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Amend 2012 Tax Return

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Amend 2012 Tax Return

Amend 2012 tax return 23. Amend 2012 tax return   Interest Expense Table of Contents Introduction Useful Items - You may want to see: Home Mortgage InterestAmount Deductible Points Mortgage Insurance Premiums Form 1098, Mortgage Interest Statement Investment InterestInvestment Property Allocation of Interest Expense Limit on Deduction Items You Cannot DeductPersonal Interest Allocation of Interest How To ReportMore than one borrower. Amend 2012 tax return Mortgage proceeds used for business or investment. Amend 2012 tax return Introduction This chapter discusses what interest expenses you can deduct. Amend 2012 tax return Interest is the amount you pay for the use of borrowed money. Amend 2012 tax return The following are types of interest you can deduct as itemized deductions on Schedule A (Form 1040). Amend 2012 tax return Home mortgage interest, including certain points and mortgage insurance premiums. Amend 2012 tax return Investment interest. Amend 2012 tax return This chapter explains these deductions. Amend 2012 tax return It also explains where to deduct other types of interest and lists some types of interest you cannot deduct. Amend 2012 tax return Use Table 23-1 to find out where to get more information on various types of interest, including investment interest. Amend 2012 tax return Useful Items - You may want to see: Publication 936 Home Mortgage Interest Deduction 550 Investment Income and Expenses Home Mortgage Interest Generally, home mortgage interest is any interest you pay on a loan secured by your home (main home or a second home). Amend 2012 tax return The loan may be a mortgage to buy your home, a second mortgage, a line of credit, or a home equity loan. Amend 2012 tax return You can deduct home mortgage interest if all the following conditions are met. Amend 2012 tax return You file Form 1040 and itemize deductions on Schedule A (Form 1040). Amend 2012 tax return The mortgage is a secured debt on a qualified home in which you have an ownership interest. Amend 2012 tax return (Generally, your mortgage is a secured debt if you put your home up as collateral to protect the interest of the lender. Amend 2012 tax return The term “qualified home” means your main home or second home. Amend 2012 tax return For details, see Publication 936. Amend 2012 tax return )  Both you and the lender must intend that the loan be repaid. Amend 2012 tax return Amount Deductible In most cases, you can deduct all of your home mortgage interest. Amend 2012 tax return How much you can deduct depends on the date of the mortgage, the amount of the mortgage, and how you use the mortgage proceeds. Amend 2012 tax return Fully deductible interest. Amend 2012 tax return   If all of your mortgages fit into one or more of the following three categories at all times during the year, you can deduct all of the interest on those mortgages. Amend 2012 tax return (If any one mortgage fits into more than one category, add the debt that fits in each category to your other debt in the same category. Amend 2012 tax return )   The three categories are as follows: Mortgages you took out on or before October 13, 1987 (called grandfathered debt). Amend 2012 tax return Mortgages you took out after October 13, 1987, to buy, build, or improve your home (called home acquisition debt), but only if throughout 2013 these mortgages plus any grandfathered debt totaled $1 million or less ($500,000 or less if married filing separately). Amend 2012 tax return Mortgages you took out after October 13, 1987, other than to buy, build, or improve your home (called home equity debt), but only if throughout 2013 these mortgages totaled $100,000 or less ($50,000 or less if married filing separately) and totaled no more than the fair market value of your home reduced by (1) and (2). Amend 2012 tax return The dollar limits for the second and third categories apply to the combined mortgages on your main home and second home. Amend 2012 tax return   See Part II of Publication 936 for more detailed definitions of grandfathered, home acquisition, and home equity debt. Amend 2012 tax return    You can use Figure 23-A to check whether your home mortgage interest is fully deductible. Amend 2012 tax return Figure 23-A. Amend 2012 tax return Is My Home Mortgage Interest Fully Deductible? Please click here for the text description of the image. Amend 2012 tax return Figure 23-A. Amend 2012 tax return Is My Interest Fully Deductible? Limits on deduction. Amend 2012 tax return   You cannot fully deduct interest on a mortgage that does not fit into any of the three categories listed earlier. Amend 2012 tax return If this applies to you, see Part II of Publication 936 to figure the amount of interest you can deduct. Amend 2012 tax return Special Situations This section describes certain items that can be included as home mortgage interest and others that cannot. Amend 2012 tax return It also describes certain special situations that may affect your deduction. Amend 2012 tax return Late payment charge on mortgage payment. Amend 2012 tax return   You can deduct as home mortgage interest a late payment charge if it was not for a specific service performed in connection with your mortgage loan. Amend 2012 tax return Mortgage prepayment penalty. Amend 2012 tax return   If you pay off your home mortgage early, you may have to pay a penalty. Amend 2012 tax return You can deduct that penalty as home mortgage interest provided the penalty is not for a specific service performed or cost incurred in connection with your mortgage loan. Amend 2012 tax return Sale of home. Amend 2012 tax return   If you sell your home, you can deduct your home mortgage interest (subject to any limits that apply) paid up to, but not including, the date of sale. Amend 2012 tax return Example. Amend 2012 tax return John and Peggy Harris sold their home on May 7. Amend 2012 tax return Through April 30, they made home mortgage interest payments of $1,220. Amend 2012 tax return The settlement sheet for the sale of the home showed $50 interest for the 6-day period in May up to, but not including, the