Filing Your Taxes Online is Fast, Easy and Secure.
Start now and receive your tax refund in as little as 7 days.

1. Get Answers

Your online questions are customized to your unique tax situation.

2. Maximize your Refund

Find tax credits for everything from school tuition to buying a hybri

3. E-File for FREE

E-file free with direct deposit to get your refund in as few as 7 days.

Filing your taxes with paper mail can be difficult and it could take weeks for your refund to arrive. IRS e-file is easy, fast and secure. There is no paperwork going to the IRS so tax refunds can be processed in as little as 7 days with direct deposit. As you prepare your taxes online, you can see your tax refund in real time.

FREE audit support and representation from an enrolled agent – NEW and only from H&R Block

Form 1040ez 2012 Instructions

H&r Block Advantage2011 Federal Income Tax FormsIrs Tax Form 1040xFree 2005 Tax FilingH And R Block File For Free1040es FormHow Do I File An Amended Tax ReturnPrior Year Tax FormsIrs Forms 1040nrWww Irs1040ez ComTaxact For 2011Irs TaxState TaxAmend My Taxes OnlineDo Students Have To File TaxesTaxes For UnemployedFree Tax Preparation H&r BlockHow Do I Fill Out A 1040x Form1040nr Free SoftwareTax Forms 2011Filing State Taxes OnlyFree Tax AmendmentCan You Refile TaxesH And R Block Free FileFile State Income TaxFile Free Federal And State Tax ReturnFree 1040ez 2013Vita Tax Assistance2010 1040 Ez Tax FormHow Do You Amend TaxesAmend My 2012 Tax ReturnI Need To Amend My 2010 TaxesIrs Forms Amended Tax Return1040ezWww.irs.gov/1040xFree File 2012 TaxesFiling Tax Return1040ez 2012 FormAmended Tax Return 2012How To File Past Taxes

