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2012 Tax

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2012 Tax

2012 tax 8. 2012 tax   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. 2012 tax 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. 2012 tax Introduction This chapter discusses how to pay your U. 2012 tax S. 2012 tax income tax as you earn or receive income during the year. 2012 tax In general, the federal income tax is a pay as you go tax. 2012 tax There are two ways to pay as you go. 2012 tax Withholding. 2012 tax If you are an employee, your employer probably withholds income tax from your pay. 2012 tax Tax may also be withheld from certain other income—including pensions, bonuses, commissions, and gambling winnings. 2012 tax In each case, the amount withheld is paid to the U. 2012 tax S. 2012 tax Treasury in your name. 2012 tax Estimated tax. 2012 tax If you do not pay your tax through withholding, or do not pay enough tax that way, you might have to pay estimated tax. 2012 tax People who are in business for themselves generally will have to pay their tax this way. 2012 tax You may have to pay estimated tax if you receive income such as dividends, interest, rent, and royalties. 2012 tax Estimated tax is used to pay not only income tax, but self-employment tax and alternative minimum tax as well. 2012 tax 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. 2012 tax Useful Items - You may want to see: Publication 515 Withholding of Tax on Nonresident Aliens and Foreign Entities 901 U. 2012 tax S. 2012 tax 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. 2012 tax S. 2012 tax 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. 2012 tax S. 2012 tax Real Property Interests 13930 Application for Central Withholding Agreement See chapter 12 for information about getting these publications and forms. 2012 tax 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. 2012 tax 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. 2012 tax 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. 2012 tax S. 2012 tax citizens. 2012 tax 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. 2012 tax 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. 2012 tax However, if the income is effectively connected with a U. 2012 tax S. 2012 tax trade or business, file Form W-8ECI instead. 2012 tax Withholding From Compensation The following discussion generally applies only to nonresident aliens. 2012 tax Tax is withheld from resident aliens in the same manner as U. 2012 tax S. 2012 tax citizens. 2012 tax 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. 2012 tax S. 2012 tax citizens. 2012 tax 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. 2012 tax 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. 2012 tax 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). 2012 tax These are services you are required to perform as an employee and as a condition of receiving the scholarship or fellowship (or tuition reduction). 2012 tax Nonresident aliens should fill out Form W-4 using the following instructions instead of the instructions on the Form W-4. 2012 tax 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. 2012 tax Enter your social security number (SSN) on line 2. 2012 tax Do not enter an individual taxpayer identification number (ITIN). 2012 tax Check only “Single” marital status on line 3 (regardless of your actual marital status). 2012 tax Claim only one allowance on line 5, unless you are a resident of Canada, Mexico, or South Korea, or a U. 2012 tax S. 2012 tax national. 2012 tax Write “Nonresident Alien” or “NRA” on the dotted line on line 6. 2012 tax You can request additional withholding on line 6 at your option. 2012 tax Do not claim “Exempt” withholding status on line 7. 2012 tax A U. 2012 tax S. 2012 tax national is an individual who, although not a U. 2012 tax S. 2012 tax citizen, owes his or her allegiance to the United States. 2012 tax U. 2012 tax S. 2012 tax nationals include American Samoans, and Northern Mariana Islanders who chose to become U. 2012 tax S. 2012 tax nationals instead of U. 2012 tax S. 2012 tax citizens. 2012 tax See Withholding on Scholarships and Fellowship Grants later, for how to fill out Form W-4 if you receive a U. 2012 tax S. 2012 tax source scholarship or fellowship grant that is not a payment for services. 2012 tax Students and business apprentices from India. 2012 tax   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. 2012 tax 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. 2012 tax S. 2012 tax taxpayer's 2013 return. 2012 tax 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. 2012 tax S. 2012 tax citizens. 2012 tax Household employees. 2012 tax   If you work as a household employee, your employer does not have to withhold income tax. 2012 tax However, you may agree to voluntary income tax withholding by filing a Form W-4 with your employer. 2012 tax The agreement goes into effect when your employer accepts the agreement by beginning the withholding. 2012 tax You or your employer may end the agreement by letting the other know in writing. 2012 tax Agricultural workers. 2012 tax   If you are an agricultural worker on an H-2A visa, your employer does not have to withhold income tax. 2012 tax However, your employer will withhold income tax only if you and your employer agree to withhold. 2012 tax In that case, you must provide your employer with a properly completed Form W-4. 2012 tax You can find more information about not having tax withheld at www. 2012 tax irs. 2012 tax gov/Individuals/International-Taxpayers/Foreign-Agricultural-Workers. 2012 tax Wages Exempt From Withholding Wages that are exempt from U. 2012 tax S. 2012 tax income tax under an income tax treaty are generally exempt from withholding. 2012 tax For information on how to claim this exemption from withholding, see Income Entitled to Tax Treaty Benefits , later. 2012 tax Wages paid to aliens who are residents of American Samoa, Canada, Mexico, Puerto Rico, or the U. 2012 tax S. 2012 tax Virgin Islands may be exempt from withholding. 2012 tax The following paragraphs explain these exemptions. 2012 tax Residents of Canada or Mexico engaged in transportation-related employment. 2012 tax   Certain residents of Canada or Mexico who enter or leave the United States at frequent intervals are not subject to withholding on their wages. 2012 tax 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. 2012 tax    This employment is subject to withholding of social security and Medicare taxes unless the services are performed for a railroad. 2012 tax   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. 2012 tax S. 2012 tax 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. 2012 tax   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. 2012 tax Residents of American Samoa and Puerto Rico. 2012 tax   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. 2012 tax Residents of the U. 2012 tax S. 2012 tax Virgin Islands. 2012 tax   Nonresident aliens who are bona fide residents of the U. 2012 tax S Virgin Islands are not subject to withholding of U. 2012 tax S. 2012 tax tax on income earned while temporarily employed in the United States. 2012 tax This is because those persons pay their income tax to the U. 2012 tax S. 2012 tax Virgin Islands. 2012 tax To avoid having tax withheld on income earned in the United States, bona fide residents of the U. 2012 tax S. 2012 tax Virgin Islands should write a letter, in duplicate, to their employers, stating that they are bona fide residents of the U. 2012 tax S. 2012 tax Virgin Islands and expect to pay tax on all income to the U. 2012 tax S. 2012 tax Virgin Islands. 2012 tax 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. 2012 tax 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. 2012 tax 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. 2012 tax Withholding on Tip Income Tips you receive during the year for services performed in the United States are subject to U. 2012 tax S. 2012 tax income tax. 2012 tax Include them in taxable income. 2012 tax In addition, tips received while working for one employer, amounting to $20 or more in a month, are subject to graduated withholding. 2012 tax 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. 2012 tax 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. 2012 tax 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. 2012 tax You must agree to timely file an income tax return for the current tax year. 2012 tax Central withholding agreements. 2012 tax   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. 2012 tax Under no circumstances will such a withholding agreement reduce taxes withheld to less than the anticipated amount of income tax liability. 2012 tax   File Form 13930 and the required attachments with the IRS to request a central withholding agreement. 2012 tax Either you or your authorized representative can file the form. 2012 tax It should be sent to the IRS at least 45 days before the tour begins or the event occurs. 2012 tax Exceptions will be considered on a case by case basis. 2012 tax   For more information on the CWA program, go to www. 2012 tax irs. 2012 tax gov/Individuals/International-Taxpayers/Central-Withholding-Agreements. 2012 tax Final payment exemption. 2012 tax   Your final payment of compensation during the tax year for independent personal services may be entirely or partly exempt from withholding. 2012 tax This exemption is available only once during your tax year and applies to a maximum of $5,000 of compensation. 2012 tax To obtain this exemption, you or your agent must give the following statements and information to the Commissioner or his delegate. 2012 tax 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. 