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File free taxes 4. File free taxes   Communications and Air Transportation Taxes Table of Contents Uncollected Tax Report Communications TaxLocal-only service. File free taxes Private communication service. File free taxes Exemptions Credits or Refunds Air Transportation TaxesTransportation of Persons by Air International Air Travel Facilities Transportation of Property by Air Special Rules on Transportation Taxes Excise taxes are imposed on amounts paid for certain facilities and services. File free taxes If you receive any payment on which tax is imposed, you are required to collect the tax, file returns, and pay the tax over to the government. File free taxes If you fail to collect and pay over the taxes, you may be liable for the trust fund recovery penalty. File free taxes See chapter 14, later. File free taxes Uncollected Tax Report A separate report is required to be filed by collecting agents of communications services and air transportation taxes if the person from whom the facilities or services tax (the tax) is required to be collected (the taxpayer) refuses to pay the tax, or it is impossible for the collecting agent to collect the tax. File free taxes The report must contain the name and address of the taxpayer, the type of facility provided or service rendered, the amount paid for the facility or service (the amount on which the tax is based), and the date paid. File free taxes Regular method taxpayers. File free taxes   For regular method taxpayers, the report must be filed by the due date of the Form 720 on which the tax would have been reported. File free taxes Alternative method taxpayers. File free taxes   For alternative method taxpayers, the report must be filed by the due date of the Form 720 that includes an adjustment to the separate account for the uncollected tax. File free taxes See Alternative method in  chapter 11. File free taxes Where to file. File free taxes    Do not file the uncollected tax report with Form 720. File free taxes Instead, mail the report to: Internal Revenue Service Excise Tax Program SE:S:SP:EX MS C9-109 5000 Ellin Rd. File free taxes  Lanham, MD 20706 Communications Tax A 3% tax is imposed on amounts paid for local telephone service and teletypewriter exchange service. File free taxes Local telephone service. File free taxes   This includes access to a local telephone system and the privilege of telephonic quality communication with most people who are part of the system. File free taxes Local telephone service also includes any facility or services provided in connection with this service. File free taxes The tax applies to lease payments for certain customer premises equipment (CPE) even though the lessor does not also provide access to a local telecommunications system. File free taxes Local-only service. File free taxes   Local-only service is local telephone service as described above, provided under a plan that does not include long distance telephone service or that separately states the charge for local service on the bill to customers. File free taxes Local-only service also includes any facility or services provided in connection with this service, even though these services and facilities may also be used with long-distance service. File free taxes Private communication service. File free taxes   Private communication service is not local telephone service. File free taxes Private communication service includes accessory-type services provided in connection with a Centrex, PBX, or other similar system for dual use accessory equipment. File free taxes However, the charge for the service must be stated separately from the charge for the basic system, and the accessory must function, in whole or in part, in connection with intercommunication among the subscriber's stations. File free taxes Teletypewriter exchange service. File free taxes   This includes access from a teletypewriter or other data station to a teletypewriter exchange system and the privilege of intercommunication by that station with most persons having teletypewriter or other data stations in the same exchange system. File free taxes Figuring the tax. File free taxes   The tax is based on the sum of all charges for local telephone service included in the bill. File free taxes However, if the bill groups individual items for billing and tax purposes, the tax is based on the sum of the individual items within that group. File free taxes The tax on the remaining items not included in any group is based on the charge for each item separately. File free taxes Do not include in the tax base state or local sales or use taxes that are separately stated on the taxpayer's bill. File free taxes Exemptions Payments for certain services or payments from certain users are exempt from the communications tax. File free taxes Nontaxable service. File free taxes   Nontaxable service means bundled service and long distance service. File free taxes Nontaxable service also includes pre-paid telephone cards and pre-paid cellular service. File free taxes Bundled service. File free taxes   Bundled service is local and long distance service provided under a plan that does not separately state the charge for the local telephone service. File free taxes Bundled service includes plans that provide both local and long distance service for either a flat monthly fee or a charge that varies with the elapsed transmission time for which the service is used. File free taxes Telecommunications companies provide bundled service for both landlines and wireless (cellular) service. File free taxes If Voice over Internet Protocol service provides both local and long distance service and the charges are not separately stated, such service is bundled service. File free taxes   The method for sending or receiving a call, such as on a landline telephone, wireless (cellular), or some other method, does not affect whether a service is local-only or bundled. File free taxes Long distance service. File free taxes   Long distance service is telephonic quality communication with persons whose telephones are outside the local telephone system of the caller. File free taxes Pre-paid telephone cards (PTC). File free taxes   A PTC will be treated as bundled service unless a PTC expressly states it is for local-only service. File free taxes Generally, the person responsible for collecting the tax is the carrier who transfers the PTC to the transferee. File free taxes The transferee is the first person that is not a carrier to whom a PTC is transferred by the carrier. File free taxes The transferee is the person liable for the tax and is eligible to request a credit or refund. File free taxes For more information, see Regulations section 49. File free taxes 4251-4. File free taxes   The holder is the person that purchases a PTC to use and not to resell. File free taxes Holders are not liable for the tax and cannot request a credit or refund. File free taxes Pre-paid cellular telephones. File free taxes   Rules similar to the PTC rules described above apply to pre-paid cellular telephones. File free taxes The transferee is the person eligible to request the credit or refund. File free taxes Installation charges. File free taxes   The tax does not apply to payments received for the installation of any instrument, wire, pole, switchboard, apparatus, or equipment. File free taxes However, the tax does apply to payments for the repair or replacement of those items incidental to ordinary maintenance. File free taxes Answering services. File free taxes   The tax does not apply to amounts paid for a private line, an answering service, and a one-way paging or message service if they do not provide access to a local telephone system and the privilege of telephonic communication as part of the local telephone system. File free taxes Mobile radio telephone service. File free taxes   The tax does not apply to payments for a two-way radio service that does not provide access to a local telephone system. File free taxes Coin-operated telephones. File free taxes   The tax for local telephone service does not apply to payments made for services by inserting coins in public coin-operated telephones. File free taxes But the tax applies if the coin-operated telephone service is furnished for a guaranteed amount. File free taxes Figure the tax on the amount paid under the guarantee plus any fixed monthly or other periodic charge. File free taxes Telephone-operated security systems. File free taxes   The tax does not apply to amounts paid for telephones used only to originate calls to a limited number of telephone stations for security entry into a building. File free taxes In addition, the tax does not apply to any amounts paid for rented communication equipment used in the security system. File free taxes News services. File free taxes   The tax on teletypewriter exchange service does not apply to charges