Form 1040ez 2012 Instructions

Form 1040ez 2012 instructions 5. Form 1040ez 2012 instructions   Personal Use of Dwelling Unit (Including Vacation Home) Table of Contents Dividing Expenses Dwelling Unit Used as a HomeMain home. Form 1040ez 2012 instructions Shared equity financing agreement. Form 1040ez 2012 instructions Donation of use of the property. Form 1040ez 2012 instructions Examples. Form 1040ez 2012 instructions Days used for repairs and maintenance. Form 1040ez 2012 instructions Days used as a main home before or after renting. Form 1040ez 2012 instructions Reporting Income and DeductionsNot used as a home. Form 1040ez 2012 instructions Used as a home but rented less than 15 days. Form 1040ez 2012 instructions Used as a home and rented 15 days or more. Form 1040ez 2012 instructions If you have any personal use of a dwelling unit (including a vacation home) that you rent, you must divide your expenses between rental use and personal use. Form 1040ez 2012 instructions In general, your rental expenses will be no more than your total expenses multiplied by a fraction; the denominator of which is the total number of days the dwelling unit is used and the numerator of which is the total number of days actually rented at a fair rental price. Form 1040ez 2012 instructions Only your rental expenses may deducted on Schedule E (Form 1040). Form 1040ez 2012 instructions Some of your personal expenses may be deductible if you itemize your deductions on Schedule A (Form 1040). Form 1040ez 2012 instructions You must also determine if the dwelling unit is considered a home. Form 1040ez 2012 instructions The amount of rental expenses that you can deduct may be limited if the dwelling unit is considered a home. Form 1040ez 2012 instructions Whether a dwelling unit is considered a home depends on how many days during the year are considered to be days of personal use. Form 1040ez 2012 instructions There is a special rule if you used the dwelling unit as a home and you rented it for less than 15 days during the year. Form 1040ez 2012 instructions Dwelling unit. Form 1040ez 2012 instructions   A dwelling unit includes a house, apartment, condominium, mobile home, boat, vacation home, or similar property. Form 1040ez 2012 instructions It also includes all structures or other property belonging to the dwelling unit. Form 1040ez 2012 instructions A dwelling unit has basic living accommodations, such as sleeping space, a toilet, and cooking facilities. Form 1040ez 2012 instructions   A dwelling unit does not include property (or part of the property) used solely as a hotel, motel, inn, or similar establishment. Form 1040ez 2012 instructions Property is used solely as a hotel, motel, inn, or similar establishment if it is regularly available for occupancy by paying customers and is not used by an owner as a home during the year. Form 1040ez 2012 instructions Example. Form 1040ez 2012 instructions You rent a room in your home that is always available for short-term occupancy by paying customers. Form 1040ez 2012 instructions You do not use the room yourself and you allow only paying customers to use the room. Form 1040ez 2012 instructions This room is used solely as a hotel, motel, inn, or similar establishment and is not a dwelling unit. Form 1040ez 2012 instructions Dividing Expenses If you use a dwelling unit for both rental and personal purposes, divide your expenses between the rental use and the personal use based on the number of days used for each purpose. Form 1040ez 2012 instructions When dividing your expenses, follow these rules. Form 1040ez 2012 instructions Any day that the unit is rented at a fair rental price is a day of rental use even if you used the unit for personal purposes that day. Form 1040ez 2012 instructions (This rule does not apply when determining whether you used the unit as a home. Form 1040ez 2012 instructions ) Any day that the unit is available for rent but not actually rented is not a day of rental use. Form 1040ez 2012 instructions Fair rental price. Form 1040ez 2012 instructions   A fair rental price for your property generally is the amount of rent that a person who is not related to you would be willing to pay. Form 1040ez 2012 instructions The rent you charge is not a fair rental price if it is substantially less than the rents charged for other properties that are similar to your property in your area. Form 1040ez 2012 instructions   Ask yourself the following questions when comparing another property with yours. Form 1040ez 2012 instructions Is it used for the same purpose? Is it approximately the same size? Is it in approximately the same condition? Does it have similar furnishings? Is it in a similar location? If any of the answers are no, the properties probably are not similar. Form 1040ez 2012 instructions Example. Form 1040ez 2012 instructions Your beach cottage was available for rent from June 1 through August 31 (92 days). Form 1040ez 2012 instructions Except for the first week in August (7 days), when you were unable to find a renter, you rented the cottage at a fair rental price during that time. Form 1040ez 2012 instructions The person who rented the cottage for July allowed you to use it over the weekend (2 days) without any reduction in or refund of rent. Form 1040ez 2012 instructions Your family also used the cottage during the last 2 weeks of May (14 days). Form 1040ez 2012 instructions The cottage was not used at all before May 17 or after August 31. Form 1040ez 2012 instructions You figure the part of the cottage expenses to treat as rental expenses as follows. Form 1040ez 2012 instructions The cottage was used for rental a total of 85 days (92 − 7). Form 1040ez 2012 instructions The days it was available for rent but not rented (7 days) are not days of rental use. Form 1040ez 2012 instructions The July weekend (2 days) you used it is rental use because you received a fair rental price for the weekend. Form 1040ez 2012 instructions You used the cottage for personal purposes for 14 days (the last 2 weeks in May). Form 1040ez 2012 instructions The total use of the cottage was 99 days (14 days personal use + 85 days rental use). Form 1040ez 2012 instructions Your rental expenses are 85/99 (86%) of the cottage expenses. Form 1040ez 2012 instructions Note. Form 1040ez 2012 instructions When determining whether you used the cottage as a home, the July weekend (2 days) you used it is considered personal use even though you received a fair rental price for the weekend. Form 1040ez 2012 instructions Therefore, you had 16 days of personal use and 83 days of rental use for this purpose. Form 1040ez 2012 instructions Because you used the cottage for personal purposes more than 14 days and more than 10% of the days of rental use (8 days), you used it as a home. Form 1040ez 2012 instructions If you have a net loss, you may not be able to deduct all of the rental expenses. Form 1040ez 2012 instructions See Dwelling Unit Used as a Home, next. Form 1040ez 2012 instructions Dwelling Unit Used as a Home If you use a dwelling unit for both rental and personal purposes, the tax treatment of the rental expenses you figured earlier under Dividing Expenses and rental income depends on whether you are considered to be using the dwelling unit as a home. Form 1040ez 2012 instructions You use a dwelling unit as a home during the tax year if you use it for personal purposes more than the greater of: 14 days, or 10% of the total days it is rented to others at a fair rental price. Form 1040ez 2012 instructions See What is a day of personal use , later. Form 1040ez 2012 instructions If a dwelling unit is used for personal purposes on a day it is rented at a fair rental price (discussed earlier), do not count that day as a day of rental use in applying (2) above. Form 1040ez 2012 instructions Instead, count it as a day of personal use in applying both (1) and (2) above. Form 1040ez 2012 instructions What is a day of personal use?   