date of sale. Amend 2012 tax return Their mortgage interest deduction is $1,270 ($1,220 + $50). Amend 2012 tax return Prepaid interest. Amend 2012 tax return   If you pay interest in advance for a period that goes beyond the end of the tax year, you must spread this interest over the tax years to which it applies. Amend 2012 tax return You can deduct in each year only the interest that qualifies as home mortgage interest for that year. Amend 2012 tax return However, there is an exception that applies to points, discussed later. Amend 2012 tax return Mortgage interest credit. Amend 2012 tax return   You may be able to claim a mortgage interest credit if you were issued a mortgage credit certificate (MCC) by a state or local government. Amend 2012 tax return Figure the credit on Form 8396, Mortgage Interest Credit. Amend 2012 tax return If you take this credit, you must reduce your mortgage interest deduction by the amount of the credit. Amend 2012 tax return   For more information on the credit, see chapter 37. Amend 2012 tax return Ministers' and military housing allowance. Amend 2012 tax return   If you are a minister or a member of the uniformed services and receive a housing allowance that is not taxable, you can still deduct your home mortgage interest. Amend 2012 tax return Hardest Hit Fund and Emergency Homeowners' Loan Programs. Amend 2012 tax return   You can use a special method to compute your deduction for mortgage interest and real estate taxes on your main home if you meet the following two conditions. Amend 2012 tax return You received assistance under: A State Housing Finance Agency (State HFA) Hardest Hit Fund program in which program payments could be used to pay mortgage interest, or An Emergency Homeowners' Loan Program administered by the Department of Housing and Urban Development (HUD) or a state. Amend 2012 tax return You meet the rules to deduct all of the mortgage interest on your loan and all of the real estate taxes on your main home. Amend 2012 tax return If you meet these tests, then you can deduct all of the payments you actually made during the year to your mortgage servicer, the State HFA, or HUD on the home mortgage (including the amount shown on box 3 of Form 1098-MA, Mortgage Assistance Payments), but not more than the sum of the amounts shown on Form 1098, Mortgage Interest Statement, in box 1 (mortgage interest received from payer(s) / borrower(s)), box 4 (mortgage insurance premiums) and box 5 (real property taxes). Amend 2012 tax return However, you are not required to use this special method to compute your deduction for mortgage interest and real estate taxes on your main home. Amend 2012 tax return Mortgage assistance payments under section 235 of the National Housing Act. Amend 2012 tax return   If you qualify for mortgage assistance payments for lower-income families under section 235 of the National Housing Act, part or all of the interest on your mortgage may be paid for you. Amend 2012 tax return You cannot deduct the interest that is paid for you. Amend 2012 tax return No other effect on taxes. Amend 2012 tax return   Do not include these mortgage assistance payments in your income. Amend 2012 tax return Also, do not use these payments to reduce other deductions, such as real estate taxes. Amend 2012 tax return Divorced or separated individuals. Amend 2012 tax return   If a divorce or separation agreement requires you or your spouse or former spouse to pay home mortgage interest on a home owned by both of you, the payment of interest may be alimony. Amend 2012 tax return See the discussion of Payments for jointly-owned home in chapter 18. Amend 2012 tax return Redeemable ground rents. Amend 2012 tax return   If you make annual or periodic rental payments on a redeemable ground rent, you can deduct them as mortgage interest. Amend 2012 tax return   Payments made to end the lease and to buy the lessor's entire interest in the land are not deductible as mortgage interest. Amend 2012 tax return For more information, see Publication 936. Amend 2012 tax return Nonredeemable ground rents. Amend 2012 tax return   Payments on a nonredeemable ground rent are not mortgage interest. Amend 2012 tax return You can deduct them as rent if they are a business expense or if they are for rental property. Amend 2012 tax return Reverse mortgages. Amend 2012 tax return   A reverse mortgage is a loan where the lender pays you (in a lump sum, a monthly advance, a line of credit, or a combination of all three) while you continue to live in your home. Amend 2012 tax return With a reverse mortgage, you retain title to your home. Amend 2012 tax return Depending on the plan, your reverse mortgage becomes due with interest when you move, sell your home, reach the end of a pre-selected loan period, or die. Amend 2012 tax return Because reverse mortgages are considered loan advances and not income, the amount you receive is not taxable. Amend 2012 tax return Any interest (including original issue discount) accrued on a reverse mortgage is not deductible until the loan is paid in full. Amend 2012 tax return Your deduction may be limited because a reverse mortgage loan generally is subject to the limit on Home Equity Debt discussed in Publication 936. Amend 2012 tax return Rental payments. Amend 2012 tax return   If you live in a house before final settlement on the purchase, any payments you make for that period are rent and not interest. Amend 2012 tax return This is true even if the settlement papers call them interest. Amend 2012 tax return You cannot deduct these payments as home mortgage interest. Amend 2012 tax return Mortgage proceeds invested in tax-exempt securities. Amend 2012 tax return   You cannot deduct the home mortgage interest on grandfathered debt or home equity debt if you used the proceeds of the mortgage to buy securities or certificates that produce tax-free income. Amend 2012 tax return “Grandfathered debt” and “home equity debt” are defined earlier under Amount Deductible. Amend 2012 tax return Refunds of interest. Amend 2012 tax return   If you receive a refund of interest in the same tax year you paid it, you must reduce your interest expense by the amount refunded to you. Amend 2012 tax return If