for the following news services. File free taxes Services dealing exclusively with the collection or dissemination of news for or through the public press or radio or television broadcasting. File free taxes Services used exclusively in the collection or dissemination of news by a news ticker service furnishing a general news service similar to that of the public press. File free taxes This exemption applies to payments received for messages from one member of the news media to another member (or to or from their bona fide correspondents). File free taxes For the exemption to apply, the charge for these services must be billed in writing to the person paying for the service and that person must certify in writing that the services are used for an exempt purpose. File free taxes Services not exempted. File free taxes   The tax applies to amounts paid by members of the news media for local telephone service. File free taxes International organizations and the American Red Cross. File free taxes   The tax does not apply to communication services furnished to an international organization or to the American National Red Cross. File free taxes Nonprofit hospitals. File free taxes   The tax does not apply to telephone services furnished to income tax-exempt nonprofit hospitals for their use. File free taxes Also, the tax does not apply to amounts paid by these hospitals to provide local telephone service in the homes of their personnel who must be reached during their off-duty hours. File free taxes Nonprofit educational organizations. File free taxes   The tax does not apply to payments received for services and facilities furnished to a nonprofit educational organization for its use. File free taxes A nonprofit educational organization is one that satisfies all the following requirements. File free taxes It normally maintains a regular faculty and curriculum. File free taxes It normally has a regularly enrolled body of pupils or students in attendance at the place where its educational activities are regularly carried on. File free taxes It is exempt from income tax under section 501(a). File free taxes This includes a school operated by an organization exempt under section 501(c)(3) if the school meets the above qualifications. File free taxes Qualified blood collector organizations. File free taxes   The tax does not apply to telephone services furnished to qualified blood collector organizations for their use. File free taxes A qualified blood collector organization is one that is: Described in section 501(c)(3) and exempt from tax under section 501(a), Primarily engaged in the activity of collecting human blood, Registered with the IRS, and Registered by the Food and Drug Administration to collect blood. File free taxes Federal, state, and local government. File free taxes   The tax does not apply to communication services provided to the government of the United States, the government of any state or its political subdivisions, the District of Columbia, or the United Nations. File free taxes Treat an Indian tribal government as a state for the exemption from the communications tax only if the services involve the exercise of an essential tribal government function. File free taxes Exemption certificate. File free taxes   Any form of exemption certificate will be acceptable if it includes all the information required by the Internal Revenue Code and Regulations. File free taxes See Regulations section 49. File free taxes 4253-11. File free taxes File the certificate with the provider of the communication services. File free taxes An exemption certificate is not required for nontaxable services. File free taxes   The following users that are exempt from the communications tax do not have to file an annual exemption certificate after they have filed the initial certificate to claim an exemption from the communications tax. File free taxes The American National Red Cross and other international organizations. File free taxes Nonprofit hospitals. File free taxes Nonprofit educational organizations. File free taxes Qualified blood collector organizations. File free taxes State and local governments. File free taxes   The federal government does not have to file any exemption certificate. File free taxes   All other organizations must furnish exemption certificates when required. File free taxes Credits or Refunds If tax is collected and paid over for nontaxable services, or for certain services or users exempt from the communications tax, the collector or taxpayer may claim a credit or refund if it has repaid the tax to the person from whom the tax was collected or obtained the consent of that person to the allowance of the credit or refund. File free taxes Alternatively, the person who paid the tax may claim a refund. File free taxes For more information on how to file for credits or refunds, see the Instructions for Form 720 or Form 8849. File free taxes Collectors. File free taxes   The collector may request a credit or refund if it has repaid the tax to the person from whom the tax was collected, or obtained the consent of that person to the allowance of the credit or refund. File free taxes These requirements also apply to nontaxable service refunds. File free taxes Collectors using the regular method for deposits. File free taxes   Collectors using the regular method for deposits must use Form 720X to request a credit or refund if the collector has repaid the tax to the person from whom the tax was collected, or obtained the consent of that person to the allowance of the credit or refund. File free taxes Collectors using the alternative method for deposits. File free taxes   Collectors using the alternative method for deposits must adjust their separate accounts for the credit or refund if it has repaid the tax to the person from whom the tax was collected, or obtained the consent of that person to the allowance of the credit or refund. File free taxes For more information, see the Instructions for Form 720. File free taxes Air Transportation Taxes Taxes are imposed on amounts paid for: Transportation of persons by air, Use of international air travel facilities, and Transportation of property by air. File free taxes Transportation of Persons by Air The tax on transportation of persons by air is made up of the: Percentage tax, and Domestic-segment tax. File free taxes Percentage tax. File free taxes   A tax of 7. File free taxes 5% applies to amounts paid for taxable transportation of persons by air. File free taxes Amounts paid for transportation include charges for layover or waiting time and movement of aircraft in deadhead service. File free taxes Mileage awards. File free taxes   The percentage tax may apply to an amount paid (in cash or in kind) to an air carrier (or any related person) for the right to provide mileage awards for, or other reductions in the cost of, any transportation of persons by air. File free taxes For example, this applies to mileage awards purchased by credit card companies, telephone companies, restaurants, hotels, and other businesses. File free taxes   Generally, the percentage tax does not apply to amounts paid for mileage awards where the mileage awards cannot, under any circumstances, be redeemed for air transportation that is subject to the tax. File free taxes Until regulations are issued, the following rules apply to mileage awards. File free taxes Amounts paid for mileage awards that cannot be redeemed for taxable transportation beginning and ending in the United States are not subject to the tax. File free taxes For this rule, mileage awards issued by a foreign air carrier are considered to be usable only on that foreign air carrier and thus not redeemable for taxable transportation beginning and ending in the United States. File free taxes Therefore, amounts paid to a foreign air carrier for mileage awards are not subject to the tax. File free taxes Amounts paid by an air carrier to a domestic air carrier for mileage awards that can be redeemed for taxable transportation are not subject to the tax to the extent those miles will be awarded in connection with the purchase of taxable transportation. File free taxes Amounts paid by an air carrier to a domestic air carrier for mileage awards that can be redeemed for taxable transportation are subject to the tax to the extent those miles will not be awarded in connection with the purchase of taxable transportation. File free taxes Domestic-segment tax. File free taxes   The domestic-segment tax is a flat dollar amount for each segment of taxable transportation for which an amount is paid. File free taxes However, see Rural airports, later. File free taxes A segment is a single takeoff and a single landing. File free taxes The amount of the domestic-segment tax is in the Instructions for Form 720. File free taxes Charter flights. File free taxes    If an aircraft is chartered, the domestic-segment tax for each segment of