply to employees in general. 1040 ez 2010 pdf The following are not ministerial services. 1040 ez 2010 pdf Services you perform for nonreligious organizations other than the services stated above. 1040 ez 2010 pdf Services you perform as a duly ordained, commissioned, or licensed minister of a church as an employee of the United States, the District of Columbia, a foreign government, or any of their political subdivisions. 1040 ez 2010 pdf These services are not ministerial services even if you are performing sacerdotal functions or conducting religious worship. 1040 ez 2010 pdf (For example, if you perform services as a chaplain in the Armed Forces of the United States, those services are not ministerial services. 1040 ez 2010 pdf ) Services you perform in a government-owned and operated hospital. 1040 ez 2010 pdf (These services are considered performed by a government employee, not by a minister as part of the ministry. 1040 ez 2010 pdf ) However, services that you perform at a church-related hospital or health and welfare institution, or a private nonprofit hospital, are considered to be part of the ministry and are considered ministerial services. 1040 ez 2010 pdf Books or articles. 1040 ez 2010 pdf   Writing religious books or articles is considered to be in the exercise of your ministry and is considered a ministerial service. 1040 ez 2010 pdf   This rule also applies to members of religious orders and to Christian Science practitioners and readers. 1040 ez 2010 pdf Members of Religious Orders Services you perform as a member of a religious order in the exercise of duties required by the order are ministerial services. 1040 ez 2010 pdf The services are considered ministerial because you perform them as an agent of the order. 1040 ez 2010 pdf For example, if the order directs you to perform services for another agency of the supervising church or an associated institution, you are considered to perform the services as an agent of the order. 1040 ez 2010 pdf However, if the order directs you to work outside the order, this employment will not be considered a duty required by the order unless: Your services are the kind that are ordinarily performed by members of the order, and Your services are part of the duties that must be exercised for, or on behalf of, the religious order as its agent. 1040 ez 2010 pdf Effect of employee status. 1040 ez 2010 pdf   Ordinarily, if your services are not considered directed or required of you by the order, you and the outside party for whom you work are considered employee and employer. 1040 ez 2010 pdf In this case, your earnings from the services are taxed under the rules that apply to employees in general, not under the rules for services provided as agent for the order. 1040 ez 2010 pdf This result is true even if you have taken a vow of poverty. 1040 ez 2010 pdf Example. 1040 ez 2010 pdf Pat Brown and Chris Green are members of a religious order and have taken vows of poverty. 1040 ez 2010 pdf They renounce all claims to their earnings. 1040 ez 2010 pdf The earnings belong to the order. 1040 ez 2010 pdf Pat is a licensed attorney. 1040 ez 2010 pdf The superiors of the order instructed her to get a job with a law firm. 1040 ez 2010 pdf Pat joined a law firm as an employee and, as she requested, the firm made the salary payments directly to the order. 1040 ez 2010 pdf Chris is a secretary. 1040 ez 2010 pdf The superiors of the order instructed him to accept a job with the business office of the church that supervises the order. 1040 ez 2010 pdf Chris took the job and gave all his earnings to the order. 1040 ez 2010 pdf Pat's services are not duties required by the order. 1040 ez 2010 pdf Her earnings are subject to social security and Medicare tax under FICA and to federal income tax. 1040 ez 2010 pdf Chris' services are duties required by the order. 1040 ez 2010 pdf He is acting as an agent of the order and not as an employee of a third party. 1040 ez 2010 pdf He does not include the earnings in gross income, and they are not subject to income tax withholding or to social security and Medicare tax under FICA or SECA. 1040 ez 2010 pdf Christian Science Practitioners and Readers Services you perform as a Christian Science practitioner or reader in the exercise of your profession are ministerial services. 1040 ez 2010 pdf Amounts you receive for performing these services are generally subject to SE tax. 1040 ez 2010 pdf You may request an exemption from SE tax, discussed next, which applies only to those services. 1040 ez 2010 pdf Exemption From Self-Employment (SE) Tax You can request an exemption from SE tax if you are a member of the clergy (minister, member of a religious order, or Christian Science practitioner or reader) or a member of a recognized religious sect. 1040 ez 2010 pdf Generally, members of religious orders who have taken a vow of poverty are already exempt from paying SE tax, as discussed earlier under Members of Religious Orders under Social Security Coverage. 1040 ez 2010 pdf They do not have to request the exemption. 1040 ez 2010 pdf Who cannot be exempt. 1040 ez 2010 pdf   You cannot be exempt from SE tax if you made one of the following elections to be covered under social security. 1040 ez 2010 pdf These elections are irrevocable. 1040 ez 2010 pdf You elected to be covered under social security by filing Form 2031, Revocation of Exemption From Self-Employment Tax for Use by Ministers, Members of Religious Orders, and Christian Science Practitioners, for your 1986, 1987, 2000, or 2001 tax year. 1040 ez 2010 pdf You elected before 1968 to be covered under social security for your ministerial services. 1040 ez 2010 pdf Requesting exemption. 1040 ez 2010 pdf    Table 2, earlier, briefly summarizes the procedure for requesting exemption from the SE tax. 1040 ez 2010 pdf More detailed explanations follow. 1040 ez 2010 pdf If you are a minister, member of a religious order, or Christian Science practitioner, an approved exemption only applies to earnings you receive for ministerial services, discussed earlier. 1040 ez 2010 pdf It does not apply to any other self-employment income. 1040 ez 2010 pdf Table 2. 1040 ez 2010 pdf The Self-Employment Tax Exemption Application and Approval Process   Who Can Apply Members of the Clergy Members of Recognized  Religious Sects How File Form 4361 File Form 4029 When File by the due date (including extensions) of your income tax return for the second tax year in which you had at least $400 of net earnings from self-employment (at least part from ministerial services) File anytime Approval If approved, you will receive an approved copy of Form 4361 If approved, you will receive an approved copy of Form 4029 Effective Date For all tax years after 1967 in which you have at least $400 of net earnings from self-employment For all tax years beginning with the first year you meet the eligibility requirements discussed later Members of the Clergy To claim the exemption from SE tax, you must meet all of the following conditions. 1040 ez 2010 pdf You file Form 4361, described below under Requesting Exemption—Form 4361 . 1040 ez 2010 pdf You are conscientiously opposed to public insurance because of your individual religious considerations (not because of your general conscience), or you are opposed because of the principles of your religious denomination. 1040 ez 2010 pdf You file for other than economic reasons. 1040 ez 2010 pdf You inform the ordaining, commissioning, or licensing body of your church or order that you are opposed to public insurance if you are a minister or a member of a religious order (other than a vow-of-poverty member). 1040 ez 2010 pdf This requirement does not apply to Christian Science practitioners or readers. 1040 ez 2010 pdf You establish that the organization that ordained, commissioned, or licensed you, or your religious order, is a tax-exempt religious organization. 1040 ez 2010 pdf You establish that the organization is a church or a convention or association of churches. 1040 ez 2010 pdf You did not make an election discussed earlier under Who cannot be exempt . 1040 ez 2010 pdf You sign and return the statement the IRS mails to you to certify that you are requesting an exemption based on the grounds listed on the statement. 1040 ez 2010 pdf Requesting Exemption—Form 4361 To request exemption from SE tax, file Form 4361 in triplicate (original and two copies) with the IRS. 1040 ez 2010 pdf The IRS will return to you a copy of the Form 4361 that you filed indicating whether it has approved your exemption. 1040 ez 2010 pdf If it is approved, keep the approved copy of Form 4361 in your permanent records. 1040 ez 2010 pdf When to file. 1040 ez 2010 pdf   File Form 4361 by the date your income tax return is due, including extensions, for the second tax year in which both of the following are true. 1040 ez 2010 pdf You have net earnings from self-employment of at least $400. 1040 ez 2010 pdf Any part of those net earnings was from ministerial services you performed as a: Minister, Member of a religious order, or Christian Science practitioner or reader. 1040 ez 2010 pdf The 2 years do not have to be consecutive tax years. 1040 ez 2010 pdf    The approval process can take some time, so you should file Form 4361 as soon as possible. 1040 ez 2010 pdf Example 1. 1040 ez 2010 pdf Rev. 1040 ez 2010 pdf Lawrence Jaeger, a clergyman ordained in 2013, has net self-employment earnings as a minister of $450 in 2013 and $500 in 2014. 1040 ez 2010 pdf He must file his application for exemption by the due date, including extensions, for his 2014 income tax return. 1040 ez 2010 pdf However, if Rev. 1040 ez 2010 pdf Jaeger does not receive IRS approval for an exemption by April 15, 2015, his SE tax for 2014 is due by that date. 1040 ez 2010 pdf Example 2. 1040 ez 2010 pdf Rev. 1040 ez 2010 pdf Louise Wolfe has only $300 in net self-employment earnings as a minister in 2013, but earned more than $400 in 2012 and expects to earn more than $400 in 2014. 1040 ez 2010 pdf She must file her application for exemption by the due date, including extensions, for her 2014 income tax return. 1040 ez 2010 pdf However, if she does not receive IRS approval for an exemption by April 15, 2015, her SE tax for 2014 is due by that date. 1040 ez 2010 pdf Example 3. 