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1040ez Worksheet

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1040ez Worksheet

1040ez worksheet 8. 1040ez worksheet   Paying Tax Through Withholding or Estimated Tax Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Notification of Alien Status Withholding From CompensationWithholding on Wages Withholding on Pensions Withholding on Tip Income Independent Contractors Withholding From Other IncomeTax Withheld on Partnership Income Withholding on Scholarships and Fellowship Grants Income Entitled to Tax Treaty BenefitsStudents, teachers, and researchers. 1040ez worksheet Tax Withheld on Real Property Sales Social Security and Medicare TaxesStudents and Exchange Visitors Agricultural Workers Self-Employment Tax International Social Security Agreements Estimated Tax Form 1040-ES (NR)Fiscal year. 1040ez worksheet Introduction This chapter discusses how to pay your U. 1040ez worksheet S. 1040ez worksheet income tax as you earn or receive income during the year. 1040ez worksheet In general, the federal income tax is a pay as you go tax. 1040ez worksheet There are two ways to pay as you go. 1040ez worksheet Withholding. 1040ez worksheet If you are an employee, your employer probably withholds income tax from your pay. 1040ez worksheet Tax may also be withheld from certain other income—including pensions, bonuses, commissions, and gambling winnings. 1040ez worksheet In each case, the amount withheld is paid to the U. 1040ez worksheet S. 1040ez worksheet Treasury in your name. 1040ez worksheet Estimated tax. 1040ez worksheet If you do not pay your tax through withholding, or do not pay enough tax that way, you might have to pay estimated tax. 1040ez worksheet People who are in business for themselves generally will have to pay their tax this way. 1040ez worksheet You may have to pay estimated tax if you receive income such as dividends, interest, rent, and royalties. 1040ez worksheet Estimated tax is used to pay not only income tax, but self-employment tax and alternative minimum tax as well. 1040ez worksheet Topics - This chapter discusses: How to notify your employer of your alien status, Income subject to withholding of income tax, Exemptions from withholding, Social security and Medicare taxes, and Estimated tax rules. 1040ez worksheet Useful Items - You may want to see: Publication 515 Withholding of Tax on Nonresident Aliens and Foreign Entities 901 U. 1040ez worksheet S. 1040ez worksheet Tax Treaties Form (and Instructions) W-4 Employee's Withholding Allowance Certificate W-8BEN Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting (Individuals) W-8ECI Certificate of Foreign Person's Claim That Income Is Effectively Connected With the Conduct of a Trade or Business in the United States W-9 Request for Taxpayer Identification Number and Certification 1040-ES (NR) U. 1040ez worksheet S. 1040ez worksheet Estimated Tax for Nonresident Alien Individuals 8233 Exemption From Withholding on Compensation for Independent (and Certain Dependent) Personal Services of a Nonresident Alien Individual 8288-B Application for Withholding Certificate for Dispositions by Foreign Persons of U. 1040ez worksheet S. 1040ez worksheet Real Property Interests 13930 Application for Central Withholding Agreement See chapter 12 for information about getting these publications and forms. 1040ez worksheet Notification of Alien Status You must let your employer know whether you are a resident or a nonresident alien so your employer can withhold the correct amount of tax from your wages. 1040ez worksheet If you are a resident alien under the rules discussed in chapter 1, you must file Form W-9 or a similar statement with your employer. 1040ez worksheet If you are a nonresident alien under those rules, you must furnish to your employer Form 8233 or Form W-8BEN, establishing that you are a foreign person, or Form W-4, establishing that your compensation is subject to graduated withholding at the same rates as resident aliens or U. 1040ez worksheet S. 1040ez worksheet citizens. 1040ez worksheet If you are a resident alien and you receive income other than wages (such as dividends and royalties) from sources within the United States, file Form W-9 or similar statement with the withholding agent (generally, the payer of the income) so the agent will not withhold tax on the income at the 30% (or lower treaty) rate. 1040ez worksheet If you receive this type of income as a nonresident alien, file Form W-8BEN with the withholding agent so that the agent will withhold tax at the 30% (or lower treaty) rate. 1040ez worksheet However, if the income is effectively connected with a U. 1040ez worksheet S. 1040ez worksheet trade or business, file Form W-8ECI instead. 1040ez worksheet Withholding From Compensation The following discussion generally applies only to nonresident aliens. 1040ez worksheet Tax is withheld from resident aliens in the same manner as U. 1040ez worksheet S. 1040ez worksheet citizens. 1040ez worksheet Wages and other compensation paid to a nonresident alien for services performed as an employee are usually subject to graduated withholding at the same rates as resident aliens and U. 1040ez worksheet S. 1040ez worksheet citizens. 1040ez worksheet Therefore, your compensation, unless it is specifically excluded from the term “wages” by law, or is exempt from tax by treaty, is subject to graduated withholding. 1040ez worksheet Withholding on Wages If you are an employee and you receive wages subject to graduated withholding, you will be required to fill out a Form W-4. 1040ez worksheet Also fill out Form W-4 for a scholarship or fellowship grant to the extent it represents payment for past, present, or future services and for which you are not claiming a tax treaty withholding exemption on Form 8233 (discussed later under Income Entitled to Tax Treaty Benefits). 1040ez worksheet These are services you are required to perform as an employee and as a condition of receiving the scholarship or fellowship (or tuition reduction). 1040ez worksheet Nonresident aliens should fill out Form W-4 using the following instructions instead of the instructions on the Form W-4. 1040ez worksheet This is because of the restrictions on a nonresident alien's filing status, the limited number of personal exemptions a nonresident alien is allowed, and because a nonresident alien cannot claim the standard deduction. 1040ez worksheet Enter your social security number (SSN) on line 2. 1040ez worksheet Do not enter an individual taxpayer identification number (ITIN). 1040ez worksheet Check only “Single” marital status on line 3 (regardless of your actual marital status). 1040ez worksheet Claim only one allowance on line 5, unless you are a resident of Canada, Mexico, or South Korea, or a U. 1040ez worksheet S. 1040ez worksheet national. 1040ez worksheet Write “Nonresident Alien” or “NRA” on the dotted line on line 6. 1040ez worksheet You can request additional withholding on line 6 at your option. 1040ez worksheet Do not claim “Exempt” withholding status on line 7. 1040ez worksheet A U. 1040ez worksheet S. 1040ez worksheet national is an individual who, although not a U. 1040ez worksheet S. 1040ez worksheet citizen, owes his or her allegiance to the United States. 1040ez worksheet U. 1040ez worksheet S. 1040ez worksheet nationals include American Samoans, and Northern Mariana Islanders who chose to become U. 1040ez worksheet S. 1040ez worksheet nationals instead of U. 1040ez worksheet S. 1040ez worksheet citizens. 1040ez worksheet See Withholding on Scholarships and Fellowship Grants later, for how to fill out Form W-4 if you receive a U. 1040ez worksheet S. 1040ez worksheet source scholarship or fellowship grant that is not a payment for services. 1040ez worksheet Students and business apprentices from India. 1040ez worksheet   If you are eligible for the benefits of Article 21(2) of the United States-India Income Tax Treaty, you may claim an additional withholding allowance for the standard deduction. 1040ez worksheet You can claim an additional withholding allowance for your spouse only if your spouse will have no gross income for 2013 and cannot be claimed as a dependent on another U. 1040ez worksheet S. 1040ez worksheet taxpayer's 2013 return. 1040ez worksheet You may also claim an additional withholding allowance for each of your dependents not admitted to the United States on “F-2,” “J-2,” or “M-2” visas if they meet the same rules that apply to U. 1040ez worksheet S. 1040ez worksheet citizens. 1040ez worksheet Household employees. 1040ez worksheet   If you work as a household employee, your employer does not have to withhold income tax. 1040ez worksheet However, you may agree to voluntary income tax withholding by filing a Form W-4 with your employer. 1040ez worksheet The agreement goes into effect when your employer accepts the agreement by beginning the withholding. 1040ez worksheet You or your employer may end the agreement by letting the other know in writing. 1040ez worksheet Agricultural workers. 1040ez worksheet   If you are an agricultural worker on an H-2A visa, your employer does not have to withhold income tax. 1040ez worksheet However, your employer will withhold income tax only if you and your employer agree to withhold. 1040ez worksheet In that case, you must provide your employer with a properly completed Form W-4. 1040ez worksheet You can find more information about not having tax withheld at www. 1040ez worksheet irs. 1040ez worksheet gov/Individuals/International-Taxpayers/Foreign-Agricultural-Workers. 1040ez worksheet Wages Exempt From Withholding Wages that are exempt from U. 1040ez worksheet S. 1040ez worksheet income tax under an income tax treaty are generally exempt from withholding. 1040ez worksheet For information on how to claim this exemption from withholding, see Income Entitled to Tax Treaty Benefits , later. 1040ez worksheet Wages paid to aliens who are residents of American Samoa, Canada, Mexico, Puerto Rico, or the U. 1040ez worksheet S. 1040ez worksheet Virgin Islands may be exempt from withholding. 1040ez worksheet The following paragraphs explain these exemptions. 1040ez worksheet Residents of Canada or Mexico engaged in transportation-related employment. 1040ez worksheet   Certain residents of Canada or Mexico who enter or leave the United States at frequent intervals are not subject to withholding on their wages. 1040ez worksheet These persons either: Perform duties in transportation service between the United States and Canada or Mexico, or Perform duties connected to the construction, maintenance, or operation of a waterway, viaduct, dam, or bridge crossed by, or crossing, the boundary between the United States and Canada or the boundary between the United States and Mexico. 1040ez worksheet    This employment is subject to withholding of social security and Medicare taxes unless the services are performed for a railroad. 1040ez worksheet   To qualify for the exemption from withholding during a tax year, a Canadian or Mexican resident must give the employer a statement in duplicate with name, address, and identification number, certifying that the resident: Is not a U. 1040ez worksheet S. 1040ez worksheet citizen or resident, Is a resident of Canada or Mexico, whichever applies, and Expects to perform duties previously described during the tax year in question. 1040ez worksheet   The statement can be in any form, but it must be dated and signed by the employee and must include a written declaration that it is made under the penalties of perjury. 1040ez worksheet Residents of American Samoa and Puerto Rico. 1040ez worksheet   If you are a nonresident alien employee who is a resident of American Samoa or Puerto Rico, wages for services performed in American Samoa or Puerto Rico are generally not subject to withholding unless you are an employee of the United States or any of its agencies in American Samoa or Puerto Rico. 1040ez worksheet Residents of the U. 1040ez worksheet S. 1040ez worksheet Virgin Islands. 1040ez worksheet   Nonresident aliens who are bona fide residents of the U. 1040ez worksheet S Virgin Islands are not subject to withholding of U. 1040ez worksheet S. 1040ez worksheet tax on income earned while temporarily employed in the United States. 1040ez worksheet This is because those persons pay their income tax to the U. 1040ez worksheet S. 1040ez worksheet Virgin Islands. 1040ez worksheet To avoid having tax withheld on income earned in the United States, bona fide residents of the U. 1040ez worksheet S. 1040ez worksheet Virgin Islands should write a letter, in duplicate, to their employers, stating that they are bona fide residents of the U. 1040ez worksheet S. 1040ez worksheet Virgin Islands and expect to pay tax on all income to the U. 1040ez worksheet S. 1040ez worksheet Virgin Islands. 1040ez worksheet Withholding on Pensions If you receive a pension as a result of personal services performed in the United States, the pension income is subject to the 30% (or lower treaty) rate of withholding. 1040ez worksheet You may, however, have tax withheld at graduated rates on the portion of the pension that arises from the performance of services in the United States after December 31, 1986. 1040ez worksheet You must fill out Form W-8BEN and give it to the withholding agent or payer before the income is paid or credited to you. 1040ez worksheet Withholding on Tip Income Tips you receive during the year for services performed in the United States are subject to U. 1040ez worksheet S. 1040ez worksheet income tax. 1040ez worksheet Include them in taxable income. 1040ez worksheet In addition, tips received while working for one employer, amounting to $20 or more in a month, are subject to graduated withholding. 