you receive a refund of interest you deducted in an earlier year, you generally must include the refund in income in the year you receive it. Amend 2012 tax return However, you need to include it only up to the amount of the deduction that reduced your tax in the earlier year. Amend 2012 tax return This is true whether the interest overcharge was refunded to you or was used to reduce the outstanding principal on your mortgage. Amend 2012 tax return    If you received a refund of interest you overpaid in an earlier year, you generally will receive a Form 1098, Mortgage Interest Statement, showing the refund in box 3. Amend 2012 tax return For information about Form 1098, see Form 1098, Mortgage Interest Statement , later. Amend 2012 tax return   For more information on how to treat refunds of interest deducted in earlier years, see Recoveries in chapter 12. Amend 2012 tax return Points The term “points” is used to describe certain charges paid, or treated as paid, by a borrower to obtain a home mortgage. Amend 2012 tax return Points may also be called loan origination fees, maximum loan charges, loan discount, or discount points. Amend 2012 tax return A borrower is treated as paying any points that a home seller pays for the borrower's mortgage. Amend 2012 tax return See Points paid by the seller , later. Amend 2012 tax return General Rule You generally cannot deduct the full amount of points in the year paid. Amend 2012 tax return Because they are prepaid interest, you generally deduct them ratably over the life (term) of the mortgage. Amend 2012 tax return See Deduction Allowed Ratably , next. Amend 2012 tax return For exceptions to the general rule, see Deduction Allowed in Year Paid , later. Amend 2012 tax return Deduction Allowed Ratably If you do not meet the tests listed under Deduction Allowed in Year Paid , later, the loan is not a home improvement loan, or you choose not to deduct your points in full in the year paid, you can deduct the points ratably (equally) over the life of the loan if you meet all the following tests. Amend 2012 tax return You use the cash method of accounting. Amend 2012 tax return This means you report income in the year you receive it and deduct expenses in the year you pay them. Amend 2012 tax return Most individuals use this method. Amend 2012 tax return Your loan is secured by a home. Amend 2012 tax return (The home does not need to be your main home. Amend 2012 tax return ) Your loan period is not more than 30 years. Amend 2012 tax return If your loan period is more than 10 years, the terms of your loan are the same as other loans offered in your area for the same or longer period. Amend 2012 tax return Either your loan amount is $250,000 or less, or the number of points is not more than: 4, if your loan period is 15 years or less, or 6, if your loan period is more than 15 years. Amend 2012 tax return Deduction Allowed in Year Paid You can fully deduct points in the year paid if you meet all the following tests. Amend 2012 tax return (You can use Figure 23-B as a quick guide to see whether your points are fully deductible in the year paid. Amend 2012 tax return ) Your loan is secured by your main home. Amend 2012 tax return (Your main home is the one you ordinarily live in most of the time. Amend 2012 tax return ) Paying points is an established business practice in the area where the loan was made. Amend 2012 tax return The points paid were not more than the points generally charged in that area. Amend 2012 tax return You use the cash method of accounting. Amend 2012 tax return This means you report income in the year you receive it and deduct expenses in the year you pay them. Amend 2012 tax return (If you want more information about this method, see Accounting Methods in chapter 1. Amend 2012 tax return ) The points were not paid in place of amounts that ordinarily are stated separately on the settlement statement, such as appraisal fees, inspection fees, title fees, attorney fees, and property taxes. Amend 2012 tax return The funds you provided at or before closing, plus any points the seller paid, were at least as much as the points charged. Amend 2012 tax return The funds you provided are not required to have been applied to the points. Amend 2012 tax return They can include a down payment, an escrow deposit, earnest money, and other funds you paid at or before closing for any purpose. Amend 2012 tax return You cannot have borrowed these funds from your lender or mortgage broker. Amend 2012 tax return You use your loan to buy or build your main home. Amend 2012 tax return The points were computed as a percentage of the principal amount of the mortgage. Amend 2012 tax return The amount is clearly shown on the settlement statement (such as the Settlement Statement, Form HUD-1) as points charged for the mortgage. Amend 2012 tax return The points may be shown as paid from either your funds or the seller's. Amend 2012 tax return Figure 23-B. Amend 2012 tax return Are My Points Fully Deductible This Year? Please click here for the text description of the image. Amend 2012 tax return Figure 23-B. Amend 2012 tax return Are My Points Fully Deductible This Year? Note. Amend 2012 tax return If you meet all of these tests, you can choose to either fully deduct the points in the year paid, or deduct them over the life of the loan. Amend 2012 tax return Home improvement loan. Amend 2012 tax return   You can also fully deduct in the year paid points paid on a loan to improve your main home, if tests (1) through (6) are met. Amend 2012 tax return Second home. Amend 2012 tax return You cannot fully deduct in the year paid points you pay on loans secured by your second home. Amend 2012 tax return You can deduct these points only over the life of the loan. Amend 2012 tax return Refinancing. Amend 2012 tax return   Generally, points you pay to refinance a mortgage are not deductible in full in the year you pay them. Amend 2012 tax return This is true even if the new mortgage is secured by your main home. Amend 2012 tax return   However, if you use part of the refinanced mortgage proceeds to improve your main home and you meet the first 6 tests listed under Deduction Allowed in Year Paid , earlier, you can fully deduct