1040 ez 2010 pdf In 2011, Rev. 1040 ez 2010 pdf David Moss was ordained a minister and had $700 in net self-employment earnings as a minister. 1040 ez 2010 pdf In 2012, he received $1,000 as a minister, but his related expenses were over $1,000. 1040 ez 2010 pdf Therefore, he had no net self-employment earnings as a minister in 2012. 1040 ez 2010 pdf Also in 2012, he opened a book store and had $8,000 in net self-employment earnings from the store. 1040 ez 2010 pdf In 2013, he had net self-employment earnings of $1,500 as a minister and $10,000 net self-employment earnings from the store. 1040 ez 2010 pdf Rev. 1040 ez 2010 pdf Moss had net earnings from self-employment in 2011 and 2013 that were $400 or more each year, and part of the self-employment earnings in each of those years was for his services as a minister. 1040 ez 2010 pdf Thus, he must file his application for exemption by the due date, including extensions, for his 2013 income tax return. 1040 ez 2010 pdf Death of individual. 1040 ez 2010 pdf   The right to file an application for exemption ends with an individual's death. 1040 ez 2010 pdf A surviving spouse, executor, or administrator cannot file an exemption application for a deceased clergy member. 1040 ez 2010 pdf Effective date of exemption. 1040 ez 2010 pdf   An approved exemption is effective for all tax years after 1967 in which you have $400 or more of net earnings from self-employment and any part of those earnings is for services as a member of the clergy. 1040 ez 2010 pdf Once the exemption is approved, it is irrevocable. 1040 ez 2010 pdf Example. 1040 ez 2010 pdf Rev. 1040 ez 2010 pdf Trudy Austin, ordained in 2010, had $400 or more in net self-employment earnings as a minister in both 2010 and 2013. 1040 ez 2010 pdf She files an application for exemption on February 20, 2014. 1040 ez 2010 pdf If an exemption is granted, it is effective for 2010 and the following years. 1040 ez 2010 pdf Refunds of SE tax. 1040 ez 2010 pdf   If, after receiving an approved Form 4361, you find that you overpaid SE tax, you can file a claim for refund on Form 1040X. 1040 ez 2010 pdf Generally, for a refund, you must file Form 1040X within 3 years from the date you filed the return or within 2 years from the date you paid the tax, whichever is later. 1040 ez 2010 pdf A return you filed, or tax you paid, before the due date is considered to have been filed or paid on the due date. 1040 ez 2010 pdf   If you file a claim after the 3-year period but within 2 years from the time you paid the tax, the credit or refund will not be more than the tax you paid within the 2 years immediately before you file the claim. 1040 ez 2010 pdf Members of Recognized Religious Sects If you are a member of a recognized religious sect, or a division of a recognized religious sect, you can apply for an exemption from payment of social security and Medicare taxes on both your self-employment income and the wages you earn from an employer who also has an exemption. 1040 ez 2010 pdf Exception. 1040 ez 2010 pdf   If you received social security benefits or payments, or anyone else received these benefits or payments based on your wages or self-employment income, you cannot apply. 1040 ez 2010 pdf However, if you pay your benefits back, you may be considered for exemption. 1040 ez 2010 pdf Contact your local Social Security Administration office to find out the amount you must pay back. 1040 ez 2010 pdf Eligibility requirements. 1040 ez 2010 pdf   To claim this exemption from SE tax, all the following requirements must be met. 1040 ez 2010 pdf You must file Form 4029, discussed later under Requesting Exemption—Form 4029 . 1040 ez 2010 pdf As a follower of the established teachings of the sect or division, you must be conscientiously opposed to accepting benefits of any private or public insurance that makes payments for death, disability, old age, retirement, or medical care, or provides services for medical care. 1040 ez 2010 pdf You must waive all rights to receive any social security payment or benefit and agree that no benefits or payments will be made to anyone else based on your wages and self-employment income. 1040 ez 2010 pdf The Commissioner of Social Security must determine that: Your sect or division has the established teachings as described in (2) above, It is the practice, and has been for a substantial period of time, for members of the sect or division to provide for their dependent members in a manner that is reasonable in view of the members' general level of living, and The sect or division has existed at all times since December 31, 1950. 1040 ez 2010 pdf Requesting Exemption—Form 4029 To request the exemption, file Form 4029 in triplicate (original and two copies) with the Social Security Administration at the address shown on the form. 1040 ez 2010 pdf The sect or division must complete part of the form. 1040 ez 2010 pdf The IRS will return to you a copy of the Form 4029 that you filed indicating whether it has approved your exemption. 1040 ez 2010 pdf If it is approved, keep the approved copy of Form 4029 in your permanent records. 1040 ez 2010 pdf When to file. 1040 ez 2010 pdf   You can file Form 4029 at any time. 1040 ez 2010 pdf   If you have an approved exemption from SE tax and for some reason that approved exemption ended, you must file a new Form 4029 if you subsequently meet the eligibility requirements, discussed earlier. 1040 ez 2010 pdf See Effective date of exemption next for information on when the newly approved exemption would become effective. 1040 ez 2010 pdf    If you have a previously approved exemption from SE tax and you change membership to another recognized religious sect, without any change to your eligibility requirements, then you do not need to file a new Form 4029. 1040 ez 2010 pdf Effective date of exemption. 1040 ez 2010 pdf   An approved exemption from SE tax generally is effective for all tax years beginning with the first year you meet the eligibility requirements discussed earlier. 1040 ez 2010 pdf (For example, if you meet the eligibility requirements in 2011, you file Form 4029 in 2012, and the IRS approves your exemption in 2013, your exemption is effective for tax year 2011 and all later years. 1040 ez 2010 pdf )   The exemption will end if you fail to meet the eligibility requirements or if the Commissioner of Social Security determines that the sect or division fails to meet them. 1040 ez 2010 pdf You must notify the IRS within 60 days if you are no longer a member of the religious group, or if you no longer follow the established teachings of this group. 1040 ez 2010 pdf The exemption will end for the tax year where you or your sect/division first fails to meet the eligibility requirements. 1040 ez 2010 pdf Refunds of SE tax paid. 1040 ez 2010 pdf    To get a refund of any SE tax you paid while the exemption was in effect, file Form 1040X. 1040 ez 2010 pdf For information on filing this form, see Refunds of SE tax under Requesting Exemption—Form 4361, earlier. 1040 ez 2010 pdf Exemption From FICA Taxes Generally, under FICA, the employer and the employee each pay half of the social security and Medicare tax. 1040 ez 2010 pdf Both the employee and the employer, if they meet the eligibility requirements discussed earlier, can apply to be exempt from their share of FICA taxes on wages paid by the employer to the employee. 1040 ez 2010 pdf A partnership in which each partner holds a religious exemption from social security and Medicare is an employer for this purpose. 1040 ez 2010 pdf If the employer's application is approved, the exemption will apply only to FICA taxes on wages paid to employees who also received an approval of identical applications. 1040 ez 2010 pdf Information for employers. 1040 ez 2010 pdf   If you have an approved Form 4029 and you have an employee who has an approved Form 4029, do not report wages you paid to the employee as social security and Medicare wages. 1040 ez 2010 pdf   If you have an employee who does not have an approved Form 4029, you must withhold the employee's share of social security and Medicare taxes and pay the employer's share. 1040 ez 2010 pdf Form W-2. 1040 ez 2010 pdf   When preparing a Form W-2 for an employee with an approved Form 4029, enter “Form 4029” in box 14, “Other. 1040 ez 2010 pdf ” Do not make any entries in boxes 3, 4, 5, or 6. 1040 ez 2010 pdf Forms 941, 943, and 944. 1040 ez 2010 pdf   If both you and your employee have received approved Forms 4029, do not include these exempt wages on the following forms. 1040 ez 2010 pdf Instead, follow the instructions given below. 1040 ez 2010 pdf Form 941, Employer's QUARTERLY Federal Tax Return: check the box on line 4 and enter “Form 4029” in the empty space below the check box. 1040 ez 2010 pdf Form 943, Employer's Annual Federal Tax Return for Agricultural Employees: enter “Form 4029” on the dotted line next to the lines 2 and 4 entry spaces. 1040 ez 2010 pdf Form 944, Employer's ANNUAL Federal Tax Return: check the box on line 3 and enter “Form 4029” in the empty space below the check box. 1040 ez 2010 pdf Effective date. 1040 ez 2010 pdf   An approved exemption from FICA becomes effective on the first day of the first calendar quarter after the quarter in which you file Form 4029. 1040 ez 2010 pdf The exemption will end on the last day of the calendar quarter before the quarter in which the employer, employee, sect, or division fails to meet the requirements. 1040 ez 2010 pdf Self-Employment Tax: Figuring Net Earnings There are two methods for figuring your net earnings from self-employment as a member of the clergy or a religious worker. 1040 ez 2010 pdf Regular method. 1040 ez 2010 pdf Nonfarm optional method. 1040 ez 2010 pdf You may find Worksheets 1 through 4 helpful in figuring your net earnings from self-employment. 1040 ez 2010 pdf Blank worksheets are in the back of this publication, after the Comprehensive Example. 1040 ez 2010 pdf Regular Method Most people use the regular method. 1040 ez 2010 pdf Under this method, figure your net earnings from self-employment by totaling your gross income for services you performed as a minister, a member of a religious order who has not taken a vow of poverty, or a Christian Science practitioner or reader. 