1040ez worksheet Independent Contractors If there is no employee-employer relationship between you and the person for whom you perform services, your compensation is subject to the 30% (or lower treaty) rate of withholding. 1040ez worksheet However, if you are engaged in a trade or business in the United States during the tax year, your compensation for personal services as an independent contractor (independent personal services) may be entirely or partly exempt from withholding if you reach an agreement with the Internal Revenue Service on the amount of withholding required. 1040ez worksheet An agreement that you reach with the IRS regarding withholding from your compensation for independent personal services is effective for payments covered by the agreement after it is agreed to by all parties. 1040ez worksheet You must agree to timely file an income tax return for the current tax year. 1040ez worksheet Central withholding agreements. 1040ez worksheet   If you are a nonresident alien entertainer or athlete performing or participating in athletic events in the United States, you may be able to enter into a withholding agreement with the IRS for reduced withholding provided certain requirements are met. 1040ez worksheet Under no circumstances will such a withholding agreement reduce taxes withheld to less than the anticipated amount of income tax liability. 1040ez worksheet   File Form 13930 and the required attachments with the IRS to request a central withholding agreement. 1040ez worksheet Either you or your authorized representative can file the form. 1040ez worksheet It should be sent to the IRS at least 45 days before the tour begins or the event occurs. 1040ez worksheet Exceptions will be considered on a case by case basis. 1040ez worksheet   For more information on the CWA program, go to www. 1040ez worksheet irs. 1040ez worksheet gov/Individuals/International-Taxpayers/Central-Withholding-Agreements. 1040ez worksheet Final payment exemption. 1040ez worksheet   Your final payment of compensation during the tax year for independent personal services may be entirely or partly exempt from withholding. 1040ez worksheet This exemption is available only once during your tax year and applies to a maximum of $5,000 of compensation. 1040ez worksheet To obtain this exemption, you or your agent must give the following statements and information to the Commissioner or his delegate. 1040ez worksheet A statement by each withholding agent from whom you have received gross income effectively connected with a trade or business in the United States during the tax year, showing the amount of income paid and the tax withheld. 1040ez worksheet Each statement must be signed by the withholding agent and verified by a declaration that it is made under penalties of perjury. 1040ez worksheet A statement by the withholding agent from whom you expect to receive the final payment of compensation, showing the amount of the payment and the amount of tax that would be withheld if a final payment exemption were not granted. 1040ez worksheet This statement must also be signed by the withholding agent and verified by a declaration that it is made under penalties of perjury. 1040ez worksheet A statement by you that you do not intend to receive any other income effectively connected with a trade or business in the United States during the current tax year. 1040ez worksheet The amount of tax that has been withheld or paid under any other provision of the Internal Revenue Code or regulations for any income effectively connected with your trade or business in the United States during the current tax year. 1040ez worksheet The amount of your outstanding tax liabilities, if any, including interest and penalties, from the current tax year or prior tax periods. 1040ez worksheet Any provision of an income tax treaty under which a partial or complete exemption from withholding may be claimed, the country of your residence, and a statement of sufficient facts to justify an exemption under the treaty. 1040ez worksheet A statement signed by you, and verified by a declaration that it is made under penalties of perjury, that all the information given is true and that to your knowledge no relevant information has been omitted. 1040ez worksheet   If satisfied with the information, the IRS will determine the amount of your tentative income tax for the tax year on gross income effectively connected with your trade or business in the United States. 1040ez worksheet Ordinary and necessary business expenses can be taken into account if proven to the satisfaction of the Commissioner or his delegate. 1040ez worksheet   The Commissioner or his delegate will send you a letter, directed to the withholding agent, showing the amount of the final payment of compensation that is exempt from withholding and the amount that can be paid to you because of the exemption. 1040ez worksheet You must give two copies of the letter to the withholding agent and must also attach a copy of the letter to your income tax return for the tax year for which the exemption is effective. 1040ez worksheet Allowance for Personal Exemption Withholding on payments for independent personal services is generally based on the amount of your compensation payment minus the value of one exemption ($3,950 for 2014). 1040ez worksheet To determine the income for independent personal services performed in the United States to which the 30% (or lower treaty) rate will apply, you are allowed one personal exemption if you are not a U. 1040ez worksheet S. 1040ez worksheet national and are not a resident of Canada, Mexico, or South Korea. 1040ez worksheet For purposes of 30% withholding, the exemption is prorated at $10. 1040ez worksheet 82 a day in 2014 for the period that labor or personal services are performed in the United States. 1040ez worksheet To claim an exemption from withholding on the personal exemption amount, fill out the applicable parts of Form 8233 and give it to the withholding agent. 1040ez worksheet Example. 1040ez worksheet Eric Johannsen, who is a resident of Country X worked under a contract with a U. 1040ez worksheet S. 1040ez worksheet firm (not as an employee) in the United States for 100 days during 2014 before returning to his country. 1040ez worksheet He earned $6,000 for the services performed (not considered wages) in the United States. 1040ez worksheet Eric is married and has three dependent children. 1040ez worksheet His wife is not employed and has no income subject to U. 1040ez worksheet S. 1040ez worksheet tax. 1040ez worksheet The amount of the personal exemption to be allowed against the income for his personal services performed within the United States in 2014 is $1,082 (100 days × $10. 1040ez worksheet 82), and withholding at 30% is applied against the balance. 1040ez worksheet Thus, $1,475. 1040ez worksheet 40 in tax is withheld from Eric's earnings (30% of $4,918 ($6,000 − $1,082). 1040ez worksheet U. 1040ez worksheet S. 1040ez worksheet nationals or residents of Canada, Mexico, or South Korea. 1040ez worksheet   If you are a nonresident alien who is a resident of Canada, Mexico, or South Korea, or who is a national of the United States, you are subject to the same 30% withholding on your compensation for independent personal services performed in the United States. 1040ez worksheet However, if you are a U. 1040ez worksheet S. 1040ez worksheet national or a resident of Canada or Mexico, you are allowed the same personal exemptions as U. 1040ez worksheet S. 1040ez worksheet citizens. 1040ez worksheet For the 30% (or lower treaty) rate withholding, you can take $10. 1040ez worksheet 82 per day for each allowable exemption in 2014. 1040ez worksheet If you are a resident of South Korea, you are allowed personal exemptions for yourself and for your spouse and children who live with you in the United States at any time during the tax year. 1040ez worksheet However, the additional exemptions for your spouse and children must be further prorated as explained in chapter 5 under Exemptions . 1040ez worksheet Students and business apprentices from India. 1040ez worksheet   If you are eligible for the benefits of Article 21(2) of the United States-India Income Tax Treaty, you are allowed an exemption for your spouse only if your spouse will have no gross income for 2014 and cannot be claimed as a dependent on another U. 1040ez worksheet S. 1040ez worksheet taxpayer's 2014 return. 1040ez worksheet You are also allowed an exemption for each dependent not admitted to the United States on “F-2,” “J-2,” or “M-2” visas if they meet the same rules that apply to U. 1040ez worksheet S. 1040ez worksheet citizens. 1040ez worksheet For the 30% (or lower treaty rate) withholding on compensation for independent personal services performed in the United States, you are allowed $10. 1040ez worksheet 82 per day for each allowable exemption in 2014. 1040ez worksheet Refund of Taxes Withheld in Error Multi-level marketing. 1040ez worksheet   If you are a distributor for a multi-level marketing company who had taxes withheld in error, file a U. 1040ez worksheet S. 1040ez worksheet income tax return (Form 1040NR, Form 1040NR-EZ, or Form 1120-F) or, if a tax return has already been filed, a claim for refund (Form 1040X or amended Form 1120-F) to recover the amount withheld in error. 1040ez worksheet You must also attach to the U. 1040ez worksheet S. 1040ez worksheet income tax return or claim for refund supporting information that includes, but is not limited to, the following items. 1040ez worksheet A copy of your Form W-2, Form 1042-S, or Form 1099 to prove the amount of taxes withheld. 1040ez worksheet A statement explaining why income reported on your Form W-2, Form 1042-S, or Form 1099 is not subject to U. 1040ez worksheet S. 1040ez worksheet taxation. 1040ez worksheet A statement listing all the dates you entered and left the United States during the taxable year. 1040ez worksheet If the compensation is multi-year compensation, the statement must list all the dates you entered and left the United States during each of the taxable years to which the compensation is attributable. 1040ez worksheet A copy of any documents or records that show the number of days you actually were present in the United States during the years listed. 1040ez worksheet A statement providing: (a) the number of days (or unit of time less than a day, if appropriate) that personal services were performed in the United States in connection with recruiting, training, and supporting your lower-tier distributors; and (b) the total number of days (or unit of time less than a day, if appropriate) that personal services were performed globally in connection with recruiting, training, and supporting your lower-tier distributors. 1040ez worksheet Any further relevant document or record supporting your claim that the taxes were withheld in error. 1040ez worksheet Withholding From Other Income Other income subject to 30% withholding generally includes fixed or determinable income such as interest (other than portfolio interest), dividends, pensions and annuities, and gains from certain sales and exchanges, discussed in chapter 4. 1040ez worksheet It also includes 85% of social security benefits paid to nonresident aliens. 1040ez worksheet Refund of taxes withheld in error on social security benefits paid to resident aliens. 1040ez worksheet   Social security benefits paid to a lawful permanent resident (green card holder) are not subject to 30% withholding. 1040ez worksheet For U. 1040ez worksheet S. 1040ez worksheet income tax purposes, green card holders continue to be resident aliens until their lawful permanent resident status under immigration laws is either taken away or is administratively or judicially determined to have been abandoned. 1040ez worksheet See Green Card Test in chapter 1. 1040ez worksheet If you are a green card holder and tax was withheld in error on your social security benefits because you have a foreign address, the withholding tax is refundable by the Social Security Administration (SSA) or the IRS. 1040ez worksheet SSA will refund taxes erroneously withheld if the refund can be processed during the same calendar year in which the tax was withheld. 1040ez worksheet If SSA cannot refund the taxes withheld, you must file a Form 1040 or 1040A with the Department of the Treasury, Internal Revenue Service Center, Austin, TX 73301 to determine if you are entitled to a refund. 1040ez worksheet You must also attach the following to your Form 1040 or 1040A. 1040ez worksheet A copy of Form SSA-1042S, Social Security Benefit Statement. 1040ez worksheet A copy of the “green card. 1040ez worksheet ” A signed declaration that includes the following statements: The SSA should not have withheld income tax from my social security benefits because I am a U. 1040ez worksheet S. 1040ez worksheet lawful permanent resident and my green card has been neither revoked nor administratively or judicially determined to have been abandoned. 1040ez worksheet I am filing a U. 1040ez worksheet S. 1040ez worksheet income tax return for the tax year as a resident alien reporting all of my worldwide income. 1040ez worksheet I have not claimed benefits for the tax year under an income tax treaty as the resident of a country other than the United States. 1040ez worksheet Other income not subject to withholding of 30% (or lower treaty) rate. 1040ez worksheet   The following income is not subject to withholding at the 30% (or lower treaty) rate if you file Form W-8ECI with the payer of the income. 1040ez worksheet Income (other than compensation) that is effectively connected with your U. 1040ez worksheet S. 1040ez worksheet trade or business. 1040ez worksheet Income from real property that you choose to treat as effectively connected with a U. 1040ez worksheet S. 1040ez worksheet trade or business. 