2012 tax Each statement must be signed by the withholding agent and verified by a declaration that it is made under penalties of perjury. 2012 tax 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. 2012 tax This statement must also be signed by the withholding agent and verified by a declaration that it is made under penalties of perjury. 2012 tax 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. 2012 tax 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. 2012 tax The amount of your outstanding tax liabilities, if any, including interest and penalties, from the current tax year or prior tax periods. 2012 tax 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. 2012 tax 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. 2012 tax   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. 2012 tax Ordinary and necessary business expenses can be taken into account if proven to the satisfaction of the Commissioner or his delegate. 2012 tax   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. 2012 tax 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. 2012 tax 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). 2012 tax 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. 2012 tax S. 2012 tax national and are not a resident of Canada, Mexico, or South Korea. 2012 tax For purposes of 30% withholding, the exemption is prorated at $10. 2012 tax 82 a day in 2014 for the period that labor or personal services are performed in the United States. 2012 tax 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. 2012 tax Example. 2012 tax Eric Johannsen, who is a resident of Country X worked under a contract with a U. 2012 tax S. 2012 tax firm (not as an employee) in the United States for 100 days during 2014 before returning to his country. 2012 tax He earned $6,000 for the services performed (not considered wages) in the United States. 2012 tax Eric is married and has three dependent children. 2012 tax His wife is not employed and has no income subject to U. 2012 tax S. 2012 tax tax. 2012 tax 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. 2012 tax 82), and withholding at 30% is applied against the balance. 2012 tax Thus, $1,475. 2012 tax 40 in tax is withheld from Eric's earnings (30% of $4,918 ($6,000 − $1,082). 2012 tax U. 2012 tax S. 2012 tax nationals or residents of Canada, Mexico, or South Korea. 2012 tax   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. 2012 tax However, if you are a U. 2012 tax S. 2012 tax national or a resident of Canada or Mexico, you are allowed the same personal exemptions as U. 2012 tax S. 2012 tax citizens. 2012 tax For the 30% (or lower treaty) rate withholding, you can take $10. 2012 tax 82 per day for each allowable exemption in 2014. 2012 tax 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. 2012 tax However, the additional exemptions for your spouse and children must be further prorated as explained in chapter 5 under Exemptions . 2012 tax Students and business apprentices from India. 2012 tax   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. 2012 tax S. 2012 tax taxpayer's 2014 return. 2012 tax 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. 2012 tax S. 2012 tax citizens. 2012 tax For the 30% (or lower treaty rate) withholding on compensation for independent personal services performed in the United States, you are allowed $10. 2012 tax 82 per day for each allowable exemption in 2014. 2012 tax Refund of Taxes Withheld in Error Multi-level marketing. 2012 tax   If you are a distributor for a multi-level marketing company who had taxes withheld in error, file a U. 2012 tax S. 2012 tax 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. 2012 tax You must also attach to the U. 2012 tax S. 2012 tax income tax return or claim for refund supporting information that includes, but is not limited to, the following items. 2012 tax A copy of your Form W-2, Form 1042-S, or Form 1099 to prove the amount of taxes withheld. 2012 tax A statement explaining why income reported on your Form W-2, Form 1042-S, or Form 1099 is not subject to U. 2012 tax S. 2012 tax taxation. 2012 tax A statement listing all the dates you entered and left the United States during the taxable year. 2012 tax 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. 2012 tax 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. 2012 tax 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. 2012 tax Any further relevant document or record supporting your claim that the taxes were withheld in error. 2012 tax 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. 2012 tax It also includes 85% of social security benefits paid to nonresident aliens. 2012 tax Refund of taxes withheld in error on social security benefits paid to resident aliens. 2012 tax   Social security benefits paid to a lawful permanent resident (green card holder) are not subject to 30% withholding. 2012 tax For U. 2012 tax S. 2012 tax 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. 2012 tax See Green Card Test in chapter 1. 2012 tax 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. 2012 tax SSA will refund taxes erroneously withheld if the refund can be processed during the same calendar year in which the tax was withheld. 2012 tax 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. 2012 tax You must also attach the following to your Form 1040 or 1040A. 2012 tax A copy of Form SSA-1042S, Social Security Benefit Statement. 2012 tax A copy of the “green card. 2012 tax ” 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. 2012 tax S. 2012 tax lawful permanent resident and my green card has been neither revoked nor administratively or judicially determined to have been abandoned. 2012 tax I am filing a U. 2012 tax S. 2012 tax income tax return for the tax year as a resident alien reporting all of my worldwide income. 2012 tax 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. 2012 tax Other income not subject to withholding of 30% (or lower treaty) rate. 2012 tax   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. 2012 tax Income (other than compensation) that is effectively connected with your U. 2012 tax S. 2012 tax trade or business. 2012 tax Income from real property that you choose to treat as effectively connected with a U. 2012 tax S. 2012 tax trade or business. 2012 tax See Income From Real Property in chapter 4 for details about this choice. 2012 tax   Special rules for withholding on partnership income, scholarships, and fellowships are explained next. 2012 tax Tax Withheld on Partnership Income If you are a foreign partner in a U. 2012 tax S. 2012 tax or foreign partnership, the partnership will withhold tax on your share of effectively connected taxable income (ECTI) from the partnership. 2012 tax You may be able to reduce your ECTI subject to withholding by certain partner-level deductions. 2012 tax Generally, you must use Form 8804-C for this purpose. 2012 tax See the Instructions for Form 8804-C for more information. 2012 tax 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. 2012 tax 6% for 2014). 2012 tax 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. 2012 tax Long-term capital gain is an example of a particular type of income to which the highest tax rate applies. 2012 tax Claim the tax withheld as a credit on your 2014 Form 1040NR. 2012 tax The partnership will give you a statement on Form 8805, Foreign Partner's Information Statement of Section 1446 Withholding Tax, showing the tax withheld. 2012 tax A partnership that is publicly traded will withhold tax on your actual distributions of effectively connected income. 2012 tax In this case the partnership will give you a statement on Form 1042-S, Foreign Person's U. 2012 tax S. 2012 tax Source Income Subject to Withholding. 2012 tax Withholding on Scholarships and Fellowship Grants There is no withholding on a qualified scholarship received by a candidate for a degree. 2012 tax See chapter 3. 2012 tax If you are a nonresident alien student or grantee with an “F,” “J,” “M,” or “Q” visa and you receive a U. 2012 tax S. 2012 tax 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. 2012 tax 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. 2012 tax 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. 2012 tax 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). 2012 tax Use the following instructions instead of the Form W-4 instructions to complete the worksheet. 2012 tax Line A. 2012 tax   Enter the total of the following amounts on line A. 2012 tax Personal exemption. 2012 tax   Include the prorated part of your allowable personal exemption. 2012 tax 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. 2012 tax 82). 2012 tax Expenses. 2012 tax   Include expenses that will be deductible on your return. 2012 tax 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. 2012 tax They also include business expenses, moving expenses, and the IRA deduction discussed under Deductions in chapter 5. 2012 tax Nontaxable grant or scholarship. 2012 tax   Include the part of your grant or scholarship that is not taxable under U. 2012 tax S. 2012 tax law or under a tax treaty. 2012 tax Line B. 2012 tax   Enter -0- unless the following paragraph applies to you. 2012 tax   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. 2012 tax The standard deduction amount for 2013 is $6,100. 2012 tax Lines C and D. 2012 tax   Enter -0- on both lines unless the following paragraphs apply to you. 2012 tax   If you are a resident of Canada, Mexico, South Korea, or a U. 2012 tax S. 2012 tax national, an additional daily exemption amount may be allowed for your spouse and each of your dependents. 2012 tax   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. 2012 tax S. 2012 tax taxpayer's 2014 return. 