1040 ez 2010 pdf Then, subtract your allowable business deductions and multiply the difference by 92. 1040 ez 2010 pdf 35% (. 1040 ez 2010 pdf 9235). 1040 ez 2010 pdf Use Schedule SE (Form 1040) to figure your net earnings and SE tax. 1040 ez 2010 pdf If you are an employee of a church that elected to exclude you from FICA coverage, figure net earnings by multiplying your church wages shown on Form W-2 by 92. 1040 ez 2010 pdf 35% (. 1040 ez 2010 pdf 9235). 1040 ez 2010 pdf Do not reduce your wages by any business deductions when making this computation. 1040 ez 2010 pdf Use Schedule SE (Form 1040), Section B, to figure your net earnings and SE tax. 1040 ez 2010 pdf If you have an approved exemption, or you are automatically exempt, do not include the income or deductions from ministerial services in figuring your net earnings from self-employment. 1040 ez 2010 pdf Amounts included in gross income. 1040 ez 2010 pdf   To figure your net earnings from self-employment (on Schedule SE (Form 1040)), include in gross income: Salaries and fees for your ministerial services (discussed earlier), Offerings you receive for marriages, baptisms, funerals, masses, etc. 1040 ez 2010 pdf , The value of meals and lodging provided to you, your spouse, and your dependents for your employer's convenience, The fair rental value of a parsonage provided to you (including the cost of utilities that are furnished) and the rental allowance (including an amount for payment of utilities) paid to you, and Any amount a church pays toward your income tax or SE tax, other than withholding the amount from your salary. 1040 ez 2010 pdf This amount is also subject to income tax. 1040 ez 2010 pdf   For the income tax treatment of items (2) and (4), see Income Tax: Income and Expenses , later. 1040 ez 2010 pdf Example. 1040 ez 2010 pdf Pastor Roger Adams receives an annual salary of $39,000 as a full-time minister. 1040 ez 2010 pdf The $39,000 includes $5,000 that is designated as a rental allowance to pay utilities. 1040 ez 2010 pdf His church owns a parsonage that has a fair rental value of $12,000 per year. 1040 ez 2010 pdf The church gives Pastor Adams the use of the parsonage. 1040 ez 2010 pdf He is not exempt from SE tax. 1040 ez 2010 pdf He must include $51,000 ($39,000 plus $12,000) when figuring his net earnings for SE tax purposes. 1040 ez 2010 pdf The results would be the same if, instead of the use of the parsonage and receipt of the rental allowance for utilities, Pastor Adams had received an annual salary of $51,000 of which $17,000 ($5,000 plus $12,000) per year was designated as a rental allowance. 1040 ez 2010 pdf Overseas duty. 1040 ez 2010 pdf   Your net earnings from self-employment are determined without any foreign earned income exclusion or the foreign housing exclusion or deduction if you are a U. 1040 ez 2010 pdf S. 1040 ez 2010 pdf citizen or resident alien serving abroad and living in a foreign country. 1040 ez 2010 pdf   For information on excluding foreign earned income or the foreign housing amount, see Publication 54. 1040 ez 2010 pdf Example. 1040 ez 2010 pdf Diane Jones was the minister of a U. 1040 ez 2010 pdf S. 1040 ez 2010 pdf church in Mexico. 1040 ez 2010 pdf She earned $35,000 in that position and was able to exclude it all for income tax purposes under the foreign earned income exclusion. 1040 ez 2010 pdf The United States does not have a social security agreement with Mexico, so Mrs. 1040 ez 2010 pdf Jones is subject to U. 1040 ez 2010 pdf S. 1040 ez 2010 pdf SE tax and must include $35,000 when figuring net earnings from self-employment. 1040 ez 2010 pdf Specified U. 1040 ez 2010 pdf S. 1040 ez 2010 pdf possessions. 1040 ez 2010 pdf    The exclusion from gross income for amounts derived from American Samoa or Puerto Rico does not apply in computing net earnings from self-employment. 1040 ez 2010 pdf Also see Residents of Puerto Rico, the U. 1040 ez 2010 pdf S. 1040 ez 2010 pdf Virgin Islands, Guam, the CNMI, and American Samoa , earlier, under U. 1040 ez 2010 pdf S. 1040 ez 2010 pdf Citizens and Resident and Nonresident Aliens. 1040 ez 2010 pdf Amounts not included in gross income. 1040 ez 2010 pdf   Do not include the following amounts in gross income when figuring your net earnings from self-employment. 1040 ez 2010 pdf Offerings that others made to the church. 1040 ez 2010 pdf Contributions by your church to a tax-sheltered annuity plan set up for you, including any salary reduction contributions (elective deferrals) that are not included in your gross income. 1040 ez 2010 pdf Pension payments or retirement allowances you receive for your past ministerial services. 1040 ez 2010 pdf The rental value of a parsonage or a parsonage allowance provided to you after you retire. 1040 ez 2010 pdf Allowable deductions. 1040 ez 2010 pdf   When figuring your net earnings from self-employment, deduct all your expenses related to your ministerial services performed as a self-employed person. 1040 ez 2010 pdf These are ministerial expenses you incurred while working other than as a common-law employee of the church. 1040 ez 2010 pdf They include expenses incurred in performing marriages and baptisms, and in delivering speeches. 1040 ez 2010 pdf Deduct these expenses on Schedule C or C-EZ (Form 1040), and carry the net amount to line 2 of Schedule SE (Form 1040), Section A or B. 1040 ez 2010 pdf   Wages earned as a common-law employee (explained earlier) of a church are generally subject to self-employment tax unless an exemption is requested, as discussed earlier under Exemption From Self-Employment (SE) Tax . 1040 ez 2010 pdf Subtract any allowable expenses (including unreimbursed employee business expenses) from those wages, include the net amount on line 2 of Schedule SE (Form 1040), Section A or B, and attach an explanation. 1040 ez 2010 pdf Do not complete Schedule C or C-EZ (Form 1040). 1040 ez 2010 pdf However, for income tax purposes, the expenses are allowed only as an itemized deduction on Schedule A (Form 1040) to the extent they exceed 2% of adjusted gross income. 1040 ez 2010 pdf Employee reimbursement arrangements. 1040 ez 2010 pdf   If you received an advance, allowance, or reimbursement for your employee expenses, how you report this amount and your employee expenses depends on whether your employer reimbursed you under an accountable plan or a nonaccountable plan. 1040 ez 2010 pdf Ask your employer if you are not sure if it reimburses you using an accountable or a nonaccountable plan. 1040 ez 2010 pdf Accountable plans. 1040 ez 2010 pdf   To be an accountable plan, your employer's reimbursement arrangement must include all three of the following rules. 1040 ez 2010 pdf Your expenses must have a business connection—that is, you must have paid or incurred deductible expenses while performing services as an employee of your employer. 1040 ez 2010 pdf You must adequately account to your employer for these expenses within a reasonable period of time. 1040 ez 2010 pdf You must return any excess reimbursement or allowance within a reasonable period of time. 1040 ez 2010 pdf   The reimbursement is not reported on your Form W-2. 1040 ez 2010 pdf Generally, if your expenses equal your reimbursement, you have no deduction. 1040 ez 2010 pdf If your expenses are more than your reimbursement, you can deduct your excess expenses for SE tax and income tax purposes. 1040 ez 2010 pdf Nonaccountable plan. 1040 ez 2010 pdf   A nonaccountable plan is a reimbursement arrangement that does not meet all three of the rules listed under Accountable plans above. 1040 ez 2010 pdf In addition, even if your employer has an accountable plan, the following payments will be treated as being paid under a nonaccountable plan. 1040 ez 2010 pdf Excess reimbursements you fail to return to your employer. 1040 ez 2010 pdf Reimbursement of nondeductible expenses related to your employer's business. 1040 ez 2010 pdf   Your employer will combine any reimbursement paid to you under a nonaccountable plan with your wages, salary, or other compensation and report the combined total in box 1 of your Form W-2. 1040 ez 2010 pdf Since reimbursements under a nonaccountable plan are included in your gross income, you can deduct your related expenses (for SE tax and income tax purposes) regardless of whether they are more than, less than, or equal to your reimbursement. 1040 ez 2010 pdf   For more information on accountable and nonaccountable plans, see Publication 463, Travel, Entertainment, Gift, and Car Expenses. 1040 ez 2010 pdf Married Couple Missionary Team If both spouses are duly ordained, commissioned, or licensed ministers of a church and have an agreement that each will perform specific services for which they are paid jointly or separately, they must divide the self-employment income according to the agreement. 1040 ez 2010 pdf If the agreement is with one spouse only and the other spouse is not paid for any specific duties, amounts received for their services are included only in the self-employment income of the spouse having the agreement. 1040 ez 2010 pdf Earnings Subject to SE Tax For 2013, the maximum net earnings from self-employment subject to social security (old age, survivors, and disability insurance) tax is $113,700 minus any wages and tips you earned that were subject to social security tax. 1040 ez 2010 pdf The tax rate for the social security part is 12. 1040 ez 2010 pdf 4%. 1040 ez 2010 pdf In addition, all of your net earnings are subject to the Medicare (hospital insurance) part of the SE tax. 1040 ez 2010 pdf This tax rate is 2. 1040 ez 2010 pdf 9%. 1040 ez 2010 pdf The combined self-employment tax rate is 15. 1040 ez 2010 pdf 3%. 1040 ez 2010 pdf Additional Medicare Tax. 1040 ez 2010 pdf   Beginning in 2013, a 0. 1040 ez 2010 pdf 9% Additional Medicare Tax applies to Medicare wages, railroad retirement (RRTA) compensation, and self-employment income that are more than: $125,000 if married filing separately, $250,000 if married filing jointly, or $200,000 for any other filing status. 1040 ez 2010 pdf Medicare wages and self-employment income are combined to determine if income exceeds the threshold. 1040 ez 2010 pdf A self-employment loss is not considered for purposes of this tax. 1040 ez 2010 pdf RRTA compensation is separately compared to the threshold. 