taxable transportation is figured by multiplying the tax by the number of passengers transported on the aircraft. File free taxes Rural airports. File free taxes   The domestic-segment tax does not apply to a segment to or from a rural airport. File free taxes An airport is a rural airport for a calendar year if fewer than 100,000 commercial passengers departed from the airport by air during the second preceding calendar year (the 100,000 passenger rule), and one of the following is true: The airport is not located within 75 miles of another airport from which 100,000 or more commercial passengers departed during the second preceding calendar year, The airport was receiving essential air service subsidies as of August 5, 1997, or The airport is not connected by paved roads to another airport. File free taxes   To apply the 100,000 passenger rule to any airport described in (3) above, only count commercial passengers departing from the airport by air on flight segments of at least 100 miles. File free taxes   An updated list of rural airports can be found on the Department of Transportation website at www. File free taxes dot. File free taxes gov and enter the phrase “Essential Air Service” in the search box. File free taxes Taxable transportation. File free taxes   Taxable transportation is transportation by air that meets either of the following tests. File free taxes It begins and ends either in the United States or at any place in Canada or Mexico not more than 225 miles from the nearest point on the continental United States boundary (this is the 225-mile zone). File free taxes It is directly or indirectly from one port or station in the United States to another port or station in the United States, but only if it is not a part of uninterrupted international air transportation, discussed later. File free taxes Round trip. File free taxes   A round trip is considered two separate trips. File free taxes The first trip is from the point of departure to the destination. File free taxes The second trip is the return trip from that destination. File free taxes Uninterrupted international air transportation. File free taxes   This means transportation entirely by air that does not begin and end in the United States or in the 225-mile zone if there is not more than a 12-hour scheduled interval between arrival and departure at any station in the United States. File free taxes For a special rule that applies to military personnel, see Exemptions, later. File free taxes Transportation between the continental U. File free taxes S. File free taxes and Alaska or Hawaii. File free taxes   This transportation is partially exempt from the tax on transportation of persons by air. File free taxes The tax does not apply to the part of the trip between the point at which the route of transportation leaves or enters the continental United States (or a port or station in the 225-mile zone) and the point at which it enters or leaves Hawaii or Alaska. File free taxes Leaving or entering occurs when the route of the transportation passes over either the United States border or a point 3 nautical miles (3. File free taxes 45 statute miles) from low tide on the coast line, or when it leaves a port or station in the 225-mile zone. File free taxes Therefore, this transportation is subject to the percentage tax on the part of the trip in U. File free taxes S. File free taxes airspace, the domestic-segment tax for each domestic segment, and the tax on the use of international air travel facilities, discussed later. File free taxes Transportation within Alaska or Hawaii. File free taxes   The tax on transportation of persons by air applies to the entire fare paid in the case of flights between any of the Hawaiian Islands, and between any ports or stations in the Aleutian Islands or other ports or stations elsewhere in Alaska. File free taxes The tax applies even though parts of the flights may be over international waters or over Canada, if no point on the direct line of transportation between the ports or stations is more than 225 miles from the United States (Hawaii or Alaska). File free taxes Package tours. File free taxes   The air transportation taxes apply to “complimentary” air transportation furnished solely to participants in package holiday tours. File free taxes The amount paid for these package tours includes a charge for air transportation even though it may be advertised as “free. File free taxes ” This rule also applies to the tax on the use of international air travel facilities, discussed later. File free taxes Liability for tax. File free taxes   The person paying for taxable transportation is liable for the tax and, ordinarily, the person receiving the payment collects the tax, files the returns, and pays the tax over to the government. File free taxes However, if payment is made outside the United States for a prepaid order, exchange order, or similar order, the person furnishing the initial transportation provided for under that order must collect the tax. File free taxes    A travel agency that is an independent broker and sells tours on aircraft that it charters must collect the transportation tax, file the returns, and pay the tax over to the government. File free taxes However, a travel agency that sells tours as the agent of an airline must collect the tax and remit it to the airline for the filing of returns and for the payment of the tax over to the government. File free taxes An independent third party that is not under the airline's supervision or control, but is acting on behalf of, and receiving compensation from, a passenger, is not required to collect the tax and pay it to the government. File free taxes For more information on resellers of air transportation, see Revenue Ruling 2006-52. File free taxes You can find Revenue Ruling 2006-52 on page 761 of I. File free taxes R. File free taxes B. File free taxes 2006-43 at www. File free taxes irs. File free taxes gov/pub/irs-irbs/irb06-43. File free taxes pdf. File free taxes   The fact that the aircraft does not use public or commercial airports in taking off and landing has no effect on the tax. File free taxes But see Certain helicopter uses, later. File free taxes   For taxable transportation that begins and ends in the United States, the tax applies regardless of whether the payment is made in or outside the United States. File free taxes   If the tax is not paid when payment for the transportation is made, the air carrier providing the initial segment of the transportation that begins or ends in the United States becomes liable for the tax. File free taxes Exemptions. File free taxes   The tax on transportation of persons by air does not apply in the following situations. File free taxes See also Special Rules on Transportation Taxes, later. File free taxes Military personnel on international trips. File free taxes   When traveling in uniform at their own expense, United States military personnel on authorized leave are deemed to be traveling in uninterrupted international air transportation (defined earlier) even if the scheduled interval between arrival and departure at any station in the United States is actually more than 12 hours. File free taxes However, such personnel must buy their tickets within 12 hours after landing at the first domestic airport and accept the first available accommodation of the type called for by their tickets. File free taxes The trip must begin or end outside the United States and the 225-mile zone. File free taxes Certain helicopter uses. File free taxes   The tax does not apply to air transportation by helicopter if the helicopter is used for any of the following purposes. File free taxes Transporting individuals, equipment, or supplies in the exploration for, or the development or removal of, hard minerals, oil, or gas. File free taxes Planting, cultivating, cutting, transporting, or caring for trees (including logging operations). File free taxes Providing emergency medical transportation. File free taxes   However, during a use described in items (1) or (2), the tax applies if the helicopter takes off from, or lands at, a facility eligible for assistance under the Airport and Airway Development Act of 1970, or otherwise uses services provided under section 44509 or 44913(b) or subchapter I of chapter 471 of title 49, United States Code. File free taxes For item (1), treat each flight segment as a separate flight. File free taxes Fixed-wing aircraft uses. File free taxes   The tax does not apply to air transportation by fixed-wing aircraft if the fixed-wing aircraft is used for any of the following purposes. File free taxes Planting, cultivating, cutting, transporting, or caring for trees (including logging operations). File free taxes Providing emergency medical transportation. File free taxes The aircraft must be equipped for and exclusively dedicated on that flight to acute care emergency medical services. File