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Filing 2010 Taxes Late

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Filing 2010 Taxes Late

Filing 2010 taxes late 8. Filing 2010 taxes late   Paying Tax Through Withholding or Estimated Tax Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Notification of Alien Status Withholding From CompensationWithholding on Wages Withholding on Pensions Withholding on Tip Income Independent Contractors Withholding From Other IncomeTax Withheld on Partnership Income Withholding on Scholarships and Fellowship Grants Income Entitled to Tax Treaty BenefitsStudents, teachers, and researchers. Filing 2010 taxes late Tax Withheld on Real Property Sales Social Security and Medicare TaxesStudents and Exchange Visitors Agricultural Workers Self-Employment Tax International Social Security Agreements Estimated Tax Form 1040-ES (NR)Fiscal year. Filing 2010 taxes late Introduction This chapter discusses how to pay your U. Filing 2010 taxes late S. Filing 2010 taxes late income tax as you earn or receive income during the year. Filing 2010 taxes late In general, the federal income tax is a pay as you go tax. Filing 2010 taxes late There are two ways to pay as you go. Filing 2010 taxes late Withholding. Filing 2010 taxes late If you are an employee, your employer probably withholds income tax from your pay. Filing 2010 taxes late Tax may also be withheld from certain other income—including pensions, bonuses, commissions, and gambling winnings. Filing 2010 taxes late In each case, the amount withheld is paid to the U. Filing 2010 taxes late S. Filing 2010 taxes late Treasury in your name. Filing 2010 taxes late Estimated tax. Filing 2010 taxes late If you do not pay your tax through withholding, or do not pay enough tax that way, you might have to pay estimated tax. Filing 2010 taxes late People who are in business for themselves generally will have to pay their tax this way. Filing 2010 taxes late You may have to pay estimated tax if you receive income such as dividends, interest, rent, and royalties. Filing 2010 taxes late Estimated tax is used to pay not only income tax, but self-employment tax and alternative minimum tax as well. Filing 2010 taxes late Topics - This chapter discusses: How to notify your employer of your alien status, Income subject to withholding of income tax, Exemptions from withholding, Social security and Medicare taxes, and Estimated tax rules. Filing 2010 taxes late Useful Items - You may want to see: Publication 515 Withholding of Tax on Nonresident Aliens and Foreign Entities 901 U. Filing 2010 taxes late S. Filing 2010 taxes late Tax Treaties Form (and Instructions) W-4 Employee's Withholding Allowance Certificate W-8BEN Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting (Individuals) W-8ECI Certificate of Foreign Person's Claim That Income Is Effectively Connected With the Conduct of a Trade or Business in the United States W-9 Request for Taxpayer Identification Number and Certification 1040-ES (NR) U. Filing 2010 taxes late S. Filing 2010 taxes late Estimated Tax for Nonresident Alien Individuals 8233 Exemption From Withholding on Compensation for Independent (and Certain Dependent) Personal Services of a Nonresident Alien Individual 8288-B Application for Withholding Certificate for Dispositions by Foreign Persons of U. Filing 2010 taxes late S. Filing 2010 taxes late Real Property Interests 13930 Application for Central Withholding Agreement See chapter 12 for information about getting these publications and forms. Filing 2010 taxes late Notification of Alien Status You must let your employer know whether you are a resident or a nonresident alien so your employer can withhold the correct amount of tax from your wages. Filing 2010 taxes late If you are a resident alien under the rules discussed in chapter 1, you must file Form W-9 or a similar statement with your employer. Filing 2010 taxes late If you are a nonresident alien under those rules, you must furnish to your employer Form 8233 or Form W-8BEN, establishing that you are a foreign person, or Form W-4, establishing that your compensation is subject to graduated withholding at the same rates as resident aliens or U. Filing 2010 taxes late S. Filing 2010 taxes late citizens. Filing 2010 taxes late If you are a resident alien and you receive income other than wages (such as dividends and royalties) from sources within the United States, file Form W-9 or similar statement with the withholding agent (generally, the payer of the income) so the agent will not withhold tax on the income at the 30% (or lower treaty) rate. Filing 2010 taxes late If you receive this type of income as a nonresident alien, file Form W-8BEN with the withholding agent so that the agent will withhold tax at the 30% (or lower treaty) rate. Filing 2010 taxes late However, if the income is effectively connected with a U. Filing 2010 taxes late S. Filing 2010 taxes late trade or business, file Form W-8ECI instead. Filing 2010 taxes late Withholding From Compensation The following discussion generally applies only to nonresident aliens. Filing 2010 taxes late Tax is withheld from resident aliens in the same manner as U. Filing 2010 taxes late S. Filing 2010 taxes late citizens. Filing 2010 taxes late Wages and other compensation paid to a nonresident alien for services performed as an employee are usually subject to graduated withholding at the same rates as resident aliens and U. Filing 2010 taxes late S. Filing 2010 taxes late citizens. Filing 2010 taxes late Therefore, your compensation, unless it is specifically excluded from the term “wages” by law, or is exempt from tax by treaty, is subject to graduated withholding. Filing 2010 taxes late Withholding on Wages If you are an employee and you receive wages subject to graduated withholding, you will be required to fill out a Form W-4. Filing 2010 taxes late Also fill out Form W-4 for a scholarship or fellowship grant to the extent it represents payment for past, present, or future services and for which you are not claiming a tax treaty withholding exemption on Form 8233 (discussed later under Income Entitled to Tax Treaty Benefits). Filing 2010 taxes late These are services you are required to perform as an employee and as a condition of receiving the scholarship or fellowship (or tuition reduction). Filing 2010 taxes late Nonresident aliens should fill out Form W-4 using the following instructions instead of the instructions on the Form W-4. Filing 2010 taxes late This is because of the restrictions on a nonresident alien's filing status, the limited number of personal exemptions a nonresident alien is allowed, and because a nonresident alien cannot claim the standard deduction. Filing 2010 taxes late Enter your social security number (SSN) on line 2. Filing 2010 taxes late Do not enter an individual taxpayer identification number (ITIN). Filing 2010 taxes late Check only “Single” marital status on line 3 (regardless of your actual marital status). Filing 2010 taxes late Claim only one allowance on line 5, unless you are a resident of Canada, Mexico, or South Korea, or a U. Filing 2010 taxes late S. Filing 2010 taxes late national. Filing 2010 taxes late Write “Nonresident Alien” or “NRA” on the dotted line on line 6. Filing 2010 taxes late You can request additional withholding on line 6 at your option. Filing 2010 taxes late Do not claim “Exempt” withholding status on line 7. Filing 2010 taxes late A U. Filing 2010 taxes late S. Filing 2010 taxes late national is an individual who, although not a U. Filing 2010 taxes late S. Filing 2010 taxes late citizen, owes his or her allegiance to the United States. Filing 2010 taxes late U. Filing 2010 taxes late S. Filing 2010 taxes late nationals include American Samoans, and Northern Mariana Islanders who chose to become U. Filing 2010 taxes late S. Filing 2010 taxes late nationals instead of U. Filing 2010 taxes late S. Filing 2010 taxes late citizens. Filing 2010 taxes late See Withholding on Scholarships and Fellowship Grants later, for how to fill out Form W-4 if you receive a U. Filing 2010 taxes late S. Filing 2010 taxes late source scholarship or fellowship grant that is not a payment for services. Filing 2010 taxes late Students and business apprentices from India. Filing 2010 taxes late   If you are eligible for the benefits of Article 21(2) of the United States-India Income Tax Treaty, you may claim an additional withholding allowance for the standard deduction. Filing 2010 taxes late You can claim an additional withholding allowance for your spouse only if your spouse will have no gross income for 2013 and cannot be claimed as a dependent on another U. Filing 2010 taxes late S. Filing 2010 taxes late taxpayer's 2013 return. Filing 2010 taxes late You may also claim an additional withholding allowance for each of your dependents not admitted to the United States on “F-2,” “J-2,” or “M-2” visas if they meet the same rules that apply to U. Filing 2010 taxes late S. Filing 2010 taxes late citizens. Filing 2010 taxes late Household employees. Filing 2010 taxes late   If you work as a household employee, your employer does not have to withhold income tax. Filing 2010 taxes late However, you may agree to voluntary income tax withholding by filing a Form W-4 with your employer. Filing 2010 taxes late The agreement goes into effect when your employer accepts the agreement by beginning the withholding. Filing 2010 taxes late You or your employer may end the agreement by letting the other know in writing. Filing 2010 taxes late Agricultural workers. Filing 2010 taxes late   If you are an agricultural worker on an H-2A visa, your employer does not have to withhold income tax. Filing 2010 taxes late However, your employer will withhold income tax only if you and your employer agree to withhold. Filing 2010 taxes late In that case, you must provide your employer with a properly completed Form W-4. Filing 2010 taxes late You can find more information about not having tax withheld at www. Filing 2010 taxes late irs. Filing 2010 taxes late gov/Individuals/International-Taxpayers/Foreign-Agricultural-Workers. Filing 2010 taxes late Wages Exempt From Withholding Wages that are exempt from U. Filing 2010 taxes late S. Filing 2010 taxes late income tax under an income tax treaty are generally exempt from withholding. Filing 2010 taxes late For information on how to claim this exemption from withholding, see Income Entitled to Tax Treaty Benefits , later. Filing 2010 taxes late Wages paid to aliens who are residents of American Samoa, Canada, Mexico, Puerto Rico, or the U. Filing 2010 taxes late S. Filing 2010 taxes late Virgin Islands may be exempt from withholding. Filing 2010 taxes late The following paragraphs explain these exemptions. Filing 2010 taxes late Residents of Canada or Mexico engaged in transportation-related employment. Filing 2010 taxes late   Certain residents of Canada or Mexico who enter or leave the United States at frequent intervals are not subject to withholding on their wages. Filing 2010 taxes late These persons either: Perform duties in transportation service between the United States and Canada or Mexico, or Perform duties connected to the construction, maintenance, or operation of a waterway, viaduct, dam, or bridge crossed by, or crossing, the boundary between the United States and Canada or the boundary between the United States and Mexico. Filing 2010 taxes late    This employment is subject to withholding of social security and Medicare taxes unless the services are performed for a railroad. Filing 2010 taxes late   To qualify for the exemption from withholding during a tax year, a Canadian or Mexican resident must give the employer a statement in duplicate with name, address, and identification number, certifying that the resident: Is not a U. Filing 2010 taxes late S. Filing 2010 taxes late citizen or resident, Is a resident of Canada or Mexico, whichever applies, and Expects to perform duties previously described during the tax year in question. Filing 2010 taxes late   The statement can be in any form, but it must be dated and signed by the employee and must include a written declaration that it is made under the penalties of perjury. Filing 2010 taxes late Residents of American Samoa and Puerto Rico. Filing 2010 taxes late   If you are a nonresident alien employee who is a resident of American Samoa or Puerto Rico, wages for services performed in American Samoa or Puerto Rico are generally not subject to withholding unless you are an employee of the United States or any of its agencies in American Samoa or Puerto Rico. Filing 2010 taxes late Residents of the U. Filing 2010 taxes late S. Filing 2010 taxes late Virgin Islands. Filing 2010 taxes late   Nonresident aliens who are bona fide residents of the U. Filing 2010 taxes late S Virgin Islands are not subject to withholding of U. Filing 2010 taxes late S. Filing 2010 taxes late tax on income earned while temporarily employed in the United States. Filing 2010 taxes late This is because those persons pay their income tax to the U. Filing 2010 taxes late S. Filing 2010 taxes late Virgin Islands. Filing 2010 taxes late To avoid having tax withheld on income earned in the United States, bona fide residents of the U. Filing 2010 taxes late S. Filing 2010 taxes