2012 tax 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. 2012 tax S. 2012 tax citizens. 2012 tax   Enter any additional amount for your spouse on line C. 2012 tax Enter any additional amount for your dependents on line D. 2012 tax Lines E, F, and G. 2012 tax   No entries should be made on lines E, F, and G. 2012 tax Line H. 2012 tax   Add the amounts on lines A through D and enter the total on line H. 2012 tax Form W-4. 2012 tax   Complete lines 1 through 4 of Form W-4. 2012 tax Sign and date the form and give it with the Personal Allowances Worksheet to your withholding agent. 2012 tax   If you file a Form W-4 to reduce or eliminate the withholding on your scholarship or grant, you must file an annual U. 2012 tax S. 2012 tax income tax return to be allowed the exemptions and deductions you claimed on that form. 2012 tax 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. 2012 tax S. 2012 tax income tax return for the previous year. 2012 tax 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. 2012 tax S. 2012 tax income tax return when required. 2012 tax 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. 2012 tax 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. 2012 tax 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. 2012 tax Use this form to prepare your annual U. 2012 tax S. 2012 tax income tax return. 2012 tax 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. 2012 tax Generally, you do this by filing either Form W-8BEN or Form 8233 with the withholding agent. 2012 tax File Form W-8BEN for income that is not personal services income. 2012 tax File Form 8233 for personal services income as discussed next. 2012 tax Employees and independent contractors. 2012 tax   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. 2012 tax   Even if you submit Form 8233, the withholding agent may have to withhold tax from your income. 2012 tax This is because the factors on which the treaty exemption is based may not be determinable until after the close of the tax year. 2012 tax 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. 2012 tax Students, teachers, and researchers. 2012 tax   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. 2012 tax For treaties not listed in the appendices, attach a statement in a format similar to those for other treaties. 2012 tax   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. 2012 tax Special events and promotions. 2012 tax   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. 2012 tax Form 13930 is used to request a reduction in withholding. 2012 tax Withholding may be required even if the income may be exempt from taxation by provisions of a tax treaty. 2012 tax 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. 2012 tax You will be required to pay U. 2012 tax S. 2012 tax tax, at the time of your departure from the United States, on any income for which you incorrectly claimed a treaty exemption. 2012 tax For more details on treaty provisions that apply to compensation, see Publication 901. 2012 tax Tax Withheld on Real Property Sales If you are a nonresident alien and you dispose of a U. 2012 tax S. 2012 tax real property interest, the transferee (buyer) of the property generally must withhold a tax equal to 10% of the amount realized on the disposition. 2012 tax 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. 2012 tax S. 2012 tax real property interest by the shareholder is subject to withholding at 35%. 2012 tax Withholding is also required on certain distributions and other transactions by domestic or foreign corporations, partnerships, trusts, and estates. 2012 tax These rules are covered in Publication 515. 2012 tax For information on the tax treatment of dispositions of U. 2012 tax S. 2012 tax real property interests, see Real Property Gain or Loss in chapter 4. 2012 tax If you are a partner in a domestic partnership, and the partnership disposes of a U. 2012 tax S. 2012 tax real property interest at a gain, the partnership will withhold tax on the amount of gain allocable to its foreign partners. 2012 tax 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. 2012 tax S. 2012 tax Source Income Subject to Withholding (in the case of a publicly traded partnership). 2012 tax Withholding is not required in the following situations. 2012 tax The property is acquired by the buyer for use as a residence and the amount realized (sales price) is not more than $300,000. 2012 tax 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. 2012 tax However, this exception does not apply to certain dispositions of substantial amounts of non-publicly traded interests in publicly traded corporations. 2012 tax The property disposed of is an interest in a U. 2012 tax S. 2012 tax 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. 2012 tax S. 2012 tax real property interest. 2012 tax 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. 2012 tax S. 2012 tax taxpayer identification number, and home address. 2012 tax You can give the certification to a qualified substitute. 2012 tax The qualified substitute gives the buyer a statement, under penalties of perjury, that the certification is in the possession of the qualified substitute. 2012 tax 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. 2012 tax The buyer receives a withholding certificate from the Internal Revenue Service. 2012 tax 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. 2012 tax S. 2012 tax tax treaty. 2012 tax The buyer must file a copy of the notice with the Ogden Service Center, P. 2012 tax O. 2012 tax Box 409101, Ogden, UT 84409. 2012 tax You must verify the notice as true and sign it under penalties of perjury. 2012 tax The notice must contain the following information. 2012 tax A statement that the notice is a notice of nonrecognition under regulation section 1. 2012 tax 1445-2(d)(2). 2012 tax Your name, taxpayer identification number, and home address. 2012 tax A statement that you are not required to recognize any gain or loss on the transfer. 2012 tax A brief description of the transfer. 2012 tax A brief summary of the law and facts supporting your claim that recognition of gain or loss is not required. 2012 tax 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. 2012 tax Instead, a withholding certificate (described next) must be obtained. 2012 tax The amount you realize on the transfer of a U. 2012 tax S. 2012 tax real property interest is zero. 2012 tax The property is acquired by the United States, a U. 2012 tax S. 2012 tax state or possession, a political subdivision, or the District of Columbia. 2012 tax The distribution is from a domestically controlled qualified investment entity (QIE) and is treated as a distribution of a U. 2012 tax S. 2012 tax real property interest only because an interest in the entity was disposed of in an applicable wash sale transaction. 2012 tax For the definition of a QIE, see Qualified investment entities under Real Property Gain or Loss, earlier. 2012 tax See Wash sale under Real Property Gain or Loss in chapter 4. 2012 tax 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. 2012 tax This also applies to the qualified substitute's statement under (4). 2012 tax Withholding certificates. 2012 tax   The tax required to be withheld on a disposition can be reduced or eliminated under a withholding certificate issued by the IRS. 2012 tax Either you or the buyer can request a withholding certificate. 2012 tax   A withholding certificate can be issued due to any of the following. 2012 tax 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. 2012 tax All of your realized gain is exempt from U. 2012 tax S. 2012 tax tax. 2012 tax You or the buyer enters into an agreement for the payment of tax providing security for the tax liability. 2012 tax   Get Publication 515 and Form 8288-B for information on procedures to request a withholding certificate. 2012 tax Credit for tax withheld. 2012 tax   The buyer must report and pay over the withheld tax within 20 days after the transfer using Form 8288, U. 2012 tax S. 2012 tax Withholding Tax Return for Dispositions by Foreign Persons of U. 2012 tax S. 2012 tax Real Property Interests. 2012 tax 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. 2012 tax S. 2012 tax Real Property Interests. 2012 tax 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). 2012 tax You must file Copy B with your tax return to take credit for the tax withheld. 2012 tax   A stamped copy of Form 8288-A will not be provided to you if your TIN is not included on that form. 2012 tax The IRS will send you a letter requesting the TIN and providing instructions for how to get a TIN. 2012 tax When you provide the IRS with a TIN, the IRS will provide you with a stamped Copy B of Form 8288-A. 2012 tax 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. 2012 tax Your payments of these taxes contribute to your coverage under the U. 2012 tax S. 2012 tax social security system. 2012 tax Social security coverage provides retirement benefits, survivors and disability benefits, and medical insurance (Medicare) benefits to individuals who meet certain eligibility requirements. 2012 tax 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. 2012 tax All taxable wages are subject to Medicare tax. 2012 tax Your employer deducts these taxes from each wage payment. 2012 tax Your employer must deduct these taxes even if you do not expect to qualify for social security or Medicare benefits. 2012 tax 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. 2012 tax 40. 2012 tax Use the appropriate worksheet in chapter 3 of Publication 505, Tax Withholding and Estimated Tax, to figure your credit. 2012 tax If any one employer deducted more than $7,049. 2012 tax 40, you cannot claim a credit for that amount. 