1040ez worksheet See Income From Real Property in chapter 4 for details about this choice. 1040ez worksheet   Special rules for withholding on partnership income, scholarships, and fellowships are explained next. 1040ez worksheet Tax Withheld on Partnership Income If you are a foreign partner in a U. 1040ez worksheet S. 1040ez worksheet or foreign partnership, the partnership will withhold tax on your share of effectively connected taxable income (ECTI) from the partnership. 1040ez worksheet You may be able to reduce your ECTI subject to withholding by certain partner-level deductions. 1040ez worksheet Generally, you must use Form 8804-C for this purpose. 1040ez worksheet See the Instructions for Form 8804-C for more information. 1040ez worksheet The withholding rate on your share of effectively connected income is generally the highest rate of tax specified under section 1 of the Code (39. 1040ez worksheet 6% for 2014). 1040ez worksheet However, the partnership may withhold at the highest rate that applies to a particular type of income allocable to you if you gave the partnership the appropriate documentation. 1040ez worksheet Long-term capital gain is an example of a particular type of income to which the highest tax rate applies. 1040ez worksheet Claim the tax withheld as a credit on your 2014 Form 1040NR. 1040ez worksheet The partnership will give you a statement on Form 8805, Foreign Partner's Information Statement of Section 1446 Withholding Tax, showing the tax withheld. 1040ez worksheet A partnership that is publicly traded will withhold tax on your actual distributions of effectively connected income. 1040ez worksheet In this case the partnership will give you a statement on Form 1042-S, Foreign Person's U. 1040ez worksheet S. 1040ez worksheet Source Income Subject to Withholding. 1040ez worksheet Withholding on Scholarships and Fellowship Grants There is no withholding on a qualified scholarship received by a candidate for a degree. 1040ez worksheet See chapter 3. 1040ez worksheet If you are a nonresident alien student or grantee with an “F,” “J,” “M,” or “Q” visa and you receive a U. 1040ez worksheet S. 1040ez worksheet source grant or scholarship that is not fully exempt, the withholding agent (usually the payer of the scholarship) withholds tax at 14% (or lower treaty rate) of the taxable part of the grant or scholarship that is not a payment for services. 1040ez worksheet However, if you are not a candidate for a degree and the grant does not meet certain requirements, tax will be withheld at the 30% (or lower treaty) rate. 1040ez worksheet Any part of a scholarship or fellowship grant that is a payment for services is subject to graduated withholding as discussed earlier under Withholding on Wages. 1040ez worksheet Alternate Withholding Procedure Your withholding agent may choose to use an alternate procedure by asking you to fill out Form W-4 and the Personal Allowances Worksheet (attached to Form W-4). 1040ez worksheet Use the following instructions instead of the Form W-4 instructions to complete the worksheet. 1040ez worksheet Line A. 1040ez worksheet   Enter the total of the following amounts on line A. 1040ez worksheet Personal exemption. 1040ez worksheet   Include the prorated part of your allowable personal exemption. 1040ez worksheet Figure the amount by multiplying the number of days you expect to be in the United States in 2014 by the daily exemption amount ($10. 1040ez worksheet 82). 1040ez worksheet Expenses. 1040ez worksheet   Include expenses that will be deductible on your return. 1040ez worksheet These include away-from-home expenses (meals, lodging, and transportation), certain state and local income taxes, charitable contributions, and casualty losses, discussed earlier under Itemized Deductions in chapter 5. 1040ez worksheet They also include business expenses, moving expenses, and the IRA deduction discussed under Deductions in chapter 5. 1040ez worksheet Nontaxable grant or scholarship. 1040ez worksheet   Include the part of your grant or scholarship that is not taxable under U. 1040ez worksheet S. 1040ez worksheet law or under a tax treaty. 1040ez worksheet Line B. 1040ez worksheet   Enter -0- unless the following paragraph applies to you. 1040ez worksheet   If you are a student who qualifies under Article 21(2) of the United States-India Income Tax Treaty, and you are not claiming deductions for away-from-home expenses or other itemized deductions (discussed earlier), enter the standard deduction on line B. 1040ez worksheet The standard deduction amount for 2013 is $6,100. 1040ez worksheet Lines C and D. 1040ez worksheet   Enter -0- on both lines unless the following paragraphs apply to you. 1040ez worksheet   If you are a resident of Canada, Mexico, South Korea, or a U. 1040ez worksheet S. 1040ez worksheet national, an additional daily exemption amount may be allowed for your spouse and each of your dependents. 1040ez worksheet   If you are a resident of India who is eligible for the benefits of Article 21(2) of the United States-India Income Tax Treaty, you can claim an additional daily exemption amount for your spouse only if your spouse will have no gross income for 2014 and cannot be claimed as a dependent on another U. 1040ez worksheet S. 1040ez worksheet taxpayer's 2014 return. 1040ez worksheet You can also claim an additional amount for each of your dependents not admitted to the United States on “F-2,” “J-2,” or “M-2” visas if they meet the same rules that apply to U. 1040ez worksheet S. 1040ez worksheet citizens. 1040ez worksheet   Enter any additional amount for your spouse on line C. 1040ez worksheet Enter any additional amount for your dependents on line D. 1040ez worksheet Lines E, F, and G. 1040ez worksheet   No entries should be made on lines E, F, and G. 1040ez worksheet Line H. 1040ez worksheet   Add the amounts on lines A through D and enter the total on line H. 1040ez worksheet Form W-4. 1040ez worksheet   Complete lines 1 through 4 of Form W-4. 1040ez worksheet Sign and date the form and give it with the Personal Allowances Worksheet to your withholding agent. 1040ez worksheet   If you file a Form W-4 to reduce or eliminate the withholding on your scholarship or grant, you must file an annual U. 1040ez worksheet S. 1040ez worksheet income tax return to be allowed the exemptions and deductions you claimed on that form. 1040ez worksheet If you are in the United States during more than one tax year, you must attach a statement to your yearly Form W-4 indicating that you have filed a U. 1040ez worksheet S. 1040ez worksheet income tax return for the previous year. 1040ez worksheet If you have not been in the United States long enough to be required to file a return, you must attach a statement to your Form W-4 saying you will file a U. 1040ez worksheet S. 1040ez worksheet income tax return when required. 1040ez worksheet After the withholding agent has accepted your Form W-4, tax will be withheld on your scholarship or grant at the graduated rates that apply to wages. 1040ez worksheet The gross amount of the income is reduced by the amount on line H of the worksheet and the withholding tax is figured on the remainder. 1040ez worksheet You will receive a Form 1042-S from the withholding agent (usually the payer of your grant) showing the gross amount of your taxable scholarship or fellowship grant less the withholding allowance amount, the tax rate, and the amount of tax withheld. 1040ez worksheet Use this form to prepare your annual U. 1040ez worksheet S. 1040ez worksheet income tax return. 1040ez worksheet Income Entitled to Tax Treaty Benefits If a tax treaty between the United States and your country provides an exemption from, or a reduced rate of, tax for certain items of income, you should notify the payor of the income (the withholding agent) of your foreign status to claim a tax treaty withholding exemption. 1040ez worksheet Generally, you do this by filing either Form W-8BEN or Form 8233 with the withholding agent. 1040ez worksheet File Form W-8BEN for income that is not personal services income. 1040ez worksheet File Form 8233 for personal services income as discussed next. 1040ez worksheet Employees and independent contractors. 1040ez worksheet   If you perform personal services as an employee or as an independent contractor and you can claim an exemption from withholding on that personal service income because of a tax treaty, give Form 8233 to each withholding agent from whom amounts will be received. 1040ez worksheet   Even if you submit Form 8233, the withholding agent may have to withhold tax from your income. 1040ez worksheet This is because the factors on which the treaty exemption is based may not be determinable until after the close of the tax year. 1040ez worksheet In this case, you must file Form 1040NR (or Form 1040NR-EZ if you qualify) to recover any overwithheld tax and to provide the IRS with proof that you are entitled to the treaty exemption. 1040ez worksheet Students, teachers, and researchers. 1040ez worksheet   Students, teachers, and researchers must attach the appropriate statement shown in Appendix A (for students) or Appendix B (for teachers and researchers) at the end of this publication to the Form 8233 and give it to the withholding agent. 1040ez worksheet For treaties not listed in the appendices, attach a statement in a format similar to those for other treaties. 1040ez worksheet   If you received a scholarship or fellowship and personal services income from the same withholding agent, use Form 8233 to claim an exemption from withholding based on a tax treaty for both types of income. 1040ez worksheet Special events and promotions. 1040ez worksheet   Withholding at the full 30% rate is required for payments made to a nonresident alien or foreign corporation for gate receipts (or television or other receipts) from rock music festivals, boxing promotions, and other entertainment or sporting events, unless the withholding agent has been specifically advised otherwise by letter from the IRS. 1040ez worksheet Form 13930 is used to request a reduction in withholding. 1040ez worksheet Withholding may be required even if the income may be exempt from taxation by provisions of a tax treaty. 1040ez worksheet One reason for this is that the partial or complete exemption is usually based on factors that cannot be determined until after the close of the tax year. 1040ez worksheet You will be required to pay U. 1040ez worksheet S. 1040ez worksheet tax, at the time of your departure from the United States, on any income for which you incorrectly claimed a treaty exemption. 1040ez worksheet For more details on treaty provisions that apply to compensation, see Publication 901. 1040ez worksheet Tax Withheld on Real Property Sales If you are a nonresident alien and you dispose of a U. 1040ez worksheet S. 1040ez worksheet real property interest, the transferee (buyer) of the property generally must withhold a tax equal to 10% of the amount realized on the disposition. 1040ez worksheet A distribution by a qualified investment entity to a nonresident alien shareholder that is treated as gain from the sale or exchange of a U. 1040ez worksheet S. 1040ez worksheet real property interest by the shareholder is subject to withholding at 35%. 1040ez worksheet Withholding is also required on certain distributions and other transactions by domestic or foreign corporations, partnerships, trusts, and estates. 1040ez worksheet These rules are covered in Publication 515. 1040ez worksheet For information on the tax treatment of dispositions of U. 1040ez worksheet S. 1040ez worksheet real property interests, see Real Property Gain or Loss in chapter 4. 1040ez worksheet If you are a partner in a domestic partnership, and the partnership disposes of a U. 1040ez worksheet S. 1040ez worksheet real property interest at a gain, the partnership will withhold tax on the amount of gain allocable to its foreign partners. 1040ez worksheet Your share of the income and tax withheld will be reported to you on Form 8805, Foreign Partner's Information Statement of Section 1446 Withholding Tax, or Form 1042-S, Foreign Person's U. 1040ez worksheet S. 1040ez worksheet Source Income Subject to Withholding (in the case of a publicly traded partnership). 1040ez worksheet Withholding is not required in the following situations. 1040ez worksheet The property is acquired by the buyer for use as a residence and the amount realized (sales price) is not more than $300,000. 1040ez worksheet The property disposed of is an interest in a domestic corporation if any class of stock of the corporation is regularly traded on an established securities market. 1040ez worksheet However, this exception does not apply to certain dispositions of substantial amounts of non-publicly traded interests in publicly traded corporations. 1040ez worksheet The property disposed of is an interest in a U. 1040ez worksheet S. 1040ez worksheet corporation that is not regularly traded on an established market and you (the seller) give the buyer a copy of a statement issued by the corporation certifying that the interest is not a U. 1040ez worksheet S. 1040ez worksheet real property interest. 1040ez worksheet You (the seller) give the buyer a certification stating, under penalties of perjury, that you are not a foreign person, and containing your name, U. 1040ez worksheet S. 1040ez worksheet taxpayer identification number, and home address. 1040ez worksheet You can give the certification to a qualified substitute. 1040ez worksheet The qualified substitute gives the buyer a statement, under penalties of perjury, that the certification is in the possession of the qualified substitute. 1040ez worksheet For this purpose, a qualified substitute is (a) the person (including any attorney or title company) responsible for closing the transaction, other than your agent, and (b) the buyer's agent. 