free taxes   However, during a use described in item (1), the tax applies if the fixed-wing aircraft takes off from, or lands at, a facility eligible for assistance under the Airport and Airway Development Act of 1970, or otherwise uses services provided under section 44509 or 44913(b) or subchapter I of chapter 471 of title 49, United States Code. File free taxes Skydiving. File free taxes   The tax does not apply to any air transportation exclusively for the purpose of skydiving. File free taxes Seaplanes. File free taxes   The tax does not apply to any air transportation by seaplane for any segment consisting of a takeoff from, and a landing on, water if the places where the takeoff and landing occur are not receiving financial assistance from the Airport and Airways Trust Fund. File free taxes Bonus tickets. File free taxes   The tax does not apply to free bonus tickets issued by an airline company to its customers who have satisfied all requirements to qualify for the bonus tickets. File free taxes However, the tax applies to amounts paid by customers for advance bonus tickets when customers have traveled insufficient mileage to fully qualify for the free advance bonus tickets. File free taxes International Air Travel Facilities A tax per person is imposed (whether in or outside the United States) for international flights that begin or end in the United States. File free taxes However, for a domestic segment that begins or ends in Alaska or Hawaii, a reduced tax per person applies only to departures. File free taxes This tax does not apply if all the transportation is subject to the percentage tax, discussed earlier. File free taxes It also doesn't apply if the surtax on fuel used in a fractional ownership program aircraft (discussed earlier) is imposed. File free taxes See the Instructions for Form 720 for the tax rates. File free taxes Transportation of Property by Air A tax of 6. File free taxes 25% is imposed on amounts paid (whether in or outside the United States) for transportation of property by air. File free taxes The fact that the aircraft may not use public or commercial airports in taking off and landing has no effect on the tax. File free taxes The tax applies only to amounts paid to a person engaged in the business of transporting property by air for hire. File free taxes The tax applies only to transportation (including layover time and movement of aircraft in deadhead service) that begins and ends in the United States. File free taxes Thus, the tax does not apply to transportation of property by air that begins or ends outside the United States. File free taxes Exemptions. File free taxes   The tax on transportation of property by air does not apply in the following situations. File free taxes See also Special Rules on Transportation Taxes, later. File free taxes Cropdusting and firefighting service. File free taxes   The tax does not apply to amounts paid for cropdusting or aerial firefighting service. File free taxes Exportation. File free taxes    The tax does not apply to payments for transportation of property by air in the course of exportation (including to United States possessions) by continuous movement, as evidenced by the execution of Form 1363, Export Exemption Certificate. File free taxes See Form 1363 for more information. File free taxes Certain helicopter and fixed-wing air ambulance uses. File free taxes   The tax does not apply to amounts paid for the use of helicopters in construction to set heating and air conditioning units on roofs of buildings, to dismantle tower cranes, and to aid in construction of power lines and ski lifts. File free taxes   The tax also does not apply to air transportation by helicopter or fixed-wing aircraft for the purpose of providing emergency medical services. File free taxes The fixed-wing aircraft must be equipped for and exclusively dedicated on that flight to acute care emergency medical services. File free taxes Skydiving. File free taxes   The tax does not apply to any air transportation exclusively for the purpose of skydiving. File free taxes Excess baggage. File free taxes    The tax does not apply to excess baggage accompanying a passenger on an aircraft operated on an established line. File free taxes Surtax on fuel used in a fractional ownership program aircraft. File free taxes   The tax does not apply if the surtax on fuel used in a fractional ownership program aircraft (discussed earlier) is imposed. File free taxes Alaska and Hawaii. File free taxes   For transportation of property to and from Alaska and Hawaii, the tax in general does not apply to the portion of the transportation that is entirely outside the continental United States (or the 225-mile zone if the aircraft departs from or arrives at an airport in the 225-mile zone). File free taxes But the tax applies to flights between ports or stations in Alaska and the Aleutian Islands, as well as between ports or stations in Hawaii. File free taxes The tax applies even though parts of the flights may be over international waters or over Canada, if no point on a line drawn from where the route of transportation leaves the United States (Alaska) to where it reenters the United States (Alaska) is more than 225 miles from the United States. File free taxes Liability for tax. File free taxes   The person paying for taxable transportation is liable for the tax and, ordinarily, the person engaged in the business of transporting property by air for hire receives the payment, collects the tax, files the returns, and pays the tax over to the government. File free taxes   If tax is not paid when a payment is made outside the United States, the person furnishing the last segment of taxable transportation collects the tax from the person to whom the property is delivered in the United States. File free taxes Special Rules on Transportation Taxes In certain circumstances, special rules apply to the taxes on transportation of persons and property by air. File free taxes Aircraft used by affiliated corporations. File free taxes   The taxes do not apply to payments received by one member of an affiliated group of corporations from another member for services furnished in connection with the use of an aircraft. File free taxes However, the aircraft must be owned or leased by a member of the affiliated group and cannot be available for hire by a nonmember of the affiliated group. File free taxes Determine whether an aircraft is available for hire by a nonmember of an affiliated group on a flight-by-flight basis. File free taxes   For this rule, an affiliated group of corporations is any group of corporations connected with a common parent corporation through 80% or more of stock ownership. File free taxes Small aircraft. File free taxes   The taxes do not apply to transportation furnished by an aircraft having a maximum certificated takeoff weight of 6,000 pounds or less. File free taxes However, the taxes do apply if the aircraft is operated on an established line. File free taxes “Operated on an established line” means the aircraft operates with some degree of regularity between definite points. File free taxes However, it does not include any time an aircraft is being operated on a flight that is solely for sightseeing. File free taxes   Consider an aircraft to be operated on an established line if it is operated on a charter basis between two cities also served by that carrier on a regularly scheduled basis. File free taxes   Also, the taxes apply if the aircraft is jet-powered, regardless of its maximum certificated takeoff weight or whether or not it is operated on an established line. File free taxes Mixed load of persons and property. File free taxes   If a single amount is paid for air transportation of persons and property, the payment must be allocated between the amount subject to the tax on transportation of persons and the amount subject to the tax on transportation of property. File free taxes The allocation must be reasonable and supported by adequate records. File free taxes Credits or refunds. File free taxes   If tax is collected and paid over for air transportation that is not taxable air transportation, the collector may claim a credit or refund if it has repaid the tax to the person from whom the tax was collected or obtained the consent of that person to the allowance of the credit or refund. File free taxes Alternatively, the person who paid the tax may claim a refund. File free taxes For information on how to file for credits or refunds, see the Instructions for Form 720 or Form 8849. File free taxes Prev  Up  Next   Home   More Online Publications
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Bureau of Economic Analysis (BEA)

The Bureau of Economic Analysis produces economic accounts statistics that enable government and business decision–makers, researchers, and the American public to follow and understand the performance of the Nation's economy.