2012 tax Ask your employer to refund the excess. 2012 tax If your employer does not refund the excess, you can file a claim for refund using Form 843. 2012 tax In general, U. 2012 tax S. 2012 tax 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. 2012 tax In limited situations, these taxes apply to wages for services performed outside the United States. 2012 tax Your employer should be able to tell you if social security and Medicare taxes apply to your wages. 2012 tax You cannot make voluntary payments if no taxes are due. 2012 tax Additional Medicare Tax. 2012 tax   Beginning in 2013, in addition to the Medicare tax, a 0. 2012 tax 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. 2012 tax   There are no special rules for nonresident aliens for purposes of Additional Medicare Tax. 2012 tax 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. 2012 tax   Your employer is responsible for withholding the 0. 2012 tax 9% Additional Medicare Tax on Medicare wages or RRTA compensation it pays to you in excess of $200,000 in the calendar year. 2012 tax 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. 2012 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). 2012 tax    See Form 8959, Additional Medicare Tax, and the Instructions for Form 8959 to determine whether you are required to pay Additional Medicare Tax. 2012 tax For more information on Additional Medicare Tax, go to IRS. 2012 tax gov and enter “Additional Medicare Tax” in the search box. 2012 tax   Self-employed individuals may also be required to pay Additional Medicare Tax. 2012 tax See Self-Employment Tax , later. 2012 tax 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. 2012 tax This means that there will be no withholding of social security or Medicare taxes from the pay you receive for these services. 2012 tax These types of services are very limited, and generally include only on-campus work, practical training, and economic hardship employment. 2012 tax 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. 2012 tax 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. 2012 tax 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. 2012 tax In some cases, a student admitted to the United States in “F-1,” “M-1,” or “J-1” status is granted permission to work. 2012 tax Social security and Medicare taxes are not withheld from pay for the work unless the student is considered a resident alien. 2012 tax 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. 2012 tax The U. 2012 tax S. 2012 tax Citizenship and Immigration Services (USCIS) permits on-campus work for students in “F-1” status if it does not displace a U. 2012 tax S. 2012 tax resident. 2012 tax On-campus work means work performed on the school's premises. 2012 tax On-campus work includes work performed at an off-campus location that is educationally affiliated with the school. 2012 tax 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. 2012 tax Social security and Medicare taxes are not withheld from pay for this work unless the student is considered a resident alien. 2012 tax 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. 2012 tax Exchange Visitors Exchange visitors are temporarily admitted to the United States under section 101(a)(15)(J) of the Immigration and Nationality Act. 2012 tax 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. 2012 tax 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. 2012 tax 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. 2012 tax The employer must be the petitioner through whom the alien obtained the “Q” visa. 2012 tax Social security and Medicare taxes are not withheld from pay for this work unless the alien is considered a resident alien. 2012 tax 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. 2012 tax 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. 2012 tax Attach the following items to Form 843. 2012 tax A copy of your Form W-2 to prove the amount of social security and Medicare taxes withheld. 2012 tax A copy of your visa. 2012 tax Form I-94 (or other documentation showing your dates of arrival or departure). 2012 tax If you have an F-1 visa, documentation showing permission to work in the U. 2012 tax S. 2012 tax If you have a J-1 visa, documentation showing permission to work in the U. 2012 tax S. 2012 tax If you are engaged in optional practical training or employment due to severe economic necessity, documentation showing permission to work in the U. 2012 tax S. 2012 tax 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. 2012 tax 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. 2012 tax 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. 2012 tax File Form 843 (with attachments) with the Department of the Treasury, Internal Revenue Service Center, Ogden, UT 84201-0038. 2012 tax Do not use Form 843 to request a refund of Additional Medicare Tax. 2012 tax 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. 2012 tax 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. 2012 tax S. 2012 tax 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. 2012 tax See the Instructions for Form 1040X. 2012 tax 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. 2012 tax You can find more information about not having tax withheld at www. 2012 tax irs. 2012 tax gov/Individuals/International-Taxpayers/Foreign-Agricultural-Workers. 2012 tax Self-Employment Tax Self-employment tax is the social security and Medicare taxes for individuals who are self-employed. 2012 tax 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. 2012 tax S. 2012 tax social security system. 2012 tax Residents of the U. 2012 tax S. 2012 tax Virgin Islands, Puerto Rico, Guam, the Commonwealth of the Northern Mariana Islands, or American Samoa are considered U. 2012 tax S. 2012 tax residents for this purpose and are subject to the self-employment tax. 2012 tax Resident aliens must pay self-employment tax under the same rules that apply to U. 2012 tax S. 2012 tax citizens. 2012 tax 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. 2012 tax 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. 2012 tax Example. 2012 tax Bill Jones is an author engaged in the business of writing books. 2012 tax Bill had several books published in a foreign country while he was a citizen and resident of that country. 2012 tax During 2013, Bill entered the United States as a resident alien. 2012 tax After becoming a U. 2012 tax S. 2012 tax resident, he continued to receive royalties from his foreign publisher. 2012 tax Bill reports his income and expenses on the cash basis (he reports income on his tax return when received and deducts expenses when paid). 2012 tax Bill's 2013 self-employment income includes the royalties received after he became a U. 2012 tax S. 2012 tax resident even though the books were published while he was a nonresident alien. 2012 tax This royalty income is subject to self-employment tax. 2012 tax Reporting self-employment tax. 2012 tax   Use Schedule SE (Form 1040) to report and figure your self-employment tax. 2012 tax Then enter the tax on Form 1040, line 56, or Form 1040NR, line 54. 2012 tax Attach Schedule SE to Form 1040 or Form 1040NR. 2012 tax Additional Medicare Tax. 2012 tax   Self-employed individuals must pay a 0. 2012 tax 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. 2012 tax   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. 2012 tax 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). 2012 tax   See Form 8959, Additional Medicare Tax, and the Instructions for Form 8959 to determine whether you are required to pay Additional Medicare Tax. 2012 tax For more information on Additional Medicare Tax, go to IRS. 2012 tax gov and enter “Additional Medicare Tax” in the search box. 2012 tax Deduction for employer-equivalent portion of self-employment tax. 2012 tax   If you must pay self-employment tax, you can deduct a portion of the self-employment tax paid in figuring your adjusted gross income. 2012 tax This deduction is figured on Schedule SE (Form 1040). 2012 tax Note. 2012 tax No portion of the Additional Medicare Tax is deductible for self-employment tax. 2012 tax More information. 2012 tax   Get Publication 334, Tax Guide for Small Business, for more information about self-employment tax. 2012 tax 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. 2012 tax These agreements are commonly referred to as totalization agreements. 2012 tax Under these agreements, dual coverage and dual contributions (taxes) for the same work are eliminated. 2012 tax The agreements generally make sure that social security taxes (including self-employment tax) are paid only to one country. 2012 tax Agreements are in effect with the following countries. 2012 tax Australia. 2012 tax Austria. 2012 tax Belgium. 2012 tax Canada. 2012 tax Chile. 2012 tax Czech Republic. 2012 tax Denmark. 2012 tax Finland. 2012 tax France. 2012 tax Germany. 2012 tax Greece. 2012 tax Ireland. 2012 tax Italy. 2012 tax Japan. 2012 tax Korea, South. 2012 tax Luxembourg. 2012 tax The Netherlands. 2012 tax Norway. 2012 tax Poland. 2012 tax Portugal. 2012 tax Spain. 2012 tax Sweden. 2012 tax Switzerland. 2012 tax The United Kingdom. 2012 tax Agreements with other countries are expected to enter into force in the future. 2012 tax Employees. 2012 tax   Generally, under these agreements, you are subject to social security taxes only in the country where you are working. 2012 tax 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. 2012 tax You can get more information on any agreement by contacting the U. 2012 tax S. 2012 tax Social Security Administration at the address given later. 2012 tax If you have access to the Internet, you can get more information at www. 2012 tax socialsecurity. 