A day of personal use of a dwelling unit is any day that the unit is used by any of the following persons. Form 1040ez 2012 instructions You or any other person who owns an interest in it, unless you rent it to another owner as his or her main home under a shared equity financing agreement (defined later). Form 1040ez 2012 instructions However, see Days used as a main home before or after renting , later. Form 1040ez 2012 instructions A member of your family or a member of the family of any other person who owns an interest in it, unless the family member uses the dwelling unit as his or her main home and pays a fair rental price. Form 1040ez 2012 instructions Family includes only your spouse, brothers and sisters, half-brothers and half-sisters, ancestors (parents, grandparents, etc. Form 1040ez 2012 instructions ), and lineal descendants (children, grandchildren, etc. Form 1040ez 2012 instructions ). Form 1040ez 2012 instructions Anyone under an arrangement that lets you use some other dwelling unit. Form 1040ez 2012 instructions Anyone at less than a fair rental price. Form 1040ez 2012 instructions Main home. Form 1040ez 2012 instructions   If the other person or member of the family in (1) or (2) above has more than one home, his or her main home is ordinarily the one he or she lived in most of the time. Form 1040ez 2012 instructions Shared equity financing agreement. Form 1040ez 2012 instructions   This is an agreement under which two or more persons acquire undivided interests for more than 50 years in an entire dwelling unit, including the land, and one or more of the co-owners is entitled to occupy the unit as his or her main home upon payment of rent to the other co-owner or owners. Form 1040ez 2012 instructions Donation of use of the property. Form 1040ez 2012 instructions   You use a dwelling unit for personal purposes if: You donate the use of the unit to a charitable organization, The organization sells the use of the unit at a fund-raising event, and The “purchaser” uses the unit. Form 1040ez 2012 instructions Examples. Form 1040ez 2012 instructions   The following examples show how to determine if you have days of personal use. Form 1040ez 2012 instructions Example 1. Form 1040ez 2012 instructions You and your neighbor are co-owners of a condominium at the beach. Form 1040ez 2012 instructions Last year, you rented the unit to vacationers whenever possible. Form 1040ez 2012 instructions The unit was not used as a main home by anyone. Form 1040ez 2012 instructions Your neighbor used the unit for 2 weeks last year; you did not use it at all. Form 1040ez 2012 instructions Because your neighbor has an interest in the unit, both of you are considered to have used the unit for personal purposes during those 2 weeks. Form 1040ez 2012 instructions Example 2. Form 1040ez 2012 instructions You and your neighbors are co-owners of a house under a shared equity financing agreement. Form 1040ez 2012 instructions Your neighbors live in the house and pay you a fair rental price. Form 1040ez 2012 instructions Even though your neighbors have an interest in the house, the days your neighbors live there are not counted as days of personal use by you. Form 1040ez 2012 instructions This is because your neighbors rent the house as their main home under a shared equity financing agreement. Form 1040ez 2012 instructions Example 3. Form 1040ez 2012 instructions You own a rental property that you rent to your son. Form 1040ez 2012 instructions Your son does not own any interest in this property. Form 1040ez 2012 instructions He uses it as his main home and pays you a fair rental price. Form 1040ez 2012 instructions Your son's use of the property is not personal use by you because your son is using it as his main home, he owns no interest in the property, and he is paying you a fair rental price. Form 1040ez 2012 instructions Example 4. Form 1040ez 2012 instructions You rent your beach house to Rosa. Form 1040ez 2012 instructions Rosa rents her cabin in the mountains to you. Form 1040ez 2012 instructions You each pay a fair rental price. Form 1040ez 2012 instructions You are using your beach house for personal purposes on the days that Rosa uses it because your house is used by Rosa under an arrangement that allows you to use her cabin. Form 1040ez 2012 instructions Example 5. Form 1040ez 2012 instructions You rent an apartment to your mother at less than a fair rental price. Form 1040ez 2012 instructions You are using the apartment for personal purposes on the days that your mother rents it because you rent it for less than a fair rental price. Form 1040ez 2012 instructions Days used for repairs and maintenance. Form 1040ez 2012 instructions   Any day that you spend working substantially full time repairing and maintaining (not improving) your property is not counted as a day of personal use. Form 1040ez 2012 instructions Do not count such a day as a day of personal use even if family members use the property for recreational purposes on the same day. Form 1040ez 2012 instructions Example. Form 1040ez 2012 instructions Corey owns a cabin in the mountains that he rents for most of the year. Form 1040ez 2012 instructions He spends a week at the cabin with family members. Form 1040ez 2012 instructions Corey works on maintenance of the cabin 3 or 4 hours each day during the week and spends the rest of the time fishing, hiking, and relaxing. Form 1040ez 2012 instructions Corey's family members, however, work substantially full time on the cabin each day during the week. Form 1040ez 2012 instructions The main purpose of being at the cabin that week is to do maintenance work. Form 1040ez 2012 instructions Therefore, the use of the cabin during the week by Corey and his family will not be considered personal use by Corey. Form 1040ez 2012 instructions Days used as a main home before or after renting. Form 1040ez 2012 instructions   For purposes of determining whether a dwelling unit was used as a home, you may not have to count days you used the property as your main home before or after renting it or offering it for rent as days of personal use. Form 1040ez 2012 instructions Do not count them as days of personal use if: You rented or tried to rent the property for 12 or more consecutive months. Form 1040ez 2012 instructions You rented or tried to rent the property for a period of less than 12 consecutive months and the period ended because you sold or exchanged the property. Form 1040ez 2012 instructions However, this special rule does not apply when dividing expenses between rental and personal use. Form 1040ez 2012 instructions See Property Changed to Rental Use in chapter 4. Form 1040ez 2012 instructions Example 1. Form 1040ez 2012 instructions On February 29, 2012, you moved out of the house you had lived in for 6 years because you accepted a job in another town. Form 1040ez 2012 instructions You rented your house at a fair rental price from March 15, 2012, to May 14, 2013 (14 months). Form 1040ez 2012 instructions On June 1, 2013, you moved back into your old house. Form 1040ez 2012 instructions The days you used the house as your main home from January 1 to February 29, 2012, and from June 1 to December 31, 2013, are not counted as days of personal use. Form 1040ez 2012 instructions Therefore, you would use the rules in chapter 1 when figuring your rental income and expenses. Form 1040ez 2012 instructions Example 2. Form 1040ez 2012 instructions On January 31, you moved out of the condominium where you had lived for 3 years. Form 1040ez 2012 instructions You offered it for rent at a fair rental price beginning on February 1. Form 1040ez 2012 instructions You were unable to rent it until April. Form 1040ez 2012 instructions On September 15, you sold the condominium. Form 1040ez 2012 instructions The days you used the condominium as your main home from January 1 to January 31 are not counted as days of personal use when determining whether you used it as a home. Form 1040ez 2012 instructions Examples. Form 1040ez 2012 instructions   The following examples show how to determine whether you used your rental property as a home. Form 1040ez 2012 instructions Example 1. Form 1040ez 2012 instructions You converted the basement of your home into an apartment with a bedroom, a bathroom, and a small kitchen. Form 1040ez 2012 instructions You rented the basement apartment at a fair rental price to college students during the regular school year. Form 1040ez 2012 instructions You rented to them on a 9-month lease (273 days). Form 1040ez 2012 instructions You figured 10% of the total days rented to others at a fair rental price is 27 days. Form 1040ez 2012 instructions During June (30 days), your brothers stayed with you and lived in the basement apartment rent free. Form 1040ez 2012 instructions Your basement apartment was used as a home because you used it for personal purposes for 30 days. Form 1040ez 2012 instructions Rent-free use by your brothers is considered personal use. Form 1040ez 2012 instructions Your personal use (30 days) is more than the greater of 14 days or 10% of the total days it was rented (27 days). Form 1040ez 2012 instructions Example 2. Form 1040ez 2012 instructions You