1040ez worksheet The buyer receives a withholding certificate from the Internal Revenue Service. 1040ez worksheet You give the buyer written notice that you are not required to recognize any gain or loss on the transfer because of a nonrecognition provision in the Internal Revenue Code or a provision in a U. 1040ez worksheet S. 1040ez worksheet tax treaty. 1040ez worksheet The buyer must file a copy of the notice with the Ogden Service Center, P. 1040ez worksheet O. 1040ez worksheet Box 409101, Ogden, UT 84409. 1040ez worksheet You must verify the notice as true and sign it under penalties of perjury. 1040ez worksheet The notice must contain the following information. 1040ez worksheet A statement that the notice is a notice of nonrecognition under regulation section 1. 1040ez worksheet 1445-2(d)(2). 1040ez worksheet Your name, taxpayer identification number, and home address. 1040ez worksheet A statement that you are not required to recognize any gain or loss on the transfer. 1040ez worksheet A brief description of the transfer. 1040ez worksheet A brief summary of the law and facts supporting your claim that recognition of gain or loss is not required. 1040ez worksheet You may not give the buyer a written notice for any of the following transfers: the sale of your main home on which you exclude gain, a like-kind exchange that does not qualify for nonrecognition treatment in its entirety, or a deferred like-kind exchange that has not been completed at the time the buyer must file Form 8288. 1040ez worksheet Instead, a withholding certificate (described next) must be obtained. 1040ez worksheet The amount you realize on the transfer of a U. 1040ez worksheet S. 1040ez worksheet real property interest is zero. 1040ez worksheet The property is acquired by the United States, a U. 1040ez worksheet S. 1040ez worksheet state or possession, a political subdivision, or the District of Columbia. 1040ez worksheet The distribution is from a domestically controlled qualified investment entity (QIE) and is treated as a distribution of a U. 1040ez worksheet S. 1040ez worksheet real property interest only because an interest in the entity was disposed of in an applicable wash sale transaction. 1040ez worksheet For the definition of a QIE, see Qualified investment entities under Real Property Gain or Loss, earlier. 1040ez worksheet See Wash sale under Real Property Gain or Loss in chapter 4. 1040ez worksheet The certifications in (3) and (4) must be disregarded by the buyer if the buyer or qualified substitute has actual knowledge, or receives notice from a seller's or buyer's agent (or substitute), that they are false. 1040ez worksheet This also applies to the qualified substitute's statement under (4). 1040ez worksheet Withholding certificates. 1040ez worksheet   The tax required to be withheld on a disposition can be reduced or eliminated under a withholding certificate issued by the IRS. 1040ez worksheet Either you or the buyer can request a withholding certificate. 1040ez worksheet   A withholding certificate can be issued due to any of the following. 1040ez worksheet The IRS determines that reduced withholding is appropriate because either: The amount required to be withheld would be more than your maximum tax liability, or Withholding of the reduced amount would not jeopardize collection of the tax. 1040ez worksheet All of your realized gain is exempt from U. 1040ez worksheet S. 1040ez worksheet tax. 1040ez worksheet You or the buyer enters into an agreement for the payment of tax providing security for the tax liability. 1040ez worksheet   Get Publication 515 and Form 8288-B for information on procedures to request a withholding certificate. 1040ez worksheet Credit for tax withheld. 1040ez worksheet   The buyer must report and pay over the withheld tax within 20 days after the transfer using Form 8288, U. 1040ez worksheet S. 1040ez worksheet Withholding Tax Return for Dispositions by Foreign Persons of U. 1040ez worksheet S. 1040ez worksheet Real Property Interests. 1040ez worksheet This form is filed with the IRS with copies A and B of Form 8288-A, Statement of Withholding on Dispositions by Foreign Persons of U. 1040ez worksheet S. 1040ez worksheet Real Property Interests. 1040ez worksheet Copy B of this statement will be stamped received by the IRS and returned to you (the seller) if the statement is complete and includes your taxpayer identification number (TIN). 1040ez worksheet You must file Copy B with your tax return to take credit for the tax withheld. 1040ez worksheet   A stamped copy of Form 8288-A will not be provided to you if your TIN is not included on that form. 1040ez worksheet The IRS will send you a letter requesting the TIN and providing instructions for how to get a TIN. 1040ez worksheet When you provide the IRS with a TIN, the IRS will provide you with a stamped Copy B of Form 8288-A. 1040ez worksheet Social Security and Medicare Taxes If you work as an employee in the United States, you must pay social security and Medicare taxes in most cases. 1040ez worksheet Your payments of these taxes contribute to your coverage under the U. 1040ez worksheet S. 1040ez worksheet social security system. 1040ez worksheet Social security coverage provides retirement benefits, survivors and disability benefits, and medical insurance (Medicare) benefits to individuals who meet certain eligibility requirements. 1040ez worksheet In most cases, the first $113,700 of taxable wages received in 2013 for services performed in the United States is subject to social security tax. 1040ez worksheet All taxable wages are subject to Medicare tax. 1040ez worksheet Your employer deducts these taxes from each wage payment. 1040ez worksheet Your employer must deduct these taxes even if you do not expect to qualify for social security or Medicare benefits. 1040ez worksheet You can claim a credit for excess social security tax on your income tax return if you have more than one employer and the amount deducted from your combined wages for 2013 is more than $7,049. 1040ez worksheet 40. 1040ez worksheet Use the appropriate worksheet in chapter 3 of Publication 505, Tax Withholding and Estimated Tax, to figure your credit. 1040ez worksheet If any one employer deducted more than $7,049. 1040ez worksheet 40, you cannot claim a credit for that amount. 1040ez worksheet Ask your employer to refund the excess. 1040ez worksheet If your employer does not refund the excess, you can file a claim for refund using Form 843. 1040ez worksheet In general, U. 1040ez worksheet S. 1040ez worksheet social security and Medicare taxes apply to payments of wages for services performed as an employee in the United States, regardless of the citizenship or residence of either the employee or the employer. 1040ez worksheet In limited situations, these taxes apply to wages for services performed outside the United States. 1040ez worksheet Your employer should be able to tell you if social security and Medicare taxes apply to your wages. 1040ez worksheet You cannot make voluntary payments if no taxes are due. 1040ez worksheet Additional Medicare Tax. 1040ez worksheet   Beginning in 2013, in addition to the Medicare tax, a 0. 1040ez worksheet 9% Additional Medicare Tax applies to Medicare wages, Railroad Retirement Tax Act (RRTA) compensation, and self-employment income that are more than: $250,000 if married filing jointly, $125,000 if married filing separately, or $200,000 for any other filing status. 1040ez worksheet   There are no special rules for nonresident aliens for purposes of Additional Medicare Tax. 1040ez worksheet Wages, RRTA compensation, and self-employment income that are subject to Medicare tax will also be subject to Additional Medicare Tax if in excess of the applicable threshold. 1040ez worksheet   Your employer is responsible for withholding the 0. 1040ez worksheet 9% Additional Medicare Tax on Medicare wages or RRTA compensation it pays to you in excess of $200,000 in the calendar year. 1040ez worksheet If you intend to file a joint return and you anticipate that you and your spouse's individual wages are not going to be more than $200,000 but your combined wages and self-employment income are going to be more than $250,000, you may want to request additional withholding on Form W-4 and/or make estimated tax payments. 1040ez worksheet   If you file Form 1040NR, you must pay Additional Medicare Tax if the total of your wages and your self-employment income was more than $125,000 if married (Box 3, 4, or 5 on page 1 of Form 1040NR), or $200,000 if single or qualifying widow(er) (Box 1, 2, or 6 on page 1 of Form 1040NR). 1040ez worksheet    See Form 8959, Additional Medicare Tax, and the Instructions for Form 8959 to determine whether you are required to pay Additional Medicare Tax. 1040ez worksheet For more information on Additional Medicare Tax, go to IRS. 1040ez worksheet gov and enter “Additional Medicare Tax” in the search box. 1040ez worksheet   Self-employed individuals may also be required to pay Additional Medicare Tax. 1040ez worksheet See Self-Employment Tax , later. 1040ez worksheet Students and Exchange Visitors Generally, services performed by you as a nonresident alien temporarily in the United States as a nonimmigrant under subparagraph (F), (J), (M), or (Q) of section 101(a)(15) of the Immigration and Nationality Act are not covered under the social security program if the services are performed to carry out the purpose for which you were admitted to the United States. 1040ez worksheet This means that there will be no withholding of social security or Medicare taxes from the pay you receive for these services. 1040ez worksheet These types of services are very limited, and generally include only on-campus work, practical training, and economic hardship employment. 1040ez worksheet Social security and Medicare taxes will be withheld from your pay for these services if you are considered a resident alien as discussed in chapter 1, even though your nonimmigrant classification (“F,” “J,” “M,” or “Q”) remains the same. 1040ez worksheet Services performed by a spouse or minor child of nonimmigrant aliens with the classification of “F-2,” “J-2,” “M-2,” and “Q-3” are covered under social security. 1040ez worksheet Nonresident Alien Students If you are a nonresident alien temporarily admitted to the United States as a student, you generally are not permitted to work for a wage or salary or to engage in business while you are in the United States. 1040ez worksheet In some cases, a student admitted to the United States in “F-1,” “M-1,” or “J-1” status is granted permission to work. 1040ez worksheet Social security and Medicare taxes are not withheld from pay for the work unless the student is considered a resident alien. 1040ez worksheet Any student who is enrolled and regularly attending classes at a school may be exempt from social security and Medicare taxes on pay for services performed for that school. 1040ez worksheet The U. 1040ez worksheet S. 1040ez worksheet Citizenship and Immigration Services (USCIS) permits on-campus work for students in “F-1” status if it does not displace a U. 1040ez worksheet S. 1040ez worksheet resident. 1040ez worksheet On-campus work means work performed on the school's premises. 1040ez worksheet On-campus work includes work performed at an off-campus location that is educationally affiliated with the school. 1040ez worksheet On-campus work under the terms of a scholarship, fellowship, or assistantship is considered part of the academic program of a student taking a full course of study and is permitted by the USCIS. 1040ez worksheet Social security and Medicare taxes are not withheld from pay for this work unless the student is considered a resident alien. 1040ez worksheet If services performed by a nonresident alien student are not considered as performed to carry out the purpose for which the student was admitted to the United States, social security and Medicare taxes will be withheld from pay for the services unless the pay is exempt under the Internal Revenue Code. 1040ez worksheet Exchange Visitors Exchange visitors are temporarily admitted to the United States under section 101(a)(15)(J) of the Immigration and Nationality Act. 1040ez worksheet Social security and Medicare taxes are not withheld on pay for services of an exchange visitor who has been given permission to work and who possesses or obtains a letter of authorization from the sponsor unless the exchange visitor is considered a resident alien. 1040ez worksheet If services performed by an exchange visitor are not considered as performed to carry out the purpose for which the visitor was admitted to the United States, social security and Medicare taxes are withheld from pay for the services unless the pay is exempt under the Internal Revenue Code. 1040ez worksheet Nonresident aliens temporarily admitted to the United States as participants in international cultural exchange programs under section 101(a)(15)(Q) of the Immigration and Nationality Act may be exempt from social security and Medicare taxes. 1040ez worksheet The employer must be the petitioner through whom the alien obtained the “Q” visa. 1040ez worksheet Social security and Medicare taxes are not withheld from pay for this work unless the alien is considered a resident alien. 1040ez worksheet Refund of Taxes Withheld in Error If social security or Medicare taxes were withheld in error from pay that is not subject to these taxes, contact the employer who withheld the taxes for a refund. 1040ez worksheet If you are unable to get a full refund of the amount from your employer, file a claim for refund with the Internal Revenue Service on Form 843, Claim for Refund and Request for Abatement. 1040ez worksheet Attach the following items to Form 843. 