the part of the points related to the improvement in the year you paid them with your own funds. Amend 2012 tax return You can deduct the rest of the points over the life of the loan. Amend 2012 tax return Example 1. Amend 2012 tax return In 1998, Bill Fields got a mortgage to buy a home. Amend 2012 tax return In 2013, Bill refinanced that mortgage with a 15-year $100,000 mortgage loan. Amend 2012 tax return The mortgage is secured by his home. Amend 2012 tax return To get the new loan, he had to pay three points ($3,000). Amend 2012 tax return Two points ($2,000) were for prepaid interest, and one point ($1,000) was charged for services, in place of amounts that ordinarily are stated separately on the settlement statement. Amend 2012 tax return Bill paid the points out of his private funds, rather than out of the proceeds of the new loan. Amend 2012 tax return The payment of points is an established practice in the area, and the points charged are not more than the amount generally charged there. Amend 2012 tax return Bill's first payment on the new loan was due July 1. Amend 2012 tax return He made six payments on the loan in 2013 and is a cash basis taxpayer. Amend 2012 tax return Bill used the funds from the new mortgage to repay his existing mortgage. Amend 2012 tax return Although the new mortgage loan was for Bill's continued ownership of his main home, it was not for the purchase or improvement of that home. Amend 2012 tax return He cannot deduct all of the points in 2013. Amend 2012 tax return He can deduct two points ($2,000) ratably over the life of the loan. Amend 2012 tax return He deducts $67 [($2,000 ÷ 180 months) × 6 payments] of the points in 2013. Amend 2012 tax return The other point ($1,000) was a fee for services and is not deductible. Amend 2012 tax return Example 2. Amend 2012 tax return The facts are the same as in Example 1, except that Bill used $25,000 of the loan proceeds to improve his home and $75,000 to repay his existing mortgage. Amend 2012 tax return Bill deducts 25% ($25,000 ÷ $100,000) of the points ($2,000) in 2013. Amend 2012 tax return His deduction is $500 ($2,000 × 25%). Amend 2012 tax return Bill also deducts the ratable part of the remaining $1,500 ($2,000 − $500) that must be spread over the life of the loan. Amend 2012 tax return This is $50 [($1,500 ÷ 180 months) × 6 payments] in 2013. Amend 2012 tax return The total amount Bill deducts in 2013 is $550 ($500 + $50). Amend 2012 tax return Special Situations This section describes certain special situations that may affect your deduction of points. Amend 2012 tax return Original issue discount. Amend 2012 tax return   If you do not qualify to either deduct the points in the year paid or deduct them ratably over the life of the loan, or if you choose not to use either of these methods, the points reduce the issue price of the loan. Amend 2012 tax return This reduction results in original issue discount, which is discussed in chapter 4 of Publication 535. Amend 2012 tax return Amounts charged for services. Amend 2012 tax return   Amounts charged by the lender for specific services connected to the loan are not interest. Amend 2012 tax return Examples of these charges are: Appraisal fees, Notary fees, and Preparation costs for the mortgage note or deed of trust. Amend 2012 tax return You cannot deduct these amounts as points either in the year paid or over the life of the mortgage. Amend 2012 tax return Points paid by the seller. Amend 2012 tax return   The term “points” includes loan placement fees that the seller pays to the lender to arrange financing for the buyer. Amend 2012 tax return Treatment by seller. Amend 2012 tax return   The seller cannot deduct these fees as interest. Amend 2012 tax return But they are a selling expense that reduces the amount realized by the seller. Amend 2012 tax return See chapter 15 for information on selling your home. Amend 2012 tax return Treatment by buyer. Amend 2012 tax return    The buyer reduces the basis of the home by the amount of the seller-paid points and treats the points as if he or she had paid them. Amend 2012 tax return If all the tests under Deduction Allowed in Year Paid , earlier, are met, the buyer can deduct the points in the year paid. Amend 2012 tax return If any of those tests are not met, the buyer deducts the points over the life of the loan. Amend 2012 tax return   For information about basis, see chapter 13. Amend 2012 tax return Funds provided are less than points. Amend 2012 tax return   If you meet all the tests in Deduction Allowed in Year Paid , earlier, except that the funds you provided were less than the points charged to you (test (6)), you can deduct the points in the year paid, up to the amount of funds you provided. Amend 2012 tax return In addition, you can deduct any points paid by the seller. Amend 2012 tax return Example 1. Amend 2012 tax return When you took out a $100,000 mortgage loan to buy your home in December, you were charged one point ($1,000). Amend 2012 tax return You meet all the tests for deducting points in the year paid, except the only funds you provided were a $750 down payment. Amend 2012 tax return Of the $1,000 charged for points, you can deduct $750 in the year paid. Amend 2012 tax return You spread the remaining $250 over the life of the mortgage. Amend 2012 tax return Example 2. Amend 2012 tax return The facts are the same as in Example 1, except that the person who sold you your home also paid one point ($1,000) to help you get your mortgage. Amend 2012 tax return In the year paid, you can deduct $1,750 ($750 of the amount you were charged plus the $1,000 paid by the seller). Amend 2012 tax return You spread the remaining $250 over the life of the mortgage. Amend 2012 tax return You must reduce the basis of your home by the $1,000 paid by the seller. Amend 2012 tax return Excess points. Amend 2012 tax return   If you meet all the tests in Deduction Allowed in Year Paid , earlier, except that the points paid were more than generally paid in your area (test (3)), you deduct in the year paid only the points that are generally charged. Amend 2012 tax return You must spread any additional points over the life of the mortgage. Amend 2012 tax return Mortgage