late Virgin Islands should write a letter, in duplicate, to their employers, stating that they are bona fide residents of the U. Filing 2010 taxes late S. Filing 2010 taxes late Virgin Islands and expect to pay tax on all income to the U. Filing 2010 taxes late S. Filing 2010 taxes late Virgin Islands. Filing 2010 taxes late Withholding on Pensions If you receive a pension as a result of personal services performed in the United States, the pension income is subject to the 30% (or lower treaty) rate of withholding. Filing 2010 taxes late You may, however, have tax withheld at graduated rates on the portion of the pension that arises from the performance of services in the United States after December 31, 1986. Filing 2010 taxes late You must fill out Form W-8BEN and give it to the withholding agent or payer before the income is paid or credited to you. Filing 2010 taxes late Withholding on Tip Income Tips you receive during the year for services performed in the United States are subject to U. Filing 2010 taxes late S. Filing 2010 taxes late income tax. Filing 2010 taxes late Include them in taxable income. Filing 2010 taxes late In addition, tips received while working for one employer, amounting to $20 or more in a month, are subject to graduated withholding. Filing 2010 taxes late Independent Contractors If there is no employee-employer relationship between you and the person for whom you perform services, your compensation is subject to the 30% (or lower treaty) rate of withholding. Filing 2010 taxes late However, if you are engaged in a trade or business in the United States during the tax year, your compensation for personal services as an independent contractor (independent personal services) may be entirely or partly exempt from withholding if you reach an agreement with the Internal Revenue Service on the amount of withholding required. Filing 2010 taxes late An agreement that you reach with the IRS regarding withholding from your compensation for independent personal services is effective for payments covered by the agreement after it is agreed to by all parties. Filing 2010 taxes late You must agree to timely file an income tax return for the current tax year. Filing 2010 taxes late Central withholding agreements. Filing 2010 taxes late   If you are a nonresident alien entertainer or athlete performing or participating in athletic events in the United States, you may be able to enter into a withholding agreement with the IRS for reduced withholding provided certain requirements are met. Filing 2010 taxes late Under no circumstances will such a withholding agreement reduce taxes withheld to less than the anticipated amount of income tax liability. Filing 2010 taxes late   File Form 13930 and the required attachments with the IRS to request a central withholding agreement. Filing 2010 taxes late Either you or your authorized representative can file the form. Filing 2010 taxes late It should be sent to the IRS at least 45 days before the tour begins or the event occurs. Filing 2010 taxes late Exceptions will be considered on a case by case basis. Filing 2010 taxes late   For more information on the CWA program, go to www. Filing 2010 taxes late irs. Filing 2010 taxes late gov/Individuals/International-Taxpayers/Central-Withholding-Agreements. Filing 2010 taxes late Final payment exemption. Filing 2010 taxes late   Your final payment of compensation during the tax year for independent personal services may be entirely or partly exempt from withholding. Filing 2010 taxes late This exemption is available only once during your tax year and applies to a maximum of $5,000 of compensation. Filing 2010 taxes late To obtain this exemption, you or your agent must give the following statements and information to the Commissioner or his delegate. Filing 2010 taxes late A statement by each withholding agent from whom you have received gross income effectively connected with a trade or business in the United States during the tax year, showing the amount of income paid and the tax withheld. Filing 2010 taxes late Each statement must be signed by the withholding agent and verified by a declaration that it is made under penalties of perjury. Filing 2010 taxes late A statement by the withholding agent from whom you expect to receive the final payment of compensation, showing the amount of the payment and the amount of tax that would be withheld if a final payment exemption were not granted. Filing 2010 taxes late This statement must also be signed by the withholding agent and verified by a declaration that it is made under penalties of perjury. Filing 2010 taxes late A statement by you that you do not intend to receive any other income effectively connected with a trade or business in the United States during the current tax year. Filing 2010 taxes late The amount of tax that has been withheld or paid under any other provision of the Internal Revenue Code or regulations for any income effectively connected with your trade or business in the United States during the current tax year. Filing 2010 taxes late The amount of your outstanding tax liabilities, if any, including interest and penalties, from the current tax year or prior tax periods. Filing 2010 taxes late Any provision of an income tax treaty under which a partial or complete exemption from withholding may be claimed, the country of your residence, and a statement of sufficient facts to justify an exemption under the treaty. Filing 2010 taxes late A statement signed by you, and verified by a declaration that it is made under penalties of perjury, that all the information given is true and that to your knowledge no relevant information has been omitted. Filing 2010 taxes late   If satisfied with the information, the IRS will determine the amount of your tentative income tax for the tax year on gross income effectively connected with your trade or business in the United States. Filing 2010 taxes late Ordinary and necessary business expenses can be taken into account if proven to the satisfaction of the Commissioner or his delegate. Filing 2010 taxes late   The Commissioner or his delegate will send you a letter, directed to the withholding agent, showing the amount of the final payment of compensation that is exempt from withholding and the amount that can be paid to you because of the exemption. Filing 2010 taxes late You must give two copies of the letter to the withholding agent and must also attach a copy of the letter to your income tax return for the tax year for which the exemption is effective. Filing 2010 taxes late Allowance for Personal Exemption Withholding on payments for independent personal services is generally based on the amount of your compensation payment minus the value of one exemption ($3,950 for 2014). Filing 2010 taxes late To determine the income for independent personal services performed in the United States to which the 30% (or lower treaty) rate will apply, you are allowed one personal exemption if you are not a U. Filing 2010 taxes late S. Filing 2010 taxes late national and are not a resident of Canada, Mexico, or South Korea. Filing 2010 taxes late For purposes of 30% withholding, the exemption is prorated at $10. Filing 2010 taxes late 82 a day in 2014 for the period that labor or personal services are performed in the United States. Filing 2010 taxes late To claim an exemption from withholding on the personal exemption amount, fill out the applicable parts of Form 8233 and give it to the withholding agent. Filing 2010 taxes late Example. Filing 2010 taxes late Eric Johannsen, who is a resident of Country X worked under a contract with a U. Filing 2010 taxes late S. Filing 2010 taxes late firm (not as an employee) in the United States for 100 days during 2014 before returning to his country. Filing 2010 taxes late He earned $6,000 for the services performed (not considered wages) in the United States. Filing 2010 taxes late Eric is married and has three dependent children. Filing 2010 taxes late His wife is not employed and has no income subject to U. Filing 2010 taxes late S. Filing 2010 taxes late tax. Filing 2010 taxes late The amount of the personal exemption to be allowed against the income for his personal services performed within the United States in 2014 is $1,082 (100 days × $10. Filing 2010 taxes late 82), and withholding at 30% is applied against the balance. Filing 2010 taxes late Thus, $1,475. Filing 2010 taxes late 40 in tax is withheld from Eric's earnings (30% of $4,918 ($6,000 − $1,082). Filing 2010 taxes late U. Filing 2010 taxes late S. Filing 2010 taxes late nationals or residents of Canada, Mexico, or South Korea. Filing 2010 taxes late   If you are a nonresident alien who is a resident of Canada, Mexico, or South Korea, or who is a national of the United States, you are subject to the same 30% withholding on your compensation for independent personal services performed in the United States. Filing 2010 taxes late However, if you are a U. Filing 2010 taxes late S. Filing 2010 taxes late national or a resident of Canada or Mexico, you are allowed the same personal exemptions as U. Filing 2010 taxes late S. Filing 2010 taxes late citizens. Filing 2010 taxes late For the 30% (or lower treaty) rate withholding, you can take $10. Filing 2010 taxes late 82 per day for each allowable exemption in 2014. Filing 2010 taxes late If you are a resident of South Korea, you are allowed personal exemptions for yourself and for your spouse and children who live with you in the United States at any time during the tax year. Filing 2010 taxes late However, the additional exemptions for your spouse and children must be further prorated as explained in chapter 5 under Exemptions . Filing 2010 taxes late Students and business apprentices from India. Filing 2010 taxes late   If you are eligible for the benefits of Article 21(2) of the United States-India Income Tax Treaty, you are allowed an exemption for your spouse only if your spouse will have no gross income for 2014 and cannot be claimed as a dependent on another U. Filing 2010 taxes late S. Filing 2010 taxes late taxpayer's 2014 return. Filing 2010 taxes late You are also allowed an exemption for each dependent not admitted to the United States on “F-2,” “J-2,” or “M-2” visas if they meet the same rules that apply to U. Filing 2010 taxes late S. Filing 2010 taxes late citizens. Filing 2010 taxes late For the 30% (or lower treaty rate) withholding on compensation for independent personal services performed in the United States, you are allowed $10. Filing 2010 taxes late 82 per day for each allowable exemption in 2014. Filing 2010 taxes late Refund of Taxes Withheld in Error Multi-level marketing. Filing 2010 taxes late   If you are a distributor for a multi-level marketing company who had taxes withheld in error, file a U. Filing 2010 taxes late S. Filing 2010 taxes late income tax return (Form 1040NR, Form 1040NR-EZ, or Form 1120-F) or, if a tax return has already been filed, a claim for refund (Form 1040X or amended Form 1120-F) to recover the amount withheld in error. Filing 2010 taxes late You must also attach to the U. Filing 2010 taxes late S. Filing 2010 taxes late income tax return or claim for refund supporting information that includes, but is not limited to, the following items. Filing 2010 taxes late A copy of your Form W-2, Form 1042-S, or Form 1099 to prove the amount of taxes withheld. Filing 2010 taxes late A statement explaining why income reported on your Form W-2, Form 1042-S, or Form 1099 is not subject to U. Filing 2010 taxes late S. Filing 2010 taxes late taxation. Filing 2010 taxes late A statement listing all the dates you entered and left the United States during the taxable year. Filing 2010 taxes late If the compensation is multi-year compensation, the statement must list all the dates you entered and left the United States during each of the taxable years to which the compensation is attributable. Filing 2010 taxes late A copy of any documents or records that show the number of days you actually were present in the United States during the years listed. Filing 2010 taxes late A statement providing: (a) the number of days (or unit of time less than a day, if appropriate) that personal services were performed in the United States in connection with recruiting, training, and supporting your lower-tier distributors; and (b) the total number of days (or unit of time less than a day, if appropriate) that personal services were performed globally in connection with recruiting, training, and supporting your lower-tier distributors. Filing 2010 taxes late Any further relevant document or record supporting your claim that the taxes were withheld in error. Filing 2010 taxes late Withholding From Other Income Other income subject to 30% withholding generally includes fixed or determinable income such as interest (other than portfolio interest), dividends, pensions and annuities, and gains from certain sales and exchanges, discussed in chapter 4. Filing 2010 taxes late It also includes 85% of social security benefits paid to nonresident aliens. Filing 2010 taxes late Refund of taxes withheld in error on social security benefits paid to resident aliens. Filing 2010 taxes late   Social security benefits paid to a lawful permanent resident (green card holder) are not subject to 