1040 ez 2010 pdf For more information, see Form 8959, Additional Medicare Tax, and its separate instructions. 1040 ez 2010 pdf Nonfarm Optional Method You may be able to use the nonfarm optional method for figuring your net earnings from self-employment. 1040 ez 2010 pdf In general, the nonfarm optional method is intended to permit continued coverage for social security and Medicare purposes when your income for the tax year is low. 1040 ez 2010 pdf You may use the nonfarm optional method if you meet all the following tests. 1040 ez 2010 pdf You are self-employed on a regular basis. 1040 ez 2010 pdf You meet this test if your actual net earnings from self-employment were $400 or more in at least 2 of the 3 tax years before the one for which you use this method. 1040 ez 2010 pdf The net earnings can be from either farm or nonfarm earnings or both. 1040 ez 2010 pdf You have used this method less than 5 prior years. 1040 ez 2010 pdf (There is a 5-year lifetime limit. 1040 ez 2010 pdf ) The years do not have to be consecutive. 1040 ez 2010 pdf Your net nonfarm profits were: Less than $5,024, and Less than 72. 1040 ez 2010 pdf 189% of your gross nonfarm income. 1040 ez 2010 pdf If you meet all three tests, use Table 3 to figure your net earnings from self-employment under the nonfarm optional method. 1040 ez 2010 pdf Table 3. 1040 ez 2010 pdf Figuring Nonfarm Net Earnings IF your gross nonfarm income is . 1040 ez 2010 pdf . 1040 ez 2010 pdf . 1040 ez 2010 pdf THEN your net earnings are equal to . 1040 ez 2010 pdf . 1040 ez 2010 pdf . 1040 ez 2010 pdf $6,960 or less Two-thirds of your gross nonfarm income. 1040 ez 2010 pdf More than $6,960 $4,640. 1040 ez 2010 pdf Actual net earnings. 1040 ez 2010 pdf   Multiply your total earnings subject to SE tax by 92. 1040 ez 2010 pdf 35% (. 1040 ez 2010 pdf 9235) to get actual net earnings. 1040 ez 2010 pdf Actual net earnings are equivalent to net earnings under the “Regular Method. 1040 ez 2010 pdf ” More information. 1040 ez 2010 pdf   For more information on the nonfarm optional method, see Publication 334, Tax Guide for Small Business, and the Schedule SE (Form 1040) instructions. 1040 ez 2010 pdf Income Tax: Income and Expenses Some income and expense items are treated the same for both income tax and SE tax purposes and some are treated differently. 1040 ez 2010 pdf Note. 1040 ez 2010 pdf For purposes of this section, references to members of the clergy are only to ministers or members of a religious order. 1040 ez 2010 pdf Income Items The tax treatment of offerings and fees, outside earnings, rental allowances, rental value of a parsonage, earnings of members of religious orders, and foreign earned income is discussed here. 1040 ez 2010 pdf Offerings and Fees If you are a member of the clergy, you must include in your income offerings and fees you receive for marriages, baptisms, funerals, masses, etc. 1040 ez 2010 pdf , in addition to your salary. 1040 ez 2010 pdf If the offering is made to the religious institution, it is not taxable to you. 1040 ez 2010 pdf Outside Earnings If you are a member of a religious organization and you give your outside earnings to the organization, you still must include the earnings in your income. 1040 ez 2010 pdf However, you may be entitled to a charitable contribution deduction for the amount paid to the organization. 1040 ez 2010 pdf For more information, see Publication 526. 1040 ez 2010 pdf Exclusion of Rental Allowance and Fair Rental Value of a Parsonage Ordained, commissioned, or licensed ministers of the gospel may be able to exclude from income tax the rental allowance or fair rental value of a parsonage that is provided to them as pay for their services. 1040 ez 2010 pdf Services include: Ministerial services, discussed earlier, Administrative duties and teaching at theological seminaries, and The ordinary duties of a minister performed as an employee of the United States (other than as a chaplain in the Armed Forces), a state, possession, political subdivision, or the District of Columbia. 1040 ez 2010 pdf This exclusion applies only for income tax purposes. 1040 ez 2010 pdf It does not apply for SE tax purposes, as discussed earlier under Amounts included in gross income under Self-Employment Tax: Figuring Net Earnings. 1040 ez 2010 pdf Designation requirement. 1040 ez 2010 pdf   The church or organization that employs you must officially designate the payment as a housing allowance before it makes the payment. 1040 ez 2010 pdf It must designate a definite amount. 1040 ez 2010 pdf It cannot determine the amount of the housing allowance at a later date. 1040 ez 2010 pdf If the church or organization does not officially designate a definite amount as a housing allowance, you must include your total salary in your income. 1040 ez 2010 pdf   If you are employed and paid by a local congregation, a resolution by a national church agency of your denomination does not effectively designate a housing allowance for you. 1040 ez 2010 pdf The local congregation must officially designate the part of your salary that is a housing allowance. 1040 ez 2010 pdf However, a resolution of a national church agency can designate your housing allowance if you are directly employed by the national agency. 1040 ez 2010 pdf Rental allowances. 1040 ez 2010 pdf   If you receive in your salary an amount officially designated as a rental allowance (including an amount to pay utility costs), you can exclude the allowance from your gross income if: You use the amount to provide or rent a home, and The amount is not more than reasonable pay for your services. 1040 ez 2010 pdf   The amount you exclude cannot be more than the fair rental value of the home, including furnishings, plus the cost of utilities. 1040 ez 2010 pdf Fair rental value of parsonage. 1040 ez 2010 pdf   You can exclude from gross income the fair rental value of a house or parsonage, including utilities, furnished to you as part of your earnings. 1040 ez 2010 pdf However, the exclusion cannot be more than the reasonable pay for your services. 1040 ez 2010 pdf If you pay for the utilities, you can exclude any allowance designated for utility costs, up to your actual cost. 1040 ez 2010 pdf Example. 1040 ez 2010 pdf Rev. 1040 ez 2010 pdf Joanna Baker is a full-time minister. 1040 ez 2010 pdf The church allows her to use a parsonage that has an annual fair rental value of $24,000. 1040 ez 2010 pdf The church pays her an annual salary of $67,000, of which $7,500 is designated for utility costs. 1040 ez 2010 pdf Her actual utility costs during the year were $7,000. 1040 ez 2010 pdf For income tax purposes, Rev. 1040 ez 2010 pdf Baker excludes $31,000 from gross income ($24,000 fair rental value of the parsonage plus $7,000 from the allowance for utility costs). 1040 ez 2010 pdf She will report $60,000 ($59,500 salary plus $500 of unused utility allowance). 1040 ez 2010 pdf Her income for SE tax purposes, however, is $91,000 ($67,000 salary + $24,000 fair rental value of the parsonage). 1040 ez 2010 pdf Home ownership. 1040 ez 2010 pdf   If you own your home and you receive as part of your salary a housing or rental allowance, you may exclude from gross income the smallest of: The amount actually used to provide a home, The amount officially designated as a rental allowance, or The fair rental value of the home, including furnishings, utilities, garage, etc. 1040 ez 2010 pdf Excess rental allowance. 1040 ez 2010 pdf   You must include in gross income the amount of any rental allowance that is more than the smallest of: Your reasonable salary, The fair rental value of the home plus utilities, or The amount actually used to provide a home. 1040 ez 2010 pdf   Include in the total on Form 1040, line 7. 1040 ez 2010 pdf On the dotted line next to line 7, enter “Excess allowance” and the amount. 1040 ez 2010 pdf You may deduct the home mortgage interest and real estate taxes paid on your home even though you pay all or part of those expenses with funds you get through a tax-free rental or parsonage allowance. 1040 ez 2010 pdf However, you can only deduct these expenses as itemized deductions on Schedule A (Form 1040). 1040 ez 2010 pdf Retired ministers. 1040 ez 2010 pdf   If you are a retired minister, you can exclude from your gross income the rental value of a home (plus utilities) furnished to you by your church as a part of your pay for past services, or the part of your pension that was designated as a rental allowance. 1040 ez 2010 pdf However, a minister's surviving spouse cannot exclude the rental value unless the rental value is for ministerial services he or she performs or performed. 1040 ez 2010 pdf Teachers or administrators. 1040 ez 2010 pdf   If you are a minister employed as a teacher or administrator by a church school, college, or university, you are performing ministerial services for purposes of the housing exclusion. 1040 ez 2010 pdf However, if you perform services as a teacher or administrator on the faculty of a nonchurch college, you cannot exclude from your income a housing allowance or the value of a home that the college provides to you. 1040 ez 2010 pdf    If you live in faculty lodging as an employee of an educational institution or academic health center, all or part of the value of that lodging may be nontaxable under a different rule. 1040 ez 2010 pdf In Publication 525, see Faculty lodging in the discussion on meals and lodging under Fringe Benefits. 1040 ez 2010 pdf   If you serve as a minister of music or minister of education, or serve in an administrative or other function of your religious organization, but are not authorized to perform substantially all of the religious duties of an ordained minister in your church (even if you are commissioned as a minister of the gospel), the housing exclusion does not apply to you. 1040 ez 2010 pdf Theological students. 1040 ez 2010 pdf   If you are a theological student serving a required internship as a part-time or assistant pastor, you cannot exclude a parsonage or rental allowance from your income unless you are ordained, commissioned, or licensed as a minister. 1040 ez 2010 pdf Traveling evangelists. 