ending early. Amend 2012 tax return   If you spread your deduction for points over the life of the mortgage, you can deduct any remaining balance in the year the mortgage ends. Amend 2012 tax return However, if you refinance the mortgage with the same lender, you cannot deduct any remaining balance of spread points. Amend 2012 tax return Instead, deduct the remaining balance over the term of the new loan. Amend 2012 tax return    A mortgage may end early due to a prepayment, refinancing, foreclosure, or similar event. Amend 2012 tax return Example. Amend 2012 tax return Dan paid $3,000 in points in 2002 that he had to spread out over the 15-year life of the mortgage. Amend 2012 tax return He deducts $200 points per year. Amend 2012 tax return Through 2012, Dan has deducted $2,200 of the points. Amend 2012 tax return Dan prepaid his mortgage in full in 2013. Amend 2012 tax return He can deduct the remaining $800 of points in 2013. Amend 2012 tax return Limits on deduction. Amend 2012 tax return   You cannot fully deduct points paid on a mortgage unless the mortgage fits into one of the categories listed earlier under Fully deductible interest . Amend 2012 tax return See Publication 936 for details. Amend 2012 tax return Mortgage Insurance Premiums You can treat amounts you paid during 2013 for qualified mortgage insurance as home mortgage interest. Amend 2012 tax return The insurance must be in connection with home acquisition debt and the insurance contract must have been issued after 2006. Amend 2012 tax return Qualified mortgage insurance. Amend 2012 tax return   Qualified mortgage insurance is mortgage insurance provided by the Department of Veterans Affairs, the Federal Housing Administration, or the Rural Housing Service, and private mortgage insurance (as defined in section 2 of the Homeowners Protection Act of 1998 as in effect on December 20, 2006). Amend 2012 tax return   Mortgage insurance provided by the Department of Veterans Affairs is commonly known as a funding fee. Amend 2012 tax return If provided by the Rural Housing Service, it is commonly known as a guarantee fee. Amend 2012 tax return These fees can be deducted fully in 2013 if the mortgage insurance contract was issued in 2013. Amend 2012 tax return Contact the mortgage insurance issuer to determine the deductible amount if it is not reported in box 4 of Form 1098. Amend 2012 tax return Special rules for prepaid mortgage insurance. Amend 2012 tax return   Generally, if you paid premiums for qualified mortgage insurance that are allocable to periods after the close of the tax year, such premiums are treated as paid in the period to which they are allocated. Amend 2012 tax return You must allocate the premiums over the shorter of the stated term of the mortgage or 84 months, beginning with the month the insurance was obtained. Amend 2012 tax return No deduction is allowed for the unamortized balance if the mortgage is satisfied before its term. Amend 2012 tax return This paragraph does not apply to qualified mortgage insurance provided by the Department of Veterans Affairs or the Rural Housing Service. Amend 2012 tax return See the Example below. Amend 2012 tax return Example. Amend 2012 tax return Ryan purchased a home in May of 2012 and financed the home with a 15-year mortgage. Amend 2012 tax return Ryan also prepaid all of the $9,240 in private mortgage insurance required at the time of closing in May. Amend 2012 tax return Since the $9,240 in private mortgage insurance is allocable to periods after 2012, Ryan must allocate the $9,240 over the shorter of the life of the mortgage or 84 months. Amend 2012 tax return Ryan's adjusted gross income (AGI) for 2012 is $76,000. Amend 2012 tax return Ryan can deduct $880 ($9,240 ÷ 84 × 8 months) for qualified mortgage insurance premiums in 2012. Amend 2012 tax return For 2013, Ryan can deduct $1,320 ($9,240 ÷ 84 × 12 months) if his AGI is $100,000 or less. Amend 2012 tax return In this example, the mortgage insurance premiums are allocated over 84 months, which is shorter than the life of the mortgage of 15 years (180 months). Amend 2012 tax return Limit on deduction. Amend 2012 tax return   If your adjusted gross income on Form 1040, line 38, is more than $100,000 ($50,000 if your filing status is married filing separately), the amount of your mortgage insurance premiums that are otherwise deductible is reduced and may be eliminated. Amend 2012 tax return See Line 13 in the instructions for Schedule A (Form 1040) and complete the Mortgage Insurance Premiums Deduction Worksheet to figure the amount you can deduct. Amend 2012 tax return If your adjusted gross income is more than $109,000 ($54,500 if married filing separately), you cannot deduct your mortgage insurance premiums. Amend 2012 tax return Form 1098, Mortgage Interest Statement If you paid $600 or more of mortgage interest (including certain points and mortgage insurance premiums) during the year on any one mortgage, you generally will receive a Form 1098 or a similar statement from the mortgage holder. Amend 2012 tax return You will receive the statement if you pay interest to a person (including a financial institution or a cooperative housing corporation) in the course of that person's trade or business. Amend 2012 tax return A governmental unit is a person for purposes of furnishing the statement. Amend 2012 tax return The statement for each year should be sent to you by January 31 of the following year. Amend 2012 tax return A copy of this form will also be sent to the IRS. Amend 2012 tax return The statement will show the total interest you paid during the year, any mortgage insurance premiums you paid, and if you purchased a main home during the year, it also will show the deductible points paid during the year, including seller-paid points. Amend 2012 tax return However, it should not show any interest that was paid for you by a government agency. Amend 2012 tax return As a general rule, Form 1098 will include only points that you can fully deduct in the year paid. Amend 2012 tax return However, certain points not included on Form 1098 also may be deductible, either in the year paid or over the life of the loan. Amend 2012 tax return See Points , earlier, to determine