1040ez worksheet A copy of your Form W-2 to prove the amount of social security and Medicare taxes withheld. 1040ez worksheet A copy of your visa. 1040ez worksheet Form I-94 (or other documentation showing your dates of arrival or departure). 1040ez worksheet If you have an F-1 visa, documentation showing permission to work in the U. 1040ez worksheet S. 1040ez worksheet If you have a J-1 visa, documentation showing permission to work in the U. 1040ez worksheet S. 1040ez worksheet If you are engaged in optional practical training or employment due to severe economic necessity, documentation showing permission to work in the U. 1040ez worksheet S. 1040ez worksheet A statement from your employer indicating the amount of the reimbursement your employer provided and the amount of the credit or refund your employer claimed or you authorized your employer to claim. 1040ez worksheet If you cannot obtain this statement from your employer, you must provide this information on your own statement and explain why you are not attaching a statement from your employer or on Form 8316 claiming your employer will not issue the refund. 1040ez worksheet If you were exempt from social security and Medicare tax for only part of the year, pay statements showing the tax paid during the period you were exempt. 1040ez worksheet File Form 843 (with attachments) with the Department of the Treasury, Internal Revenue Service Center, Ogden, UT 84201-0038. 1040ez worksheet Do not use Form 843 to request a refund of Additional Medicare Tax. 1040ez worksheet If Additional Medicare Tax was withheld from your pay in error, you can claim a credit for any withheld Additional Medicare Tax against the total tax liability shown on your tax return by filing Form 8959 with Form 1040 or 1040NR. 1040ez worksheet If Additional Medicare Tax was withheld in error in a prior year for which you already filed Form 1040 or 1040NR, you must file Form 1040X, Amended U. 1040ez worksheet S. 1040ez worksheet Individual Income Tax Return, for the prior year in which the wages or compensation were originally received to recover the Additional Medicare Tax withheld in error. 1040ez worksheet See the Instructions for Form 1040X. 1040ez worksheet Agricultural Workers Agricultural workers temporarily admitted into the United States on H-2A visas are exempt from social security and Medicare taxes on compensation paid to them for services performed in connection with the H-2A visa. 1040ez worksheet You can find more information about not having tax withheld at www. 1040ez worksheet irs. 1040ez worksheet gov/Individuals/International-Taxpayers/Foreign-Agricultural-Workers. 1040ez worksheet Self-Employment Tax Self-employment tax is the social security and Medicare taxes for individuals who are self-employed. 1040ez worksheet Nonresident aliens are not subject to self-employment tax unless an international social security agreement in effect determines that they are covered under the U. 1040ez worksheet S. 1040ez worksheet social security system. 1040ez worksheet Residents of the U. 1040ez worksheet S. 1040ez worksheet Virgin Islands, Puerto Rico, Guam, the Commonwealth of the Northern Mariana Islands, or American Samoa are considered U. 1040ez worksheet S. 1040ez worksheet residents for this purpose and are subject to the self-employment tax. 1040ez worksheet Resident aliens must pay self-employment tax under the same rules that apply to U. 1040ez worksheet S. 1040ez worksheet citizens. 1040ez worksheet However, a resident alien employed by an international organization, a foreign government, or a wholly-owned instrumentality of a foreign government is not subject to the self-employment tax on income earned in the United States. 1040ez worksheet Self-employment income you receive while you are a resident alien is subject to self-employment tax even if it was paid for services you performed as a nonresident alien. 1040ez worksheet Example. 1040ez worksheet Bill Jones is an author engaged in the business of writing books. 1040ez worksheet Bill had several books published in a foreign country while he was a citizen and resident of that country. 1040ez worksheet During 2013, Bill entered the United States as a resident alien. 1040ez worksheet After becoming a U. 1040ez worksheet S. 1040ez worksheet resident, he continued to receive royalties from his foreign publisher. 1040ez worksheet Bill reports his income and expenses on the cash basis (he reports income on his tax return when received and deducts expenses when paid). 1040ez worksheet Bill's 2013 self-employment income includes the royalties received after he became a U. 1040ez worksheet S. 1040ez worksheet resident even though the books were published while he was a nonresident alien. 1040ez worksheet This royalty income is subject to self-employment tax. 1040ez worksheet Reporting self-employment tax. 1040ez worksheet   Use Schedule SE (Form 1040) to report and figure your self-employment tax. 1040ez worksheet Then enter the tax on Form 1040, line 56, or Form 1040NR, line 54. 1040ez worksheet Attach Schedule SE to Form 1040 or Form 1040NR. 1040ez worksheet Additional Medicare Tax. 1040ez worksheet   Self-employed individuals must pay a 0. 1040ez worksheet 9% Additional Medicare Tax on self-employment income that exceeds one of the following threshold amounts (based on your filing status): Married filing jointly — $250,000; Married filing separately — $125,000; Single, Head of household, or Qualifying widow(er) — $200,000. 1040ez worksheet   If you have both wages and self-employment income, the threshold amount for applying the Additional Medicare Tax on the self-employment income is reduced (but not below zero) by the amount of wages subject to Additional Medicare Tax. 1040ez worksheet A self-employment loss should not be considered for purposes of this tax   If you file Form 1040NR, you must pay Additional Medicare Tax if the total of your wages and your self-employment income was more than $125,000 if married (Box 3, 4, or 5 on page 1 of Form 1040NR), or $200,000 if single or qualifying widow(er) (Box 1, 2, or 6 on page 1 of Form 1040NR). 1040ez worksheet   See Form 8959, Additional Medicare Tax, and the Instructions for Form 8959 to determine whether you are required to pay Additional Medicare Tax. 1040ez worksheet For more information on Additional Medicare Tax, go to IRS. 1040ez worksheet gov and enter “Additional Medicare Tax” in the search box. 1040ez worksheet Deduction for employer-equivalent portion of self-employment tax. 1040ez worksheet   If you must pay self-employment tax, you can deduct a portion of the self-employment tax paid in figuring your adjusted gross income. 1040ez worksheet This deduction is figured on Schedule SE (Form 1040). 1040ez worksheet Note. 1040ez worksheet No portion of the Additional Medicare Tax is deductible for self-employment tax. 1040ez worksheet More information. 1040ez worksheet   Get Publication 334, Tax Guide for Small Business, for more information about self-employment tax. 1040ez worksheet International Social Security Agreements The United States has entered into social security agreements with foreign countries to coordinate social security coverage and taxation of workers employed for part or all of their working careers in one of the countries. 1040ez worksheet These agreements are commonly referred to as totalization agreements. 1040ez worksheet Under these agreements, dual coverage and dual contributions (taxes) for the same work are eliminated. 1040ez worksheet The agreements generally make sure that social security taxes (including self-employment tax) are paid only to one country. 1040ez worksheet Agreements are in effect with the following countries. 1040ez worksheet Australia. 1040ez worksheet Austria. 1040ez worksheet Belgium. 1040ez worksheet Canada. 1040ez worksheet Chile. 1040ez worksheet Czech Republic. 1040ez worksheet Denmark. 1040ez worksheet Finland. 1040ez worksheet France. 1040ez worksheet Germany. 1040ez worksheet Greece. 1040ez worksheet Ireland. 1040ez worksheet Italy. 1040ez worksheet Japan. 1040ez worksheet Korea, South. 1040ez worksheet Luxembourg. 1040ez worksheet The Netherlands. 1040ez worksheet Norway. 1040ez worksheet Poland. 1040ez worksheet Portugal. 1040ez worksheet Spain. 1040ez worksheet Sweden. 1040ez worksheet Switzerland. 1040ez worksheet The United Kingdom. 1040ez worksheet Agreements with other countries are expected to enter into force in the future. 1040ez worksheet Employees. 1040ez worksheet   Generally, under these agreements, you are subject to social security taxes only in the country where you are working. 1040ez worksheet However, if you are temporarily sent to work for the same employer in the United States and your pay would normally be subject to social security taxes in both countries, most agreements provide that you remain covered only by the social security system of the country from which you were sent. 1040ez worksheet You can get more information on any agreement by contacting the U. 1040ez worksheet S. 1040ez worksheet Social Security Administration at the address given later. 1040ez worksheet If you have access to the Internet, you can get more information at www. 1040ez worksheet socialsecurity. 1040ez worksheet gov/international. 1040ez worksheet   To establish that your pay is subject only to foreign social security taxes and is exempt from U. 1040ez worksheet S. 1040ez worksheet social security taxes (including the Medicare tax) under an agreement, you or your employer should request a certificate of coverage from the appropriate agency of the foreign country. 1040ez worksheet This will usually be the same agency to which you or your employer pays your foreign social security taxes. 1040ez worksheet The foreign agency will be able to tell you what information is needed for them to issue the certificate. 1040ez worksheet Your employer should keep a copy of the certificate because it may be needed to show why you are exempt from U. 1040ez worksheet S. 1040ez worksheet social security taxes. 1040ez worksheet Only wages paid on or after the effective date of the agreement can be exempt from U. 1040ez worksheet S. 1040ez worksheet social security taxes. 1040ez worksheet    Some of the countries with which the United States has agreements will not issue certificates of coverage. 1040ez worksheet In this case, either you or your employer should request a statement that your wages are not covered by the U. 1040ez worksheet S. 1040ez worksheet social security system. 1040ez worksheet Request the statement from the following address. 1040ez worksheet U. 1040ez worksheet S. 1040ez worksheet Social Security Administration Office of International Programs P. 1040ez worksheet O. 1040ez worksheet Box 17741 Baltimore, MD 21235-7741 Self-employed individuals. 1040ez worksheet   Under most agreements, self-employed individuals are covered by the social security system of the country where they reside. 1040ez worksheet However, under some agreements, you may be exempt from U. 1040ez worksheet S. 1040ez worksheet self-employment tax if you temporarily transfer your business activity to or from the United States. 1040ez worksheet   If you believe that your self-employment income is subject only to U. 1040ez worksheet S. 1040ez worksheet self-employment tax and is exempt from foreign social security taxes, request a certificate of coverage from the U. 1040ez worksheet S. 1040ez worksheet Social Security Administration at the address given earlier. 1040ez worksheet This certificate will establish your exemption from foreign social security taxes. 1040ez worksheet   To establish that your self-employment income is subject only to foreign social security taxes and is exempt from U. 1040ez worksheet S. 1040ez worksheet self-employment tax, request a certificate of coverage from the appropriate agency of the foreign country. 1040ez worksheet If the foreign country will not issue the certificate, you should request a statement that your income is not covered by the U. 1040ez worksheet S. 1040ez worksheet social security system. 1040ez worksheet Request it from the U. 1040ez worksheet S. 1040ez worksheet Social Security Administration at the address given earlier. 1040ez worksheet Attach a photocopy of either statement to Form 1040 each year you are exempt. 1040ez worksheet Also print “Exempt, see attached statement” on the line for self-employment tax. 1040ez worksheet Estimated Tax Form 1040-ES (NR) You may have income from which no U. 1040ez worksheet S. 1040ez worksheet income tax is withheld. 1040ez worksheet Or the amount of tax withheld may be less than the income tax you estimate you will owe at the end of the year. 1040ez worksheet If so, you may have to pay estimated tax. 1040ez worksheet Generally, you must make estimated tax payments for 2014 if you expect to owe at least $1,000 in tax and you expect your withholding and certain refundable credits to be less than the smaller of: 90% of the tax to be shown on your 2014 income tax return, or 100% of the tax shown on your 2013 income tax return (if your 2013 return covered all 12 months of the year). 1040ez worksheet If your adjusted gross income for 2013 was more than $150,000 ($75,000 if your filing status for 2014 is married filing separately), substitute 110% for 100% in (2) above if you are not a farmer or fisherman. 1040ez worksheet Item (2) does not apply if you did not file a 2013 return. 1040ez worksheet A nonresident alien should use Form 1040-ES (NR) to figure and pay estimated tax. 1040ez worksheet If you pay by check, make it payable to the "United States Treasury. 1040ez worksheet " How to estimate your tax for 2014. 