rented the guest bedroom in your home at a fair rental price during the local college's homecoming, commencement, and football weekends (a total of 27 days). Form 1040ez 2012 instructions Your sister-in-law stayed in the room, rent free, for the last 3 weeks (21 days) in July. Form 1040ez 2012 instructions You figured 10% of the total days rented to others at a fair rental price is 3 days. Form 1040ez 2012 instructions The room was used as a home because you used it for personal purposes for 21 days. Form 1040ez 2012 instructions That is more than the greater of 14 days or 10% of the 27 days it was rented (3 days). Form 1040ez 2012 instructions Example 3. Form 1040ez 2012 instructions You own a condominium apartment in a resort area. Form 1040ez 2012 instructions You rented it at a fair rental price for a total of 170 days during the year. Form 1040ez 2012 instructions For 12 of these days, the tenant was not able to use the apartment and allowed you to use it even though you did not refund any of the rent. Form 1040ez 2012 instructions Your family actually used the apartment for 10 of those days. Form 1040ez 2012 instructions Therefore, the apartment is treated as having been rented for 160 (170 – 10) days. Form 1040ez 2012 instructions You figured 10% of the total days rented to others at a fair rental price is 16 days. Form 1040ez 2012 instructions Your family also used the apartment for 7 other days during the year. Form 1040ez 2012 instructions You used the apartment as a home because you used it for personal purposes for 17 days. Form 1040ez 2012 instructions That is more than the greater of 14 days or 10% of the 160 days it was rented (16 days). Form 1040ez 2012 instructions Minimal rental use. Form 1040ez 2012 instructions   If you use the dwelling unit as a home and you rent it less than 15 days during the year, that period is not treated as rental activity. Form 1040ez 2012 instructions See Used as a home but rented less than 15 days, later, for more information. Form 1040ez 2012 instructions Limit on deductions. Form 1040ez 2012 instructions   Renting a dwelling unit that is considered a home is not a passive activity. Form 1040ez 2012 instructions Instead, if your rental expenses are more than your rental income, some or all of the excess expenses cannot be used to offset income from other sources. Form 1040ez 2012 instructions The excess expenses that cannot be used to offset income from other sources are carried forward to the next year and treated as rental expenses for the same property. Form 1040ez 2012 instructions Any expenses carried forward to the next year will be subject to any limits that apply for that year. Form 1040ez 2012 instructions This limitation will apply to expenses carried forward to another year even if you do not use the property as your home for that subsequent year. Form 1040ez 2012 instructions   To figure your deductible rental expenses for this year and any carryover to next year, use Worksheet 5–1. Form 1040ez 2012 instructions Reporting Income and Deductions Property not used for personal purposes. Form 1040ez 2012 instructions   If you do not use a dwelling unit for personal purposes, see chapter 3 for how to report your rental income and expenses. Form 1040ez 2012 instructions Property used for personal purposes. Form 1040ez 2012 instructions   If you do use a dwelling unit for personal purposes, then how you report your rental income and expenses depends on whether you used the dwelling unit as a home. Form 1040ez 2012 instructions Not used as a home. Form 1040ez 2012 instructions   If you use a dwelling unit for personal purposes, but not as a home, report all the rental income in your income. Form 1040ez 2012 instructions Since you used the dwelling unit for personal purposes, you must divide your expenses between the rental use and the personal use as described earlier in this chapter under Dividing Expenses . Form 1040ez 2012 instructions The expenses for personal use are not deductible as rental expenses. Form 1040ez 2012 instructions   Your deductible rental expenses can be more than your gross rental income; however, see Limits on Rental Losses in chapter 3. Form 1040ez 2012 instructions Used as a home but rented less than 15 days. Form 1040ez 2012 instructions   If you use a dwelling unit as a home and you rent it less than 15 days during the year, its primary function is not considered to be rental and it should not be reported on Schedule E (Form 1040). Form 1040ez 2012 instructions You are not required to report the rental income and rental expenses from this activity. Form 1040ez 2012 instructions The expenses, including qualified mortgage interest, property taxes, and any qualified casualty loss will be reported as normally allowed on Schedule A (Form 1040). Form 1040ez 2012 instructions See the Instructions for Schedule A (Form 1040) for more information on deducting these expenses. Form 1040ez 2012 instructions Used as a home and rented 15 days or more. Form 1040ez 2012 instructions   If you use a dwelling unit as a home and rent it 15 days or more during the year, include all your rental income in your income. Form 1040ez 2012 instructions Since you used the dwelling unit for personal purposes, you must divide your expenses between the rental use and the personal use as described earlier in this chapter under Dividing Expenses . Form 1040ez 2012 instructions The expenses for personal use are not deductible as rental expenses. Form 1040ez 2012 instructions   If you had a net profit from renting the dwelling unit for the year (that is, if your rental income is more than the total of your rental expenses, including depreciation), deduct all of your rental expenses. Form 1040ez 2012 instructions You do not need to use Worksheet 5-1. Form 1040ez 2012 instructions   However, if you had a net loss from renting the dwelling unit for the year, your deduction for certain rental expenses is limited. Form 1040ez 2012 instructions To figure your deductible rental expenses and any carryover to next year, use Worksheet 5–1. Form 1040ez 2012 instructions Worksheet 5-1. Form 1040ez 2012 instructions Worksheet for Figuring Rental Deductions for a Dwelling Unit Used as a Home Use this worksheet only if you answer “yes” to all of the following questions. Form 1040ez 2012 instructions Did you use the dwelling unit as a home this year? (See Dwelling Unit Used as a Home . Form 1040ez 2012 instructions ) Did you rent the dwelling unit at a fair rental price 15 days or more this year? Is the total of your rental expenses and depreciation more than your rental income? PART I. Form 1040ez 2012 instructions Rental Use Percentage A. Form 1040ez 2012 instructions Total days available for rent at fair rental price A. Form 1040ez 2012 instructions       B. Form 1040ez 2012 instructions Total days available for rent (line A) but not rented B. Form 1040ez 2012 instructions       C. Form 1040ez 2012 instructions Total days of rental use. Form 1040ez 2012 instructions Subtract line B from line A C. Form 1040ez 2012 instructions       D. Form 1040ez 2012 instructions Total days of personal use (including days rented at less than fair rental price) D. Form 1040ez 2012 instructions       E. Form 1040ez 2012 instructions Total days of rental and personal use. Form 1040ez 2012 instructions Add lines C and D E. Form 1040ez 2012 instructions       F. Form 1040ez 2012 instructions Percentage of expenses allowed for rental. Form 1040ez 2012 instructions Divide line C by line E     F. Form 1040ez 2012 instructions . Form 1040ez 2012 instructions PART II. Form 1040ez 2012 instructions Allowable Rental Expenses 1. Form 1040ez 2012 instructions Enter rents received 1. Form 1040ez 2012 instructions   2a. Form 1040ez 2012 instructions Enter the rental portion of deductible home mortgage interest and qualified mortgage insurance premiums (see instructions) 2a. Form 1040ez 2012 instructions       b. Form 1040ez 2012 instructions Enter the rental portion of real estate taxes b. Form 1040ez 2012 instructions       c. Form 1040ez 2012 instructions Enter the rental portion of deductible casualty and theft losses (see instructions) c. Form 1040ez 2012 instructions       d. Form 1040ez 2012 instructions Enter direct rental expenses (see instructions) d. Form 1040ez 2012 instructions       e. Form 1040ez 2012 instructions Fully deductible rental expenses. Form 1040ez 2012 instructions Add lines 2a–2d. Form 1040ez 2012 instructions Enter here and  on the appropriate lines on Schedule E (see instructions) 2e. Form 1040ez 2012 instructions   3. Form 1040ez 