30% withholding. Filing 2010 taxes late For U. Filing 2010 taxes late S. Filing 2010 taxes late income tax purposes, green card holders continue to be resident aliens until their lawful permanent resident status under immigration laws is either taken away or is administratively or judicially determined to have been abandoned. Filing 2010 taxes late See Green Card Test in chapter 1. Filing 2010 taxes late If you are a green card holder and tax was withheld in error on your social security benefits because you have a foreign address, the withholding tax is refundable by the Social Security Administration (SSA) or the IRS. Filing 2010 taxes late SSA will refund taxes erroneously withheld if the refund can be processed during the same calendar year in which the tax was withheld. Filing 2010 taxes late If SSA cannot refund the taxes withheld, you must file a Form 1040 or 1040A with the Department of the Treasury, Internal Revenue Service Center, Austin, TX 73301 to determine if you are entitled to a refund. Filing 2010 taxes late You must also attach the following to your Form 1040 or 1040A. Filing 2010 taxes late A copy of Form SSA-1042S, Social Security Benefit Statement. Filing 2010 taxes late A copy of the “green card. Filing 2010 taxes late ” A signed declaration that includes the following statements: The SSA should not have withheld income tax from my social security benefits because I am a U. Filing 2010 taxes late S. Filing 2010 taxes late lawful permanent resident and my green card has been neither revoked nor administratively or judicially determined to have been abandoned. Filing 2010 taxes late I am filing a U. Filing 2010 taxes late S. Filing 2010 taxes late income tax return for the tax year as a resident alien reporting all of my worldwide income. Filing 2010 taxes late I have not claimed benefits for the tax year under an income tax treaty as the resident of a country other than the United States. Filing 2010 taxes late Other income not subject to withholding of 30% (or lower treaty) rate. Filing 2010 taxes late   The following income is not subject to withholding at the 30% (or lower treaty) rate if you file Form W-8ECI with the payer of the income. Filing 2010 taxes late Income (other than compensation) that is effectively connected with your U. Filing 2010 taxes late S. Filing 2010 taxes late trade or business. Filing 2010 taxes late Income from real property that you choose to treat as effectively connected with a U. Filing 2010 taxes late S. Filing 2010 taxes late trade or business. Filing 2010 taxes late See Income From Real Property in chapter 4 for details about this choice. Filing 2010 taxes late   Special rules for withholding on partnership income, scholarships, and fellowships are explained next. Filing 2010 taxes late Tax Withheld on Partnership Income If you are a foreign partner in a U. Filing 2010 taxes late S. Filing 2010 taxes late or foreign partnership, the partnership will withhold tax on your share of effectively connected taxable income (ECTI) from the partnership. Filing 2010 taxes late You may be able to reduce your ECTI subject to withholding by certain partner-level deductions. Filing 2010 taxes late Generally, you must use Form 8804-C for this purpose. Filing 2010 taxes late See the Instructions for Form 8804-C for more information. Filing 2010 taxes late The withholding rate on your share of effectively connected income is generally the highest rate of tax specified under section 1 of the Code (39. Filing 2010 taxes late 6% for 2014). Filing 2010 taxes late However, the partnership may withhold at the highest rate that applies to a particular type of income allocable to you if you gave the partnership the appropriate documentation. Filing 2010 taxes late Long-term capital gain is an example of a particular type of income to which the highest tax rate applies. Filing 2010 taxes late Claim the tax withheld as a credit on your 2014 Form 1040NR. Filing 2010 taxes late The partnership will give you a statement on Form 8805, Foreign Partner's Information Statement of Section 1446 Withholding Tax, showing the tax withheld. Filing 2010 taxes late A partnership that is publicly traded will withhold tax on your actual distributions of effectively connected income. Filing 2010 taxes late In this case the partnership will give you a statement on Form 1042-S, Foreign Person's U. Filing 2010 taxes late S. Filing 2010 taxes late Source Income Subject to Withholding. Filing 2010 taxes late Withholding on Scholarships and Fellowship Grants There is no withholding on a qualified scholarship received by a candidate for a degree. Filing 2010 taxes late See chapter 3. Filing 2010 taxes late If you are a nonresident alien student or grantee with an “F,” “J,” “M,” or “Q” visa and you receive a U. Filing 2010 taxes late S. Filing 2010 taxes late source grant or scholarship that is not fully exempt, the withholding agent (usually the payer of the scholarship) withholds tax at 14% (or lower treaty rate) of the taxable part of the grant or scholarship that is not a payment for services. Filing 2010 taxes late However, if you are not a candidate for a degree and the grant does not meet certain requirements, tax will be withheld at the 30% (or lower treaty) rate. Filing 2010 taxes late Any part of a scholarship or fellowship grant that is a payment for services is subject to graduated withholding as discussed earlier under Withholding on Wages. Filing 2010 taxes late Alternate Withholding Procedure Your withholding agent may choose to use an alternate procedure by asking you to fill out Form W-4 and the Personal Allowances Worksheet (attached to Form W-4). Filing 2010 taxes late Use the following instructions instead of the Form W-4 instructions to complete the worksheet. Filing 2010 taxes late Line A. Filing 2010 taxes late   Enter the total of the following amounts on line A. Filing 2010 taxes late Personal exemption. Filing 2010 taxes late   Include the prorated part of your allowable personal exemption. Filing 2010 taxes late Figure the amount by multiplying the number of days you expect to be in the United States in 2014 by the daily exemption amount ($10. Filing 2010 taxes late 82). Filing 2010 taxes late Expenses. Filing 2010 taxes late   Include expenses that will be deductible on your return. Filing 2010 taxes late These include away-from-home expenses (meals, lodging, and transportation), certain state and local income taxes, charitable contributions, and casualty losses, discussed earlier under Itemized Deductions in chapter 5. Filing 2010 taxes late They also include business expenses, moving expenses, and the IRA deduction discussed under Deductions in chapter 5. Filing 2010 taxes late Nontaxable grant or scholarship. Filing 2010 taxes late   Include the part of your grant or scholarship that is not taxable under U. Filing 2010 taxes late S. Filing 2010 taxes late law or under a tax treaty. Filing 2010 taxes late Line B. Filing 2010 taxes late   Enter -0- unless the following paragraph applies to you. Filing 2010 taxes late   If you are a student who qualifies under Article 21(2) of the United States-India Income Tax Treaty, and you are not claiming deductions for away-from-home expenses or other itemized deductions (discussed earlier), enter the standard deduction on line B. Filing 2010 taxes late The standard deduction amount for 2013 is $6,100. Filing 2010 taxes late Lines C and D. Filing 2010 taxes late   Enter -0- on both lines unless the following paragraphs apply to you. Filing 2010 taxes late   If you are a resident of Canada, Mexico, South Korea, or a U. Filing 2010 taxes late S. Filing 2010 taxes late national, an additional daily exemption amount may be allowed for your spouse and each of your dependents. Filing 2010 taxes late   If you are a resident of India who is eligible for the benefits of Article 21(2) of the United States-India Income Tax Treaty, you can claim an additional daily exemption amount for your spouse only if your spouse will have no gross income for 2014 and cannot be claimed as a dependent on another U. Filing 2010 taxes late S. Filing 2010 taxes late taxpayer's 2014 return. Filing 2010 taxes late You can also claim an additional amount for each of your dependents not admitted to the United States on “F-2,” “J-2,” or “M-2” visas if they meet the same rules that apply to U. Filing 2010 taxes late S. Filing 2010 taxes late citizens. Filing 2010 taxes late   Enter any additional amount for your spouse on line C. Filing 2010 taxes late Enter any additional amount for your dependents on line D. Filing 2010 taxes late Lines E, F, and G. Filing 2010 taxes late   No entries should be made on lines E, F, and G. Filing 2010 taxes late Line H. Filing 2010 taxes late   Add the amounts on lines A through D and enter the total on line H. Filing 2010 taxes late Form W-4. Filing 2010 taxes late   Complete lines 1 through 4 of Form W-4. Filing 2010 taxes late Sign and date the form and give it with the Personal Allowances Worksheet to your withholding agent. Filing 2010 taxes late   If you file a Form W-4 to reduce or eliminate the withholding on your scholarship or grant, you must file an annual U. Filing 2010 taxes late S. Filing 2010 taxes late income tax return to be allowed the exemptions and deductions you claimed on that form. Filing 2010 taxes late If you are in the United States during more than one tax year, you must attach a statement to your yearly Form W-4 indicating that you have filed a U. Filing 2010 taxes late S. Filing 2010 taxes late income tax return for the previous year. Filing 2010 taxes late If you have not been in the United States long enough to be required to file a return, you must attach a statement to your Form W-4 saying you will file a U. Filing 2010 taxes late S. Filing 2010 taxes late income tax return when required. Filing 2010 taxes late After the withholding agent has accepted your Form W-4, tax will be withheld on your scholarship or grant at the graduated rates that apply to wages. Filing 2010 taxes late The gross amount of the income is reduced by the amount on line H of the worksheet and the withholding tax is figured on the remainder. Filing 2010 taxes late You will receive a Form 1042-S from the withholding agent (usually the payer of your grant) showing the gross amount of your taxable scholarship or fellowship grant less the withholding allowance amount, the tax rate, and the amount of tax withheld. Filing 2010 taxes late Use this form to prepare your annual U. Filing 2010 taxes late S. Filing 2010 taxes late income tax return. Filing 2010 taxes late Income Entitled to Tax Treaty Benefits If a tax treaty between the United States and your country provides an exemption from, or a reduced rate of, tax for certain items of income, you should notify the payor of the income (the withholding agent) of your foreign status to claim a tax treaty withholding exemption. Filing 2010 taxes late Generally, you do this by filing either Form W-8BEN or Form 8233 with the withholding agent. Filing 2010 taxes late File Form W-8BEN for income that is not personal services income. Filing 2010 taxes late File Form 8233 for personal services income as discussed next. Filing 2010 taxes late Employees and independent contractors. Filing 2010 taxes late   If you perform personal services as an employee or as an independent contractor and you can claim an exemption from withholding on that personal service income because of a tax treaty, give Form 8233 to each withholding agent from whom amounts will be received. Filing 2010 taxes late   Even if you submit Form 8233, the withholding agent may have to withhold tax from your income. Filing 2010 taxes late This is because the factors on which the treaty exemption is based may not be determinable until after the close of the tax year. Filing 2010 taxes late In this case, you must file Form 1040NR (or Form 1040NR-EZ if you qualify) to recover any overwithheld tax and to provide the IRS with proof that you are entitled to the treaty exemption. Filing 2010 taxes late Students, teachers, and researchers. Filing 2010 taxes late   Students, teachers, and researchers must attach the appropriate statement shown in Appendix A (for students) or Appendix B (for teachers and researchers) at the end of this publication to the Form 8233 and give it to the withholding agent. Filing 2010 taxes late For treaties not listed in the appendices, attach a statement in a format similar to those for other treaties. Filing 2010 taxes late   If you received a scholarship or fellowship and personal services income from the same withholding agent, use Form 8233 to claim an exemption from withholding based on a tax treaty for both types of income. Filing 2010 taxes late Special events and promotions. Filing 2010 taxes late   Withholding at the full 30% rate is required for payments made to a nonresident alien or foreign corporation for gate receipts (or television or other receipts) from rock music festivals, boxing promotions, and other entertainment or sporting events, unless the withholding agent has been specifically advised otherwise by letter from the IRS. Filing 2010 taxes late Form 13930 is used to request a reduction in withholding. Filing 2010 taxes late Withholding may be required even if the income may be exempt from taxation by provisions of a