1040 ez 2010 pdf   You can exclude a designated rental allowance from out-of-town churches if you meet all of the following requirements. 1040 ez 2010 pdf You are an ordained minister. 1040 ez 2010 pdf You perform ministerial services at churches located away from your community. 1040 ez 2010 pdf You actually use the rental allowance to maintain your permanent home. 1040 ez 2010 pdf Cantors. 1040 ez 2010 pdf   If you have a bona fide commission and your congregation employs you on a full-time basis to perform substantially all the religious functions of the Jewish faith, you can exclude a rental allowance from your gross income. 1040 ez 2010 pdf Earnings—Members of Religious Orders Your earnings may be exempt from both income tax and SE tax if you are a member of a religious order who: Has taken a vow of poverty, Receives earnings for services performed as an agent of the order and in the exercise of duties required by the order, and Renounces the earnings and gives them to the order. 1040 ez 2010 pdf See Members of Religious Orders , earlier, under Social Security Coverage. 1040 ez 2010 pdf Foreign Earned Income Certain income may be exempt from income tax if you work in a foreign country or in a specified U. 1040 ez 2010 pdf S. 1040 ez 2010 pdf possession. 1040 ez 2010 pdf Publication 54 discusses the foreign earned income exclusion. 1040 ez 2010 pdf Publication 570, Tax Guide for Individuals With Income From U. 1040 ez 2010 pdf S. 1040 ez 2010 pdf Possessions, covers the rules for taxpayers with income from U. 1040 ez 2010 pdf S. 1040 ez 2010 pdf possessions. 1040 ez 2010 pdf You can get these free publications from the Internal Revenue Service at IRS. 1040 ez 2010 pdf gov or from most U. 1040 ez 2010 pdf S. 1040 ez 2010 pdf Embassies or consulates. 1040 ez 2010 pdf Expense Items The tax treatment of ministerial trade or business expenses, expenses allocable to tax-free income, and health insurance costs is discussed here. 1040 ez 2010 pdf Ministerial Trade or Business Expenses as an Employee When you figure your income tax, you must itemize your deductions on Schedule A (Form 1040) to claim allowable deductions for ministerial trade or business expenses incurred while working as an employee. 1040 ez 2010 pdf You also may have to file Form 2106, Employee Business Expenses (or Form 2106-EZ, Unreimbursed Employee Business Expenses). 1040 ez 2010 pdf You claim these expenses as miscellaneous itemized deductions that are subject to the 2%-of-adjusted-gross-income (AGI) limit. 1040 ez 2010 pdf See Publication 529 for more information on this limit. 1040 ez 2010 pdf However, you cannot deduct any of your employee business expenses that are allocable to tax-free income (discussed next). 1040 ez 2010 pdf Expenses Allocable to Tax-Free Income If you receive a rental or parsonage allowance that is exempt from income tax (tax free), you must allocate a portion of the expenses of operating your ministry to that tax-free income. 1040 ez 2010 pdf You cannot deduct the portion of your expenses that you allocate to your tax-free rental or parsonage allowance. 1040 ez 2010 pdf Exception. 1040 ez 2010 pdf   This rule does not apply to your deductions for home mortgage interest or real estate taxes on your home. 1040 ez 2010 pdf Figuring the allocation. 1040 ez 2010 pdf   Figure the portion of your otherwise deductible expenses that you cannot deduct (because you must allocate that portion to tax-free income) by multiplying the expenses by the following fraction:      Tax-free rental or parsonage allowance     All income (taxable and tax free) earned from your ministry           When figuring the allocation, include the income and expenses related to the ministerial duties you perform both as an employee and as a self-employed person. 1040 ez 2010 pdf    Reduce your otherwise deductible expenses only in figuring your income tax, not your SE tax. 1040 ez 2010 pdf Example. 1040 ez 2010 pdf Rev. 1040 ez 2010 pdf Charles Ashford received $40,000 in earnings for ministerial services consisting of a $28,000 salary for ministerial services performed as an employee, $2,000 for weddings and baptisms performed as a self-employed person, and a $10,000 tax-free parsonage allowance. 1040 ez 2010 pdf He incurred $4,000 of unreimbursed expenses connected with his earnings for ministerial services. 1040 ez 2010 pdf $3,500 of the $4,000 is for employee expenses related to his ministerial salary, and $500 is related to the weddings and baptisms he performed as a self-employed person. 1040 ez 2010 pdf Rev. 1040 ez 2010 pdf Ashford figures the nondeductible (tax-free) portion of expenses related to his ministerial salary as follows: ($10,000 ÷ $40,000) x $3,500 = $875   Rev. 1040 ez 2010 pdf Ashford figures the nondeductible (tax-free) portion of expenses related to his wedding and baptism income as follows: ($10,000 ÷ $40,000) x $500 = $125 Required statement. 1040 ez 2010 pdf   If you receive a tax-free rental or parsonage allowance and have ministerial expenses, attach a statement to your tax return. 1040 ez 2010 pdf The statement must contain all of the following information. 1040 ez 2010 pdf A list of each item of taxable ministerial income by source (such as wages, salary, weddings, baptisms, etc. 1040 ez 2010 pdf ) plus the amount. 1040 ez 2010 pdf A list of each item of tax-free ministerial income by source (parsonage allowance) plus the amount. 1040 ez 2010 pdf A list of each item of otherwise deductible ministerial expenses plus the amount. 1040 ez 2010 pdf How you figured the nondeductible part of your otherwise deductible expenses. 1040 ez 2010 pdf A statement that the other deductions claimed on your tax return are not allocable to your tax-free income. 1040 ez 2010 pdf   See the attachments prepared for the Comprehensive Example , later. 1040 ez 2010 pdf Following the example, you will find blank worksheets for your own use. 1040 ez 2010 pdf Health Insurance Costs of Self-Employed Ministers If you are self-employed, you may be able to deduct the amount you paid in 2013 for medical and dental insurance and qualified long-term care insurance for you, your spouse, and your dependents. 1040 ez 2010 pdf If you qualify, you can take this deduction as an adjustment to income on Form 1040, line 29. 1040 ez 2010 pdf See the Instructions for Form 1040 to figure your deduction. 1040 ez 2010 pdf The following special rules apply to the self-employed health insurance deduction. 1040 ez 2010 pdf You cannot take a medical expense deduction on Schedule A (Form 1040) for any expenses you claim for purposes of the self-employed health insurance deduction. 1040 ez 2010 pdf You cannot take the deduction for any month you are eligible to participate in a subsidized plan of your (or your spouse's) employer. 1040 ez 2010 pdf The deduction cannot exceed your net earnings from the business under which the insurance plan is established. 1040 ez 2010 pdf Your net earnings under this rule do not include the income you earned as a common-law employee (discussed earlier) of a church. 1040 ez 2010 pdf More information. 1040 ez 2010 pdf   For more information about the self-employed health insurance deduction, see chapter 6 in Publication 535. 1040 ez 2010 pdf Deduction for SE Tax You can deduct one-half of your SE tax in figuring adjusted gross income. 1040 ez 2010 pdf This is an income tax deduction only, on Form 1040, line 27. 1040 ez 2010 pdf Do not claim this deduction in figuring net earnings from self-employment subject to SE tax. 1040 ez 2010 pdf Income Tax Withholding and Estimated Tax The federal income tax is a pay-as-you-go tax. 1040 ez 2010 pdf You must pay the tax as you earn or receive income during the year. 1040 ez 2010 pdf An employee usually has income tax withheld from his or her wages or salary. 1040 ez 2010 pdf However, your salary is not subject to federal income tax withholding if both of the following conditions apply. 1040 ez 2010 pdf You are a duly ordained, commissioned, or licensed minister, a member of a religious order (who has not taken a vow of poverty), or a Christian Science practitioner or reader. 1040 ez 2010 pdf Your salary is for ministerial services (see Ministerial Services , earlier). 1040 ez 2010 pdf If your salary is not subject to withholding, or if you do not pay enough tax through withholding, you may need to make estimated tax payments to avoid penalties for not paying enough tax as you earn your income. 1040 ez 2010 pdf You generally must make estimated tax payments if you expect to owe taxes, including SE tax, of $1,000 or more, when you file your return. 1040 ez 2010 pdf Determine your estimated tax by using the worksheets in Publication 505, Tax Withholding and Estimated Tax. 1040 ez 2010 pdf Pay the entire estimated tax for 2014 or the first installment by April 15, 2014. 1040 ez 2010 pdf See Form 1040-ES for the different payment methods. 1040 ez 2010 pdf The April 15 date applies whether or not your tax home and your abode are outside the United States and Puerto Rico. 1040 ez 2010 pdf For more information, see chapter 2 of Publication 505. 1040 ez 2010 pdf If you perform your services as a common-law employee of the church and your salary is not subject to income tax withholding, you can enter into a voluntary withholding agreement with the church to cover any income and SE tax that may be due. 1040 ez 2010 pdf Filing Your Return You must file an income tax return for 2013 if your gross income was at least the amount shown in the third column of Table 4 above. 1040 ez 2010 pdf Table 4. 1040 ez 2010 pdf 2013 Filing Requirements for Most Taxpayers IF your filing status is . 1040 ez 2010 pdf . 1040 ez 2010 pdf . 1040 ez 2010 pdf AND at the end of 2013 you were* . 1040 ez 2010 pdf . 1040 ez 2010 pdf . 1040 ez 2010 pdf THEN file a return if your gross income** was at least . 1040 ez 2010 pdf . 1040 ez 2010 pdf . 1040 ez 2010 pdf single under age 65 65 or older   $10,000 $11,500   married filing jointly*** under 65 (both spouses) 65 or older (one spouse) 65 or older (both spouses)   $20,000  $21,200  $22,400   married filing separately any age   $3,900   head of household under 65 65 or older   $12,850 $14,350   qualifying widow(er) with dependent child under 65 65 or older   $16,100  $17,300   * If you were born on January 1, 1949, you are considered to be age 65 at the end of 2013. 