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The File Free Taxes

File free taxes 1. File free taxes   Bona Fide Residence Table of Contents Presence TestDays of Presence in the United States or Relevant Possession Significant Connection Tax HomeExceptions Closer ConnectionException for Year of Move Special Rules in the Year of a MoveYear of Moving to a Possession Year of Moving From a Possession Reporting a Change in Bona Fide ResidenceWho Must File Penalty for Not Filing Form 8898 In order to qualify for certain tax benefits (see chapter 3), you must be a bona fide resident of American Samoa, the CNMI, Guam, Puerto Rico, or the USVI for the entire tax year. File free taxes Generally, you are a bona fide resident of one of these possessions (the relevant possession) if, during the tax year, you: Meet the presence test, Do not have a tax home outside the relevant possession, and Do not have a closer connection to the United States or to a foreign country than to the relevant possession. File free taxes Special rule for members of the U. File free taxes S. File free taxes Armed Forces. File free taxes   If you are a member of the U. File free taxes S. File free taxes Armed Forces who qualified as a bona fide resident of the relevant possession in an earlier tax year, your absence from that possession during the current tax year in compliance with military orders will not affect your status as a bona fide resident. File free taxes Likewise, being in a possession solely in compliance with military orders will not qualify you for bona fide residency. File free taxes Also see the special income source rule for members of the U. File free taxes S. File free taxes Armed Forces in chapter 2, under Compensation for Labor or Personal Services . File free taxes Special rule for civilian spouse of active duty member of the U. File free taxes S. File free taxes Armed Forces. File free taxes   If you are the civilian spouse of an active duty servicemember, under Military Spouses Residency Relief Act (MSRRA) you can choose to keep your prior residence or domicile for tax purposes (tax residence) when accompanying the servicemember spouse, who is relocating under military orders, to a new military duty station in one of the 50 states, the District of Columbia, or a U. File free taxes S. File free taxes possession. File free taxes Before relocating, you and your spouse must have the same tax residence. File free taxes If you are a civilian spouse and choose to keep your prior tax residence after such relocation, the source of income for services performed (for example, wages, salaries, tips, or self-employment) by you is considered to be (the jurisdiction of) the prior tax residence. File free taxes As a result, the amount of income tax withholding (from Form(s) W-2, Wage and Tax Statement) that you are able to claim on your federal return, as well as the need to file a state or U. File free taxes S. File free taxes possession return, may be affected. File free taxes For more information, consult with state, local, or U. File free taxes S. File free taxes possession tax authorities regarding your tax obligations under MSRRA. File free taxes Presence Test If you are a U. File free taxes S. File free taxes citizen or resident alien, you will satisfy the presence test for the entire tax year if you meet one of the following conditions. File free taxes You were present in the relevant possession for at least 183 days during the tax year. File free taxes You were present in the relevant possession for at least 549 days during the 3-year period that includes the current tax year and the 2 immediately preceding tax years. File free taxes During each year of the 3-year period, you must be present in the relevant possession for at least 60 days. File free taxes You were present in the United States for no more than 90 days during the tax year. File free taxes You had earned income in the United States of no more than a total of $3,000 and were present for more days in the relevant possession than in the United States during the tax year. File free taxes Earned income is pay for personal services performed, such as wages, salaries, or professional fees. File free taxes You had no significant connection to the United States during the tax year. File free taxes Special rule for nonresident aliens. File free taxes   Conditions (1) through (5) above do not apply to nonresident aliens of the United States. File free taxes Instead, nonresident aliens must meet the substantial presence test discussed in chapter 1 of Publication 519. File free taxes In that discussion, substitute the name of the possession for “United States” and “U. File free taxes S. File free taxes ” wherever they appear. File free taxes Disregard the discussion in that chapter about a Closer Connection to a Foreign Country. File free taxes Days of Presence in the United States or Relevant Possession Generally, you are treated as being present in the United States or in the relevant possession on any day that you are physically present in that location at any time during the day. File free taxes Days of presence in a possession. File free taxes   You are considered to be present in the relevant possession on any of the following days. File free taxes Any day you are physically present in that possession at any time during the day. File free taxes Any day you are outside of the relevant possession in order to receive, or to accompany any of the following family members to receive, qualifying medical treatment (see Qualifying Medical Treatment , later). File free taxes Your parent. File free taxes Your spouse. File free taxes Your child, who is your son, daughter, stepson, or stepdaughter. File free taxes This includes an adopted child or child lawfully placed with you for legal adoption. File free taxes This also includes a foster child who is placed with you by an authorized placement agency or by judgment, decree, or other order of any court of competent jurisdiction. File free taxes Any day you are outside the relevant possession because you leave or are unable to return to the relevant possession during any: 14-day period within which a major disaster occurs in the relevant possession for which a Federal Emergency Management Agency (FEMA) notice of a federal declaration of a major disaster is issued in the Federal Register, or Period for which a mandatory evacuation order is in effect for the geographic area in the relevant possession in which your main home is located. File free taxes   If, during a single day, you are physically present: In the United States and in the relevant possession, that day is considered a day of presence in the relevant possession; or In two possessions, that day is considered a day of presence in the possession where your tax home is located (see Tax Home , later). File free taxes Days of presence in the United States. File free taxes   You are considered to be present in the United States on any day that you are physically present in the United States at any time during the day. File free taxes However, do not count the following days as days of presence in the United States. File free taxes Any day you are temporarily present in the United States in order to receive, or to accompany a parent, spouse, or child who is receiving, qualifying medical treatment. File free taxes “Child” is defined under item 2c earlier. File free taxes “Qualifying medical treatment” is defined later. File free taxes Any day you are temporarily present in the United States because you leave or are unable to return to the relevant possession during any: 14-day period within which a major disaster occurs in the relevant possession for which a Federal Emergency Management Agency (FEMA) notice of a federal declaration of a major disaster is issued in the Federal Register, or Period for which a mandatory evacuation order is in effect for the geographic area in the relevant possession in which your main home is located. File free taxes Any day you are in the United States for less than 24 hours when you are traveling between two places outside the United States. File free taxes Any day you are temporarily present in the United States as a professional athlete to compete in a charitable sports event (defined later). File free taxes Any day you are temporarily in the United States as a student (defined later). File free taxes Any day you are in the United States serving as an elected representative of the relevant possession, or serving full time as an elected or appointed official or employee of the government