tax treaty. Filing 2010 taxes late One reason for this is that the partial or complete exemption is usually based on factors that cannot be determined until after the close of the tax year. Filing 2010 taxes late You will be required to pay U. Filing 2010 taxes late S. Filing 2010 taxes late tax, at the time of your departure from the United States, on any income for which you incorrectly claimed a treaty exemption. Filing 2010 taxes late For more details on treaty provisions that apply to compensation, see Publication 901. Filing 2010 taxes late Tax Withheld on Real Property Sales If you are a nonresident alien and you dispose of a U. Filing 2010 taxes late S. Filing 2010 taxes late real property interest, the transferee (buyer) of the property generally must withhold a tax equal to 10% of the amount realized on the disposition. Filing 2010 taxes late A distribution by a qualified investment entity to a nonresident alien shareholder that is treated as gain from the sale or exchange of a U. Filing 2010 taxes late S. Filing 2010 taxes late real property interest by the shareholder is subject to withholding at 35%. Filing 2010 taxes late Withholding is also required on certain distributions and other transactions by domestic or foreign corporations, partnerships, trusts, and estates. Filing 2010 taxes late These rules are covered in Publication 515. Filing 2010 taxes late For information on the tax treatment of dispositions of U. Filing 2010 taxes late S. Filing 2010 taxes late real property interests, see Real Property Gain or Loss in chapter 4. Filing 2010 taxes late If you are a partner in a domestic partnership, and the partnership disposes of a U. Filing 2010 taxes late S. Filing 2010 taxes late real property interest at a gain, the partnership will withhold tax on the amount of gain allocable to its foreign partners. Filing 2010 taxes late Your share of the income and tax withheld will be reported to you on Form 8805, Foreign Partner's Information Statement of Section 1446 Withholding Tax, or Form 1042-S, Foreign Person's U. Filing 2010 taxes late S. Filing 2010 taxes late Source Income Subject to Withholding (in the case of a publicly traded partnership). Filing 2010 taxes late Withholding is not required in the following situations. Filing 2010 taxes late The property is acquired by the buyer for use as a residence and the amount realized (sales price) is not more than $300,000. Filing 2010 taxes late The property disposed of is an interest in a domestic corporation if any class of stock of the corporation is regularly traded on an established securities market. Filing 2010 taxes late However, this exception does not apply to certain dispositions of substantial amounts of non-publicly traded interests in publicly traded corporations. Filing 2010 taxes late The property disposed of is an interest in a U. Filing 2010 taxes late S. Filing 2010 taxes late corporation that is not regularly traded on an established market and you (the seller) give the buyer a copy of a statement issued by the corporation certifying that the interest is not a U. Filing 2010 taxes late S. Filing 2010 taxes late real property interest. Filing 2010 taxes late You (the seller) give the buyer a certification stating, under penalties of perjury, that you are not a foreign person, and containing your name, U. Filing 2010 taxes late S. Filing 2010 taxes late taxpayer identification number, and home address. Filing 2010 taxes late You can give the certification to a qualified substitute. Filing 2010 taxes late The qualified substitute gives the buyer a statement, under penalties of perjury, that the certification is in the possession of the qualified substitute. Filing 2010 taxes late For this purpose, a qualified substitute is (a) the person (including any attorney or title company) responsible for closing the transaction, other than your agent, and (b) the buyer's agent. Filing 2010 taxes late The buyer receives a withholding certificate from the Internal Revenue Service. Filing 2010 taxes late You give the buyer written notice that you are not required to recognize any gain or loss on the transfer because of a nonrecognition provision in the Internal Revenue Code or a provision in a U. Filing 2010 taxes late S. Filing 2010 taxes late tax treaty. Filing 2010 taxes late The buyer must file a copy of the notice with the Ogden Service Center, P. Filing 2010 taxes late O. Filing 2010 taxes late Box 409101, Ogden, UT 84409. Filing 2010 taxes late You must verify the notice as true and sign it under penalties of perjury. Filing 2010 taxes late The notice must contain the following information. Filing 2010 taxes late A statement that the notice is a notice of nonrecognition under regulation section 1. Filing 2010 taxes late 1445-2(d)(2). Filing 2010 taxes late Your name, taxpayer identification number, and home address. Filing 2010 taxes late A statement that you are not required to recognize any gain or loss on the transfer. Filing 2010 taxes late A brief description of the transfer. Filing 2010 taxes late A brief summary of the law and facts supporting your claim that recognition of gain or loss is not required. Filing 2010 taxes late You may not give the buyer a written notice for any of the following transfers: the sale of your main home on which you exclude gain, a like-kind exchange that does not qualify for nonrecognition treatment in its entirety, or a deferred like-kind exchange that has not been completed at the time the buyer must file Form 8288. Filing 2010 taxes late Instead, a withholding certificate (described next) must be obtained. Filing 2010 taxes late The amount you realize on the transfer of a U. Filing 2010 taxes late S. Filing 2010 taxes late real property interest is zero. Filing 2010 taxes late The property is acquired by the United States, a U. Filing 2010 taxes late S. Filing 2010 taxes late state or possession, a political subdivision, or the District of Columbia. Filing 2010 taxes late The distribution is from a domestically controlled qualified investment entity (QIE) and is treated as a distribution of a U. Filing 2010 taxes late S. Filing 2010 taxes late real property interest only because an interest in the entity was disposed of in an applicable wash sale transaction. Filing 2010 taxes late For the definition of a QIE, see Qualified investment entities under Real Property Gain or Loss, earlier. Filing 2010 taxes late See Wash sale under Real Property Gain or Loss in chapter 4. Filing 2010 taxes late The certifications in (3) and (4) must be disregarded by the buyer if the buyer or qualified substitute has actual knowledge, or receives notice from a seller's or buyer's agent (or substitute), that they are false. Filing 2010 taxes late This also applies to the qualified substitute's statement under (4). Filing 2010 taxes late Withholding certificates. Filing 2010 taxes late   The tax required to be withheld on a disposition can be reduced or eliminated under a withholding certificate issued by the IRS. Filing 2010 taxes late Either you or the buyer can request a withholding certificate. Filing 2010 taxes late   A withholding certificate can be issued due to any of the following. Filing 2010 taxes late The IRS determines that reduced withholding is appropriate because either: The amount required to be withheld would be more than your maximum tax liability, or Withholding of the reduced amount would not jeopardize collection of the tax. Filing 2010 taxes late All of your realized gain is exempt from U. Filing 2010 taxes late S. Filing 2010 taxes late tax. Filing 2010 taxes late You or the buyer enters into an agreement for the payment of tax providing security for the tax liability. Filing 2010 taxes late   Get Publication 515 and Form 8288-B for information on procedures to request a withholding certificate. Filing 2010 taxes late Credit for tax withheld. Filing 2010 taxes late   The buyer must report and pay over the withheld tax within 20 days after the transfer using Form 8288, U. Filing 2010 taxes late S. Filing 2010 taxes late Withholding Tax Return for Dispositions by Foreign Persons of U. Filing 2010 taxes late S. Filing 2010 taxes late Real Property Interests. Filing 2010 taxes late This form is filed with the IRS with copies A and B of Form 8288-A, Statement of Withholding on Dispositions by Foreign Persons of U. Filing 2010 taxes late S. Filing 2010 taxes late Real Property Interests. Filing 2010 taxes late Copy B of this statement will be stamped received by the IRS and returned to you (the seller) if the statement is complete and includes your taxpayer identification number (TIN). Filing 2010 taxes late You must file Copy B with your tax return to take credit for the tax withheld. Filing 2010 taxes late   A stamped copy of Form 8288-A will not be provided to you if your TIN is not included on that form. Filing 2010 taxes late The IRS will send you a letter requesting the TIN and providing instructions for how to get a TIN. Filing 2010 taxes late When you provide the IRS with a TIN, the IRS will provide you with a stamped Copy B of Form 8288-A. Filing 2010 taxes late Social Security and Medicare Taxes If you work as an employee in the United States, you must pay social security and Medicare taxes in most cases. Filing 2010 taxes late Your payments of these taxes contribute to your coverage under the U. Filing 2010 taxes late S. Filing 2010 taxes late social security system. Filing 2010 taxes late Social security coverage provides retirement benefits, survivors and disability benefits, and medical insurance (Medicare) benefits to individuals who meet certain eligibility requirements. Filing 2010 taxes late In most cases, the first $113,700 of taxable wages received in 2013 for services performed in the United States is subject to social security tax. Filing 2010 taxes late All taxable wages are subject to Medicare tax. Filing 2010 taxes late Your employer deducts these taxes from each wage payment. Filing 2010 taxes late Your employer must deduct these taxes even if you do not expect to qualify for social security or Medicare benefits. Filing 2010 taxes late You can claim a credit for excess social security tax on your income tax return if you have more than one employer and the amount deducted from your combined wages for 2013 is more than $7,049. Filing 2010 taxes late 40. Filing 2010 taxes late Use the appropriate worksheet in chapter 3 of Publication 505, Tax Withholding and Estimated Tax, to figure your credit. Filing 2010 taxes late If any one employer deducted more than $7,049. Filing 2010 taxes late 40, you cannot claim a credit for that amount. Filing 2010 taxes late Ask your employer to refund the excess. Filing 2010 taxes late If your employer does not refund the excess, you can file a claim for refund using Form 843. Filing 2010 taxes late In general, U. Filing 2010 taxes late S. Filing 2010 taxes late social security and Medicare taxes apply to payments of wages for services performed as an employee in the United States, regardless of the citizenship or residence of either the employee or the employer. Filing 2010 taxes late In limited situations, these taxes apply to wages for services performed outside the United States. Filing 2010 taxes late Your employer should be able to tell you if social security and Medicare taxes apply to your wages. Filing 2010 taxes late You cannot make voluntary payments if no taxes are due. Filing 2010 taxes late Additional Medicare Tax. Filing 2010 taxes late   Beginning in 2013, in addition to the Medicare tax, a 0. Filing 2010 taxes late 9% Additional Medicare Tax applies to Medicare wages, Railroad Retirement Tax Act (RRTA) compensation, and self-employment income that are more than: $250,000 if married filing jointly, $125,000 if married filing separately, or $200,000 for any other filing status. Filing 2010 taxes late   There are no special rules for nonresident aliens for purposes of Additional Medicare Tax. Filing 2010 taxes late Wages, RRTA compensation, and self-employment income that are subject to Medicare tax will also be subject to Additional Medicare Tax if in excess of the applicable threshold. Filing 2010 taxes late   Your employer is responsible for withholding the 0. Filing 2010 taxes late 9% Additional Medicare Tax on Medicare wages or RRTA compensation it pays to you in excess of $200,000 in the calendar year. Filing 2010 taxes late If you intend to file a joint return and you anticipate that you and your spouse's individual wages are not going to be more than $200,000 but your combined wages and self-employment income are going to be more than $250,000, you may want to request additional withholding on Form W-4 and/or make estimated tax payments. Filing 2010 taxes late   If you file Form 1040NR, you must pay Additional Medicare Tax if the total of your wages and your self-employment income was more than $125,000 if married (Box 3, 4, or 5 on page 1 of Form 1040NR), or $200,000 if single or qualifying widow(er) (Box 1, 2, or 6 on page 1 of Form 1040NR). Filing 2010 taxes late    See Form 8959, Additional Medicare Tax, and the Instructions for Form 8959 to determine whether you are required to pay Additional Medicare Tax. Filing 2010 taxes late For more information on Additional Medicare Tax, go to IRS. Filing 2010 taxes late gov and enter “Additional Medicare