2012 instructions Subtract line 2e from line 1. Form 1040ez 2012 instructions If zero or less, enter -0- 3. Form 1040ez 2012 instructions   4a. Form 1040ez 2012 instructions Enter the rental portion of expenses directly related to operating or maintaining  the dwelling unit (such as repairs, insurance, and utilities) 4a. Form 1040ez 2012 instructions       b. Form 1040ez 2012 instructions Enter the rental portion of excess mortgage interest and qualified mortgage insurance premiums (see instructions) b. Form 1040ez 2012 instructions       c. Form 1040ez 2012 instructions Carryover of operating expenses from 2012 worksheet c. Form 1040ez 2012 instructions       d. Form 1040ez 2012 instructions Add lines 4a–4c d. Form 1040ez 2012 instructions       e. Form 1040ez 2012 instructions Allowable expenses. Form 1040ez 2012 instructions Enter the smaller of line 3 or line 4d (see instructions) 4e. Form 1040ez 2012 instructions   5. Form 1040ez 2012 instructions Subtract line 4e from line 3. Form 1040ez 2012 instructions If zero or less, enter -0- 5. Form 1040ez 2012 instructions   6a. Form 1040ez 2012 instructions Enter the rental portion of excess casualty and theft losses (see instructions) 6a. Form 1040ez 2012 instructions       b. Form 1040ez 2012 instructions Enter the rental portion of depreciation of the dwelling unit b. Form 1040ez 2012 instructions       c. Form 1040ez 2012 instructions Carryover of excess casualty losses and depreciation from 2012 worksheet c. Form 1040ez 2012 instructions       d. Form 1040ez 2012 instructions Add lines 6a–6c d. Form 1040ez 2012 instructions       e. Form 1040ez 2012 instructions Allowable excess casualty and theft losses and depreciation. Form 1040ez 2012 instructions Enter the smaller of  line 5 or line 6d (see instructions) 6e. Form 1040ez 2012 instructions   PART III. Form 1040ez 2012 instructions Carryover of Unallowed Expenses to Next Year 7a. Form 1040ez 2012 instructions Operating expenses to be carried over to next year. Form 1040ez 2012 instructions Subtract line 4e from line 4d 7a. Form 1040ez 2012 instructions   b. Form 1040ez 2012 instructions Excess casualty and theft losses and depreciation to be carried over to next year. Form 1040ez 2012 instructions  Subtract line 6e from line 6d b. Form 1040ez 2012 instructions   Worksheet 5-1 Instructions. Form 1040ez 2012 instructions Worksheet for Figuring Rental Deductions for a Dwelling Unit Used as a Home Caution. Form 1040ez 2012 instructions Use the percentage determined in Part I, line F, to figure the rental portions to enter on lines 2a–2c, 4a–4b, and 6a–6b of  Part II. Form 1040ez 2012 instructions Line 2a. Form 1040ez 2012 instructions Figure the mortgage interest on the dwelling unit that you could deduct on Schedule A as if you had not rented the unit. Form 1040ez 2012 instructions Do not include interest on a loan that did not benefit the dwelling unit. Form 1040ez 2012 instructions For example, do not include interest on a home equity loan used to pay off credit cards or other personal loans, buy a car, or pay college tuition. Form 1040ez 2012 instructions Include interest on a loan used to buy, build, or improve the dwelling unit, or to refinance such a loan. Form 1040ez 2012 instructions Include the rental portion of this interest in the total you enter on line 2a of the worksheet. Form 1040ez 2012 instructions   Figure the qualified mortgage insurance premiums on the dwelling unit that you could deduct on line 13 of Schedule A as if you had not rented the unit. Form 1040ez 2012 instructions See the Schedule A instructions. Form 1040ez 2012 instructions However, figure your adjusted gross income (Form 1040, line 38) without your rental income and expenses from the dwelling unit. Form 1040ez 2012 instructions See Line 4b to deduct the part of the qualified mortgage insurance premiums not allowed because of the adjusted gross income limit. Form 1040ez 2012 instructions Include the rental portion of the amount from Schedule A, line 13, in the total you enter on line 2a of the worksheet. Form 1040ez 2012 instructions   Note. Form 1040ez 2012 instructions Do not file this Schedule A or use it to figure the amount to deduct on line 13 of that schedule. Form 1040ez 2012 instructions Instead, figure the personal portion on a separate Schedule A. Form 1040ez 2012 instructions If you have deducted mortgage interest or qualified mortgage insurance premiums on the dwelling unit on other forms, such as Schedule C or F, remember to reduce your Schedule A deduction by that amount. Form 1040ez 2012 instructions           Line 2c. Form 1040ez 2012 instructions Figure the casualty and theft losses related to the dwelling unit that you could deduct on Schedule A as if you had not rented the dwelling unit. Form 1040ez 2012 instructions To do this, complete Section A of Form 4684, Casualties and Thefts, treating the losses as personal losses. Form 1040ez 2012 instructions If any of the loss is due to a federally declared disaster, see the Instructions for Form 4684. Form 1040ez 2012 instructions On Form 4684, line 17, enter 10% of your adjusted gross income figured without your rental income and expenses from the dwelling unit. Form 1040ez 2012 instructions Enter the rental portion of the result from Form 4684, line 18, on line 2c of this worksheet. Form 1040ez 2012 instructions   Note. Form 1040ez 2012 instructions Do not file this Form 4684 or use it to figure your personal losses on Schedule A. Form 1040ez 2012 instructions Instead, figure the personal portion on a separate Form 4684. Form 1040ez 2012 instructions           Line 2d. Form 1040ez 2012 instructions Enter the total of your rental expenses that are directly related only to the rental activity. Form 1040ez 2012 instructions These include interest on loans used for rental activities other than to buy, build, or improve the dwelling unit. Form 1040ez 2012 instructions Also include rental agency fees, advertising, office supplies, and depreciation on office equipment used in your rental activity. Form 1040ez 2012 instructions           Line 2e. Form 1040ez 2012 instructions You can deduct the amounts on lines 2a, 2b, 2c, and 2d as rental expenses on Schedule E even if your rental expenses are more than your rental income. Form 1040ez 2012 instructions Enter the amounts on lines 2a, 2b, 2c, and 2d on the appropriate lines of Schedule E. Form 1040ez 2012 instructions           Line 4b. Form 1040ez 2012 instructions On line 2a, you entered the rental portion of the mortgage interest or qualified mortgage insurance premiums you could deduct on Schedule A if you had not rented the dwelling unit. Form 1040ez 2012 instructions If you had additional mortgage interest and qualified mortgage insurance premiums that would not be deductible on Schedule A because of limits imposed on them, enter on line 4b of this worksheet the rental portion of those excess amounts. Form 1040ez 2012 instructions Do not include interest on a loan that did not benefit the dwelling unit  (as explained in the line 2a instructions). Form 1040ez 2012 instructions           Line 4e. Form 1040ez 2012 instructions You can deduct the amounts on lines 4a, 4b, and 4c as rental expenses on Schedule E only to the extent they are not more than the amount on line 4e. Form 1040ez 2012 instructions *           Line 6a. Form 1040ez 2012 instructions To find the rental portion of excess casualty and theft losses, use the Form 4684 you prepared for line 2c of this worksheet. Form 1040ez 2012 instructions   A. Form 1040ez 2012 instructions Enter the amount from Form 4684, line 10       B. Form 1040ez 2012 instructions Enter the rental portion of line A       C. Form 1040ez 2012 instructions Enter the amount from line 2c of this worksheet       D. Form 1040ez 2012 instructions Subtract line C from line B. Form 1040ez 2012 instructions Enter the result here and on line 6a of this worksheet               Line 6e. Form 1040ez 2012 instructions You can deduct the amounts on lines 6a, 6b, and 6c as rental expenses on Schedule E only to the extent they are not more than the amount on line 6e. Form 1040ez 2012 instructions * *Allocating the limited deduction. Form 1040ez 2012 instructions If you cannot deduct all of the amount on line 4d or 6d this year, you can allocate the allowable deduction in any way you wish among the expenses included on line 4d or 6d. Form 1040ez 2012 instructions Enter the amount you allocate to each expense on the appropriate line of Schedule E, Part I. Form 1040ez 2012 instructions Prev  Up  Next   Home   More Online Publications
Español