1040ez worksheet   If you filed a 2013 return on Form 1040NR or Form 1040NR-EZ and expect your income, number of exemptions, and total deductions for 2014 to be nearly the same, you should use your 2013 return as a guide to complete the Estimated Tax Worksheet in the Form 1040-ES (NR) instructions. 1040ez worksheet If you did not file a return for 2013, or if your income, exemptions, deductions, or credits will be different for 2014, you must estimate these amounts. 1040ez worksheet Figure your estimated tax liability using the Tax Rate Schedule in the 2014 Form 1040-ES (NR) instructions for your filing status. 1040ez worksheet Note. 1040ez worksheet If you expect to be a resident of Puerto Rico during the entire year, use Form 1040-ES or Formulario 1040-ES (PR). 1040ez worksheet When to pay estimated tax. 1040ez worksheet   Make your first estimated tax payment by the due date for filing the previous year's Form 1040NR or Form 1040NR-EZ. 1040ez worksheet If you have wages subject to the same withholding rules that apply to U. 1040ez worksheet S. 1040ez worksheet citizens, you must file Form 1040NR or Form 1040NR-EZ and make your first estimated tax payment by April 15, 2014. 1040ez worksheet If you do not have wages subject to withholding, file your income tax return and make your first estimated tax payment by June 16, 2014. 1040ez worksheet   If your first estimated tax payment is due April 15, 2014, you can pay your estimated tax in full at that time or in four equal installments by the dates shown next. 1040ez worksheet 1st installment April 15, 2014 2nd installment June 16, 2014 3rd installment Sept. 1040ez worksheet 15, 2014 4th installment Jan. 1040ez worksheet 15, 2015 If your first payment is not due until June 16, 2014, you can pay your estimated tax in full at that time or: ½ of your estimated tax by June 16, 2014, 1/4 of the tax by September 15, 2014, and 1/4 by January 15, 2015. 1040ez worksheet    You do not have to make the payment due January 15, 2015, if you file your 2014 Form 1040NR or 1040NR-EZ by February 2, 2015, and pay the entire balance due with your return. 1040ez worksheet Fiscal year. 1040ez worksheet   If your return is not on a calendar year basis, your due dates are the 15th day of the 4th, 6th, and 9th months of your fiscal year, and the 1st month of the following fiscal year. 1040ez worksheet If any date falls on a Saturday, Sunday, or legal holiday, use the next day that is not a Saturday, Sunday, or legal holiday. 1040ez worksheet Changes in income, deductions, or exemptions. 1040ez worksheet   Even if you are not required to make an estimated tax payment in April or June, your circumstances may change so that you will have to make estimated tax payments later. 1040ez worksheet This can happen if you receive additional income or if any of your deductions are reduced or eliminated. 1040ez worksheet If so, see the instructions for Form 1040-ES (NR) and Publication 505 for information on figuring your estimated tax. 1040ez worksheet Amended estimated tax. 1040ez worksheet   If, after you have made estimated tax payments, you find your estimated tax is substantially increased or decreased because of a change in your income or exemptions, you should adjust your remaining estimated tax payments. 1040ez worksheet To do this, see the instructions for Form 1040-ES (NR) and Publication 505. 1040ez worksheet Penalty for failure to pay estimated income tax. 1040ez worksheet   You will be subject to a penalty for underpayment of installments of estimated tax except in certain situations. 1040ez worksheet These situations are explained on Form 2210, Underpayment of Estimated Tax by Individuals, Estates, and Trusts. 1040ez worksheet Prev  Up  Next   Home   More Online Publications
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The 1040ez Worksheet

1040ez worksheet 5. 1040ez worksheet   Exemptions, Deductions, and Credits Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: Items Related to Excluded Income Exemptions Contributions to Foreign Charitable Organizations Moving ExpensesAllocation of Moving Expenses Forms To File Contributions to Individual Retirement Arrangements Taxes of Foreign Countries and U. 1040ez worksheet S. 1040ez worksheet PossessionsCredit for Foreign Income Taxes Deduction for Foreign Income Taxes Deduction for Other Foreign Taxes How To Report Deductions Topics - This chapter discusses: The rules concerning items related to excluded income, Exemptions, Contributions to foreign charitable organizations, Moving expenses, Contributions to individual retirement arrangements (IRAs), Taxes of foreign countries and U. 1040ez worksheet S. 1040ez worksheet possessions, and How to report deductions. 1040ez worksheet Useful Items - You may want to see: Publication 501 Exemptions, Standard Deduction, and Filing Information 514 Foreign Tax Credit for Individuals 521 Moving Expenses 523 Selling Your Home 590 Individual Retirement Arrangements (IRAs) 597 Information on the United States—Canada Income Tax Treaty Form (and Instructions) 1116 Foreign Tax Credit 2106 Employee Business Expenses 2555 Foreign Earned Income 2555-EZ Foreign Earned Income Exclusion 3903 Moving Expenses Schedule A (Form 1040) Itemized Deductions Schedule C (Form 1040) Profit or Loss From Business SS-5 Application for a Social Security Card W-7 Application for IRS Individual Taxpayer Identification Number See chapter 7 for information about getting these publications and forms. 1040ez worksheet Items Related to Excluded Income U. 1040ez worksheet S. 1040ez worksheet citizens and resident aliens living outside the United States generally are allowed the same deductions as citizens and residents living in the United States. 1040ez worksheet If you choose to exclude foreign earned income or housing amounts, you cannot deduct, exclude, or claim a credit for any item that can be allocated to or charged against the excluded amounts. 1040ez worksheet This includes any expenses, losses, and other normally deductible items that are allocable to the excluded income. 1040ez worksheet You can deduct only those expenses connected with earning includible income. 1040ez worksheet These rules apply only to items definitely related to the excluded earned income and they do not apply to other items that are not definitely related to any particular type of gross income. 1040ez worksheet These rules do not apply to items such as: Personal exemptions, Qualified retirement contributions, Alimony payments, Charitable contributions, Medical expenses, Mortgage interest, or Real estate taxes on your personal residence. 1040ez worksheet For purposes of these rules, your housing deduction is not treated as allocable to your excluded income, but the deduction for self- employment tax is. 1040ez worksheet If you receive foreign earned income in a tax year after the year in which you earned it, you may have to file an amended return for the earlier year to properly adjust the amounts of deductions, credits, or exclusions allocable to your foreign earned income and housing exclusions. 1040ez worksheet Example. 1040ez worksheet In 2012, you had $90,400 of foreign earned income and $9,500 of deductions allocable to your foreign earned income. 1040ez worksheet You did not have a housing exclusion. 1040ez worksheet Because you excluded all of your foreign earned income, you would not have been able to claim any of the deductions on your 2012 return. 1040ez worksheet In 2013, you received a $12,000 bonus for work you did abroad in 2012. 1040ez worksheet You can exclude $4,700 of the bonus because the limit on the foreign earned income exclusion for 2012 was $95,100 and you have already excluded $90,400. 1040ez worksheet Since you must include $7,300 of the bonus ($12,000 − $4,700) for work you did in 2012 in income, you can file an amended return for 2012 to claim $677 of the deductions. 1040ez worksheet This is the deductions allocable to the foreign earned income ($9,500) multiplied by the includible portion of the foreign earned income ($7,300) and divided by the total foreign earned income for 2012 ($102,400). 1040ez worksheet Exemptions You can claim an exemption for your nonresident alien spouse on your separate return, provided your spouse has no gross income for U. 1040ez worksheet S. 1040ez worksheet tax purposes and is not the dependent of another U. 1040ez worksheet S. 1040ez worksheet taxpayer. 1040ez worksheet You also can claim exemptions for individuals who qualify as your dependents. 1040ez worksheet To be your dependent, the individual must be a U. 1040ez worksheet S. 1040ez worksheet citizen, U. 1040ez worksheet S. 1040ez worksheet national, U. 1040ez worksheet S. 1040ez worksheet resident alien, or a resident of Canada or Mexico for some part of the calendar year in which your tax year begins. 1040ez worksheet Children. 1040ez worksheet   Children usually are citizens or residents of the same country as their parents. 1040ez worksheet If you were a U. 1040ez worksheet S. 1040ez worksheet citizen when your child was born, your child generally is a U. 1040ez worksheet S. 1040ez worksheet citizen. 1040ez worksheet This is true even if the child's other parent is a nonresident alien, the child was born in a foreign country, and the child lives abroad with the other parent. 1040ez worksheet   If you have a legally adopted child who is not a U. 1040ez worksheet S. 1040ez worksheet citizen, U. 1040ez worksheet S. 1040ez worksheet resident, or U. 1040ez worksheet S. 1040ez worksheet national, the child meets the citizen requirement if you are a U. 1040ez worksheet S. 1040ez worksheet citizen or U. 1040ez worksheet S. 1040ez worksheet national and the child lived with you as a member of your household all year. 1040ez worksheet Social security number. 1040ez worksheet   You must include on your return the social security number (SSN) of each dependent for whom you claim an exemption. 1040ez worksheet To get a social security number for a dependent, apply at a Social Security office or U. 1040ez worksheet S. 1040ez worksheet consulate. 1040ez worksheet You must provide original or certified copies of documents to verify the dependent's age, identity, and citizenship, and complete Form SS-5. 1040ez worksheet   If you do not have an SSN for a child who was born in 2013 and died in 2013, attach a copy of the child's birth certificate to your tax return. 1040ez worksheet Print “Died” in column (2) of line 6c of your Form 1040 or Form 1040A. 1040ez worksheet   If your dependent is a nonresident alien who is not eligible to get a social security number, you must list the dependent's individual taxpayer identification number (ITIN) instead of an SSN. 1040ez worksheet To apply for an ITIN, file Form W-7 with the IRS. 1040ez worksheet It usually takes 6 to 10 weeks to get an ITIN. 1040ez worksheet Enter your dependent's ITIN wherever an SSN is requested on your tax return. 1040ez worksheet More information. 1040ez worksheet   For more information about exemptions, see Publication 501. 1040ez worksheet Contributions to Foreign Charitable Organizations If you make contributions directly to a foreign church or other foreign charitable organization, you generally cannot deduct them. 1040ez worksheet Exceptions are explained under Canadian, Mexican, and Israeli charities, later. 1040ez worksheet You can deduct contributions to a U. 1040ez worksheet S. 1040ez worksheet organization that transfers funds to a charitable foreign organization if the U. 1040ez worksheet S. 1040ez worksheet organization controls the use of the funds by the foreign organization or if the foreign organization is just an administrative arm of the U. 1040ez worksheet S. 1040ez worksheet organization. 1040ez worksheet Canadian, Mexican, and Israeli charities. 1040ez worksheet   Under the income tax treaties with Canada, Mexico and Israel, you may be able to deduct contributions to certain Canadian, Mexican, and Israeli charitable organizations. 1040ez worksheet Generally, you must have income from sources in Canada, Mexico, or Israel, and the organization must meet certain requirements. 1040ez worksheet See Publication 597, Information on the United States-Canada Income Tax Treaty, and Publication 526, Charitable Contributions, for more information. 1040ez worksheet Moving Expenses If you moved to a new home in 2013 because of your job or business, you may be able to deduct the expenses of your move. 1040ez worksheet Generally, to be deductible, the moving expenses must have been paid or incurred in connection with starting work at a new job location. 1040ez worksheet See Publication 521 for a complete discussion of the deduction for moving expenses and information about moves within the United States. 1040ez worksheet Foreign moves. 1040ez worksheet   A foreign move is a move in connection with the start of work at a new job location outside the United States and its possessions. 1040ez worksheet A foreign move does not include a move back to the United States or its possessions. 1040ez worksheet Allocation of Moving Expenses When your new place of work is in a foreign country, your moving expenses are directly connected with the income earned in that foreign country. 1040ez worksheet If you exclude all or part of the income that you earn at the new location under the foreign earned income exclusion or the foreign housing exclusion, you cannot deduct the part of your moving expense that is allocable to the excluded income. 1040ez worksheet Also, you cannot deduct the part of the moving expense related to the excluded income for a move from a foreign country to the United States if you receive a reimbursement that you are able to treat as compensation for services performed in the foreign country. 1040ez worksheet Year to which expense is connected. 1040ez worksheet   The moving expense is connected with earning the income (including reimbursements, as discussed in chapter 4 under Reimbursement of moving expenses ) either entirely in the year of the move or in 2 years. 