1040 ez 2010 pdf ** Gross income means all income you received in the form of money, goods, property, and services that is not exempt from tax, including any income from sources outside the United States or from the sale of your main home (even if you can exclude part or all of it). 1040 ez 2010 pdf Do not include any social security benefits unless (a) you are married filing a separate return and you lived with your spouse at any time in 2013, or (b) one-half of your social security benefits plus your other gross income and any tax-exempt interest is more than $25,000 ($32,000 if married filing jointly). 1040 ez 2010 pdf If (a) or (b) applies, see the instructions for Form 1040, lines 20a and 20b, to figure the taxable part of social security benefits you must include in gross income. 1040 ez 2010 pdf Gross income includes gains, but not losses, reported on Form 8949 or Schedule D (Form 1040). 1040 ez 2010 pdf Gross income from a business means, for example, the amount on Schedule C (Form 1040), line 7, or Schedule F (Form 1040), line 9. 1040 ez 2010 pdf But, in figuring gross income, do not reduce your income by any losses, including any loss on Schedule C (Form 1040), line 7, or Schedule F (Form 1040), line 9. 1040 ez 2010 pdf *** If you did not live with your spouse at the end of 2013 (or on the date your spouse died) and your gross income was at least $3,900, you must file a return regardless of your age. 1040 ez 2010 pdf Additional requirements. 1040 ez 2010 pdf   Even if your income was less than the amount shown in Table 4, you must file an income tax return on Form 1040, and attach a completed Schedule SE (Form 1040), if:    You are not exempt from SE tax, and you have net earnings from self-employment (discussed earlier under Self-Employment Tax: Figuring Net Earnings ) of $400 or more in the tax year, You are exempt from SE tax on earnings from ministerial services and you have $400 or more of other net earnings subject to SE tax, or You had wages of $108. 1040 ez 2010 pdf 28 or more from an electing church or church-controlled organization (see Coverage of Religious Workers (Church Employees) , earlier, under Social Security Coverage). 1040 ez 2010 pdf Self-employment tax. 1040 ez 2010 pdf   If you are liable for SE tax, you must file Schedule SE (Form 1040) with your return. 1040 ez 2010 pdf   If you filed Form 4361 and did not receive approval from the IRS, you must pay SE tax on your ministerial earnings, as explained earlier. 1040 ez 2010 pdf You should report ministerial earnings and expenses from nonemployee ministerial services on Schedule C or C-EZ (Form 1040). 1040 ez 2010 pdf You should then carry the net amount over to line 2 of Schedule SE (Form 1040), Section A or B. 1040 ez 2010 pdf However, if you were a duly ordained minister who was an employee of a church and you must pay SE tax on the wages you earned for those services, do not report those wages on Schedule C or C-EZ (Form 1040). 1040 ez 2010 pdf Instead, report those wages less any allowable expenses (including any unreimbursed employee business expenses), on line 2 of Schedule SE (Form 1040), Section A or B, and attach an explanation. 1040 ez 2010 pdf Note. 1040 ez 2010 pdf For income tax purposes, the unreimbursed employee business expenses that you incurred as an employee of the church and subtracted from your wages on line 2 of Schedule SE (Form 1040) are allowed only as an itemized deduction on Schedule A (Form 1040) if they exceed 2% of your adjusted gross income. 1040 ez 2010 pdf You cannot deduct these expenses on Schedule C or C-EZ (Form 1040) as a trade or business expense. 1040 ez 2010 pdf Exemption from SE tax. 1040 ez 2010 pdf   If you filed Form 4361 and received IRS approval not to be taxed on your ministerial earnings, and you do not have any other income subject to SE tax, do not file Schedule SE (Form 1040). 1040 ez 2010 pdf Instead, enter “Exempt—Form 4361” on the dotted line next to Form 1040, line 56. 1040 ez 2010 pdf However, if you had net earnings from another trade or business of $400 or more subject to SE tax, see line A at the top of Schedule SE (Form 1040), Section B. 1040 ez 2010 pdf    If you filed Form 4029 and received IRS approval not to be taxed on those earnings, and you do not have any other income subject to SE tax, do not file Schedule SE (Form 1040). 1040 ez 2010 pdf Instead, enter “Exempt—Form 4029” on the dotted line next to Form 1040, line 56. 1040 ez 2010 pdf More information. 1040 ez 2010 pdf   For more information on filing your return, including when and where to file it, see the Instructions for Form 1040. 1040 ez 2010 pdf Retirement Savings Arrangements Retirement savings arrangements are plans that offer you a tax-favored way to save for your retirement. 1040 ez 2010 pdf You generally can deduct your contributions to the plan. 1040 ez 2010 pdf Your contributions and the earnings on them are not taxed until they are distributed. 1040 ez 2010 pdf Retirement plans for the self-employed. 1040 ez 2010 pdf   To set up one of the following plans you must be self-employed. 1040 ez 2010 pdf SEP (simplified employee pension) plan. 1040 ez 2010 pdf SIMPLE (savings incentive match plan for employees) plan. 1040 ez 2010 pdf Qualified retirement plan (also called a Keogh or H. 1040 ez 2010 pdf R. 1040 ez 2010 pdf 10 plan). 1040 ez 2010 pdf   The common-law rules determine whether you are an employee or a self-employed person for purposes of setting up a retirement plan. 1040 ez 2010 pdf See Employment status for other tax purposes under Coverage of Members of the Clergy, earlier. 1040 ez 2010 pdf This result is true even if your compensation for ministerial services (defined earlier) is subject to SE tax. 1040 ez 2010 pdf   For example, if a congregation pays you a salary for performing ministerial services and you are subject to the congregation's control, you generally are a common-law employee. 1040 ez 2010 pdf You are not a self-employed person for purposes of setting up a retirement plan. 1040 ez 2010 pdf This result is true even if your salary is subject to SE tax. 1040 ez 2010 pdf   On the other hand, amounts received directly from members of the congregation, such as fees for performing marriages, baptisms, or other personal services that you report on Schedule C or C-EZ (Form 1040), are earnings from self-employment for all tax purposes. 1040 ez 2010 pdf   For more information on establishing a SEP, SIMPLE, or qualified retirement plan, see Publication 560, Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans). 1040 ez 2010 pdf Individual retirement arrangements (IRAs). 1040 ez 2010 pdf   The traditional IRA and the Roth IRA are two individual retirement arrangements you can use to save money for your retirement. 1040 ez 2010 pdf Generally, your maximum contribution for 2013 to either of these plans (or to a combination of the two) is the smaller of your taxable compensation or $5,500 ($6,500 if you are age 50 or older). 1040 ez 2010 pdf   However, your maximum contribution to a Roth IRA will be further reduced or eliminated if your adjusted gross income is above a certain amount. 1040 ez 2010 pdf You cannot deduct Roth IRA contributions, but if you satisfy certain requirements, all earnings in the Roth IRA are tax free and neither your nondeductible contributions nor any earnings on them are taxable when distributed. 1040 ez 2010 pdf   If you contribute to a traditional IRA, your contribution may be deductible. 1040 ez 2010 pdf However, your deduction may be reduced or eliminated if you or your spouse is covered by an employer retirement plan (including, but not limited to, a SEP, SIMPLE, or qualified retirement plan). 1040 ez 2010 pdf   For more information on IRAs, see Publication 590. 1040 ez 2010 pdf Tax-sheltered annuity plans. 1040 ez 2010 pdf   Church employees, members of religious orders, and duly ordained, commissioned, or licensed ministers working as ministers or chaplains can participate in tax-sheltered annuity (403(b)) plans. 1040 ez 2010 pdf For more
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The 1040 Ez 2010 Pdf

1040 ez 2010 pdf 3. 1040 ez 2010 pdf   Exclusions From Gross Income Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Resident AliensForeign Earned Income and Housing Amount Nonresident AliensInterest Income Dividend Income Services Performed for Foreign Employer Gambling Winnings From Dog or Horse Racing Gain From the Sale of Your Main Home Scholarships and Fellowship GrantsExpenses that do not qualify. 1040 ez 2010 pdf Introduction Resident and nonresident aliens are allowed exclusions from gross income if they meet certain conditions. 1040 ez 2010 pdf An exclusion from gross income is generally income you receive that is not included in your U. 1040 ez 2010 pdf S. 1040 ez 2010 pdf income and is not subject to U. 1040 ez 2010 pdf S. 1040 ez 2010 pdf tax. 1040 ez 2010 pdf This chapter covers some of the more common exclusions allowed to resident and nonresident aliens. 1040 ez 2010 pdf Topics - This chapter discusses: Nontaxable interest, Nontaxable dividends, Certain compensation paid by a foreign employer, Gain from sale of home, and Scholarships and fellowship grants. 1040 ez 2010 pdf Useful Items - You may want to see: Publication 54 Tax Guide for U. 1040 ez 2010 pdf S. 1040 ez 2010 pdf Citizens and Resident Aliens Abroad 523 Selling Your Home See chapter 12 for information about getting these publications. 1040 ez 2010 pdf Resident Aliens Resident aliens may be able to exclude the following items from their gross income. 1040 ez 2010 pdf Foreign Earned Income and Housing Amount If you are physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months, you may qualify for the foreign earned income exclusion. 1040 ez 2010 pdf The exclusion is $97,600 in 2013. 1040 ez 2010 pdf In addition, you may be able to exclude or deduct certain foreign housing amounts. 1040 ez 2010 pdf You may also qualify if you are a bona fide resident of a foreign country and you are a citizen or national of a country with which the United States has an income tax treaty. 1040 ez 2010 pdf For more information, see Publication 54. 1040 ez 2010 pdf Foreign country. 1040 ez 2010 pdf    A foreign country is any territory under the sovereignty of a government other than that of the United States. 