of that possession (or any of its political subdivisions). File free taxes Qualifying Medical Treatment Such treatment is generally provided by (or under the supervision of) a physician for an illness, injury, impairment, or physical or mental condition. File free taxes The treatment generally involves: Any period of inpatient care that requires an overnight stay in a hospital or hospice, and any period immediately before or after that inpatient care to the extent it is medically necessary, or Any temporary period of inpatient care in a residential medical care facility for medically necessary rehabilitation services. File free taxes With respect to each qualifying medical treatment, you must prepare (or obtain) and maintain documentation supporting your claim that such treatment meets the criteria to be considered days of presence in the relevant possession. File free taxes You must be able to produce this documentation within 30 days if requested by the IRS or tax administrator for the relevant possession. File free taxes You must keep the following documentation. File free taxes Records that provide: The patient's name and relationship to you (if the medical treatment is provided to a person you accompany); The name and address of the hospital, hospice, or residential medical care facility where the medical treatment was provided; The name, address, and telephone number of the physician who provided the medical treatment; The date(s) on which the medical treatment was provided; and Receipt(s) of payment for the medical treatment. File free taxes Signed certification by the providing or supervising physician that the medical treatment met the requirements for being qualified medical treatment, and setting forth: The patient's name, A reasonably detailed description of the medical treatment provided by (or under the supervision of) the physician, The dates on which the medical treatment was provided, and The medical facts that support the physician's certification and determination that the treatment was medically necessary. File free taxes Charitable Sports Event A charitable sports event is one that meets all of the following conditions. File free taxes The main purpose is to benefit a qualified charitable organization. File free taxes The entire net proceeds go to charity. File free taxes Volunteers perform substantially all the work. File free taxes In figuring the days of presence in the United States, you can exclude only the days on which you actually competed in the charitable sports event. File free taxes 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. File free taxes Student To qualify as a student, you must be, during some part of each of any 5 calendar months during the calendar year: A full-time student at a school that has a regular teaching staff, course of study, and regularly enrolled body of students in attendance, or A student taking a full-time, on-farm training course given by a school described in (1) above or by a state, county, or local government agency. File free taxes The 5 calendar months do not have to be consecutive. File free taxes Full-time student. File free taxes   A full-time student is a person who is enrolled for the number of hours or courses the school considers to be full-time attendance. File free taxes However, school attendance exclusively at night is not considered full-time attendance. File free taxes School. File free taxes   The term “school” includes elementary schools, middle schools, junior and senior high schools, colleges, universities, and technical, trade, and mechanical schools. File free taxes It does not include on-the-job training courses, correspondence schools, and schools offering courses only through the Internet. File free taxes Significant Connection One way in which you can meet the presence test is to have no significant connection to the United States during the tax year. File free taxes This section looks at the factors that determine if a significant connection exists. File free taxes You are treated as having a significant connection to the United States if you: Have a permanent home in the United States, Are currently registered to vote in any political subdivision of the United States, or Have a spouse or child (see item 2c under Days of presence in a possession , earlier) who is under age 18 whose main home is in the United States, other than: A child who is in the United States because he or she is the child of divorced or legally separated parents and is living with a custodial parent under a custodial decree or multiple support agreement, or A child who is in the United States as a student. File free taxes For the purpose of determining if you have a significant connection to the United States, the term “spouse” does not include a spouse from whom you are legally separated under a decree of divorce or separate maintenance. File free taxes Permanent home. File free taxes   A permanent home generally includes an accommodation such as a house, an apartment, or a furnished room that is either owned or rented by you or your spouse. File free taxes The dwelling unit must be available at all times, continuously, not only for short stays. File free taxes Exception for rental property. File free taxes   If you or your spouse own the dwelling unit and at any time during the tax year it is rented to someone else at fair rental value, it will be considered your permanent home only if you or your spouse use that property for personal purposes for more than the greater of: 14 days, or 10% of the number of days during that tax year that the property is rented to others at a fair rental value. File free taxes   You are treated as using rental property for personal purposes on any day the property is not being rented to someone else at fair rental value for the entire day. File free taxes   A day of personal use of a dwelling unit is also any day that the unit is used by any of the following persons. File free taxes You or any other person who has an interest in it, unless you rent it to another owner as his or her main home under a shared equity financing agreement. File free taxes A member of your family or a member of the family of any other person who has an interest in it, unless the family member uses the dwelling unit as his or her main home and pays a fair rental price. File free taxes Family includes only brothers and sisters, half-brothers and half-sisters, spouses, ancestors (parents, grandparents, etc. File free taxes ), and lineal descendants (children, grandchildren, etc. File free taxes ). File free taxes Anyone under an arrangement that lets you use some other dwelling unit. File free taxes Anyone at less than a fair rental price. File free taxes   However, any day you spend working substantially full time repairing and maintaining (not improving) your property is not counted as a day of personal use. File free taxes Whether your property is used mainly for this purpose is determined in light of all the facts and circumstances, such as: The amount of time you devote to repair and maintenance work, How often during the tax year you perform repair and maintenance work on this property, and The presence and activities of companions. File free taxes   See Publication 527, Residential Rental Property, for more information about personal use of a dwelling unit. File free taxes Example—significant connection. File free taxes Ann Green, a U. File free taxes S. File free taxes citizen, is a sales representative for a company based in Guam. File free taxes Ann lives with her spouse and young children in their house in Guam, where she is also registered to vote. File free taxes Her business travel requires her to spend 120 days in the United States and another 120 days in foreign countries. File free taxes When traveling on business, Ann generally stays at hotels but sometimes stays with her brother, who lives in the United States. File free taxes Ann's stays are always of short duration and she asks her brother's permission to stay with him. File free taxes Her brother's house is not her permanent home, nor does she have any other accommodations in the United States that would be considered her permanent home. File free taxes Ann satisfies the presence test because she has no significant connection to the United States. File free taxes Example—presence test. File free taxes Eric and Wanda Brown live for part of the year in a condominium, which they own, in the CNMI. File free taxes They also own a house in Maine where they live for 120 days every year to be near their grown children