1040ez worksheet It is connected with earning the income entirely in the year of the move if you qualify for the foreign earned income exclusion under the bona fide residence test or physical presence test for at least 120 days during that tax year. 1040ez worksheet   If you do not qualify under either the bona fide residence test or the physical presence test for at least 120 days during the year of the move, the expense is connected with earning the income in 2 years. 1040ez worksheet The moving expense is connected with the year of the move and the following year if the move is from the United States to a foreign country. 1040ez worksheet The moving expense is connected with the year of the move and the preceding year if the move is from a foreign country to the United States. 1040ez worksheet Amount allocable to excluded income. 1040ez worksheet   To figure the amount of your moving expense that is allocable to your excluded foreign earned income (and not deductible), you must multiply your total moving expense deduction by a fraction. 1040ez worksheet The numerator (top number) of the fraction is the total of your excluded foreign earned income and housing amounts for both years and the denominator (bottom number) of the fraction is your total foreign earned income for both years. 1040ez worksheet Example. 1040ez worksheet On November 1, 2012, you transfer to Monaco. 1040ez worksheet Your tax home is in Monaco, and you are a bona fide resident of Monaco for the entire tax year 2013. 1040ez worksheet In 2012, you paid $6,000 for allowable moving expenses for your move from the United States to Monaco. 1040ez worksheet You were fully reimbursed (under a nonaccountable plan) for these expenses in the same year. 1040ez worksheet The reimbursement is included in your income. 1040ez worksheet Your only other income consists of $16,000 wages earned in 2012 after the date of your move, and $100,100 wages earned in Monaco for 2013. 1040ez worksheet Because you did not meet the bona fide residence test for at least 120 days during 2012, the year of the move, the moving expenses are for services you performed in both 2012 and the following year, 2013. 1040ez worksheet Your total foreign earned income for both years is $122,100, consisting of $16,000 wages for 2012, $100,100 wages for 2013, and $6,000 moving expense reimbursement for both years. 1040ez worksheet You have no housing exclusion. 1040ez worksheet The total amount you can exclude is $113,190, consisting of the $97,600 full-year exclusion for 2013 and a $15,590 part-year exclusion for 2012 ($95,100 times the fraction of 60 qualifying bona fide residence days over 366 total days in the year). 1040ez worksheet To find the part of your moving expenses that is not deductible, multiply your $6,000 total expenses by the fraction $113,190 over $122,100. 1040ez worksheet The result, $5,562, is your nondeductible amount. 1040ez worksheet    You must report the full amount of the moving expense reimbursement in the year in which you received the reimbursement. 1040ez worksheet In the preceding example, this year was 2012. 1040ez worksheet You attribute the reimbursement to both 2012 and 2013 only to figure the amount of foreign earned income eligible for exclusion for each year. 1040ez worksheet Move between foreign countries. 1040ez worksheet   If you move between foreign countries, your moving expense is allocable to income earned in the year of the move if you qualified under either the bona fide residence test or the physical presence test for a period that includes at least 120 days in the year of the move. 1040ez worksheet New place of work in U. 1040ez worksheet S. 1040ez worksheet   If your new place of work is in the United States, the deductible moving expenses are directly connected with the income earned in the United States. 1040ez worksheet If you treat a reimbursement from your employer as foreign earned income (see the discussion in chapter 4), you must allocate deductible moving expenses to foreign earned income. 1040ez worksheet Storage expenses. 1040ez worksheet   These expenses are attributable to work you do during the year in which you incur the storage expenses. 1040ez worksheet You cannot deduct the amount allocable to excluded income. 1040ez worksheet Moving Expense Attributable to Foreign Earnings in 2 Years If your moving expense deduction is attributable to your foreign earnings in 2 years (the year of the move and the following year), you should request an extension of time to file your return for the year of the move until after the end of the second year. 1040ez worksheet By then, you should have all the information needed to properly figure the moving expense deduction. 1040ez worksheet See Extensions under When To File and Pay in chapter 1. 1040ez worksheet If you do not request an extension, you should figure the part of the moving expense that you cannot deduct because it is allocable to the foreign earned income you are excluding. 1040ez worksheet You do this by multiplying the moving expense by a fraction, the numerator (top number) of which is your excluded foreign earned income for the year of the move, and the denominator (bottom number) of which is your total foreign earned income for the year of the move. 1040ez worksheet Once you know your foreign earnings and exclusion for the following year, you must either: Adjust the moving expense deduction by filing an amended return for the year of the move, or Recapture any additional unallowable amount as income on your return for the following year. 1040ez worksheet If, after you make the final computation, you have an additional amount of allowable moving expense deduction, you can claim this only on an amended return for the year of the move. 1040ez worksheet You cannot claim it on the return for the second year. 1040ez worksheet Forms To File Report your moving expenses on Form 3903. 1040ez worksheet Report your moving expense deduction on line 26 of Form 1040. 1040ez worksheet If you must reduce your moving expenses by the amount allocable to excluded income (as explained later under How To Report Deductions ), attach a statement to your return showing how you figured this amount. 1040ez worksheet For more information about figuring moving expenses, see Publication 521. 1040ez worksheet Contributions to Individual Retirement Arrangements Contributions to your individual retirement arrangements (IRAs) that are traditional IRAs or Roth IRAs are generally limited to the lesser of $5,500 ($6,500 if 50 or older) or your compensation that is includible in your gross income for the tax year. 1040ez worksheet In determining compensation for this purpose, do not take into account amounts you exclude under either the foreign earned income exclusion or the foreign housing exclusion. 1040ez worksheet Do not reduce your compensation by the foreign housing deduction. 1040ez worksheet If you are covered by an employer retirement plan at work, your deduction for your contributions to your traditional IRAs is generally limited based on your modified adjusted gross income. 1040ez worksheet This is your adjusted gross income figured without taking into account the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction. 1040ez worksheet Other modifications are also required. 1040ez worksheet For more information on IRAs, see Publication 590. 1040ez worksheet Taxes of Foreign Countries and U. 1040ez worksheet S. 1040ez worksheet Possessions You can take either a credit or a deduction for income taxes paid to a foreign country or a U. 1040ez worksheet S. 1040ez worksheet possession. 1040ez worksheet Taken as a deduction, foreign income taxes reduce your taxable income. 1040ez worksheet Taken as a credit, foreign income taxes reduce your tax liability. 1040ez worksheet You must treat all foreign income taxes the same way. 1040ez worksheet If you take a credit for any foreign income taxes, you cannot deduct any foreign income taxes. 1040ez worksheet However, you may be able to deduct other foreign taxes. 1040ez worksheet See Deduction for Other Foreign Taxes, later. 1040ez worksheet There is no rule to determine whether it is to your advantage to take a deduction or a credit for foreign income taxes. 1040ez worksheet In most cases, it is to your advantage to take foreign income taxes as a tax credit, which you subtract directly from your U. 1040ez worksheet S. 1040ez worksheet tax liability, rather than as a deduction in figuring taxable income. 1040ez worksheet However, if foreign income taxes were imposed at a high rate and the proportion of foreign income to U. 1040ez worksheet S. 1040ez worksheet income is small, a lower final tax may result from deducting the foreign income taxes. 1040ez worksheet In any event, you should figure your tax liability both ways and then use the one that is better for you. 1040ez worksheet You can make or change your choice within 10 years from the due date for filing the tax return on which you are entitled to take either the deduction or the credit. 1040ez worksheet Foreign income taxes. 1040ez worksheet   These are generally income taxes you pay to any foreign country or possession of the United States. 1040ez worksheet Foreign income taxes on U. 1040ez worksheet S. 1040ez worksheet return. 1040ez worksheet   Foreign income taxes can only be taken as a credit on Form 1040, line 47, or as an itemized deduction on Schedule A. 1040ez worksheet These amounts cannot be included as withheld income taxes on Form 1040, line 62. 1040ez worksheet Foreign taxes paid on excluded income. 1040ez worksheet   You cannot take a credit or deduction for foreign income taxes paid on earnings you exclude from tax under any of the following. 1040ez worksheet Foreign earned income exclusion. 1040ez worksheet Foreign housing exclusion. 1040ez worksheet Possession exclusion. 1040ez worksheet If your wages are completely excluded, you cannot deduct or take a credit for any of the foreign taxes paid on your wages. 1040ez worksheet   If only part of your wages is excluded, you cannot deduct or take a credit for the foreign income taxes allocable to the excluded part. 1040ez worksheet You find the taxes allocable to your excluded wages by applying a fraction to the foreign taxes paid on foreign earned income received during the tax year. 1040ez worksheet The numerator (top number) of the fraction is your excluded foreign earned income received during the tax year minus deductible expenses allocable to that income (not including the foreign housing deduction). 1040ez worksheet The denominator (bottom number) of the fraction is your total foreign earned income received during the tax year minus all deductible expenses allocable to that income (including the foreign housing deduction). 1040ez worksheet   If foreign law taxes both earned income and some other type of income and the taxes on the other type cannot be separated, the denominator of the fraction is the total amount of income subject to foreign tax minus deductible expenses allocable to that income. 1040ez worksheet    If you take a foreign tax credit for tax on income you could have excluded under your choice to exclude foreign earned income or your choice to exclude foreign housing costs, one or both of the choices may be considered revoked. 1040ez worksheet Credit for Foreign Income Taxes If you take the foreign tax credit, you may have to file Form 1116 with Form 1040. 1040ez worksheet Form 1116 is used to figure the amount of foreign tax paid or accrued that can be claimed as a foreign tax credit. 1040ez worksheet Do not include the amount of foreign tax paid or accrued as withheld federal income taxes on Form 1040, line 62. 1040ez worksheet The foreign income tax for which you can claim a credit is the amount of legal and actual tax liability you pay or accrue during the year. 1040ez worksheet The amount for which you can claim a credit is not necessarily the amount withheld by the foreign country. 1040ez worksheet You cannot take a foreign tax credit for income tax you paid to a foreign country that would be refunded by the foreign country if you made a claim for refund. 1040ez worksheet Subsidies. 1040ez worksheet   If a foreign country returns your foreign tax payments to you in the form of a subsidy, you cannot claim a foreign tax credit based on these payments. 1040ez worksheet This rule applies to a subsidy provided by any means that is determined, directly or indirectly, by reference to the amount of tax, or to the base used to figure the tax. 1040ez worksheet   Some ways of providing a subsidy are refunds, credits, deductions, payments, or discharges of obligations. 1040ez worksheet A credit is also not allowed if the subsidy is given to a person related to you, or persons who participated in a transaction or a related transaction with you. 1040ez worksheet Limit The foreign tax credit is limited to the part of your total U. 1040ez worksheet S. 1040ez worksheet tax that is in proportion to your taxable income from sources outside the United States compared to your total taxable income. 1040ez worksheet The allowable foreign tax credit cannot be more than your actual foreign tax liability. 1040ez worksheet Exemption from limit. 1040ez worksheet   You will not be subject to this limit and will not have to file Form 1116 if you meet all three of the following requirements. 1040ez worksheet Your only foreign source income for the year is passive income (dividends, interest, royalties, etc. 1040ez worksheet ) that is reported to you on a payee statement (such as a Form 1099-DIV or 1099-INT). 1040ez worksheet Your foreign taxes for the year that qualify for the credit are not more than $300 ($600 if you are filing a joint return) and are reported on a payee statement. 