Tax” in the search box. Filing 2010 taxes late   Self-employed individuals may also be required to pay Additional Medicare Tax. Filing 2010 taxes late See Self-Employment Tax , later. Filing 2010 taxes late Students and Exchange Visitors Generally, services performed by you as a nonresident alien temporarily in the United States as a nonimmigrant under subparagraph (F), (J), (M), or (Q) of section 101(a)(15) of the Immigration and Nationality Act are not covered under the social security program if the services are performed to carry out the purpose for which you were admitted to the United States. Filing 2010 taxes late This means that there will be no withholding of social security or Medicare taxes from the pay you receive for these services. Filing 2010 taxes late These types of services are very limited, and generally include only on-campus work, practical training, and economic hardship employment. Filing 2010 taxes late Social security and Medicare taxes will be withheld from your pay for these services if you are considered a resident alien as discussed in chapter 1, even though your nonimmigrant classification (“F,” “J,” “M,” or “Q”) remains the same. Filing 2010 taxes late Services performed by a spouse or minor child of nonimmigrant aliens with the classification of “F-2,” “J-2,” “M-2,” and “Q-3” are covered under social security. Filing 2010 taxes late Nonresident Alien Students If you are a nonresident alien temporarily admitted to the United States as a student, you generally are not permitted to work for a wage or salary or to engage in business while you are in the United States. Filing 2010 taxes late In some cases, a student admitted to the United States in “F-1,” “M-1,” or “J-1” status is granted permission to work. Filing 2010 taxes late Social security and Medicare taxes are not withheld from pay for the work unless the student is considered a resident alien. Filing 2010 taxes late Any student who is enrolled and regularly attending classes at a school may be exempt from social security and Medicare taxes on pay for services performed for that school. Filing 2010 taxes late The U. Filing 2010 taxes late S. Filing 2010 taxes late Citizenship and Immigration Services (USCIS) permits on-campus work for students in “F-1” status if it does not displace a U. Filing 2010 taxes late S. Filing 2010 taxes late resident. Filing 2010 taxes late On-campus work means work performed on the school's premises. Filing 2010 taxes late On-campus work includes work performed at an off-campus location that is educationally affiliated with the school. Filing 2010 taxes late On-campus work under the terms of a scholarship, fellowship, or assistantship is considered part of the academic program of a student taking a full course of study and is permitted by the USCIS. Filing 2010 taxes late Social security and Medicare taxes are not withheld from pay for this work unless the student is considered a resident alien. Filing 2010 taxes late If services performed by a nonresident alien student are not considered as performed to carry out the purpose for which the student was admitted to the United States, social security and Medicare taxes will be withheld from pay for the services unless the pay is exempt under the Internal Revenue Code. Filing 2010 taxes late Exchange Visitors Exchange visitors are temporarily admitted to the United States under section 101(a)(15)(J) of the Immigration and Nationality Act. Filing 2010 taxes late Social security and Medicare taxes are not withheld on pay for services of an exchange visitor who has been given permission to work and who possesses or obtains a letter of authorization from the sponsor unless the exchange visitor is considered a resident alien. Filing 2010 taxes late If services performed by an exchange visitor are not considered as performed to carry out the purpose for which the visitor was admitted to the United States, social security and Medicare taxes are withheld from pay for the services unless the pay is exempt under the Internal Revenue Code. Filing 2010 taxes late Nonresident aliens temporarily admitted to the United States as participants in international cultural exchange programs under section 101(a)(15)(Q) of the Immigration and Nationality Act may be exempt from social security and Medicare taxes. Filing 2010 taxes late The employer must be the petitioner through whom the alien obtained the “Q” visa. Filing 2010 taxes late Social security and Medicare taxes are not withheld from pay for this work unless the alien is considered a resident alien. Filing 2010 taxes late Refund of Taxes Withheld in Error If social security or Medicare taxes were withheld in error from pay that is not subject to these taxes, contact the employer who withheld the taxes for a refund. Filing 2010 taxes late If you are unable to get a full refund of the amount from your employer, file a claim for refund with the Internal Revenue Service on Form 843, Claim for Refund and Request for Abatement. Filing 2010 taxes late Attach the following items to Form 843. Filing 2010 taxes late A copy of your Form W-2 to prove the amount of social security and Medicare taxes withheld. Filing 2010 taxes late A copy of your visa. Filing 2010 taxes late Form I-94 (or other documentation showing your dates of arrival or departure). Filing 2010 taxes late If you have an F-1 visa, documentation showing permission to work in the U. Filing 2010 taxes late S. Filing 2010 taxes late If you have a J-1 visa, documentation showing permission to work in the U. Filing 2010 taxes late S. Filing 2010 taxes late If you are engaged in optional practical training or employment due to severe economic necessity, documentation showing permission to work in the U. Filing 2010 taxes late S. Filing 2010 taxes late A statement from your employer indicating the amount of the reimbursement your employer provided and the amount of the credit or refund your employer claimed or you authorized your employer to claim. Filing 2010 taxes late If you cannot obtain this statement from your employer, you must provide this information on your own statement and explain why you are not attaching a statement from your employer or on Form 8316 claiming your employer will not issue the refund. Filing 2010 taxes late If you were exempt from social security and Medicare tax for only part of the year, pay statements showing the tax paid during the period you were exempt. Filing 2010 taxes late File Form 843 (with attachments) with the Department of the Treasury, Internal Revenue Service Center, Ogden, UT 84201-0038. Filing 2010 taxes late Do not use Form 843 to request a refund of Additional Medicare Tax. Filing 2010 taxes late If Additional Medicare Tax was withheld from your pay in error, you can claim a credit for any withheld Additional Medicare Tax against the total tax liability shown on your tax return by filing Form 8959 with Form 1040 or 1040NR. Filing 2010 taxes late If Additional Medicare Tax was withheld in error in a prior year for which you already filed Form 1040 or 1040NR, you must file Form 1040X, Amended U. Filing 2010 taxes late S. Filing 2010 taxes late Individual Income Tax Return, for the prior year in which the wages or compensation were originally received to recover the Additional Medicare Tax withheld in error. Filing 2010 taxes late See the Instructions for Form 1040X. Filing 2010 taxes late Agricultural Workers Agricultural workers temporarily admitted into the United States on H-2A visas are exempt from social security and Medicare taxes on compensation paid to them for services performed in connection with the H-2A visa. Filing 2010 taxes late You can find more information about not having tax withheld at www. Filing 2010 taxes late irs. Filing 2010 taxes late gov/Individuals/International-Taxpayers/Foreign-Agricultural-Workers. Filing 2010 taxes late Self-Employment Tax Self-employment tax is the social security and Medicare taxes for individuals who are self-employed. Filing 2010 taxes late Nonresident aliens are not subject to self-employment tax unless an international social security agreement in effect determines that they are covered under the U. Filing 2010 taxes late S. Filing 2010 taxes late social security system. Filing 2010 taxes late Residents of the U. Filing 2010 taxes late S. Filing 2010 taxes late Virgin Islands, Puerto Rico, Guam, the Commonwealth of the Northern Mariana Islands, or American Samoa are considered U. Filing 2010 taxes late S. Filing 2010 taxes late residents for this purpose and are subject to the self-employment tax. Filing 2010 taxes late Resident aliens must pay self-employment tax under the same rules that apply to U. Filing 2010 taxes late S. Filing 2010 taxes late citizens. Filing 2010 taxes late However, a resident alien employed by an international organization, a foreign government, or a wholly-owned instrumentality of a foreign government is not subject to the self-employment tax on income earned in the United States. Filing 2010 taxes late Self-employment income you receive while you are a resident alien is subject to self-employment tax even if it was paid for services you performed as a nonresident alien. Filing 2010 taxes late Example. Filing 2010 taxes late Bill Jones is an author engaged in the business of writing books. Filing 2010 taxes late Bill had several books published in a foreign country while he was a citizen and resident of that country. Filing 2010 taxes late During 2013, Bill entered the United States as a resident alien. Filing 2010 taxes late After becoming a U. Filing 2010 taxes late S. Filing 2010 taxes late resident, he continued to receive royalties from his foreign publisher. Filing 2010 taxes late Bill reports his income and expenses on the cash basis (he reports income on his tax return when received and deducts expenses when paid). Filing 2010 taxes late Bill's 2013 self-employment income includes the royalties received after he became a U. Filing 2010 taxes late S. Filing 2010 taxes late resident even though the books were published while he was a nonresident alien. Filing 2010 taxes late This royalty income is subject to self-employment tax. Filing 2010 taxes late Reporting self-employment tax. Filing 2010 taxes late   Use Schedule SE (Form 1040) to report and figure your self-employment tax. Filing 2010 taxes late Then enter the tax on Form 1040, line 56, or Form 1040NR, line 54. Filing 2010 taxes late Attach Schedule SE to Form 1040 or Form 1040NR. Filing 2010 taxes late Additional Medicare Tax. Filing 2010 taxes late   Self-employed individuals must pay a 0. Filing 2010 taxes late 9% Additional Medicare Tax on self-employment income that exceeds one of the following threshold amounts (based on your filing status): Married filing jointly — $250,000; Married filing separately — $125,000; Single, Head of household, or Qualifying widow(er) — $200,000. Filing 2010 taxes late   If you have both wages and self-employment income, the threshold amount for applying the Additional Medicare Tax on the self-employment income is reduced (but not below zero) by the amount of wages subject to Additional Medicare Tax. Filing 2010 taxes late A self-employment loss should not be considered for purposes of this tax   If you file Form 1040NR, you must pay Additional Medicare Tax if the total of your wages and your self-employment income was more than $125,000 if married (Box 3, 4, or 5 on page 1 of Form 1040NR), or $200,000 if single or qualifying widow(er) (Box 1, 2, or 6 on page 1 of Form 1040NR). Filing 2010 taxes late   See Form 8959, Additional Medicare Tax, and the Instructions for Form 8959 to determine whether you are required to pay Additional Medicare Tax. Filing 2010 taxes late For more information on Additional Medicare Tax, go to IRS. Filing 2010 taxes late gov and enter “Additional Medicare Tax” in the search box. Filing 2010 taxes late Deduction for employer-equivalent portion of self-employment tax. Filing 2010 taxes late   If you must pay self-employment tax, you can deduct a portion of the self-employment tax paid in figuring your adjusted gross income. Filing 2010 taxes late This deduction is figured on Schedule SE (Form 1040). Filing 2010 taxes late Note. Filing 2010 taxes late No portion of the Additional Medicare Tax is deductible for self-employment tax. Filing 2010 taxes late More information. Filing 2010 taxes late   Get Publication 334, Tax Guide for Small Business, for more information about self-employment tax. Filing 2010 taxes late International Social Security Agreements The United States has entered into social security agreements with foreign countries to coordinate social security coverage and taxation of workers employed for part or all of their working careers in one of the countries. Filing 2010 taxes late These agreements are commonly referred to as totalization agreements. Filing 2010 taxes late Under these agreements, dual coverage and dual contributions (taxes) for the same work are eliminated. Filing 2010 taxes late The agreements generally make sure that social security taxes (including self-employment tax) are paid only to one country. Filing 2010 taxes late Agreements are in effect with the following countries. Filing 2010 taxes late Australia. Filing 2010 taxes late Austria. Filing 2010 taxes late Belgium. Filing 2010 taxes late