and grandchildren. File free taxes The Browns are retired and their only income is from pension payments, dividends, interest, and social security benefits. File free taxes In 2013, they spent only 175 days in the CNMI because of a 70-day vacation to Europe and Asia. File free taxes Thus, in 2013, the Browns were not present in the CNMI for at least 183 days, were present in the United States for more than 90 days, and had a significant connection to the United States because of their permanent home. File free taxes However, the Browns still satisfied the presence test with respect to the CNMI because they had no earned income in the United States and were physically present for more days in the CNMI than in the United States. File free taxes Tax Home You will have met the tax home test if you did not have a tax home outside the relevant possession during any part of the tax year. File free taxes Your tax home is your regular or main place of business, employment, or post of duty regardless of where you maintain your family home. File free taxes 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. File free taxes If you do not fit either of these categories, you are considered an itinerant and your tax home is wherever you work. File free taxes Exceptions There are some special rules regarding tax home that provide exceptions to the general rule stated above. File free taxes Students and Government Officials Disregard the following days when determining whether you have a tax home outside the relevant possession. File free taxes Days you were temporarily in the United States as a student (see Student under Days of Presence in the United States or Relevant Possession, earlier). File free taxes Days you were in the United States serving as an elected representative of the relevant possession, or serving full time as an elected or appointed official or employee of the government of that possession (or any of its political subdivisions). File free taxes Seafarers You will not be considered to have a tax home outside the relevant possession solely because you are employed on a ship or other seafaring vessel that is predominantly used in local and international waters. File free taxes For this purpose, a vessel is considered to be predominantly used in local and international waters if, during the tax year, the total amount of time it is used in international waters and in the waters within 3 miles of the relevant possession exceeds the total amount of time it is used in the territorial waters of the United States, another possession, or any foreign country. File free taxes Example. File free taxes In 2013, Sean Silverman, a U. File free taxes S. File free taxes citizen, was employed by a fishery and spent 250 days at sea on a fishing vessel. File free taxes When not at sea, Sean lived with his spouse at a house they own in American Samoa. File free taxes The fishing vessel on which Sean works departs and arrives at various ports in American Samoa, other possessions, and foreign countries, but was in international or American Samoa's local waters for 225 days. File free taxes For purposes of determining bona fide residency of American Samoa, Sean will not be considered to have a tax home outside that possession solely because of his employment on board the fishing vessel. File free taxes Year of Move If you are moving to or from a possession during the year, you may still be able to meet the tax home test for that year. File free taxes See Special Rules in the Year of a Move , later in this chapter. File free taxes Closer Connection You will have met the closer connection test if, during any part of the tax year, you do not have a closer connection to the United States or a foreign country than to the relevant U. File free taxes S. File free taxes possession. File free taxes You will be considered to have a closer connection to a possession than to the United States or to a foreign country if you have maintained more significant contacts with the possession(s) than with the United States or foreign country. File free taxes In determining if you have maintained more significant contacts with the relevant possession, the facts and circumstances to be considered include, but are not limited to, the following. File free taxes The location of your permanent home. File free taxes The location of your family. File free taxes The location of personal belongings, such as automobiles, furniture, clothing, and jewelry owned by you and your family. File free taxes The location of social, political, cultural, professional, or religious organizations with which you have a current relationship. File free taxes The location where you conduct your routine personal banking activities. File free taxes The location where you conduct business activities (other than those that go into determining your tax home). File free taxes The location of the jurisdiction in which you hold a driver's license. File free taxes The location of the jurisdiction in which you vote. File free taxes The location of charitable organizations to which you contribute. File free taxes The country of residence you designate on forms and documents. File free taxes The types of official forms and documents you file, such as Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting (Individuals), or Form W-9, Request for Taxpayer Identification Number and Certification. File free taxes Your connections to the relevant possession will be compared to the total of your connections with the United States and foreign countries. File free taxes Your answers to the questions on Form 8898, Part III, will help establish the jurisdiction to which you have a closer connection. File free taxes Example—closer connection to the United States. File free taxes Marcos Reyes, a U. File free taxes S. File free taxes citizen, moved to Puerto Rico in 2013 to start an investment consulting and venture capital business. File free taxes His spouse and two teenage children remained in California to allow the children to complete high school. File free taxes He traveled back to the United States regularly to see his spouse and children, to engage in business activities, and to take vacations. File free taxes Marcos had an apartment available for his full-time use in Puerto Rico, but remained a joint owner of the residence in California where his spouse and children lived. File free taxes Marcos and his family had automobiles and personal belongings such as furniture, clothing, and jewelry located at both residences. File free taxes Although Marcos was a member of the Puerto Rico Chamber of Commerce, he also belonged to and had current relationships with social, political, cultural, and religious organizations in California. File free taxes Marcos received mail in California, including bank and brokerage statements and credit card bills. File free taxes He conducted his personal banking activities in California. File free taxes He held a California driver's license and was also registered to vote there. File free taxes Based on all of the particular facts and circumstances pertaining to Marcos, he was not a bona fide resident of Puerto Rico in 2013 because he had a closer connection to the United States than to Puerto Rico. File free taxes Closer connection to another possession. File free taxes   Generally, possessions are not treated as foreign countries. File free taxes Therefore, a closer connection to a possession other than the relevant possession will not be treated as a closer connection to a foreign country. File free taxes Example—tax home and closer connection to possession. File free taxes Pearl Blackmon, a U. File free taxes S. File free taxes citizen, is a permanent employee of a hotel in Guam, but works only during the tourist season. File free taxes For the remainder of each year, Pearl lives with her spouse and children in the CNMI, where she has no outside employment. File free taxes Most of Pearl's personal belongings, including her automobile, are located in the CNMI. File free taxes She is registered to vote in, and has a driver's license issued by, the CNMI. File free taxes She does her personal banking in the CNMI and routinely lists her CNMI address as her permanent address on forms and documents. File free taxes Pearl satisfies the presence test with respect to both Guam and the CNMI. File free taxes She satisfies the tax home test with respect to Guam, because her regular place of business is in Guam. File free taxes Pearl satisfies the closer connection test with respect to both Guam and the CNMI, because she