1040 ez 2010 pdf   The term “foreign country” includes the country's territorial waters and airspace, but not international waters and the airspace above them. 1040 ez 2010 pdf It also includes the seabed and subsoil of those submarine areas adjacent to the country's territorial waters over which it has exclusive rights under international law to explore and exploit the natural resources. 1040 ez 2010 pdf   The term “foreign country” does not include U. 1040 ez 2010 pdf S. 1040 ez 2010 pdf possessions or territories. 1040 ez 2010 pdf It does not include the Antarctic region. 1040 ez 2010 pdf Nonresident Aliens Nonresident aliens can exclude the following items from their gross income. 1040 ez 2010 pdf Interest Income Interest income that is not connected with a U. 1040 ez 2010 pdf S. 1040 ez 2010 pdf trade or business is excluded from income if it is from: Deposits (including certificates of deposit) with persons in the banking business, Deposits or withdrawable accounts with mutual savings banks, cooperative banks, credit unions, domestic building and loan associations, and other savings institutions chartered and supervised as savings and loan or similar associations under federal or state law (if the interest paid or credited can be deducted by the association), and Amounts held by an insurance company under an agreement to pay interest on them. 1040 ez 2010 pdf State and local government obligations. 1040 ez 2010 pdf   Interest on obligations of a state or political subdivision, the District of Columbia, or a U. 1040 ez 2010 pdf S. 1040 ez 2010 pdf possession, generally is not included in income. 1040 ez 2010 pdf However, interest on certain private activity bonds, arbitrage bonds, and certain bonds not in registered form is included in income. 1040 ez 2010 pdf Portfolio interest. 1040 ez 2010 pdf   Interest and original issue discount that qualifies as portfolio interest is not subject to NRA withholding. 1040 ez 2010 pdf To qualify as portfolio interest, the interest must be paid on obligations issued after July 18, 1984, and otherwise subject to NRA withholding. 1040 ez 2010 pdf Note. 1040 ez 2010 pdf For obligations issued after March 18, 2012, portfolio interest does not include interest paid on debt that is not in registered form. 1040 ez 2010 pdf Before March 19, 2012, portfolio interest included interest on certain registered and nonregistered (bearer) bonds if the obligations meet the requirements described below. 1040 ez 2010 pdf Obligations in registered form. 1040 ez 2010 pdf   Portfolio interest includes interest paid on an obligation that is in registered form, and for which you have received documentation that the beneficial owner of the obligation is not a United States person. 1040 ez 2010 pdf   Generally, an obligation is in registered form if: (i) the obligation is registered as to both principal and any stated interest with the issuer (or its agent) and any transfer of the obligation may be effected only by surrender of the old obligation and reissuance to the new holder; (ii) the right to principal and stated interest with respect to the obligation may be transferred only through a book entry system maintained by the issuer or its agent; or (iii) the obligation is registered as to both principal and stated interest with the issuer or its agent and can be transferred both by surrender and reissuance and through a book entry system. 1040 ez 2010 pdf   An obligation that would otherwise be considered to be in registered form is not considered to be in registered form as of a particular time if it can be converted at any time in the future into an obligation that is not in registered form. 1040 ez 2010 pdf For more information on whether obligations are considered to be in registered form, see Portfolio interest in Publication 515. 1040 ez 2010 pdf Obligations not in registered form. 1040 ez 2010 pdf    For obligations issued before March 19, 2012, interest on an obligation that is not in registered form (bearer obligation) is portfolio interest if the obligation is foreign-targeted. 1040 ez 2010 pdf A bearer obligation is foreign-targeted if: There are arrangements to ensure that the obligation will be sold, or resold in connection with the original issue, only to a person who is not a United States person, Interest on the obligation is payable only outside the United States and its possessions, and The face of the obligation contains a statement that any United States person who holds the obligation will be subject to limits under the United States income tax laws. 1040 ez 2010 pdf   Documentation is not required for interest on bearer obligations to qualify as portfolio interest. 1040 ez 2010 pdf In some cases, however, you may need documentation for purposes of Form 1099 reporting and backup withholding. 1040 ez 2010 pdf Interest that does not qualify as portfolio interest. 1040 ez 2010 pdf   Payments to certain persons and payments of contingent interest do not qualify as portfolio interest. 1040 ez 2010 pdf You must withhold at the statutory rate on such payments unless some other exception, such as a treaty provision, applies. 1040 ez 2010 pdf Contingent interest. 1040 ez 2010 pdf   Portfolio interest does not include contingent interest. 1040 ez 2010 pdf Contingent interest is either of the following: Interest that is determined by reference to: Any receipts, sales, or other cash flow of the debtor or related person, Income or profits of the debtor or related person, Any change in value of any property of the debtor or a related person, or Any dividend, partnership distributions, or similar payments made by the debtor or a related person. 1040 ez 2010 pdf For exceptions, see Internal Revenue Code section 871(h)(4)(C). 1040 ez 2010 pdf Any other type of contingent interest that is identified by the Secretary of the Treasury in regulations. 1040 ez 2010 pdf Related persons. 1040 ez 2010 pdf   Related persons include the following. 1040 ez 2010 pdf Members of a family, including only brothers, sisters, half-brothers, half-sisters, spouse, ancestors (parents, grandparents, etc. 1040 ez 2010 pdf ), and lineal descendants (children, grandchildren, etc. 1040 ez 2010 pdf ). 1040 ez 2010 pdf Any person who is a party to any arrangement undertaken for the purpose of avoiding the contingent interest rules. 1040 ez 2010 pdf Certain corporations, partnerships, and other entities. 1040 ez 2010 pdf For details, see Nondeductible Loss in chapter 2 of Publication 544. 1040 ez 2010 pdf Exception for existing debt. 1040 ez 2010 pdf   Contingent interest does not include interest paid or accrued on any debt with a fixed term that was issued: On or before April 7, 1993, or After April 7, 1993, pursuant to a written binding contract in effect on that date and at all times thereafter before that debt was issued. 1040 ez 2010 pdf Dividend Income The following dividend income is exempt from the 30% tax. 1040 ez 2010 pdf Certain dividends paid by foreign corporations. 1040 ez 2010 pdf   There is no 30% tax on U. 1040 ez 2010 pdf S. 1040 ez 2010 pdf source dividends you receive from a foreign corporation. 1040 ez 2010 pdf See Second exception under Dividends in chapter 2 for how to figure the amount of U. 1040 ez 2010 pdf S. 1040 ez 2010 pdf source dividends. 1040 ez 2010 pdf Certain interest-related dividends. 1040 ez 2010 pdf   There is no 30% tax on interest-related dividends from sources within the United States that you receive from a mutual fund or other regulated investment company in 2013. 1040 ez 2010 pdf The mutual fund will designate in writing which dividends are interest-related dividends. 1040 ez 2010 pdf Certain short-term capital gain dividends. 1040 ez 2010 pdf   There may not be any 30% tax on certain short-term capital gain dividends from sources within the United States that you receive from a mutual fund or other regulated investment company. 1040 ez 2010 pdf The mutual fund will designate in writing which dividends are short-term capital gain dividends. 1040 ez 2010 pdf This tax relief will not apply to you if you are present in the United States for 183 days or more during your tax year. 1040 ez 2010 pdf Services Performed for Foreign Employer If you were paid by a foreign employer, your U. 1040 ez 2010 pdf S. 1040 ez 2010 pdf source income may be exempt from U. 1040 ez 2010 pdf S. 1040 ez 2010 pdf tax, but only if you meet one of the situations discussed next. 1040 ez 2010 pdf Employees of foreign persons, organizations, or offices. 1040 ez 2010 pdf   Income for personal services performed in the United States as a nonresident alien is not considered to be from U. 1040 ez 2010 pdf S. 1040 ez 2010 pdf sources and is tax exempt if you meet all three of the following conditions. 1040 ez 2010 pdf You perform personal services as an employee of or under a contract with a nonresident alien individual, foreign partnership, or foreign corporation, not engaged in a trade or business in the United States; or you work for an office or place of business maintained in a foreign country or possession of the United States by a U. 1040 ez 2010 pdf S. 1040 ez 2010 pdf corporation, a U. 1040 ez 2010 pdf S. 1040 ez 2010 pdf partnership, or a U. 1040 ez 2010 pdf S. 1040 ez 2010 pdf citizen or resident. 1040 ez 2010 pdf You perform these services while you are a nonresident alien temporarily present in the United States for a period or periods of not more than a total of 90 days during the tax year. 1040 ez 2010 pdf Your pay for these services is not more than $3,000. 1040 ez 2010 pdf If you do not meet all three conditions, your income from personal services performed in the United States is U. 1040 ez 2010 pdf S. 1040 ez 2010 pdf source income and is taxed according to the rules in chapter 4. 1040 ez 2010 pdf   If your pay for these services is more than $3,000, the entire amount is income from a trade or business within the United States. 1040 ez 2010 pdf To find if your pay is more than $3,000, do not include any amounts you get from your employer for advances or reimbursements of business travel expenses, if you were required to and did account to your employer for those expenses. 1040 ez 2010 pdf If the advances or reimbursements are more than your expenses, include the excess in your pay for these services. 