Unusual Items for Sale from the U.S. Government

Find unusual items for sale, including coins, flags, lighthouses, patents and trademarks and more.

The Form 1040ez 2012 Instructions

Form 1040ez 2012 instructions Publication 515 - Main Content Table of Contents Withholding of TaxWithholding Agent Withholding and Reporting Obligations Persons Subject to NRA WithholdingIdentifying the Payee Foreign Persons DocumentationBeneficial Owners Foreign Intermediaries and Foreign Flow-Through Entities Standards of Knowledge Presumption Rules Income Subject to NRA WithholdingSource of Income Fixed or Determinable Annual or Periodical Income (FDAP) Withholding on Specific IncomeEffectively Connected Income Income Not Effectively Connected Pay for Personal Services Performed Artists and Athletes (Income Codes 42 and 43) Other Income Foreign Governments and Certain Other Foreign Organizations U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions Taxpayer Identification NumbersUnexpected payment. Form 1040ez 2012 instructions Depositing Withheld TaxesWhen Deposits Are Required Adjustment for Overwithholding Returns RequiredJoint owners. Form 1040ez 2012 instructions Electronic reporting. Form 1040ez 2012 instructions Partnership Withholding on Effectively Connected IncomeWho Must Withhold Foreign Partner Publicly Traded Partnerships U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions Real Property InterestForeign corporations. Form 1040ez 2012 instructions Domestic corporations. Form 1040ez 2012 instructions U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions real property holding corporations. Form 1040ez 2012 instructions Partnerships. Form 1040ez 2012 instructions Trusts and estates. Form 1040ez 2012 instructions Domestically controlled QIE. Form 1040ez 2012 instructions Late filing of certifications or notices. Form 1040ez 2012 instructions Certifications. Form 1040ez 2012 instructions Liability of agent or qualified substitute. Form 1040ez 2012 instructions Reporting and Paying the Tax Withholding Certificates Tax Treaty TablesTable 1 Table 2 Table 3 How To Get Tax HelpLow Income Taxpayer Clinics (LITCs). Form 1040ez 2012 instructions Withholding of Tax In most cases, a foreign person is subject to U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions tax on its U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions source income. Form 1040ez 2012 instructions Most types of U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions source income received by a foreign person are subject to U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions tax of 30%. Form 1040ez 2012 instructions A reduced rate, including exemption, may apply if there is a tax treaty between the foreign person's country of residence and the United States. Form 1040ez 2012 instructions The tax is generally withheld (NRA withholding) from the payment made to the foreign person. Form 1040ez 2012 instructions The term “NRA withholding” is used in this publication descriptively to refer to withholding required under sections 1441, 1442, and 1443 of the Internal Revenue Code. Form 1040ez 2012 instructions In most cases, NRA withholding describes the withholding regime that requires withholding on a payment of U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions source income. Form 1040ez 2012 instructions Payments to foreign persons, including nonresident alien individuals, foreign entities, and governments, may be subject to NRA withholding. Form 1040ez 2012 instructions NRA withholding does not include withholding under section 1445 of the Code (see U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions Real Property Interest, later) or under section 1446 of the Code (see Partnership Withholding on Effectively Connected Income , later). Form 1040ez 2012 instructions A withholding agent (defined next) is the person responsible for withholding on payments made to a foreign person. Form 1040ez 2012 instructions However, a withholding agent that can reliably associate the payment with documentation (discussed later) from a U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions person is not required to withhold. Form 1040ez 2012 instructions In addition, a withholding agent may apply a reduced rate of withholding (including an exemption from withholding) if it can reliably associate the payment with documentation from a beneficial owner that is a foreign person entitled to a reduced rate of withholding. Form 1040ez 2012 instructions Withholding Agent You are a withholding agent if you are a U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions or foreign person that has control, receipt, custody, disposal, or payment of any item of income of a foreign person that is subject to withholding. Form 1040ez 2012 instructions A withholding agent may be an individual, corporation, partnership, trust, association, nominee (under section 1446 of the Code), or any other entity, including any foreign intermediary, foreign partnership, or U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions branch of certain foreign banks and insurance companies. Form 1040ez 2012 instructions You may be a withholding agent even if there is no requirement to withhold from a payment or even if another person has withheld the required amount from the payment. Form 1040ez 2012 instructions Although several persons may be withholding agents for a single payment, the full tax is required to be withheld only once. Form 1040ez 2012 instructions In most cases, the U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions person who pays an amount subject to NRA withholding is the person responsible for withholding. Form 1040ez 2012 instructions However, other persons may be required to withhold. Form 1040ez 2012 instructions For example, a payment made by a flow-through entity or nonqualified intermediary that knows, or has reason to know, that the full amount of NRA withholding was not done by the person from which it receives a payment is required to do the appropriate withholding since it also falls within the definition of a withholding agent. Form 1040ez 2012 instructions In addition, withholding must be done by any qualified intermediary, withholding foreign partnership, or withholding foreign trust in accordance with the terms of its withholding agreement, discussed later. Form 1040ez 2012 instructions Liability for tax. Form 1040ez 2012 instructions   As a withholding agent, you are personally liable for any tax required to be withheld. Form 1040ez 2012 instructions This liability is independent of the tax liability of the foreign person to whom the payment is made. Form 1040ez 2012 instructions If you fail to withhold and the foreign payee fails to satisfy its U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions tax liability, then both you and the foreign person are liable for tax, as well as interest and any applicable penalties. Form 1040ez 2012 instructions   The applicable tax will be collected only once. Form 1040ez 2012 instructions If the foreign person satisfies its U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions tax liability, you are not liable for the tax but remain liable for any interest and penalties for failure to withhold. Form 1040ez 2012 instructions Determination of amount to withhold. Form 1040ez 2012 instructions   You must withhold on the gross amount subject to NRA withholding. Form 1040ez 2012 instructions You cannot reduce the gross amount by any deductions. Form 1040ez 2012 instructions However, see Scholarships and Fellowship Grants and Pay for Personal Services Performed , later, for when a deduction for a personal exemption may be allowed. Form 1040ez 2012 instructions   If the determination of the source of the income or the amount subject to tax depends on facts that are not known at the time of payment, you must withhold an amount sufficient to ensure that at least 30% of the amount subsequently determined to be subject to withholding is withheld. Form 1040ez 2012 instructions In no case, however, should you withhold more than 30% of the total amount paid. Form 1040ez 2012 instructions Or, you may make a reasonable estimate of the amount from U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions sources and put a corresponding part of the amount due in escrow until the amount from U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions sources can be determined, at which time withholding becomes due. Form 1040ez 2012 instructions When to withhold. Form 1040ez 2012 instructions   Withholding is required at the time you make a payment of an amount subject to withholding. Form 1040ez 2012 instructions A payment is made to a person if that person realizes income, whether or not there is an actual transfer of cash or other property. Form 1040ez 2012 instructions A payment is considered made to a person if it is paid for that person's benefit. Form 1040ez 2012 instructions For example, a payment made to a creditor of a person in satisfaction of that person's debt to the creditor is considered made to the person. Form 1040ez 2012 instructions A payment also is considered made to a person if it is made to that person's agent. Form 1040ez 2012 instructions   A U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions partnership should withhold when any distributions that include amounts subject to withholding are made. Form 1040ez 2012 instructions However, if a foreign partner's distributive share of income subject to withholding is not actually distributed, the U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions partnership must withhold on the foreign partner's distributive share of the income on the earlier of the date that a Schedule K-1 (Form 1065) is provided or mailed to the partner or the due date for furnishing that schedule. Form 1040ez 2012 instructions If the distributable amount consists of effectively connected income, see Partnership Withholding on Effectively Connected Income , later. Form 1040ez 2012 instructions A U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions trust is required to withhold on the amount includible in the gross income of a foreign beneficiary to the extent the trust's distributable net income consists of an amount subject to withholding. Form 1040ez 2012 instructions To the extent a U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions trust is required to distribute an amount subject to withholding but does not actually distribute the amount, it must withhold on the foreign beneficiary's allocable share at the time the income is required to be reported on Form 1042-S. Form 1040ez 2012 instructions Withholding and Reporting Obligations You are required to report payments subject to NRA withholding on Form 1042-S and to file a tax return on Form 1042. Form 1040ez 2012 instructions (See Returns Required , later. Form 1040ez 2012 instructions ) An exception from reporting may apply to individuals who are not required to withhold from a payment and who do not make the payment in the course of their trade or business. Form 1040ez 2012 instructions Form 1099 reporting and backup withholding. Form 1040ez 2012 instructions    You also may be responsible as a payer for reporting on Form 1099 payments made to a U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions person. Form 1040ez 2012 instructions You must withhold 28% (backup withholding rate) from a reportable payment made to a U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions person that is subject to Form 1099 reporting if any of the following apply. Form 1040ez 2012 instructions The U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions person has not provided its taxpayer identification number (TIN) in the manner required. Form 1040ez 2012 instructions The IRS notifies you that the TIN furnished by the payee is incorrect. Form 1040ez 2012 instructions There has been a notified payee underreporting. Form 1040ez 2012 instructions There has been a payee certification failure. Form 1040ez 2012 instructions In most cases, a TIN must be provided by a U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions non-exempt recipient on Form W-9, Request for Taxpayer Identification Number and Certification. Form 1040ez 2012 instructions A payer files a tax return on Form 945, Annual Return of