2012 tax gov/international. 2012 tax   To establish that your pay is subject only to foreign social security taxes and is exempt from U. 2012 tax S. 2012 tax 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. 2012 tax This will usually be the same agency to which you or your employer pays your foreign social security taxes. 2012 tax The foreign agency will be able to tell you what information is needed for them to issue the certificate. 2012 tax Your employer should keep a copy of the certificate because it may be needed to show why you are exempt from U. 2012 tax S. 2012 tax social security taxes. 2012 tax Only wages paid on or after the effective date of the agreement can be exempt from U. 2012 tax S. 2012 tax social security taxes. 2012 tax    Some of the countries with which the United States has agreements will not issue certificates of coverage. 2012 tax In this case, either you or your employer should request a statement that your wages are not covered by the U. 2012 tax S. 2012 tax social security system. 2012 tax Request the statement from the following address. 2012 tax U. 2012 tax S. 2012 tax Social Security Administration Office of International Programs P. 2012 tax O. 2012 tax Box 17741 Baltimore, MD 21235-7741 Self-employed individuals. 2012 tax   Under most agreements, self-employed individuals are covered by the social security system of the country where they reside. 2012 tax However, under some agreements, you may be exempt from U. 2012 tax S. 2012 tax self-employment tax if you temporarily transfer your business activity to or from the United States. 2012 tax   If you believe that your self-employment income is subject only to U. 2012 tax S. 2012 tax self-employment tax and is exempt from foreign social security taxes, request a certificate of coverage from the U. 2012 tax S. 2012 tax Social Security Administration at the address given earlier. 2012 tax This certificate will establish your exemption from foreign social security taxes. 2012 tax   To establish that your self-employment income is subject only to foreign social security taxes and is exempt from U. 2012 tax S. 2012 tax self-employment tax, request a certificate of coverage from the appropriate agency of the foreign country. 2012 tax If the foreign country will not issue the certificate, you should request a statement that your income is not covered by the U. 2012 tax S. 2012 tax social security system. 2012 tax Request it from the U. 2012 tax S. 2012 tax Social Security Administration at the address given earlier. 2012 tax Attach a photocopy of either statement to Form 1040 each year you are exempt. 2012 tax Also print “Exempt, see attached statement” on the line for self-employment tax. 2012 tax Estimated Tax Form 1040-ES (NR) You may have income from which no U. 2012 tax S. 2012 tax income tax is withheld. 2012 tax Or the amount of tax withheld may be less than the income tax you estimate you will owe at the end of the year. 2012 tax If so, you may have to pay estimated tax. 2012 tax 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). 2012 tax 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. 2012 tax Item (2) does not apply if you did not file a 2013 return. 2012 tax A nonresident alien should use Form 1040-ES (NR) to figure and pay estimated tax. 2012 tax If you pay by check, make it payable to the "United States Treasury. 2012 tax " How to estimate your tax for 2014. 2012 tax   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. 2012 tax 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. 2012 tax Figure your estimated tax liability using the Tax Rate Schedule in the 2014 Form 1040-ES (NR) instructions for your filing status. 2012 tax Note. 2012 tax If you expect to be a resident of Puerto Rico during the entire year, use Form 1040-ES or Formulario 1040-ES (PR). 2012 tax When to pay estimated tax. 2012 tax   Make your first estimated tax payment by the due date for filing the previous year's Form 1040NR or Form 1040NR-EZ. 2012 tax If you have wages subject to the same withholding rules that apply to U. 2012 tax S. 2012 tax citizens, you must file Form 1040NR or Form 1040NR-EZ and make your first estimated tax payment by April 15, 2014. 2012 tax 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. 2012 tax   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. 2012 tax 1st installment April 15, 2014 2nd installment June 16, 2014 3rd installment Sept. 2012 tax 15, 2014 4th installment Jan. 2012 tax 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. 2012 tax    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. 2012 tax Fiscal year. 2012 tax   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. 2012 tax If any date falls on a Saturday, Sunday, or legal holiday, use the next day that is not a Saturday, Sunday, or legal holiday. 2012 tax Changes in income, deductions, or exemptions. 2012 tax   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. 2012 tax This can happen if you receive additional income or if any of your deductions are reduced or eliminated. 2012 tax If so, see the instructions for Form 1040-ES (NR) and Publication 505 for information on figuring your estimated tax. 2012 tax Amended estimated tax. 2012 tax   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. 2012 tax To do this, see the instructions for Form 1040-ES (NR) and Publication 505. 2012 tax Penalty for failure to pay estimated income tax. 2012 tax   You will be subject to a penalty for underpayment of installments of estimated tax except in certain situations. 2012 tax These situations are explained on Form 2210, Underpayment of Estimated Tax by Individuals, Estates, and Trusts. 2012 tax Prev  Up  Next   Home   More Online Publications
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Verification of Nonfiling Letter

Verification of Nonfiling Letters are proof from the IRS that you did not file a return this year. Current year requests are only available after June 15. A taxpayer may fail to file a tax return even though he/she has a filing requirement. This letter does not address whether or not the taxpayer should have filed a tax return. 

Page Last Reviewed or Updated: 10-Jan-2014

The 2012 Tax

2012 tax 6. 2012 tax   Tuition and Fees Deduction Table of Contents IntroductionWhat is the tax benefit of the tuition and fees deduction. 2012 tax Can You Claim the DeductionWho Can Claim the Deduction Who Cannot Claim the Deduction What Expenses QualifyQualified Education Expenses No Double Benefit Allowed Expenses That Do Not Qualify Who Is an Eligible Student Who Can Claim a Dependent's Expenses Figuring the DeductionEffect of the Amount of Your Income on the Amount of Your Deduction Claiming the Deduction Illustrated Example Introduction You may be able to deduct qualified education expenses paid during the year for yourself, your spouse, or your dependent(s). 2012 tax You cannot claim this deduction if your filing status is married filing separately or if another person can claim an exemption for you as a dependent on his or her tax return. 2012 tax The qualified expenses must be for higher education, as explained later under Qualified Education Expenses . 2012 tax What is the tax benefit of the tuition and fees deduction. 2012 tax   The tuition and fees deduction can reduce the amount of your income subject to tax by up to $4,000. 2012 tax   This deduction is taken as an adjustment to income. 2012 tax This means you can claim this deduction even if you do not itemize deductions on Schedule A (Form 1040). 2012 tax This deduction may be beneficial to you if you do not qualify for the American opportunity or lifetime learning credits. 2012 tax You can choose the education benefit that will give you the lowest tax. 2012 tax You may want to compare the tuition and fees deduction to the education credits. 2012 tax See chapter 2, American Opportunity Credit and chapter 3, Lifetime Learning Credit for more information on the education credits. 2012 tax Table 6-1. 2012 tax Tuition and Fees Deduction at a Glance summarizes the features of the tuition and fees deduction. 2012 tax Can You Claim the Deduction The following rules will help you determine if you can claim the tuition and fees deduction. 2012 tax Who Can Claim the Deduction Generally, you can claim the tuition and fees deduction if all three of the following requirements are met. 2012 tax You pay qualified education expenses of higher education. 2012 tax You pay the education expenses for an eligible student. 2012 tax The eligible student is yourself, your spouse, or your dependent for whom you claim an exemption on your tax return. 2012 tax The term “qualified education expenses” is defined later under Qualified Education Expenses . 2012 tax “Eligible student” is defined later under Who Is an Eligible Student . 2012 tax For more information on claiming the deduction for a dependent, see Who Can Claim a Dependent's Expenses , later. 2012 tax Table 6-1. 2012 tax Tuition and Fees Deduction at a Glance Do not rely on this table alone. 2012 tax Refer to the text for complete details. 2012 tax Question Answer What is the maximum benefit? You can reduce your income subject to tax by up to $4,000. 2012 tax What is the limit on modified adjusted gross income (MAGI)? $160,000 if married filing a joint return; $80,000 if single, head of household, or qualifying widow(er). 2012 tax Where is the deduction taken? As an adjustment to income on  Form 1040 or Form 1040A. 2012 tax For whom must the expenses be paid? A student enrolled in an eligible educational institution who is either: •you,  •your spouse, or  •your dependent for whom you claim an exemption. 