whether you can deduct points not shown on Form 1098. Amend 2012 tax return Prepaid interest on Form 1098. Amend 2012 tax return   If you prepaid interest in 2013 that accrued in full by January 15, 2014, this prepaid interest may be included in box 1 of Form 1098. Amend 2012 tax return However, you cannot deduct the prepaid amount for January 2014 in 2013. Amend 2012 tax return (See Prepaid interest , earlier. Amend 2012 tax return ) You will have to figure the interest that accrued for 2014 and subtract it from the amount in box 1. Amend 2012 tax return You will include the interest for January 2014 with the other interest you pay for 2014. Amend 2012 tax return See How To Report , later. Amend 2012 tax return Refunded interest. Amend 2012 tax return   If you received a refund of mortgage interest you overpaid in an earlier year, you generally will receive a Form 1098 showing the refund in box 3. Amend 2012 tax return See Refunds of interest , earlier. Amend 2012 tax return Mortgage insurance premiums. Amend 2012 tax return   The amount of mortgage insurance premiums you paid during 2013 may be shown in box 4 of Form 1098. Amend 2012 tax return See Mortgage Insurance Premiums, earlier. Amend 2012 tax return Investment Interest This section discusses interest expenses you may be able to deduct as an investor. Amend 2012 tax return If you borrow money to buy property you hold for investment, the interest you pay is investment interest. Amend 2012 tax return You can deduct investment interest subject to the limit discussed later. Amend 2012 tax return However, you cannot deduct interest you incurred to produce tax-exempt income. Amend 2012 tax return Nor can you deduct interest expenses on straddles. Amend 2012 tax return Investment interest does not include any qualified home mortgage interest or any interest taken into account in computing income or loss from a passive activity. Amend 2012 tax return Investment Property Property held for investment includes property that produces interest, dividends, annuities, or royalties not derived in the ordinary course of a trade or business. Amend 2012 tax return It also includes property that produces gain or loss (not derived in the ordinary course of a trade or business) from the sale or trade of property producing these types of income or held for investment (other than an interest in a passive activity). Amend 2012 tax return Investment property also includes an interest in a trade or business activity in which you did not materially participate (other than a passive activity). Amend 2012 tax return Partners, shareholders, and beneficiaries. Amend 2012 tax return   To determine your investment interest, combine your share of investment interest from a partnership, S corporation, estate, or trust with your other investment interest. Amend 2012 tax return Allocation of Interest Expense If you borrow money for business or personal purposes as well as for investment, you must allocate the debt among those purposes. Amend 2012 tax return Only the interest expense on the part of the debt used for investment purposes is treated as investment interest. Amend 2012 tax return The allocation is not affected by the use of property that secures the debt. Amend 2012 tax return Limit on Deduction Generally, your deduction for investment interest expense is limited to the amount of your net investment income. Amend 2012 tax return You can carry over the amount of investment interest that you could not deduct because of this limit to the next tax year. Amend 2012 tax return The interest carried over is treated as investment interest paid or accrued in that next year. Amend 2012 tax return You can carry over disallowed investment interest to the next tax year even if it is more than your taxable income in the year the interest was paid or accrued. Amend 2012 tax return Net Investment Income Determine the amount of your net investment income by subtracting your investment expenses (other than interest expense) from your investment income. Amend 2012 tax return Investment income. Amend 2012 tax return    This generally includes your gross income from property held for investment (such as interest, dividends, annuities, and royalties). Amend 2012 tax return Investment income does not include Alaska Permanent Fund dividends. Amend 2012 tax return It also does not include qualified dividends or net capital gain unless you choose to include them. Amend 2012 tax return Choosing to include qualified dividends. Amend 2012 tax return   Investment income generally does not include qualified dividends, discussed in chapter 8. Amend 2012 tax return However, you can choose to include all or part of your qualified dividends in investment income. Amend 2012 tax return   You make this choice by completing Form 4952, line 4g, according to its instructions. Amend 2012 tax return   If you choose to include any amount of your qualified dividends in investment income, you must reduce your qualified dividends that are eligible for the lower capital gains tax rates by the same amount. Amend 2012 tax return Choosing to include net capital gain. Amend 2012 tax return   Investment income generally does not include net capital gain from disposing of investment property (including capital gain distributions from mutual funds). Amend 2012 tax return However, you can choose to include all or part of your net capital gain in investment income. Amend 2012 tax return    You make this choice by completing Form 4952, line 4g, according to its instructions. Amend 2012 tax return   If you choose to include any amount of your net capital gain in investment income, you must reduce your net capital gain that is eligible for the lower capital gains tax rates by the same amount. Amend 2012 tax return    Before making either choice, consider the overall effect on your tax liability. Amend 2012 tax return Compare your tax if you make one or both of these choices with your tax if you do not. Amend 2012 tax return Investment income of child reported on parent's return. Amend 2012 tax return    Investment income includes the part of your child's interest and dividend income that you choose to report on your return. Amend 2012 tax return If the child does not