Withheld Federal Income Tax, for backup withholding. Form 1040ez 2012 instructions You may be required to file Form 1099 and, if appropriate, backup withhold, even if you do not make the payments directly to that U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions person. Form 1040ez 2012 instructions For example, you are required to report income paid to a foreign intermediary or flow-through entity that collects for a U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions person subject to Form 1099 reporting. Form 1040ez 2012 instructions See Identifying the Payee , later, for more information. Form 1040ez 2012 instructions Also see Section S. Form 1040ez 2012 instructions Special Rules for Reporting Payments Made Through Foreign Intermediaries and Foreign Flow-Through Entities on Form 1099 in the General Instructions for Certain Information Returns. Form 1040ez 2012 instructions Foreign persons who provide Form W-8BEN, Form W-8ECI, or Form W-8EXP (or applicable documentary evidence) are exempt from backup withholding and Form 1099 reporting. Form 1040ez 2012 instructions Wages paid to employees. Form 1040ez 2012 instructions   If you are the employer of a nonresident alien, you generally must withhold taxes at graduated rates. Form 1040ez 2012 instructions See Pay for Personal Services Performed , later. Form 1040ez 2012 instructions Effectively connected income by partnerships. Form 1040ez 2012 instructions   A withholding agent that is a partnership (whether U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions or foreign) is also responsible for withholding on its income effectively connected with a U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions trade or business that is allocable to foreign partners. Form 1040ez 2012 instructions See Partnership Withholding on Effectively Connected Income , later, for more information. Form 1040ez 2012 instructions U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions real property interest. Form 1040ez 2012 instructions   A withholding agent also may be responsible for withholding if a foreign person transfers a U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions real property interest to the agent, or if it is a corporation, partnership, trust, or estate that distributes a U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions real property interest to a shareholder, partner, or beneficiary that is a foreign person. Form 1040ez 2012 instructions See U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions Real Property Interest , later. Form 1040ez 2012 instructions Persons Subject to NRA Withholding NRA withholding applies only to payments made to a payee that is a foreign person. Form 1040ez 2012 instructions It does not apply to payments made to U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions persons. Form 1040ez 2012 instructions Usually, you determine the payee's status as a U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions or foreign person based on the documentation that person provides. Form 1040ez 2012 instructions See Documentation , later. Form 1040ez 2012 instructions However, if you have received no documentation or you cannot reliably associate all or a part of a payment with documentation, then you must apply certain presumption rules, discussed later. Form 1040ez 2012 instructions Identifying the Payee In most cases, the payee is the person to whom you make the payment, regardless of whether that person is the beneficial owner of the income. Form 1040ez 2012 instructions However, there are situations in which the payee is a person other than the one to whom you actually make a payment. Form 1040ez 2012 instructions U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions agent of foreign person. Form 1040ez 2012 instructions   If you make a payment to a U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions person and you have actual knowledge that the U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions person is receiving the payment as an agent of a foreign person, you must treat the payment as made to the foreign person. Form 1040ez 2012 instructions However, if the U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions person is a financial institution, you may treat the institution as the payee provided you have no reason to believe that the institution will not comply with its own obligation to withhold. Form 1040ez 2012 instructions   If the payment is not subject to NRA withholding (for example, gross proceeds from the sales of securities), you must treat the payment as made to a U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions person and not as a payment to a foreign person. Form 1040ez 2012 instructions You may be required to report the payment on Form 1099 and, if applicable, backup withhold. Form 1040ez 2012 instructions Disregarded entities. Form 1040ez 2012 instructions   A business entity that is not a corporation and that has a single owner may be disregarded as an entity separate from its owner (a disregarded entity) for federal tax purposes. Form 1040ez 2012 instructions The payee of a payment made to a disregarded entity is the owner of the entity. Form 1040ez 2012 instructions   If the owner of the entity is a foreign person, you must apply NRA withholding unless you can treat the foreign owner as a beneficial owner entitled to a reduced rate of withholding. Form 1040ez 2012 instructions   If the owner is a U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions person, you do not apply NRA withholding. Form 1040ez 2012 instructions However, you may be required to report the payment on Form 1099 and, if applicable, backup withhold. Form 1040ez 2012 instructions You may assume that a foreign entity is not a disregarded entity unless you can reliably associate the payment with documentation provided by the owner or you have actual knowledge or reason to know that the foreign entity is a disregarded entity. Form 1040ez 2012 instructions Flow-Through Entities The payees of payments (other than income effectively connected with a U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions trade or business) made to a foreign flow-through entity are the owners or beneficiaries of the flow-through entity. Form 1040ez 2012 instructions This rule applies for purposes of NRA withholding and for Form 1099 reporting and backup withholding. Form 1040ez 2012 instructions Income that is, or is deemed to be, effectively connected with the conduct of a U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions trade or business of a flow-through entity is treated as paid to the entity. Form 1040ez 2012 instructions All of the following are flow-through entities. Form 1040ez 2012 instructions A foreign partnership (other than a withholding foreign partnership). Form 1040ez 2012 instructions A foreign simple or foreign grantor trust (other than a withholding foreign trust). Form 1040ez 2012 instructions A fiscally transparent entity receiving income for which treaty benefits are claimed. Form 1040ez 2012 instructions See Fiscally transparent entity , later. Form 1040ez 2012 instructions In most cases, you treat a payee as a flow-through entity if it provides you with a Form W-8IMY (see Documentation , later) on which it claims such status. Form 1040ez 2012 instructions You also may be required to treat the entity as a flow-through entity under the presumption rules, discussed later. Form 1040ez 2012 instructions You must determine whether the owners or beneficiaries of a flow-through entity are U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions or foreign persons, how much of the payment relates to each owner or beneficiary, and, if the owner or beneficiary is foreign, whether a reduced rate of NRA withholding applies. Form 1040ez 2012 instructions You make these determinations based on the documentation and other information (contained in a withholding statement) that is associated with the flow-through entity's Form W-8IMY. Form 1040ez 2012 instructions If you do not have all of the information that is required to reliably associate a payment with a specific payee, you must apply the presumption rules. Form 1040ez 2012 instructions See Documentation and Presumption Rules , later. Form 1040ez 2012 instructions Withholding foreign partnerships and withholding foreign trusts are not flow-through entities. Form 1040ez 2012 instructions Foreign partnerships. Form 1040ez 2012 instructions    A foreign partnership is any partnership that is not organized under the laws of any state of the United States or the District of Columbia or any partnership that is treated as foreign under the income tax regulations. Form 1040ez 2012 instructions If a foreign partnership is not a withholding foreign partnership, the payees of income are the partners of the partnership, provided the partners are not themselves a flow-through entity or a foreign intermediary. Form 1040ez 2012 instructions However, the payee is the partnership itself if the partnership is claiming treaty benefits on the basis that it is not fiscally transparent and that it meets all the other requirements for claiming treaty benefits. Form 1040ez 2012 instructions If a partner is a foreign flow-through entity or a foreign intermediary, you apply the payee determination rules to that partner to determine the payees. Form 1040ez 2012 instructions Example 1. Form 1040ez 2012 instructions A nonwithholding foreign partnership has three partners: a nonresident alien individual; a foreign corporation; and a U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions citizen. Form 1040ez 2012 instructions You make a payment of U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions source interest to the partnership. Form 1040ez 2012 instructions It gives you a Form W-8IMY with which it associates Form W-8BEN from the nonresident alien; Form W-8BEN from the foreign corporation; and Form W-9 from the U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions citizen. Form 1040ez 2012 instructions The partnership also gives you a complete withholding statement that enables you to associate a part of the interest payment to each partner. Form 1040ez 2012 instructions You must treat all three partners as the payees of the interest payment as if the payment were made directly to them. Form 1040ez 2012 instructions Report the payment to the nonresident alien and the foreign corporation on Forms 1042-S. Form 1040ez 2012 instructions Report the payment to the U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions citizen on Form 1099-INT. Form 1040ez 2012 instructions Example 2. Form 1040ez 2012 instructions A nonwithholding foreign partnership has two partners: a foreign corporation and a nonwithholding foreign partnership. Form 1040ez 2012 instructions The second partnership has two partners, both nonresident alien individuals. Form 1040ez 2012 instructions You make a payment of U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions source interest to the first partnership. Form 1040ez 2012 instructions It gives you a valid Form W-8IMY with which it associates a Form W-8BEN from the foreign corporation and a Form W-8IMY from the second partnership. Form 1040ez 2012 instructions In addition, Forms W-8BEN from the partners are associated with the Form W-8IMY from the second partnership. Form 1040ez 2012 instructions The Forms W-8IMY from the partnerships have complete withholding statements associated with them. Form 1040ez 2012 instructions Because you can reliably associate a part of the interest payment with the Form W-8BEN provided by the foreign corporation and the Forms W-8BEN provided by the nonresident alien individual partners as a result of the withholding statements, you must treat them as the payees of the interest. Form 1040ez 2012 instructions Example 3. Form 1040ez 2012 instructions You make a payment of U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions source dividends to a withholding foreign partnership. Form 1040ez 2012 instructions The partnership has two partners, both foreign corporations. Form 1040ez 2012 instructions You can reliably associate the payment with a valid Form W-8IMY from the partnership on which it represents that it is a withholding foreign partnership. Form 1040ez 2012 instructions