2012 tax What tuition and fees are deductible? Tuition and fees required for enrollment or attendance at an eligible postsecondary educational institution, but not including personal, living, or family expenses, such as room and board. 2012 tax Who Cannot Claim the Deduction You cannot claim the tuition and fees deduction if any of the following apply. 2012 tax Your filing status is married filing separately. 2012 tax Another person can claim an exemption for you as a dependent on his or her tax return. 2012 tax You cannot take the deduction even if the other person does not actually claim that exemption. 2012 tax Your modified adjusted gross income (MAGI) is more than $80,000 ($160,000 if filing a joint return). 2012 tax You (or your spouse) were a nonresident alien for any part of 2013 and the nonresident alien did not elect to be treated as a resident alien for tax purposes. 2012 tax More information on nonresident aliens can be found in Publication 519. 2012 tax What Expenses Qualify The tuition and fees deduction is based on qualified education expenses you pay for yourself, your spouse, or a dependent for whom you claim an exemption on your tax return. 2012 tax Generally, the deduction is allowed for qualified education expenses paid in 2013 in connection with enrollment at an institution of higher education during 2013 or for an academic period beginning in 2013 or in the first 3 months of 2014. 2012 tax For example, if you paid $1,500 in December 2013 for qualified tuition for the spring 2014 semester beginning in January 2014, you may be able to use that $1,500 in figuring your 2013 deduction. 2012 tax Academic period. 2012 tax   An academic period includes a semester, trimester, quarter, or other period of study (such as a summer school session) as reasonably determined by an educational institution. 2012 tax In the case of an educational institution that uses credit hours or clock hours and does not have academic terms, each payment period can be treated as an academic period. 2012 tax Paid with borrowed funds. 2012 tax   You can claim a tuition and fees deduction for qualified education expenses paid with the proceeds of a loan. 2012 tax Use the expenses to figure the deduction for the year in which the expenses are paid, not the year in which the loan is repaid. 2012 tax Treat loan disbursements sent directly to the educational institution as paid on the date the institution credits the student's account. 2012 tax Student withdraws from class(es). 2012 tax   You can claim a tuition and fees deduction for qualified education expenses not refunded when a student withdraws. 2012 tax Qualified Education Expenses For purposes of the tuition and fees deduction, qualified education expenses are tuition and certain related expenses required for enrollment or attendance at an eligible educational institution. 2012 tax Eligible educational institution. 2012 tax   An eligible educational institution is any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the U. 2012 tax S. 2012 tax Department of Education. 2012 tax It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. 2012 tax The educational institution should be able to tell you if it is an eligible educational institution. 2012 tax   Certain educational institutions located outside the United States also participate in the U. 2012 tax S. 2012 tax Department of Education's Federal Student Aid (FSA) programs. 2012 tax Related expenses. 2012 tax   Student-activity fees and expenses for course-related books, supplies, and equipment are included in qualified education expenses only if the fees and expenses must be paid to the institution as a condition of enrollment or attendance. 2012 tax Prepaid expenses. 2012 tax   Qualified education expenses paid in 2013 for an academic period that begins in the first three months of 2014 can be used in figuring an education credit for 2013 only. 2012 tax See Academic period , earlier. 2012 tax For example, you pay $2,000 in December 2013 for qualified tuition for the 2014 winter quarter that begins in January 2014, you can use that $2,000 in figuring an education credit for 2013 only (if you meet all the other requirements). 2012 tax You cannot use any amount you paid in 2012 or 2014 to figure the qualified education expenses you use to figure your 2013 education credit(s). 2012 tax In the following examples, assume that each student is an eligible student and each college or university an eligible educational institution. 2012 tax Example 1. 2012 tax Jackson is a sophomore in University V's degree program in dentistry. 2012 tax This year, in addition to tuition, he is required to pay a fee to the university for the rental of the dental equipment he will use in this program. 2012 tax Because the equipment rental fee must be paid to University V for enrollment and attendance, Jackson's equipment rental fee is a qualified education expense. 2012 tax Example 2. 2012 tax Donna and Charles, both first-year students at College W, are required to have certain books and other reading materials to use in their mandatory first-year classes. 2012 tax The college has no policy about how students should obtain these materials, but any student who purchases them from College W's bookstore will receive a bill directly from the college. 2012 tax Charles bought his books from a friend, so what he paid for them is not a qualified education expense. 2012 tax Donna bought hers at College W's bookstore. 2012 tax Although Donna paid College W directly for her first-year books and materials, her payment is not a qualified education expense because the books and materials are not required to be purchased from College W for enrollment or attendance at the institution. 2012 tax Example 3. 2012 tax When Marci enrolled at College X for her freshman year, she had to pay a separate student activity fee in addition to her tuition. 2012 tax This activity fee is required of all students, and is used solely to fund on-campus organizations and activities run by students, such as the student newspaper and the student government. 2012 tax No portion of the fee covers personal expenses. 2012 tax Although labeled as a student activity fee, the fee is required for Marci's enrollment and attendance at College X. 2012 tax Therefore, it is a qualified expense. 2012 tax No Double Benefit Allowed You cannot do any of the following. 2012 tax Deduct qualified education expenses you deduct under any other provision of the law, for example, as a business expense. 2012 tax Deduct qualified education expenses for a student on your income tax return if you or anyone else claims an American opportunity or lifetime learning credit for that same student in the same year. 2012 tax Deduct qualified education expenses that have been used to figure the tax-free portion of a distribution from a Coverdell education savings account (ESA) or a qualified tuition program (QTP). 2012 tax For a QTP, this applies only to the amount of tax-free earnings that were distributed, not to the recovery of contributions to the program. 2012 tax See Coordination With Tuition and Fees Deduction in chapter 8, Qualified Tuition Program, later. 2012 tax Deduct qualified education expenses that have been paid with tax-free interest on U. 2012 tax S. 2012 tax savings bonds (Form 8815). 2012 tax See Figuring the Tax-Free Amount in chapter 10, Education Savings Bond Program, later. 2012 tax Deduct qualified education expenses that have been paid with tax-free educational assistance, such as a scholarship, grant, or assistance provided by an employer. 2012 tax See the following section on Adjustments to Qualified Education Expenses. 2012 tax Adjustments to Qualified Education Expenses For each student, reduce the qualified education expenses paid by or on behalf of that student under the following rules. 2012 tax The result is the amount of adjusted qualified education expenses for each student. 2012 tax You must also reduce qualified education expenses by the other amounts referred to in No Double Benefit Allowed , earlier. 2012 tax Tax-free educational assistance. 2012 tax   For tax-free educational assistance received in 2013, reduce the qualified educational expenses for each academic period by the amount of tax-free educational assistance allocable to that academic period. 2012 tax See Academic period , earlier. 2012 tax   Some tax-free educational assistance received after 2013 may be treated as a refund of qualified education expenses paid in 2013. 2012 tax This tax-free educational assistance is any tax-free educational assistance received by you or anyone else after 2013 for qualified education expenses paid on behalf of a student in 2013 (or attributable to enrollment at an eligible educational institution during 2013). 2012 tax   If this tax-free educational assistance is received after 2013 but before you file your 2013 income tax return, see Refunds received after 2013 but before your income tax return is filed , later. 2012 tax If this tax-free educational assistance is received after 2013 and after you file your 2013 income tax return, see Refunds received after 2013 and after your income tax return is filed , later. 2012 tax   This tax-free education assistance includes: The tax-free part of scholarships and fellowships (see Tax-Free Scholarships and Fellowships in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Pell grants (see Pell Grants and Other Title IV Need-Based Education Grants in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Employer-provided educational assistance (see chapter 11, Employer-Provided Educational Assistance ), Veterans' educational assistance (see Veterans' Benefits in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), and Any other nontaxable (tax-free) payments (other than gifts or inheritances) received as educational assistance. 