1040 ez 2010 pdf   A day means a calendar day during any part of which you are physically present in the United States. 1040 ez 2010 pdf Example 1. 1040 ez 2010 pdf During 2013, Henry Smythe, a nonresident alien from a nontreaty country, worked for an overseas office of a U. 1040 ez 2010 pdf S. 1040 ez 2010 pdf partnership. 1040 ez 2010 pdf Henry, who uses the calendar year as his tax year, was temporarily present in the United States for 60 days during 2013 performing personal services for the overseas office of the partnership. 1040 ez 2010 pdf That office paid him a total gross salary of $2,800 for those services. 1040 ez 2010 pdf During 2013, he was not engaged in a trade or business in the United States. 1040 ez 2010 pdf The salary is not considered U. 1040 ez 2010 pdf S. 1040 ez 2010 pdf source income and is exempt from U. 1040 ez 2010 pdf S. 1040 ez 2010 pdf tax. 1040 ez 2010 pdf Example 2. 1040 ez 2010 pdf The facts are the same as in Example 1, except that Henry's total gross salary for the services performed in the United States during 2013 was $4,500. 1040 ez 2010 pdf He received $2,875 in 2013, and $1,625 in 2014. 1040 ez 2010 pdf During 2013, he was engaged in a trade or business in the United States because the compensation for his personal services in the United States was more than $3,000. 1040 ez 2010 pdf Henry's salary is U. 1040 ez 2010 pdf S. 1040 ez 2010 pdf source income and is taxed under the rules in chapter 4. 1040 ez 2010 pdf Crew members. 1040 ez 2010 pdf   Compensation for services performed by a nonresident alien in connection with the individual's temporary presence in the United States as a regular crew member of a foreign vessel (for example, a boat or ship) engaged in transportation between the United States and a foreign country or U. 1040 ez 2010 pdf S. 1040 ez 2010 pdf possession is not U. 1040 ez 2010 pdf S. 1040 ez 2010 pdf source income and is exempt from U. 1040 ez 2010 pdf S. 1040 ez 2010 pdf tax. 1040 ez 2010 pdf This exemption does not apply to compensation for services performed on foreign aircraft. 1040 ez 2010 pdf Students and exchange visitors. 1040 ez 2010 pdf   Nonresident alien students and exchange visitors present in the United States under “F,” “J,” or “Q” visas can exclude from gross income pay received from a foreign employer. 1040 ez 2010 pdf   This group includes bona fide students, scholars, trainees, teachers, professors, research assistants, specialists, or leaders in a field of specialized knowledge or skill, or persons of similar description. 1040 ez 2010 pdf It also includes the alien's spouse and minor children if they come with the alien or come later to join the alien. 1040 ez 2010 pdf   A nonresident alien temporarily present in the United States under a “J” visa includes an alien individual entering the United States as an exchange visitor under the Mutual Educational and Cultural Exchange Act of 1961. 1040 ez 2010 pdf Foreign employer. 1040 ez 2010 pdf   A foreign employer is: A nonresident alien individual, foreign partnership, or foreign corporation, or An office or place of business maintained in a foreign country or in a U. 1040 ez 2010 pdf S. 1040 ez 2010 pdf possession by a U. 1040 ez 2010 pdf S. 1040 ez 2010 pdf corporation, a U. 1040 ez 2010 pdf S. 1040 ez 2010 pdf partnership, or an individual who is a U. 1040 ez 2010 pdf S. 1040 ez 2010 pdf citizen or resident. 1040 ez 2010 pdf   The term “foreign employer” does not include a foreign government. 1040 ez 2010 pdf Pay from a foreign government that is exempt from U. 1040 ez 2010 pdf S. 1040 ez 2010 pdf income tax is discussed in chapter 10. 1040 ez 2010 pdf Income from certain annuities. 1040 ez 2010 pdf   Do not include in income any annuity received under a qualified annuity plan or from a qualified trust exempt from U. 1040 ez 2010 pdf S. 1040 ez 2010 pdf income tax if you meet both of the following conditions. 1040 ez 2010 pdf You receive the annuity only because: You performed personal services outside the United States while you were a nonresident alien, or You performed personal services inside the United States while you were a nonresident alien and you met the three conditions, described earlier, under Employees of foreign persons, organizations, or offices . 1040 ez 2010 pdf At the time the first amount is paid as an annuity under the plan (or by the trust), 90% or more of the employees for whom contributions or benefits are provided under the annuity plan (or under the plan of which the trust is a part) are U. 1040 ez 2010 pdf S. 1040 ez 2010 pdf citizens or residents. 1040 ez 2010 pdf   If the annuity qualifies under condition (1) but not condition (2) above, you do not have to include the amount in income if: You are a resident of a country that gives a substantially equal exclusion to U. 1040 ez 2010 pdf S. 1040 ez 2010 pdf citizens and residents, or You are a resident of a beneficiary developing country under Title V of the Trade Act of 1974. 1040 ez 2010 pdf   If you are not sure whether the annuity is from a qualified annuity plan or qualified trust, ask the person who made the payment. 1040 ez 2010 pdf Income affected by treaties. 1040 ez 2010 pdf   Income of any kind that is exempt from U. 1040 ez 2010 pdf S. 1040 ez 2010 pdf tax under a treaty to which the United States is a party is excluded from your gross income. 1040 ez 2010 pdf Income on which the tax is only limited by treaty, however, is included in gross income. 1040 ez 2010 pdf See chapter 9. 1040 ez 2010 pdf Gambling Winnings From Dog or Horse Racing You can exclude from your gross income winnings from legal wagers initiated outside the United States in a parimutuel pool with respect to a live horse or dog race in the United States. 1040 ez 2010 pdf Gain From the Sale of Your Main Home If you sold your main home, you may be able to exclude up to $250,000 of the gain on the sale of your home. 1040 ez 2010 pdf If you are married and file a joint return, you may be able to exclude up to $500,000. 1040 ez 2010 pdf For information on the requirements for this exclusion, see Publication 523. 1040 ez 2010 pdf This exclusion does not apply to nonresident aliens who are subject to the expatriation tax rules discussed in chapter 4. 1040 ez 2010 pdf Scholarships and Fellowship Grants If you are a candidate for a degree, you may be able to exclude from your income part or all of the amounts you receive as a qualified scholarship. 1040 ez 2010 pdf The rules discussed here apply to both resident and nonresident aliens. 1040 ez 2010 pdf If a nonresident alien receives a grant that is not from U. 1040 ez 2010 pdf S. 1040 ez 2010 pdf sources, it is not subject to U. 1040 ez 2010 pdf S. 1040 ez 2010 pdf tax. 1040 ez 2010 pdf See Scholarships, Grants, Prizes, and Awards in chapter 2 to determine whether your grant is from U. 1040 ez 2010 pdf S. 1040 ez 2010 pdf sources. 1040 ez 2010 pdf A scholarship or fellowship is excludable from income only if: You are a candidate for a degree at an eligible educational institution, and You use the scholarship or fellowship to pay qualified education expenses. 1040 ez 2010 pdf Candidate for a degree. 1040 ez 2010 pdf   You are a candidate for a degree if you: Attend a primary or secondary school or are pursuing a degree at a college or university, or Attend an accredited educational institution that is authorized to provide: A program that is acceptable for full credit toward a bachelor's or higher degree, or A program of training to prepare students for gainful employment in a recognized occupation. 1040 ez 2010 pdf Eligible educational institution. 1040 ez 2010 pdf   An eligible educational institution is one that maintains a regular faculty and curriculum and normally has a regularly enrolled body of students in attendance at the place where it carries on its educational activities. 1040 ez 2010 pdf Qualified education expenses. 1040 ez 2010 pdf   These are expenses for: Tuition and fees required to enroll at or attend an eligible educational institution, and Course-related expenses, such as fees, books, supplies, and equipment that are required for the courses at the eligible educational institution. 1040 ez 2010 pdf These items must be required of all students in your course of instruction. 1040 ez 2010 pdf However, in order for these to be qualified education expenses, the terms of the scholarship or fellowship cannot require that it be used for other purposes, such as room and board, or specify that it cannot be used for tuition or course-related expenses. 1040 ez 2010 pdf Expenses that do not qualify. 1040 ez 2010 pdf   Qualified education expenses do not include the cost of: Room and board, Travel, Research, Clerical help, or Equipment and other expenses that are not required for enrollment in or attendance at an eligible educational institution. 1040 ez 2010 pdf This is true even if the fee must be paid to the institution as a condition of enrollment or attendance. 1040 ez 2010 pdf Scholarship or fellowship amounts used to pay these costs are taxable. 1040 ez 2010 pdf Amounts used to pay expenses that do not qualify. 1040 ez 2010 pdf   A scholarship amount used to pay any expense that does not qualify is taxable, even if the expense is a fee that must be paid to the institution as a condition of enrollment or attendance. 1040 ez 2010 pdf Payment for services. 1040 ez 2010 pdf   You cannot exclude from income the portion of any scholarship, fellowship, or tuition reduction that represents payment for past, present, or future teaching, research, or other services. 1040 ez 2010 pdf This is true even if all candidates for a degree are required to perform the services as a condition for receiving the degree. 1040 ez 2010 pdf Example. 1040 ez 2010 pdf On January 7, Maria Gomez is notified of a scholarship of $2,500 for the spring semester. 1040 ez 2010 pdf As a condition for receiving the scholarship, Maria must serve as a part-time teaching assistant. 1040 ez 2010 pdf Of the $2,500 scholarship, $1,000 represents payment for her services. 1040 ez 2010 pdf Assuming that Maria meets all other conditions, she can exclude no more than $1,500 from income as a qualified scholarship. 1040 ez 2010 pdf Prev  Up  Next   Home   More Online Publications