1040ez worksheet You elect this procedure. 1040ez worksheet If you make this election, you cannot carry back or carry over any unused foreign tax to or from this year. 1040ez worksheet Separate limit. 1040ez worksheet   You must figure the limit on a separate basis with regard to “passive category income” and “general category income” (see the instructions for Form 1116). 1040ez worksheet Figuring the limit. 1040ez worksheet   In figuring taxable income in each category, you take into account only the amount that you must include in income on your federal tax return. 1040ez worksheet Do not take any excluded amount into account. 1040ez worksheet   To determine your taxable income in each category, deduct expenses and losses that are definitely related to that income. 1040ez worksheet   Other expenses (such as itemized deductions or the standard deduction) not definitely related to specific items of income must be apportioned to the foreign income in each category by multiplying them by a fraction. 1040ez worksheet The numerator (top number) of the fraction is your gross foreign income in the separate limit category. 1040ez worksheet The denominator (bottom number) of the fraction is your gross income from all sources. 1040ez worksheet For this purpose, gross income includes income that is excluded under the foreign earned income provisions but does not include any other exempt income. 1040ez worksheet You must use special rules for deducting interest expenses. 1040ez worksheet For more information on allocating and apportioning your deductions, see Publication 514. 1040ez worksheet Exemptions. 1040ez worksheet   Do not take the deduction for exemptions for yourself, your spouse, or your dependents in figuring taxable income for purposes of the limit. 1040ez worksheet Recapture of foreign losses. 1040ez worksheet   If you have an overall foreign loss and the loss reduces your U. 1040ez worksheet S. 1040ez worksheet source income (resulting in a reduction of your U. 1040ez worksheet S. 1040ez worksheet tax liability), you must recapture the loss in later years when you have taxable income from foreign sources. 1040ez worksheet This is done by treating a part of your taxable income from foreign sources in later years as U. 1040ez worksheet S. 1040ez worksheet source income. 1040ez worksheet This reduces the numerator of the limiting fraction and the resulting foreign tax credit limit. 1040ez worksheet Recapture of domestic losses. 1040ez worksheet   If you have an overall domestic loss (resulting in no U. 1040ez worksheet S. 1040ez worksheet tax liability), you cannot claim a foreign tax credit for taxes paid during that year. 1040ez worksheet You must recapture the loss in later years when you have U. 1040ez worksheet S. 1040ez worksheet source taxable income. 1040ez worksheet This is done by treating a part of your taxable income from U. 1040ez worksheet S. 1040ez worksheet sources in later years as foreign source income. 1040ez worksheet This increases the numerator of the limiting fraction and the resulting foreign tax credit limit. 1040ez worksheet Foreign tax credit carryback and carryover. 1040ez worksheet   The amount of foreign income tax not allowed as a credit because of the limit can be carried back 1 year and carried forward 10 years. 1040ez worksheet   More information on figuring the foreign tax credit can be found in Publication 514. 1040ez worksheet Deduction for Foreign Income Taxes Instead of taking the foreign tax credit, you can deduct foreign income taxes as an itemized deduction on Schedule A (Form 1040). 1040ez worksheet You can deduct only foreign income taxes paid on income that is subject to U. 1040ez worksheet S. 1040ez worksheet tax. 1040ez worksheet You cannot deduct foreign taxes paid on earnings you exclude from tax under any of the following. 1040ez worksheet Foreign earned income exclusion. 1040ez worksheet Foreign housing exclusion. 1040ez worksheet Possession exclusion. 1040ez worksheet Example. 1040ez worksheet You are a U. 1040ez worksheet S. 1040ez worksheet citizen and qualify to exclude your foreign earned income. 1040ez worksheet Your excluded wages in Country X are $70,000 on which you paid income tax of $10,000. 1040ez worksheet You received dividends from Country X of $2,000 on which you paid income tax of $600. 1040ez worksheet You can deduct the $600 tax payment because the dividends relating to it are subject to U. 1040ez worksheet S. 1040ez worksheet tax. 1040ez worksheet Because you exclude your wages, you cannot deduct the income tax of $10,000. 1040ez worksheet If you exclude only a part of your wages, see the earlier discussion under Foreign taxes paid on excluded income. 1040ez worksheet Deduction for Other Foreign Taxes You can deduct real property taxes you pay that are imposed on you by a foreign country. 1040ez worksheet You take this deduction on Schedule A (Form 1040). 1040ez worksheet You cannot deduct other foreign taxes, such as personal property taxes, unless you incurred the expenses in a trade or business or in the production of income. 1040ez worksheet On the other hand, you generally can deduct personal property taxes when you pay them to U. 1040ez worksheet S. 1040ez worksheet possessions. 1040ez worksheet But if you claim the possession exclusion, see Publication 570. 1040ez worksheet The deduction for foreign taxes other than foreign income taxes is not related to the foreign tax credit. 1040ez worksheet You can take deductions for these miscellaneous foreign taxes and also claim the foreign tax credit for income taxes imposed by a foreign country. 1040ez worksheet How To Report Deductions If you exclude foreign earned income or housing amounts, how you show your deductions on your tax return and how you figure the amount allocable to your excluded income depends on whether the expenses are used in figuring adjusted gross income (Form 1040, line 38) or are itemized deductions. 1040ez worksheet If you have deductions used in figuring adjusted gross income, enter the total amount for each of these items on the appropriate lines and schedules of Form 1040. 1040ez worksheet Generally, you figure the amount of a deduction related to the excluded income by multiplying the deduction by a fraction, the numerator of which is your foreign earned income exclusion and the denominator of which is your foreign earned income. 1040ez worksheet Enter the amount of the deduction(s) related to excluded income on line 44 of Form 2555. 1040ez worksheet If you have itemized deductions related to excluded income, enter on Schedule A (Form 1040) only the part not related to excluded income. 1040ez worksheet You figure that amount by subtracting from the total deduction the amount related to excluded income. 1040ez worksheet Generally, you figure the amount that is related to the excluded income by multiplying the total deduction by a fraction, the numerator of which is your foreign earned income exclusion and the denominator of which is your foreign earned income. 1040ez worksheet Attach a statement to your return showing how you figured the deductible amount. 1040ez worksheet Example 1. 1040ez worksheet You are a U. 1040ez worksheet S. 1040ez worksheet citizen employed as an accountant. 1040ez worksheet Your tax home is in Germany for the entire tax year. 1040ez worksheet You meet the physical presence test. 1040ez worksheet Your foreign earned income for the year was $122,000 and your investment income was $10,380. 1040ez worksheet After excluding $97,600, your AGI is $34,780. 1040ez worksheet You had unreimbursed business expenses of $2,500 for travel and entertainment in earning your foreign income, of which $500 was for meals and entertainment. 1040ez worksheet These expenses are deductible only as miscellaneous deductions on Schedule A (Form 1040). 1040ez worksheet You also have $500 of miscellaneous expenses that are not related to your foreign income that you enter on line 23 of Schedule A. 1040ez worksheet You must fill out Form 2106. 1040ez worksheet On that form, reduce your deductible meal and entertainment expenses by 50% ($250). 1040ez worksheet You must reduce the remaining $2,250 of travel and entertainment expenses by 80% ($1,800) because you excluded 80% ($97,600/$122,000) of your foreign earned income. 1040ez worksheet You carry the remaining total of $450 to line 21 of Schedule A. 1040ez worksheet Add the $450 to the $500 that you have on line 23 and enter the total ($950) on line 24. 1040ez worksheet On line 26 of Schedule A, enter $696, which is 2% of your adjusted gross income of $34,780 (line 38, Form 1040) and subtract it from the amount on line 24. 1040ez worksheet Enter $254 on line 27 of Schedule A. 1040ez worksheet Example 2. 1040ez worksheet You are a U. 1040ez worksheet S. 1040ez worksheet citizen, have a tax home in Spain, and meet the physical presence test. 1040ez worksheet You are self-employed and personal services produce the business income. 1040ez worksheet Your gross income was $116,931, business expenses $66,895, and net income (profit) $50,036. 1040ez worksheet You choose the foreign earned income exclusion and exclude $97,600 of your gross income. 1040ez worksheet Since your excluded income is 83. 1040ez worksheet 47% of your total income, 83. 1040ez worksheet 47% of your business expenses are not deductible. 1040ez worksheet Report your total income and expenses on Schedule C (Form 1040). 1040ez worksheet On Form 2555 you will show the following: Line 20a, $116,931, gross income, Lines 42 and 43, $97,600, foreign earned income exclusion, and Line 44, $55,837 (83. 1040ez worksheet 47% × $66,895) business expenses attributable to the exclusion. 1040ez worksheet In this situation (Example 2), you cannot use Form 2555-EZ since you had self-employment income and business expenses. 1040ez worksheet Example 3. 1040ez worksheet Assume in Example 2 that both capital and personal services combine to produce the business income. 1040ez worksheet No more than 30% of your net income, or $15,011, assuming that this amount is a reasonable allowance for your services, is considered earned and can be excluded. 1040ez worksheet Your exclusion of $15,011 is 12. 1040ez worksheet 84% of your gross income ($15,011 ÷ $116,931). 1040ez worksheet Because you excluded 12. 1040ez worksheet 84% of your total income, $8,589 (. 1040ez worksheet 1284 x $66,895) of your business expenses is attributable to the excluded income and is not deductible. 1040ez worksheet Example 4. 1040ez worksheet You are a U. 1040ez worksheet S. 1040ez worksheet citizen, have a tax home in Brazil, and meet the physical presence test. 1040ez worksheet You are self-employed and both capital and personal services combine to produce business income. 1040ez worksheet Your gross income was $146,000, business expenses were $172,000, and your net loss was $26,000. 1040ez worksheet A reasonable allowance for the services you performed for the business is $77,000. 1040ez worksheet Because you incurred a net loss, the earned income limit of 30% of your net profit does not apply. 1040ez worksheet The $77,000 is foreign earned income. 1040ez worksheet If you choose to exclude the $77,000, you exclude 52. 1040ez worksheet 74% of your gross income ($77,000 ÷ $146,000), and 52. 1040ez worksheet 74% of your business expenses ($90,713) is attributable to that income and is not deductible. 1040ez worksheet Show your total income and expenses on Schedule C (Form 1040). 1040ez worksheet On Form 2555, exclude $77,000 and show $90,713 on line 44. 1040ez worksheet Subtract line 44 from line 43, and enter the difference as a negative (in parentheses) on line 45. 1040ez worksheet Because this amount is negative, enter it as a positive (no parentheses) on line 21, Form 1040, and combine it with your other income to arrive at total income on line 22 of Form 1040. 1040ez worksheet In this situation (Example 4), you would probably not want to choose the foreign earned income exclusion if this was the first year you were eligible. 1040ez worksheet If you had chosen the exclusion in an earlier year, you might want to revoke the choice for this year. 1040ez worksheet To do so would mean that you could not claim the exclusion again for the next 5 tax years without IRS approval. 1040ez worksheet See Choosing the Exclusion in chapter 4. 1040ez worksheet Example 5. 1040ez worksheet You are a U. 1040ez worksheet S. 1040ez worksheet citizen, have a tax home in Panama, and meet the bona fide residence test. 1040ez worksheet You have been performing services for clients as a partner in a firm that provides services exclusively in Panama. 1040ez worksheet Capital investment is not material in producing the partnership's income. 1040ez worksheet Under the terms of the partnership agreement, you are to receive 50% of the net profits. 1040ez worksheet The partnership received gross income of $244,000 and incurred operating expenses of $98,250. 1040ez worksheet Of the net profits of $145,750, you received $72,875 as your distributive share. 1040ez worksheet You choose to exclude $97,600 of your share of the gross income. 1040ez worksheet Because you exclude 80% ($97,600 ÷ $122,000) of your share of the gross income, you cannot deduct $39,300, 80% of your share of the operating expenses (. 1040ez worksheet 80 × $49,125). 1040ez worksheet Report $72,875, your distributive share of the partnership net profit, on Schedule E (Form 1040), Supplemental Income and Loss. 1040ez worksheet On Form 2555, show $97,600 on line 42 and show $39,300 on line 44. 1040ez worksheet Your exclusion on Form 2555 is $58,300. 1040ez worksheet In this situation (Example 5), you cannot use Form 2555-EZ since you had earned income other than salaries and wages and you had business expenses. 1040ez worksheet Prev  Up  Next   Home   More Online Publications