Canada. Filing 2010 taxes late Chile. Filing 2010 taxes late Czech Republic. Filing 2010 taxes late Denmark. Filing 2010 taxes late Finland. Filing 2010 taxes late France. Filing 2010 taxes late Germany. Filing 2010 taxes late Greece. Filing 2010 taxes late Ireland. Filing 2010 taxes late Italy. Filing 2010 taxes late Japan. Filing 2010 taxes late Korea, South. Filing 2010 taxes late Luxembourg. Filing 2010 taxes late The Netherlands. Filing 2010 taxes late Norway. Filing 2010 taxes late Poland. Filing 2010 taxes late Portugal. Filing 2010 taxes late Spain. Filing 2010 taxes late Sweden. Filing 2010 taxes late Switzerland. Filing 2010 taxes late The United Kingdom. Filing 2010 taxes late Agreements with other countries are expected to enter into force in the future. Filing 2010 taxes late Employees. Filing 2010 taxes late   Generally, under these agreements, you are subject to social security taxes only in the country where you are working. Filing 2010 taxes late However, if you are temporarily sent to work for the same employer in the United States and your pay would normally be subject to social security taxes in both countries, most agreements provide that you remain covered only by the social security system of the country from which you were sent. Filing 2010 taxes late You can get more information on any agreement by contacting the U. Filing 2010 taxes late S. Filing 2010 taxes late Social Security Administration at the address given later. Filing 2010 taxes late If you have access to the Internet, you can get more information at www. Filing 2010 taxes late socialsecurity. Filing 2010 taxes late gov/international. Filing 2010 taxes late   To establish that your pay is subject only to foreign social security taxes and is exempt from U. Filing 2010 taxes late S. Filing 2010 taxes late social security taxes (including the Medicare tax) under an agreement, you or your employer should request a certificate of coverage from the appropriate agency of the foreign country. Filing 2010 taxes late This will usually be the same agency to which you or your employer pays your foreign social security taxes. Filing 2010 taxes late The foreign agency will be able to tell you what information is needed for them to issue the certificate. Filing 2010 taxes late Your employer should keep a copy of the certificate because it may be needed to show why you are exempt from U. Filing 2010 taxes late S. Filing 2010 taxes late social security taxes. Filing 2010 taxes late Only wages paid on or after the effective date of the agreement can be exempt from U. Filing 2010 taxes late S. Filing 2010 taxes late social security taxes. Filing 2010 taxes late    Some of the countries with which the United States has agreements will not issue certificates of coverage. Filing 2010 taxes late In this case, either you or your employer should request a statement that your wages are not covered by the U. Filing 2010 taxes late S. Filing 2010 taxes late social security system. Filing 2010 taxes late Request the statement from the following address. Filing 2010 taxes late U. Filing 2010 taxes late S. Filing 2010 taxes late Social Security Administration Office of International Programs P. Filing 2010 taxes late O. Filing 2010 taxes late Box 17741 Baltimore, MD 21235-7741 Self-employed individuals. Filing 2010 taxes late   Under most agreements, self-employed individuals are covered by the social security system of the country where they reside. Filing 2010 taxes late However, under some agreements, you may be exempt from U. Filing 2010 taxes late S. Filing 2010 taxes late self-employment tax if you temporarily transfer your business activity to or from the United States. Filing 2010 taxes late   If you believe that your self-employment income is subject only to U. Filing 2010 taxes late S. Filing 2010 taxes late self-employment tax and is exempt from foreign social security taxes, request a certificate of coverage from the U. Filing 2010 taxes late S. Filing 2010 taxes late Social Security Administration at the address given earlier. Filing 2010 taxes late This certificate will establish your exemption from foreign social security taxes. Filing 2010 taxes late   To establish that your self-employment income is subject only to foreign social security taxes and is exempt from U. Filing 2010 taxes late S. Filing 2010 taxes late self-employment tax, request a certificate of coverage from the appropriate agency of the foreign country. Filing 2010 taxes late If the foreign country will not issue the certificate, you should request a statement that your income is not covered by the U. Filing 2010 taxes late S. Filing 2010 taxes late social security system. Filing 2010 taxes late Request it from the U. Filing 2010 taxes late S. Filing 2010 taxes late Social Security Administration at the address given earlier. Filing 2010 taxes late Attach a photocopy of either statement to Form 1040 each year you are exempt. Filing 2010 taxes late Also print “Exempt, see attached statement” on the line for self-employment tax. Filing 2010 taxes late Estimated Tax Form 1040-ES (NR) You may have income from which no U. Filing 2010 taxes late S. Filing 2010 taxes late income tax is withheld. Filing 2010 taxes late Or the amount of tax withheld may be less than the income tax you estimate you will owe at the end of the year. Filing 2010 taxes late If so, you may have to pay estimated tax. Filing 2010 taxes late Generally, you must make estimated tax payments for 2014 if you expect to owe at least $1,000 in tax and you expect your withholding and certain refundable credits to be less than the smaller of: 90% of the tax to be shown on your 2014 income tax return, or 100% of the tax shown on your 2013 income tax return (if your 2013 return covered all 12 months of the year). Filing 2010 taxes late If your adjusted gross income for 2013 was more than $150,000 ($75,000 if your filing status for 2014 is married filing separately), substitute 110% for 100% in (2) above if you are not a farmer or fisherman. Filing 2010 taxes late Item (2) does not apply if you did not file a 2013 return. Filing 2010 taxes late A nonresident alien should use Form 1040-ES (NR) to figure and pay estimated tax. Filing 2010 taxes late If you pay by check, make it payable to the "United States Treasury. Filing 2010 taxes late " How to estimate your tax for 2014. Filing 2010 taxes late   If you filed a 2013 return on Form 1040NR or Form 1040NR-EZ and expect your income, number of exemptions, and total deductions for 2014 to be nearly the same, you should use your 2013 return as a guide to complete the Estimated Tax Worksheet in the Form 1040-ES (NR) instructions. Filing 2010 taxes late If you did not file a return for 2013, or if your income, exemptions, deductions, or credits will be different for 2014, you must estimate these amounts. Filing 2010 taxes late Figure your estimated tax liability using the Tax Rate Schedule in the 2014 Form 1040-ES (NR) instructions for your filing status. Filing 2010 taxes late Note. Filing 2010 taxes late If you expect to be a resident of Puerto Rico during the entire year, use Form 1040-ES or Formulario 1040-ES (PR). Filing 2010 taxes late When to pay estimated tax. Filing 2010 taxes late   Make your first estimated tax payment by the due date for filing the previous year's Form 1040NR or Form 1040NR-EZ. Filing 2010 taxes late If you have wages subject to the same withholding rules that apply to U. Filing 2010 taxes late S. Filing 2010 taxes late citizens, you must file Form 1040NR or Form 1040NR-EZ and make your first estimated tax payment by April 15, 2014. Filing 2010 taxes late If you do not have wages subject to withholding, file your income tax return and make your first estimated tax payment by June 16, 2014. Filing 2010 taxes late   If your first estimated tax payment is due April 15, 2014, you can pay your estimated tax in full at that time or in four equal installments by the dates shown next. Filing 2010 taxes late 1st installment April 15, 2014 2nd installment June 16, 2014 3rd installment Sept. Filing 2010 taxes late 15, 2014 4th installment Jan. Filing 2010 taxes late 15, 2015 If your first payment is not due until June 16, 2014, you can pay your estimated tax in full at that time or: ½ of your estimated tax by June 16, 2014, 1/4 of the tax by September 15, 2014, and 1/4 by January 15, 2015. Filing 2010 taxes late    You do not have to make the payment due January 15, 2015, if you file your 2014 Form 1040NR or 1040NR-EZ by February 2, 2015, and pay the entire balance due with your return. Filing 2010 taxes late Fiscal year. Filing 2010 taxes late   If your return is not on a calendar year basis, your due dates are the 15th day of the 4th, 6th, and 9th months of your fiscal year, and the 1st month of the following fiscal year. Filing 2010 taxes late If any date falls on a Saturday, Sunday, or legal holiday, use the next day that is not a Saturday, Sunday, or legal holiday. Filing 2010 taxes late Changes in income, deductions, or exemptions. Filing 2010 taxes late   Even if you are not required to make an estimated tax payment in April or June, your circumstances may change so that you will have to make estimated tax payments later. Filing 2010 taxes late This can happen if you receive additional income or if any of your deductions are reduced or eliminated. Filing 2010 taxes late If so, see the instructions for Form 1040-ES (NR) and Publication 505 for information on figuring your estimated tax. Filing 2010 taxes late Amended estimated tax. Filing 2010 taxes late   If, after you have made estimated tax payments, you find your estimated tax is substantially increased or decreased because of a change in your income or exemptions, you should adjust your remaining estimated tax payments. Filing 2010 taxes late To do this, see the instructions for Form 1040-ES (NR) and Publication 505. Filing 2010 taxes late Penalty for failure to pay estimated income tax. Filing 2010 taxes late   You will be subject to a penalty for underpayment of installments of estimated tax except in certain situations. Filing 2010 taxes late These situations are explained on Form 2210, Underpayment of Estimated Tax by Individuals, Estates, and Trusts. Filing 2010 taxes late Prev  Up  Next   Home   More Online Publications
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The Filing 2010 Taxes Late

Filing 2010 taxes late 2. Filing 2010 taxes late   Accounting Methods Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Accounting MethodsCash Method Accrual Method Farm Inventory Cash Versus Accrual Method Special Methods of Accounting Combination Method Changes in Methods of Accounting Introduction You must use an accounting method that clearly shows your income and expenses. Filing 2010 taxes late You must also figure your taxable income and file an income tax return for an annual accounting period called a tax year. Filing 2010 taxes late This chapter discusses accounting methods. Filing 2010 taxes late For information on accounting periods, see Publication 538, Accounting Periods and Methods, and the Instructions for Form 1128, Application To Adopt, Change, or Retain a Tax Year. Filing 2010 taxes late Topics - This chapter discusses: Cash method Accrual method Farm inventory Special methods of accounting Changes in methods of accounting Useful Items - You may want to see: Publication 538 Accounting Periods and Methods 535 Business Expenses Form (and Instructions) 1128 Application To Adopt, Change, or Retain a Tax Year 3115 Application for Change in Accounting Method See chapter 16 for information about getting publications and forms. Filing 2010 taxes late Accounting Methods An accounting method is a set of rules used to determine when and how your income and expenses are reported on your tax return. Filing 2010 taxes late Your accounting method includes not only your overall method of accounting, but also the accounting treatment you use for any material item. Filing 2010 taxes late A material item is one that affects the proper time for inclusion of income or allowance of a deduction. Filing 2010 taxes late An item considered material for financial statement purposes is generally also considered material for income tax purposes. Filing 2010 taxes late See Publication 538 for more information. Filing 2010 taxes late You generally choose an accounting method for your farm business when you file your first income tax return that includes a Schedule F (Form 1040), Profit or Loss From Farming. Filing 2010 taxes late If you later want to change your accounting method, you generally must get IRS approval. Filing 2010 taxes late How to obtain IRS approval is discussed later under Changes in Methods of Accounting . Filing 2010 taxes late Types of accounting methods. Filing 2010 taxes late   Generally, you can use any of the following accounting methods. Filing 2010 taxes late Each method is discussed in detail below. Filing 2010 taxes late Cash method. Filing 2010 taxes late Accrual method. Filing 2010 taxes late Special methods of accounting for certain items of income and expenses. Filing 2010 taxes late Combination (hybrid) method using elements of two or more of the above. Filing 2010 taxes late Business and other items. Filing 2010 taxes late   You can account for business and personal items using different