have qualified dividends, Alaska Permanent Fund dividends, or capital gain distributions, this is the amount on line 6 of Form 8814, Parents' Election To Report Child's Interest and Dividends. Amend 2012 tax return Child's qualified dividends. Amend 2012 tax return   If part of the amount you report is your child's qualified dividends, that part (which is reported on Form 1040, line 9b) generally does not count as investment income. Amend 2012 tax return However, you can choose to include all or part of it in investment income, as explained under Choosing to include qualified dividends , earlier. Amend 2012 tax return   Your investment income also includes the amount on Form 8814, line 12 (or, if applicable, the reduced amount figured next under Child's Alaska Permanent Fund dividends). Amend 2012 tax return Child's Alaska Permanent Fund dividends. Amend 2012 tax return   If part of the amount you report is your child's Alaska Permanent Fund dividends, that part does not count as investment income. Amend 2012 tax return To figure the amount of your child's income that you can consider your investment income, start with the amount on Form 8814, line 6. Amend 2012 tax return Multiply that amount by a percentage that is equal to the Alaska Permanent Fund dividends divided by the total amount on Form 8814, line 4. Amend 2012 tax return Subtract the result from the amount on Form 8814, line 12. Amend 2012 tax return Child's capital gain distributions. Amend 2012 tax return    If part of the amount you report is your child's capital gain distributions, that part (which is reported on Schedule D, line 13, or Form 1040, line 13) generally does not count as investment income. Amend 2012 tax return However, you can choose to include all or part of it in investment income, as explained in Choosing to include net capital gain , earlier. Amend 2012 tax return   Your investment income also includes the amount on Form 8814, line 12 (or, if applicable, the reduced amount figured under Child's Alaska Permanent Fund dividends , earlier). Amend 2012 tax return Investment expenses. Amend 2012 tax return   Investment expenses are your allowed deductions (other than interest expense) directly connected with the production of investment income. Amend 2012 tax return Investment expenses that are included as a miscellaneous itemized deduction on Schedule A (Form 1040) are allowable deductions after applying the 2% limit that applies to miscellaneous itemized deductions. Amend 2012 tax return Use the smaller of: The investment expenses included on Schedule A (Form 1040), line 23, or The amount on Schedule A, line 27. Amend 2012 tax return Losses from passive activities. Amend 2012 tax return   Income or expenses that you used in computing income or loss from a passive activity are not included in determining your investment income or investment expenses (including investment interest expense). Amend 2012 tax return See Publication 925, Passive Activity and At-Risk Rules, for information about passive activities. Amend 2012 tax return Form 4952 Use Form 4952, Investment Interest Expense Deduction, to figure your deduction for investment interest. Amend 2012 tax return Exception to use of Form 4952. Amend 2012 tax return   You do not have to complete Form 4952 or attach it to your return if you meet all of the following tests. Amend 2012 tax return Your investment interest expense is not more than your investment income from interest and ordinary dividends minus any qualified dividends. Amend 2012 tax return You do not have any other deductible investment expenses. Amend 2012 tax return You have no carryover of investment interest expense from 2012. Amend 2012 tax return If you meet all of these tests, you can deduct all of your investment interest. Amend 2012 tax return More Information For more information on investment interest, see Interest Expenses in chapter 3 of Publication 550. Amend 2012 tax return Items You Cannot Deduct Some interest payments are not deductible. Amend 2012 tax return Certain expenses similar to interest also are not deductible. Amend 2012 tax return Nondeductible expenses include the following items. Amend 2012 tax return Personal interest (discussed later). Amend 2012 tax return Service charges (however, see Other Expenses (Line 23) in chapter 28). Amend 2012 tax return Annual fees for credit cards. Amend 2012 tax return Loan fees. Amend 2012 tax return Credit investigation fees. Amend 2012 tax return Interest to purchase or carry tax-exempt securities. Amend 2012 tax return Penalties. Amend 2012 tax return   You cannot deduct fines and penalties paid to a government for violations of law, regardless of their nature. Amend 2012 tax return Personal Interest Personal interest is not deductible. Amend 2012 tax return Personal interest is any interest that is not home mortgage interest, investment interest, business interest, or other deductible interest. Amend 2012 tax return It includes the following items. Amend 2012 tax return Interest on car loans (unless you use the car for business). Amend 2012 tax return Interest on federal, state, or local income tax. Amend 2012 tax return Finance charges on credit cards, retail installment contracts, and revolving charge accounts incurred for personal expenses. Amend 2012 tax return Late payment charges by a public utility. Amend 2012 tax return You may be able to deduct interest you pay on a qualified student loan. Amend 2012 tax return For details, see Publication 970, Tax Benefits for Education. Amend 2012 tax return Allocation of Interest If you use the proceeds of a loan for more than one purpose (for example, personal and business), you must allocate the interest on the loan to each use. Amend 2012 tax return However, you do not have to allocate home mortgage interest if it is fully deductible, regardless of how the funds are used. Amend 2012 tax return You allocate interest (other than fully deductible home mortgage interest) on a loan in the same way as the loan itself is allocated. Amend 2012 tax return You do this by tracing disbursements of the debt proceeds to specific uses. Amend 2012 tax return For details on how to do this, see chapter 4 of Publication 535. Amend 2012 tax return How To Report