does not have a closer connection to the United States or to any foreign country. File free taxes Pearl is considered a bona fide resident of Guam, the location of her tax home. File free taxes Exception for Year of Move If you are moving to or from a possession during the year, you may still be able to meet the closer connection test for that year. File free taxes See Special Rules in the Year of a Move , next. File free taxes Special Rules in the Year of a Move If you are moving to or from a possession during the year, you may still be able to meet the tax home and closer connection tests for that year. File free taxes Year of Moving to a Possession You will satisfy the tax home and closer connection tests in the tax year of changing your residence to the relevant possession if you meet all of the following. File free taxes You have not been a bona fide resident of the relevant possession in any of the 3 tax years immediately preceding your move. File free taxes In the year of the move, you do not have a tax home outside the relevant possession or a closer connection to the United States or a foreign country than to the relevant possession during any of the last 183 days of the tax year. File free taxes You are a bona fide resident of the relevant possession for each of the 3 tax years immediately following your move. File free taxes Example. File free taxes Dwight Wood, a U. File free taxes S. File free taxes citizen, files returns on a calendar year basis. File free taxes He lived in the United States from January 2007 through May 2013. File free taxes In June 2013 he moved to the USVI, purchased a house, and accepted a permanent job with a local employer. File free taxes From July 1 through December 31, 2013 (more than 183 days), Dwight's principal place of business was in the USVI and, during that time, he did not have a closer connection to the United States or a foreign country than to the USVI. File free taxes If he is a bona fide resident of the USVI during all of 2014 through 2016, he will satisfy the tax home and closer connection tests for 2013. File free taxes If Dwight also satisfies the presence test in 2013, he will be considered a bona fide resident of the USVI for the entire 2013 tax year. File free taxes Year of Moving From a Possession In the year you cease to be a bona fide resident of American Samoa, the CNMI, Guam, or the USVI, you will satisfy the tax home and closer connection tests with respect to the relevant possession if you meet all of the following. File free taxes You have been a bona fide resident of the relevant possession for each of the 3 tax years immediately preceding your change of residence. File free taxes In the year of the move, you do not have a tax home outside the relevant possession or a closer connection to the United States or a foreign country than to the relevant possession during any of the first 183 days of the tax year. File free taxes You are not a bona fide resident of the relevant possession for any of the 3 tax years immediately following your move. File free taxes Example. File free taxes Jean Aspen, a U. File free taxes S. File free taxes citizen, files returns on a calendar year basis. File free taxes From January 2010 through December 2012, Jean was a bona fide resident of American Samoa. File free taxes Jean continued to live there until September 6, 2013, when she accepted new employment and moved to Hawaii. File free taxes Jean's principal place of business from January 1 through September 5, 2013 (more than 183 days), was in American Samoa, and during that period Jean did not have a closer connection to the United States or a foreign country than to American Samoa. File free taxes If Jean continues to live and work in Hawaii for the rest of 2013 and throughout years 2014 through 2016, she will satisfy the tax home and closer connection tests for 2013 with respect to American Samoa. File free taxes If Jean also satisfies the presence test in 2013, she will be considered a bona fide resident for the entire 2013 tax year. File free taxes Puerto Rico You will be considered a bona fide resident of Puerto Rico for the part of the tax year preceding the date on which you move if you: Are a U. File free taxes S. File free taxes citizen, Are a bona fide resident of Puerto Rico for at least 2 tax years immediately preceding the tax year of the move, Cease to be a bona fide resident of Puerto Rico during the tax year, Cease to have a tax home in Puerto Rico during the tax year, and Have a closer connection to Puerto Rico than to the United States or a foreign country throughout the part of the tax year preceding the date on which you cease to have a tax home in Puerto Rico. File free taxes Example. File free taxes Randy White, a U. File free taxes S. File free taxes citizen, files returns on a calendar year basis. File free taxes For all of 2011 and 2012, Randy was a bona fide resident of Puerto Rico. File free taxes From January through April 2013, Randy continued to reside and maintain his principal place of business in and closer connection to Puerto Rico. File free taxes On May 5, 2013, Randy moved and changed his tax home to Nevada. File free taxes Later that year he established a closer connection to the United States than to Puerto Rico. File free taxes Randy did not satisfy the presence test for 2013 with respect to Puerto Rico, nor the tax home or closer connection tests. File free taxes However, because Randy was a bona fide resident of Puerto Rico for at least 2 tax years before he moved to Nevada in 2013, he was a bona fide resident of Puerto Rico from January 1 through May 4, 2013. File free taxes Reporting a Change in Bona Fide Residence If you became or ceased to be a bona fide resident of a U. File free taxes S. File free taxes possession, you may need to file Form 8898. File free taxes This applies to the U. File free taxes S. File free taxes possessions of American Samoa, the CNMI, Guam, Puerto Rico, and the USVI. File free taxes Who Must File You must file Form 8898 for the tax year in which you meet both of the following conditions. File free taxes Your worldwide gross income (defined below) in that tax year is more than $75,000. File free taxes You meet one of the following. File free taxes You take a position for U. File free taxes S. File free taxes tax purposes that you became a bona fide resident of a U. File free taxes S. File free taxes possession after a tax year for which you filed a U. File free taxes S. File free taxes income tax return as a citizen or resident alien of the United States but not as a bona fide resident of the possession. File free taxes You are a citizen or resident alien of the United States who takes the position for U. File free taxes S. File free taxes tax purposes that you ceased to be a bona fide resident of a U. File free taxes S. File free taxes possession after a tax year for which you filed an income tax return (with the IRS, the possession tax authority, or both) as a bona fide resident of the possession. File free taxes You take the position for U. File free taxes S. File free taxes tax purposes that you became a bona fide resident of Puerto Rico or American Samoa after a tax year for which you were required to file an income tax return as a bona fide resident of the CNMI, Guam, or the USVI. File free taxes Worldwide gross income. File free taxes   Worldwide gross income means all income you received in the form of money, goods, property, and services, including any income from sources outside the United States (even if you can exclude part or all of it) and before any deductions, credits, or rebates. File free taxes Example. File free taxes You are a U. File free taxes S. File free taxes citizen who moved to the CNMI in December 2012, but did not become a bona fide resident of that possession until the 2013 tax year. File free taxes You must file Form 8898 for the 2013 tax year if your worldwide gross income for that year was more than $75,000. File free taxes Penalty for Not Filing Form 8898 If you are required to file Form 8898 for any tax year and you fail to file it, you may owe a penalty of $1,000. File free taxes You may also owe this penalty if you do not include all the information required by the form or the form includes incorrect information. File free taxes In either case, you will not owe this penalty if you can show that such failure is due to reasonable cause and not willful neglect. File free taxes This is in addition to any criminal penalty that may be imposed. File free taxes Prev  Up  Next   Home   More Online Publications