accounting methods. Filing 2010 taxes late For example, you can figure your business income under an accrual method, even if you use the cash method to figure personal items. Filing 2010 taxes late Two or more businesses. Filing 2010 taxes late   If you operate two or more separate and distinct businesses, you can use a different accounting method for each business. Filing 2010 taxes late Generally, no business is separate and distinct unless a complete and separate set of books and records is maintained for each business. Filing 2010 taxes late Cash Method Most farmers use the cash method because they find it easier to keep records using the cash method. Filing 2010 taxes late However, certain farm corporations and partnerships and all tax shelters must use an accrual method of accounting. Filing 2010 taxes late See Accrual Method Required , later. Filing 2010 taxes late Income Under the cash method, include in your gross income all items of income you actually or constructively received during the tax year. Filing 2010 taxes late Items of income include money received as well as property or services received. Filing 2010 taxes late If you receive property or services, you must include the fair market value (FMV) of the property or services in income. Filing 2010 taxes late See chapter 3 for information on how to report farm income on your income tax return. Filing 2010 taxes late Constructive receipt. Filing 2010 taxes late   Income is constructively received when an amount is credited to your account or made available to you without restriction. Filing 2010 taxes late You do not need to have possession of the income for it to be treated as income for the tax year. Filing 2010 taxes late If you authorize someone to be your agent and receive income for you, you are considered to have received the income when your agent receives it. Filing 2010 taxes late Income is not constructively received if your receipt of the income is subject to substantial restrictions or limitations. Filing 2010 taxes late Direct payments and counter-cyclical payments. Filing 2010 taxes late   If you received direct payments or counter-cyclical payments under Subtitle A or C of the Farm Security and Rural Investment Act of 2002, you will not be considered to have constructively received a payment merely because you had the option to receive it in the year before it is required to be paid. Filing 2010 taxes late Delaying receipt of income. Filing 2010 taxes late   You cannot hold checks or postpone taking possession of similar property from one tax year to another to avoid paying tax on the income. Filing 2010 taxes late You must report the income in the year the money or property is received or made available to you without restriction. Filing 2010 taxes late Example. Filing 2010 taxes late Frances Jones, a farmer, was entitled to receive a $10,000 payment on a grain contract in December 2013. Filing 2010 taxes late She was told in December that her payment was available. Filing 2010 taxes late She requested not to be paid until January 2014. Filing 2010 taxes late However, she must still include this payment in her 2013 income because it was made available to her in 2013. Filing 2010 taxes late Debts paid by another person or canceled. Filing 2010 taxes late   If your debts are paid by another person or are canceled by your creditors, you may have to report part or all of this debt relief as income. Filing 2010 taxes late If you receive income in this way, you constructively receive the income when the debt is canceled or paid. Filing 2010 taxes late See Cancellation of Debt in chapter 3. Filing 2010 taxes late Deferred payment contract. Filing 2010 taxes late   If you sell an item under a deferred payment contract that calls for payment in a future year, there is no constructive receipt in the year of sale. Filing 2010 taxes late However, if the sales contract states that you have the right to the proceeds of the sale from the buyer at any time after delivery of the item, then you must include the sales price in income in the year of the sale, regardless of when you actually receive payment. Filing 2010 taxes late Example. Filing 2010 taxes late You are a farmer who uses the cash method and a calendar tax year. Filing 2010 taxes late You sell grain in December 2013 under a bona fide arm's-length contract that calls for payment in 2014. Filing 2010 taxes late You include the proceeds from the sale in your 2014 gross income since that is the year payment is received. Filing 2010 taxes late However, if the contract states that you have the right to the proceeds from the buyer at any time after the grain is delivered, you must include the sales price in your 2013 income, regardless of when you actually receive payment. Filing 2010 taxes late Repayment of income. Filing 2010 taxes late   If you include an amount in income and in a later year you have to repay all or part of it, then you can usually deduct the repayment in the year repaid. Filing 2010 taxes late If the repayment is more than $3,000, a special rule applies. Filing 2010 taxes late For details, see Repayments in chapter 11 of Publication 535, Business Expenses. Filing 2010 taxes late Expenses Under the cash method, generally you deduct expenses in the tax year you pay them. Filing 2010 taxes late This includes business expenses for which you contest liability. Filing 2010 taxes late However, you may not be able to deduct an expense paid in advance or you may be required to capitalize certain costs, as explained under Uniform Capitalization Rules in chapter 6. Filing 2010 taxes late See chapter 4 for information on how to deduct farm business expenses on your income tax return. Filing 2010 taxes late Prepayment. Filing 2010 taxes late   Generally, you cannot deduct expenses paid in advance. Filing 2010 taxes late This rule applies to any expense paid far enough in advance to, in effect, create an asset with a useful life extending substantially beyond the end of the current tax year. Filing 2010 taxes late Example. Filing 2010 taxes late On November 1, 2013, you signed and paid $3,600 for a 3-year (36-month) insurance contract for equipment. Filing 2010 taxes late In 2013, you are allowed to deduct only $200 (2/36 x $3,600) of the cost of the policy that is attributable to 2013. Filing 2010 taxes late In 2014, you'll be able to deduct $1,200 (12/36 x $3,600); in 2015, you'll be able to deduct $1,200 (12/36 x $3,600); and in 2016 you'll be able to deduct the remaining balance of $1,000. Filing 2010 taxes late An exception applies if the expense qualifies for the 12-month rule. Filing 2010 taxes late See Publication 538 for more information and examples. Filing 2010 taxes late See chapter 4 for special rules for prepaid farm supplies and prepaid livestock feed. Filing 2010 taxes late Accrual Method Under an accrual method of accounting, you generally report income in the year earned and deduct or capitalize expenses in the year incurred. Filing 2010 taxes late The purpose of an accrual method of accounting is to correctly match income and expenses. Filing 2010 taxes late Certain businesses engaged in farming must use an accrual method of accounting for its farm business and for sales and purchases of inventory items. Filing 2010 taxes late See Accrual Method Required and Farm Inventory , later. Filing 2010 taxes late Income Generally, you include an amount in income for the tax year in which all events that fix your right to receive the income have occurred, and you can determine the amount with reasonable accuracy. Filing 2010 taxes late Under this rule, include an amount in income on the earliest of the following dates. Filing 2010 taxes late When you receive payment. Filing 2010 taxes late When the income amount is due to you. Filing 2010 taxes late When you earn the income. Filing 2010 taxes late When title passes. Filing 2010 taxes late If you use an accrual method of accounting, complete Part III of Schedule F (Form 1040) to report your income. Filing 2010 taxes late Inventory. Filing 2010 taxes late   If you keep an inventory, generally you must use an accrual method of accounting to determine your gross income. Filing 2010 taxes late An inventory is necessary to clearly show income when the production, purchase, or sale of merchandise is an income-producing factor. Filing 2010 taxes late See Publication 538 for more information. Filing 2010 taxes late Also see Farm Inventory , later, for more information on items that must be included in inventory by farmers and inventory valuation methods for farmers. Filing 2010 taxes late Expenses Under an accrual method of accounting, you generally deduct or capitalize a business expense when both of the following apply. Filing 2010 taxes late The all-events test has been met. Filing 2010 taxes late This test is met when: All events have occurred that fix the fact that you have a liability, and The amount of the liability can be determined with reasonable accuracy. Filing 2010 taxes late Economic performance has occurred. Filing 2010 taxes late Economic performance. Filing 2010 taxes late   Generally, you cannot deduct or capitalize a business expense until economic performance occurs. Filing 2010 taxes late If your expense is for property or services provided to you, or for your use of property, economic performance occurs as the property or services are provided or as the property is used. Filing 2010 taxes late If your expense is for property or services you provide to others, economic performance occurs as you provide the property or services. Filing 2010 taxes late Example. Filing 2010 taxes late Jane, who is a farmer, uses a calendar tax year and an accrual method of accounting. Filing 2010 taxes late She entered into a contract with ABC Farm Consulting in 2012. Filing 2010 taxes late The contract stated that Jane pay ABC Farm Consulting $2,000 in December 2012. Filing 2010 taxes late It further stipulates that ABC Farm Consulting will develop a plan for integrating her farm with a larger farm operation based in a neighboring state by March 1, 2013. Filing 2010 taxes late Jane paid ABC Farm Consulting $2,000 in December 2012. Filing 2010 taxes late Integration of operations according to the plan began in May 2013 and they completed the integration in December 2013. Filing 2010 taxes late Economic performance for Jane's liability in the contract occurs as the services are provided. Filing 2010 taxes late Jane incurs the $2,000 cost in 2013. Filing 2010 taxes late An exception to the economic performance rule allows certain recurring items to be treated as incurred during a tax year even though economic performance has not occurred. Filing 2010 taxes late For more information, see Economic Performance in Publication 538. Filing 2010 taxes late Special rule for related persons. Filing 2010 taxes late   Business expenses and interest owed to a related person who uses the cash method of accounting are not deductible until you make the payment and the corresponding amount is includible in the related person's gross income. Filing 2010 taxes late Determine the relationship for this rule as of the end of the tax year for which the expense or interest would otherwise be deductible. Filing 2010 taxes late For more information, see Internal Revenue Code section 267. Filing 2010 taxes late Accrual Method Required Generally, the following businesses, if engaged in farming, must use an accrual method of accounting. Filing 2010 taxes late A corporation (other than a family corporation) that had gross receipts of more than $1,000,000 for any tax year beginning after 1975. Filing 2010 taxes late A family corporation that had gross receipts of more than $25,000,000 for any tax year beginning after 1985. Filing 2010 taxes late A partnership with a corporation as a partner, if that corporation meets the requirements of (1) or (2) above. Filing 2010 taxes late A tax shelter. Filing 2010 taxes late Note. Filing 2010 taxes late Items (1), (2), and (3) above do not apply to an S corporation or a business operating a nursery or sod farm, or the raising or harvesting of trees (other than fruit and nut trees). Filing 2010 taxes late Family corporation. Filing 2010 taxes late   A family corporation is generally a corporation that meets one of the following ownership requirements. Filing 2010 taxes late Members of the same family own at least 50% of the total combined voting power of all classes of stock entitled to vote and at least 50% of the total shares of all other classes of stock of the corporation. Filing 2010 taxes late Members of two families have owned, directly or indirectly, since October 4, 1976, at least 65% of the total combined voting power of all classes of voting stock and at least 65% of the total shares of all other classes of the corporation's stock. Filing 2010 taxes late Members of three families have owned, directly or indirectly, since October 4, 1976, at least 50% of the total combined voting power of all classes of voting stock and at least 50% of the total shares of all other classes of the corporation's stock. Filing 2010 taxes late For more information on family corporations, see Internal Revenue Code section 447. Filing 2010 taxes late Tax shelter. Filing 2010 taxes late   A tax shelter is a partnership, noncorporate enterprise, or S corporation