2012 tax Generally, any scholarship or fellowship is treated as tax free. 2012 tax However, a scholarship or fellowship is not treated as tax free to the extent the student includes it in gross income (if the student is required to file a tax return for the year the scholarship or fellowship is received) and either of the following is true. 2012 tax The scholarship or fellowship (or any part of it) must be applied (by its terms) to expenses (such as room and board) other than qualified education expenses as defined in Qualified education expenses in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions. 2012 tax The scholarship or fellowship (or any part of it) may be applied (by its terms) to expenses (such as room and board) other than qualified education expenses as defined in Qualified education expenses in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions. 2012 tax You may be able to increase the combined value of an education credit and certain educational assistance if the student includes some or all of the educational assistance in income in the year it is received. 2012 tax For details, see Adjustments to Qualified Education Expenses in chapters 2 and 3. 2012 tax Refunds. 2012 tax   A refund of qualified education expenses may reduce adjusted qualified education expenses for the tax year or require repayment (recapture) of a credit claimed in an earlier year. 2012 tax Some tax-free educational assistance received after 2013 may be treated as a refund. 2012 tax See Tax-free educational assistance , earlier. 2012 tax Refunds received in 2013. 2012 tax   For each student, figure the adjusted qualified education expenses for 2013 by adding all the qualified education expenses for 2013 and subtracting any refunds of those expenses received from the eligible educational institution during 2013. 2012 tax Refunds received after 2013 but before your income tax return is filed. 2012 tax   If anyone receives a refund after 2013 of qualified education expenses paid on behalf of a student in 2013 and the refund is paid before you file an income tax return for 2013, the amount of qualified education expenses for 2013 is reduced by the amount of the refund. 2012 tax Refunds received after 2013 and after your income tax return is filed. 2012 tax   If anyone receives a refund after 2013 of qualified education expenses paid on behalf of a student in 2013 and the refund is paid after you file an income tax return for 2013, you may need to repay some or all of the credit. 2012 tax See Credit recapture , later. 2012 tax Coordination with Coverdell education savings accounts and qualified tuition programs. 2012 tax   Reduce your qualified education expenses by any qualified education expenses used to figure the exclusion from gross income of (a) interest received under an education savings bond program, or (b) any distribution from a Coverdell education savings account or qualified tuition program (QTP). 2012 tax For a QTP, this applies only to the amount of tax-free earnings that were distributed, not to the recovery of contributions to the program. 2012 tax Credit recapture. 2012 tax    If any tax-free educational assistance for the qualified education expenses paid in 2013 or any refund of your qualified education expenses paid in 2013 is received after you file your 2013 income tax return, you must recapture (repay) any excess credit. 2012 tax You do this by refiguring the amount of your adjusted qualified education expenses for 2013 by reducing that amount by the amount of the refund or tax-free educational assistance. 2012 tax You then refigure your education credit(s) for 2013 and figure the amount by which your 2013 tax liability would have increased if you had claimed the refigured credit(s). 2012 tax Include that amount as an additional tax for the year the refund or tax-free assistance was received. 2012 tax Example. 2012 tax   You paid $3,500 of qualified education expenses in December 2013, and your child began college in January 2014. 2012 tax You claimed $3,500 as the tuition and fees deduction on your 2013 income tax return. 2012 tax The reduction reduced your taxable income by $3,500. 2012 tax Also, you claimed no tax credits in 2013. 2012 tax Your child withdrew from two classes and you received a refund of $2,000 in 2014 after you filed your 2013 tax return. 2012 tax Refigure your 2013 tuition and fees deduction using $1,500 of qualified education expense instead of the $3,500. 2012 tax The refigured tuition and fees deduction is $1,500. 2012 tax Do not file an amended 2013 tax return to account for this adjustment. 2012 tax Instead, include the difference of $2,000 (but only to the extent this difference would have increased your 2013 tax) on the “Other income” line of your 2014 Form 1040. 2012 tax You cannot file Form 1040A for 2014. 2012 tax Amounts that do not reduce qualified education expenses. 2012 tax   Do not reduce qualified education expenses by amounts paid with funds the student receives as: Payment for services, such as wages, A loan, A gift, An inheritance, or A withdrawal from the student's personal savings. 2012 tax   Do not reduce the qualified education expenses by any scholarship or fellowship reported as income on the student's tax return in the following situations. 2012 tax The use of the money is restricted, by the terms of the scholarship or fellowship, to costs of attendance (such as room and board) other than qualified education expenses as defined in Qualified education expenses in chapter 1, Scholarships, Fellowships, Grants, and Tuition Restrictions. 2012 tax The use of the money is not restricted. 2012 tax Example 1. 2012 tax In 2013, Jackie paid $3,000 for tuition and $5,000 for room and board at University X. 2012 tax The university did not require her to pay any fees in addition to her tuition in order to enroll in or attend classes. 2012 tax To help pay these costs, she was awarded a $2,000 scholarship and a $4,000 student loan. 2012 tax The terms of the scholarship state that it can be used to pay any of Jackie's college expenses. 2012 tax University X applies the $2,000 scholarship against Jackie's $8,000 total bill, and Jackie pays the $6,000 balance of her bill from University X with a combination of her student loan and her savings. 2012 tax Jackie does not report any portion of the scholarship as income on her tax return. 2012 tax In figuring the tuition and fees deduction, Jackie must reduce her qualified education expenses by the amount of the scholarship ($2,000) because she excluded the entire scholarship from her income. 2012 tax The student loan is not tax-free educational assistance, so she does not need to reduce her qualified expenses by any part of the loan proceeds. 2012 tax Jackie is treated as having paid $1,000 in qualified education expenses ($3,000 tuition – $2,000 scholarship) in 2013. 2012 tax Example 2. 2012 tax The facts are the same as in Example 1, except that Jackie reports her entire scholarship as income on her tax return. 2012 tax Because Jackie reported the entire $2,000 scholarship in her income, she does not need to reduce her qualified education expenses. 2012 tax Jackie is treated as having paid $3,000 in qualified education expenses. 2012 tax Expenses That Do Not Qualify Qualified education expenses do not include amounts paid for: Insurance, Medical expenses (including student health fees), Room and board, Transportation, or Similar personal, living, or family expenses. 2012 tax This is true even if the amount must be paid to the institution as a condition of enrollment or attendance. 2012 tax Sports, games, hobbies, and noncredit courses. 2012 tax   Qualified education expenses generally do not include expenses that relate to any course of instruction or other education that involves sports, games or hobbies, or any noncredit course. 2012 tax However, if the course of instruction or other education is part of the student's degree program, these expenses can qualify. 2012 tax Comprehensive or bundled fees. 2012 tax   Some eligible educational institutions combine all of their fees for an academic period into one amount. 2012 tax If you do not receive, or do not have access to, an allocation showing how much you paid for qualified education expenses and how much you paid for personal expenses, such as those listed above, contact the institution. 2012 tax The institution is required to make this allocation and provide you with the amount you paid (or were billed) for qualified education expenses on Form 1098-T. 2012 tax See Figuring the Deduction , later, for more information about Form 1098-T. 2012 tax Who Is an Eligible Student For purposes of the tuition and fees deduction, an eligible student is a student who is enrolled in one or more courses at an eligible educational institution (as defined under Qualified Education Expenses , earlier). 2012 tax Who Can Claim a Dependent's Expenses Generally, in order to claim the tuition and fees deduction for qualified education expenses for a dependent, you must: Have paid the expenses, and Claim an exemption for the student as a dependent. 2012 tax For you to be able to deduct qualified education expenses for your dependent, you must claim an exemption for that individual. 2012 tax You do this by listing your dependent's name and other required information on Form 1040 (or Form 1040A), line 6c. 2012 tax IF your dependent is an eligible student and you. 2012 tax . 2012 tax . 2012 tax AND. 2012 tax . 2012 tax . 2012 tax THEN. 2012 tax . 2012 tax . 2012 tax claim an exemption for your dependent you paid all qualified education expenses for your dependent only you can deduct the qualified education expenses that you paid. 2012 tax Your dependent cannot take a deduction. 