You must file Form 1040 to deduct any home mortgage interest expense on your tax return. Amend 2012 tax return Where you deduct your interest expense generally depends on how you use the loan proceeds. Amend 2012 tax return See Table 23-1 for a summary of where to deduct your interest expense. Amend 2012 tax return Home mortgage interest and points. Amend 2012 tax return   Deduct the home mortgage interest and points reported to you on Form 1098 on Schedule A (Form 1040), line 10. Amend 2012 tax return If you paid more deductible interest to the financial institution than the amount shown on Form 1098, show the larger deductible amount on line 10. Amend 2012 tax return Attach a statement explaining the difference and print “See attached” next to line 10. Amend 2012 tax return    Deduct home mortgage interest that was not reported to you on Form 1098 on Schedule A (Form 1040), line 11. Amend 2012 tax return If you paid home mortgage interest to the person from whom you bought your home, show that person's name, address, and taxpayer identification number (TIN) on the dotted lines next to line 11. Amend 2012 tax return The seller must give you this number and you must give the seller your TIN. Amend 2012 tax return A Form W-9, Request for Taxpayer Identification Number and Certification, can be used for this purpose. Amend 2012 tax return Failure to meet any of these requirements may result in a $50 penalty for each failure. Amend 2012 tax return The TIN can be either a social security number, an individual taxpayer identification number (issued by the Internal Revenue Service), or an employer identification number. Amend 2012 tax return See Social Security Number (SSN) in chapter 1 for more information about TINs. Amend 2012 tax return    If you can take a deduction for points that were not reported to you on Form 1098, deduct those points on Schedule A (Form 1040), line 12. Amend 2012 tax return   Deduct mortgage insurance premiums on Schedule A (Form 1040), line 13. Amend 2012 tax return More than one borrower. Amend 2012 tax return   If you and at least one other person (other than your spouse if you file a joint return) were liable for and paid interest on a mortgage that was for your home, and the other person received a Form 1098 showing the interest that was paid during the year, attach a statement to your return explaining this. Amend 2012 tax return Show how much of the interest each of you paid, and give the name and address of the person who received the form. Amend 2012 tax return Deduct your share of the interest on Schedule A (Form 1040), line 11, and print “See attached” next to the line. Amend 2012 tax return Also, deduct your share of any qualified mortgage insurance premiums on Schedule A (Form 1040), line 13. Amend 2012 tax return   Similarly, if you are the payer of record on a mortgage on which there are other borrowers entitled to a deduction for the interest shown on the Form 1098 you received, deduct only your share of the interest on Schedule A (Form 1040), line 10. Amend 2012 tax return You should let each of the other borrowers know what his or her share is. Amend 2012 tax return Mortgage proceeds used for business or investment. Amend 2012 tax return    If your home mortgage interest deduction is limited, but all or part of the mortgage proceeds were used for business, investment, or other deductible activities, see Table 23-1. Amend 2012 tax return It shows where to deduct the part of your excess interest that is for those activities. Amend 2012 tax return Investment interest. Amend 2012 tax return    Deduct investment interest, subject to certain limits discussed in Publication 550, on Schedule A (Form 1040), line 14. Amend 2012 tax return Amortization of bond premium. Amend 2012 tax return   There are various ways to treat the premium you pay to buy taxable bonds. Amend 2012 tax return See Bond Premium Amortization in Publication 550. Amend 2012 tax return Income-producing rental or royalty interest. Amend 2012 tax return   Deduct interest on a loan for income-producing rental or royalty property that is not used in your business in Part I of Schedule E (Form 1040). Amend 2012 tax return Example. Amend 2012 tax return You rent out part of your home and borrow money to make repairs. Amend 2012 tax return You can deduct only the interest payment for the rented part in Part I of Schedule E (Form 1040). Amend 2012 tax return Deduct the rest of the interest payment on Schedule A (Form 1040) if it is deductible home mortgage interest. Amend 2012 tax return Table 23-1. Amend 2012 tax return Where To Deduct Your Interest Expense IF you have . Amend 2012 tax return . Amend 2012 tax return . Amend 2012 tax return THEN deduct it on . Amend 2012 tax return . Amend 2012 tax return . Amend 2012 tax return AND for more information go to . Amend 2012 tax return . Amend 2012 tax return . Amend 2012 tax return deductible student loan interest Form 1040, line 33, or Form 1040A, line 18 Publication 970. Amend 2012 tax return deductible home mortgage interest and points reported on Form 1098 Schedule A (Form 1040), line 10 Publication 936. Amend 2012 tax return deductible home mortgage interest not reported on Form 1098 Schedule A (Form 1040), line 11 Publication 936. Amend 2012 tax return deductible points not reported on Form 1098 Schedule A (Form 1040), line 12 Publication 936. Amend 2012 tax return deductible mortgage insurance premiums Schedule A (Form 1040), line 13 Publication 936. Amend 2012 tax return deductible investment interest (other than incurred to produce rents or royalties) Schedule A (Form 1040), line 14 Publication 550. Amend 2012 tax return deductible business interest (non-farm) Schedule C or C-EZ (Form 1040) Publication 535. Amend 2012 tax return deductible farm business interest Schedule F (Form 1040) Publications 225 and 535. Amend 2012 tax return deductible interest incurred to produce rents or royalties Schedule E (Form 1040) Publications 527 and 535. Amend 2012 tax return personal interest not deductible. Amend 2012 tax return Prev  Up  Next   Home   More Online Publications
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The Amend 2012 Tax Return

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