that meets either of the following tests. Filing 2010 taxes late Its principal purpose is the avoidance or evasion of federal income tax. Filing 2010 taxes late It is a farming syndicate. Filing 2010 taxes late A farming syndicate is an entity that meets either of the following tests. Filing 2010 taxes late Interests in the activity have been offered for sale in an offering required to be registered with a federal or state agency with the authority to regulate the offering of securities for sale. Filing 2010 taxes late More than 35% of the losses during the tax year are allocable to limited partners or limited entrepreneurs. Filing 2010 taxes late   A “limited partner” is one whose personal liability for partnership debts is limited to the money or other property the partner contributed or is required to contribute to the partnership. Filing 2010 taxes late   A “limited entrepreneur” is one who has an interest in an enterprise other than as a limited partner and does not actively participate in the management of the enterprise. Filing 2010 taxes late Farm Inventory If you are required to keep an inventory, you should keep a complete record of your inventory as part of your farm records. Filing 2010 taxes late This record should show the actual count or measurement of the inventory. Filing 2010 taxes late It should also show all factors that enter into its valuation, including quality and weight, if applicable. Filing 2010 taxes late Hatchery business. Filing 2010 taxes late   If you are in the hatchery business, and use an accrual method of accounting, you must include in inventory eggs in the process of incubation. Filing 2010 taxes late Products held for sale. Filing 2010 taxes late   All harvested and purchased farm products held for sale or for feed or seed, such as grain, hay, silage, concentrates, cotton, tobacco, etc. Filing 2010 taxes late , must be included in inventory. Filing 2010 taxes late Supplies. Filing 2010 taxes late   Supplies acquired for sale or that become a physical part of items held for sale must be included in inventory. Filing 2010 taxes late Deduct the cost of supplies in the year used or consumed in operations. Filing 2010 taxes late Do not include incidental supplies in inventory as these are deductible in the year of purchase. Filing 2010 taxes late Livestock. Filing 2010 taxes late   Livestock held primarily for sale must be included in inventory. Filing 2010 taxes late Livestock held for draft, breeding, or dairy purposes can either be depreciated or included in inventory. Filing 2010 taxes late See also Unit-livestock-price method , later. Filing 2010 taxes late If you are in the business of breeding and raising chinchillas, mink, foxes, or other fur-bearing animals, these animals are livestock for inventory purposes. Filing 2010 taxes late Growing crops. Filing 2010 taxes late   Generally, growing crops are not required to be included in inventory. Filing 2010 taxes late However, if the crop has a preproductive period of more than 2 years, you may have to capitalize (or include in inventory) costs associated with the crop. Filing 2010 taxes late See Uniform capitalization rules below. Filing 2010 taxes late Also see Uniform Capitalization Rules in  chapter 6. Filing 2010 taxes late Items to include in inventory. Filing 2010 taxes late   Your inventory should include all items held for sale, or for use as feed, seed, etc. Filing 2010 taxes late , whether raised or purchased, that are unsold at the end of the year. Filing 2010 taxes late Uniform capitalization rules. Filing 2010 taxes late   The following applies if you are required to use an accrual method of accounting. Filing 2010 taxes late The uniform capitalization rules apply to all costs of raising a plant, even if the preproductive period of raising a plant is 2 years or less. Filing 2010 taxes late The costs of animals are subject to the uniform capitalization rules. Filing 2010 taxes late Inventory valuation methods. Filing 2010 taxes late   The following methods, described below, are those generally available for valuing inventory. Filing 2010 taxes late The method you use must conform to generally accepted accounting principles for similar businesses and must clearly reflect income. Filing 2010 taxes late Cost. Filing 2010 taxes late Lower of cost or market. Filing 2010 taxes late Farm-price method. Filing 2010 taxes late Unit-livestock-price method. Filing 2010 taxes late Cost and lower of cost or market methods. Filing 2010 taxes late   See Publication 538 for information on these valuation methods. Filing 2010 taxes late If you value your livestock inventory at cost or the lower of cost or market, you do not need IRS approval to change to the unit-livestock-price method. Filing 2010 taxes late However, if you value your livestock inventory using the farm-price method, then you must obtain permission from the IRS to change to the unit-livestock-price method. Filing 2010 taxes late Farm-price method. Filing 2010 taxes late   Under this method, each item, whether raised or purchased, is valued at its market price less the direct cost of disposition. Filing 2010 taxes late Market price is the current price at the nearest market in the quantities you usually sell. Filing 2010 taxes late Cost of disposition includes broker's commissions, freight, hauling to market, and other marketing costs. Filing 2010 taxes late If you use this method, you must use it for your entire inventory, except that livestock can be inventoried under the unit-livestock-price method. Filing 2010 taxes late Unit-livestock-price method. Filing 2010 taxes late   This method recognizes the difficulty of establishing the exact costs of producing and raising each animal. Filing 2010 taxes late You group or classify livestock according to type and age and use a standard unit price for each animal within a class or group. Filing 2010 taxes late The unit price you assign should reasonably approximate the normal costs incurred in producing the animals in such classes. Filing 2010 taxes late Unit prices and classifications are subject to approval by the IRS on examination of your return. Filing 2010 taxes late You must annually reevaluate your unit livestock prices and adjust the prices upward or downward to reflect increases or decreases in the costs of raising livestock. Filing 2010 taxes late IRS approval is not required for these adjustments. Filing 2010 taxes late Any other changes in unit prices or classifications do require IRS approval. Filing 2010 taxes late   If you use this method, include all raised livestock in inventory, regardless of whether they are held for sale or for draft, breeding, sport, or dairy purposes. Filing 2010 taxes late This method accounts only for the increase in cost of raising an animal to maturity. Filing 2010 taxes late It does not provide for any decrease in the animal's market value after it reaches maturity. Filing 2010 taxes late Also, if you raise cattle, you are not required to inventory hay you grow to feed your herd. Filing 2010 taxes late   Do not include sold or lost animals in the year-end inventory. Filing 2010 taxes late If your records do not show which animals were sold or lost, treat the first animals acquired as sold or lost. Filing 2010 taxes late The animals on hand at the end of the year are considered those most recently acquired. Filing 2010 taxes late   You must include in inventory all livestock purchased primarily for sale. Filing 2010 taxes late You can choose either to include in inventory or depreciate livestock purchased for draft, breeding, sport or dairy purposes. Filing 2010 taxes late However, you must be consistent from year to year, regardless of the method you have chosen. Filing 2010 taxes late You cannot change your method without obtaining approval from the IRS. Filing 2010 taxes late   You must include in inventory animals purchased after maturity or capitalize them at their purchase price. Filing 2010 taxes late If the animals are not mature at purchase, increase the cost at the end of each tax year according to the established unit price. Filing 2010 taxes late However, in the year of purchase, do not increase the cost of any animal purchased during the last 6 months of the year. Filing 2010 taxes late This “no increase” rule does not apply to tax shelters which must make an adjustment for any animal purchased during the year. Filing 2010 taxes late It also does not apply to taxpayers that must make an adjustment to reasonably reflect the particular period in the year in which animals are purchased, if necessary to avoid significant distortions in income. Filing 2010 taxes late Uniform capitalization rules. Filing 2010 taxes late   A farmer can determine costs required to be allocated under the uniform capitalization rules by using the farm-price or unit-livestock-price inventory method. Filing 2010 taxes late This applies to any plant or animal, even if the farmer does not hold or treat the plant or animal as inventory property. Filing 2010 taxes late Cash Versus Accrual Method The following examples compare the cash and accrual methods of accounting. Filing 2010 taxes late Example 1. Filing 2010 taxes late You are a farmer who uses an accrual method of accounting. Filing 2010 taxes late You keep your books on the calendar year basis. Filing 2010 taxes late You sell grain in December 2013 but you are not paid until January 2014. Filing 2010 taxes late Because the accrual method was used and 2013 was the tax year in which the grain was sold, you must both include the sales proceeds and deduct the costs incurred in producing the grain on your 2013 tax return. Filing 2010 taxes late Example 2. Filing 2010 taxes late Assume the same facts as in Example 1 except that you use the cash method and there was no constructive receipt of the sales proceeds in 2013. Filing 2010 taxes late Under this method, you include the sales proceeds in income for 2014, the year you receive payment. Filing 2010 taxes late Deduct the costs of producing the grain in the year you pay for them. Filing 2010 taxes late Special Methods of Accounting There are special methods of accounting for certain items of income and expense. Filing 2010 taxes late Crop method. Filing 2010 taxes late   If you do not harvest and dispose of your crop in the same tax year that you plant it, you can, with IRS approval, use the crop method of accounting. Filing 2010 taxes late You cannot use the crop method for any tax return, including your first tax return, unless you receive approval from the IRS. Filing 2010 taxes late Under this method, you deduct the entire cost of producing the crop, including the expense of seed or young plants, in the year you realize income from the crop. Filing 2010 taxes late    See chapter 4 for details on deducting the costs of operating a farm. Filing 2010 taxes late Also see Regulations section 1. Filing 2010 taxes late 162-12. Filing 2010 taxes late Other special methods. Filing 2010 taxes late   Other special methods of accounting apply to the following items. Filing 2010 taxes late Amortization, see chapter 7. Filing 2010 taxes late Casualties, see chapter 11. Filing 2010 taxes late Condemnations, see chapter 11. Filing 2010 taxes late Depletion, see chapter 7. Filing 2010 taxes late Depreciation, see chapter 7. Filing 2010 taxes late Farm business expenses, see chapter 4. Filing 2010 taxes late Farm income, see chapter 3. Filing 2010 taxes late Installment sales, see chapter 10. Filing 2010 taxes late Soil and water conservation expenses, see chapter 5. Filing 2010 taxes late Thefts, see chapter 11. Filing 2010 taxes late Combination Method Generally, you can use any combination of cash, accrual, and special methods of accounting if the combination clearly shows your income and expenses and you use it consistently. Filing 2010 taxes late However, the following restrictions apply. Filing 2010 taxes late If you use the cash method for figuring your income, you must use the cash method for reporting your expenses. Filing 2010 taxes late If you use an accrual method for reporting your expenses, you must use an accrual method for figuring your income. Filing 2010 taxes late Changes in Methods of Accounting A change in your method of accounting includes a change in: Your overall method, such as from the cash method to an accrual method, and Your treatment of any material item, such as a change in your method of valuing inventory (for example, a change from the farm-price method to the unit-livestock-price method, discussed earlier). Filing 2010 taxes late Generally, once you have set up your accounting method, you must receive approval from the IRS before you can change to another method of accounting. Filing 2010 taxes late You may also have to pay a fee. Filing 2010 taxes late To obtain approval, you must generally file Form 3115. Filing 2010 taxes late There are instances when you can obtain automatic consent to change certain methods of accounting. Filing 2010 taxes late See the List of Automatic Accounting Method Changes located in the Instructions for Form 3115. Filing 2010 taxes late For more information on changes in methods of accounting, see Form 3115 and the Instructions for Form 3115. Filing 2010 taxes late Also see Publication 538. Filing 2010 taxes late Prev  Up  Next   Home   More Online Publications