2012 tax claim an exemption for your dependent your dependent paid all qualified education expenses no one is allowed to take a deduction. 2012 tax do not claim an exemption for your dependent you paid all qualified education expenses no one is allowed to take a deduction. 2012 tax do not claim an exemption for your dependent your dependent paid all qualified education expenses no one is allowed to take a deduction. 2012 tax Expenses paid by dependent. 2012 tax   If your dependent pays qualified education expenses, no one can take a tuition and fees deduction for those expenses. 2012 tax Neither you nor your dependent can deduct the expenses. 2012 tax For purposes of the tuition and fees deduction, you are not treated as paying any expenses actually paid by a dependent for whom you or anyone other than the dependent can claim an exemption. 2012 tax This rule applies even if you do not claim an exemption for your dependent on your tax return. 2012 tax Expenses paid by you. 2012 tax   If you claim an exemption for a dependent who is an eligible student, only you can include any expenses you paid when figuring your tuition and fees deduction. 2012 tax Expenses paid under divorce decree. 2012 tax   Qualified education expenses paid directly to an eligible educational institution for a student under a court-approved divorce decree are treated as paid by the student. 2012 tax Only the student would be eligible to take a tuition and fees deduction for that payment, and then only if no one else could claim an exemption for the student. 2012 tax Expenses paid by others. 2012 tax   Someone other than you, your spouse, or your dependent (such as a relative or former spouse) may make a payment directly to an eligible educational institution to pay for an eligible student's qualified education expenses. 2012 tax In this case, the student is treated as receiving the payment from the other person and, in turn, paying the institution. 2012 tax If you claim, or can claim, an exemption on your tax return for the student, you are not considered to have paid the expenses and you cannot deduct them. 2012 tax If the student is not a dependent, only the student can deduct payments made directly to the institution for his or her expenses. 2012 tax If the student is your dependent, no one can deduct the payments. 2012 tax Example. 2012 tax In 2013, Ms. 2012 tax Baker makes a payment directly to an eligible educational institution for her grandson Dan's qualified education expenses. 2012 tax For purposes of deducting tuition and fees, Dan is treated as receiving the money from his grandmother and, in turn, paying his own qualified education expenses. 2012 tax If an exemption cannot be claimed for Dan on anyone else's tax return, only Dan can claim a tuition and fees deduction for his grandmother's payment. 2012 tax If someone else can claim an exemption for Dan, no one will be allowed a deduction for Ms. 2012 tax Baker's payment. 2012 tax Tuition reduction. 2012 tax   When an eligible educational institution provides a reduction in tuition to an employee of the institution (or spouse or dependent child of an employee), the amount of the reduction may or may not be taxable. 2012 tax If it is taxable, the employee is treated as receiving a payment of that amount and, in turn, paying it to the educational institution on behalf of the student. 2012 tax For more information on tuition reductions, see Qualified Tuition Reduction , in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions. 2012 tax Figuring the Deduction The maximum tuition and fees deduction in 2013 is $4,000, $2,000, or $0, depending on the amount of your MAGI. 2012 tax See Effect of the Amount of Your Income on the Amount of Your Deduction , later. 2012 tax Form 1098-T. 2012 tax   To help you figure your tuition and fees deduction, the student should receive Form 1098-T (see Appendix A for a completed example of Form 1098-T). 2012 tax Generally, an eligible educational institution (such as a college or university) must send Form 1098-T (or acceptable substitute) to each enrolled student by January 31, 2014. 2012 tax An institution may choose to report either payments received (box 1), or amounts billed (box 2), for qualified education expenses. 2012 tax However, the amount in boxes 1 and 2 of Form 1098-T might be different than what you paid. 2012 tax When figuring the deduction, use only the amounts you paid in 2013 for qualified education expenses. 2012 tax   In addition, Form 1098-T should give other information for that institution, such as adjustments made for prior years, the amount of scholarships or grants, reimbursements or refunds, and whether the student was enrolled at least half-time or was a graduate student. 2012 tax    The eligible educational institution may ask for a completed Form W-9S or similar statement to obtain the student's name, address, and taxpayer identification number. 2012 tax Effect of the Amount of Your Income on the Amount of Your Deduction If your MAGI is not more than $65,000 ($130,000 if you are married filing jointly), your maximum tuition and fees deduction is $4,000. 2012 tax If your MAGI is larger than $65,000 ($130,000 if you are married filing jointly), but is not more than $80,000 ($160,000 if you are married filing jointly), your maximum deduction is $2,000. 2012 tax No tuition and fees deduction is allowed if your MAGI is larger than $80,000 ($160,000 if you are married filing jointly). 2012 tax Modified adjusted gross income (MAGI). 2012 tax   For most taxpayers, MAGI is adjusted gross income (AGI) as figured on their federal income tax return before subtracting any deduction for tuition and fees. 2012 tax However, as discussed below, there may be other modifications. 2012 tax MAGI when using Form 1040A. 2012 tax   If you file Form 1040A, your MAGI is the AGI on line 22 of that form, figured without taking into account any amount on line 19 (tuition and fees deduction). 2012 tax MAGI when using Form 1040. 2012 tax   If you file Form 1040, your MAGI is the AGI on line 38 of that form, figured without taking into account any amount on line 34 (tuition and fees deduction) or line 35 (domestic production activities deduction), and modified by adding back any: Foreign earned income exclusion, Foreign housing exclusion, Foreign housing deduction, Exclusion of income by bona fide residents of American Samoa, and Exclusion of income by bona fide residents of Puerto Rico. 2012 tax   Table 6-2 shows how the amount of your MAGI can affect your tuition and fees deduction. 2012 tax   You can use Worksheet 6-1. 2012 tax MAGI for the Tuition and Fees Deduction , later, to figure your MAGI. 2012 tax Table 6-2. 2012 tax Effect of MAGI on Maximum Tuition and Fees Deduction IF your filing status is. 2012 tax . 2012 tax . 2012 tax AND your MAGI is. 2012 tax . 2012 tax . 2012 tax THEN your maximum tuition and fees deduction is. 2012 tax . 2012 tax . 2012 tax single,  head of household, or qualifying widow(er) not more than $65,000 $4,000. 2012 tax more than $65,000  but not more than $80,000 $2,000. 2012 tax more than $80,000 $0. 2012 tax married filing joint return not more than $130,000 $4,000. 2012 tax more than $130,000 but not more than $160,000 $2,000. 2012 tax more than $160,000 $0. 2012 tax Claiming the Deduction You claim a tuition and fees deduction by completing Form 8917 and submitting it with your Form 1040 or Form 1040A. 2012 tax Enter the deduction on Form 1040, line 34, or Form 1040A, line 19. 2012 tax A filled-in Form 8917 is shown at the end of this chapter. 2012 tax Illustrated Example Tim Pfister, a single taxpayer, enrolled full-time at a local college to earn a degree in engineering. 2012 tax This is the first year of his postsecondary education. 2012 tax During 2013, he paid $3,600 for his qualified 2013 tuition expense. 2012 tax Both he and the college meet all of the requirements for the tuition and fees deduction. 2012 tax Tim's total income (Form 1040, line 22) and MAGI are $26,000. 2012 tax He figures his deduction of $3,600 as shown on Form 8917, later. 2012 tax Worksheet 6-1. 2012 tax MAGI for the Tuition and Fees Deduction Use this worksheet if you are filing Form 2555, 2555-EZ, or 4563, or you are excluding income from sources within Puerto Rico. 2012 tax Before using this worksheet, you must complete Form 1040, lines 7 through 33, and figure any amount to be entered on the dotted line next to line 36. 2012 tax 1. 2012 tax Enter the amount from Form 1040, line 22   1. 2012 tax         2. 2012 tax Enter the total from Form 1040, lines 23 through 33   2. 2012 tax               3. 2012 tax Enter the total of any amounts entered on the dotted line next to Form 1040, line 36   3. 2012 tax               4. 2012 tax Add lines 2 and 3   4. 2012 tax         5. 2012 tax Subtract line 4 from line 1   5. 2012 tax         6. 2012 tax Enter your foreign earned income exclusion and/or housing  exclusion (Form 2555, line 45, or Form 2555-EZ, line 18)   6. 2012 tax         7. 2012 tax Enter your foreign housing deduction (Form 2555, line 50)   7. 2012 tax         8. 2012 tax Enter the amount of income from Puerto Rico you are excluding   8. 2012 tax         9. 2012 tax Enter the amount of income from American Samoa you are  excluding (Form 4563, line 15)   9. 2012 tax         10. 2012 tax Add lines 5 through 9. 2012 tax This is your modified adjusted gross income   10. 2012 tax     Note. 2012 tax If the amount on line 10 is more than $80,000 ($160,000 if married filing jointly),  you cannot take the deduction for tuition and fees. 2012 tax       This image is too large to be displayed in the current screen. 2012 tax Please click the link to view the image. 2012 tax Form 8917 for Tim Pfister Prev  Up  Next   Home   More Online Publications