You must treat the partnership as the payee of the dividends. Form 1040ez 2012 instructions Foreign simple and grantor trust. Form 1040ez 2012 instructions   A trust is foreign unless it meets both of the following tests. Form 1040ez 2012 instructions A court within the United States is able to exercise primary supervision over the administration of the trust. Form 1040ez 2012 instructions One or more U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions persons have the authority to control all substantial decisions of the trust. Form 1040ez 2012 instructions   In most cases, a foreign simple trust is a foreign trust that is required to distribute all of its income annually. Form 1040ez 2012 instructions A foreign grantor trust is a foreign trust that is treated as a grantor trust under sections 671 through 679 of the Code. Form 1040ez 2012 instructions   The payees of a payment made to a foreign simple trust are the beneficiaries of the trust. Form 1040ez 2012 instructions The payees of a payment made to a foreign grantor trust are the owners of the trust. Form 1040ez 2012 instructions However, the payee is the foreign simple or grantor trust itself if the trust is claiming treaty benefits on the basis that it is not fiscally transparent and that it meets all the other requirements for claiming treaty benefits. Form 1040ez 2012 instructions If the beneficiaries or owners are themselves flow-through entities or foreign intermediaries, you apply the payee determination rules to that beneficiary or owner to determine the payees. Form 1040ez 2012 instructions Example. Form 1040ez 2012 instructions A foreign simple trust has three beneficiaries: two nonresident alien individuals and a U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions citizen. Form 1040ez 2012 instructions You make a payment of interest to the foreign trust. Form 1040ez 2012 instructions It gives you a Form W-8IMY with which it associates Forms W-8BEN from the nonresident aliens and a Form W-9 from the U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions citizen. Form 1040ez 2012 instructions The trust also gives you a complete withholding statement that enables you to associate a part of the interest payment with the forms provided by each beneficiary. Form 1040ez 2012 instructions You must treat all three beneficiaries as the payees of the interest payment as if the payment were made directly to them. Form 1040ez 2012 instructions Report the payment to the nonresident aliens on Forms 1042-S. Form 1040ez 2012 instructions Report the payment to the U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions citizen on Form 1099-INT. Form 1040ez 2012 instructions Fiscally transparent entity. Form 1040ez 2012 instructions   If a reduced rate of withholding under an income tax treaty is claimed, a flow-through entity includes any entity in which the interest holder must treat the entity as fiscally transparent. Form 1040ez 2012 instructions The determination of whether an entity is fiscally transparent is made on an item of income basis (that is, the determination is made separately for interest, dividends, royalties, etc. Form 1040ez 2012 instructions ). Form 1040ez 2012 instructions The interest holder in an entity makes the determination by applying the laws of the jurisdiction where the interest holder is organized, incorporated, or otherwise considered a resident. Form 1040ez 2012 instructions An entity is considered to be fiscally transparent for the income to the extent the laws of that jurisdiction require the interest holder to separately take into account on a current basis the interest holder's share of the income, whether or not distributed to the interest holder, and the character and source of the income to the interest holder are determined as if the income was realized directly from the source that paid it to the entity. Form 1040ez 2012 instructions Subject to the standards of knowledge rules discussed later, you generally make the determination that an entity is fiscally transparent based on a Form W-8IMY provided by the entity. Form 1040ez 2012 instructions   The payees of a payment made to a fiscally transparent entity are the interest holders of the entity. Form 1040ez 2012 instructions Example. Form 1040ez 2012 instructions Entity A is a business organization organized under the laws of country X that has an income tax treaty in force with the United States. Form 1040ez 2012 instructions A has two interest holders, B and C. Form 1040ez 2012 instructions B is a corporation organized under the laws of country Y. Form 1040ez 2012 instructions C is a corporation organized under the laws of country Z. Form 1040ez 2012 instructions Both countries Y and Z have an income tax treaty in force with the United States. Form 1040ez 2012 instructions A receives royalty income from U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions sources that is not effectively connected with the conduct of a trade or business in the United States. Form 1040ez 2012 instructions For U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions income tax purposes, A is treated as a partnership. Form 1040ez 2012 instructions Country X treats A as a partnership and requires the interest holders in A to separately take into account on a current basis their respective shares of the income paid to A even if the income is not distributed. Form 1040ez 2012 instructions The laws of country X provide that the character and source of the income to A's interest holders are determined as if the income was realized directly from the source that paid it to A. Form 1040ez 2012 instructions Accordingly, A is fiscally transparent in its jurisdiction, country X. Form 1040ez 2012 instructions B and C are not fiscally transparent under the laws of their respective countries of incorporation. Form 1040ez 2012 instructions Country Y requires B to separately take into account on a current basis B's share of the income paid to A, and the character and source of the income to B is determined as if the income was realized directly from the source that paid it to A. Form 1040ez 2012 instructions Accordingly, A is fiscally transparent for that income under the laws of country Y, and B is treated as deriving its share of the U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions source royalty income for purposes of the U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions -Y income tax treaty. Form 1040ez 2012 instructions Country Z, on the other hand, treats A as a corporation and does not require C to take into account its share of A's income on a current basis whether or not distributed. Form 1040ez 2012 instructions Therefore, A is not treated as fiscally transparent under the laws of country Z. Form 1040ez 2012 instructions Accordingly, C is not treated as deriving its share of the U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions source royalty income for purposes of the U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions -Z income tax treaty. Form 1040ez 2012 instructions Foreign Intermediaries In most cases, if you make payments to a foreign intermediary, the payees are the persons for whom the foreign intermediary collects the payment, such as account holders or customers, not the intermediary itself. Form 1040ez 2012 instructions This rule applies for purposes of NRA withholding and for Form 1099 reporting and backup withholding. Form 1040ez 2012 instructions You may, however, treat a qualified intermediary that has assumed primary withholding responsibility for a payment as the payee, and you are not required to withhold. Form 1040ez 2012 instructions An intermediary is a custodian, broker, nominee, or any other person that acts as an agent for another person. Form 1040ez 2012 instructions A foreign intermediary is either a qualified intermediary or a nonqualified intermediary. Form 1040ez 2012 instructions In most cases, you determine whether an entity is a qualified intermediary or a nonqualified intermediary based on the representations the intermediary makes on Form W-8IMY. Form 1040ez 2012 instructions You must determine whether the customers or account holders of a foreign intermediary are U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions or foreign persons and, if the account holder or customer is foreign, whether a reduced rate of NRA withholding applies. Form 1040ez 2012 instructions You make these determinations based on the foreign intermediary's Form W-8IMY and associated information and documentation. Form 1040ez 2012 instructions If you do not have all of the information or documentation that is required to reliably associate a payment with a payee, you must apply the presumption rules. Form 1040ez 2012 instructions See Documentation and Presumption Rules , later. Form 1040ez 2012 instructions Nonqualified intermediary. Form 1040ez 2012 instructions   A nonqualified intermediary (NQI) is any intermediary that is a foreign person and that is not a qualified intermediary. Form 1040ez 2012 instructions The payees of a payment made to an NQI are the customers or account holders on whose behalf the NQI is acting. Form 1040ez 2012 instructions Example. Form 1040ez 2012 instructions You make a payment of interest to a foreign bank that is a nonqualified intermediary. Form 1040ez 2012 instructions The bank gives you a Form W-8IMY and the Forms W-8BEN of two foreign persons, and a Form W-9 from a U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions person for whom the bank is collecting the payments. Form 1040ez 2012 instructions The bank also associates with its Form W-8IMY a withholding statement on which it allocates the interest payment to each account holder and provides all other information required to be on the withholding statement. Form 1040ez 2012 instructions The account holders are the payees of the interest payment. Form 1040ez 2012 instructions You should report the part of the interest paid to the two foreign persons on Forms 1042-S and the part paid to the U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions person on Form 1099-INT. Form 1040ez 2012 instructions Qualified intermediary. Form 1040ez 2012 instructions   A qualified intermediary (QI) is any foreign intermediary (or foreign branch of a U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions intermediary) that has entered into a qualified intermediary withholding agreement (discussed later) with the IRS. Form 1040ez 2012 instructions You may treat a QI as a payee to the extent the QI assumes primary withholding responsibility or primary Form 1099 reporting and backup withholding responsibility for a payment. Form 1040ez 2012 instructions In this situation, the QI is required to withhold the tax. Form 1040ez 2012 instructions You can determine whether a QI has assumed responsibility from the Form W-8IMY provided by the QI. Form 1040ez 2012 instructions   A payment to a QI to the extent it does not assume primary NRA withholding responsibility is considered made to the person on whose behalf the QI acts. Form 1040ez 2012 instructions If a QI does not assume Form 1099 reporting and backup withholding responsibility, you must report on Form 1099 and, if applicable, backup withhold as if you were making the payment directly to the U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions person. Form 1040ez 2012 instructions Branches of financial institutions. Form 1040ez 2012 instructions   Branches of financial institutions are not permitted to operate as QIs if they are located outside of countries having approved “know-your-customer” (KYC) rules. Form 1040ez 2012 instructions The countries with approved KYC rules are listed on IRS. Form 1040ez 2012 instructions gov. Form 1040ez 2012 instructions QI withholding agreement. Form 1040ez 2012 instructions   Foreign financial institutions and foreign branches of U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions financial institutions can enter into an agreement with the IRS to be a qualified intermediary. Form 1040ez 2012 instructions   A QI is entitled to certain simplified withholding and reporting rules. Form 1040ez 2012 instructions In general, there are three major areas whereby intermediaries with QI status are afforded such simplified treatment. Form 1040ez 2012 instructions   To apply for QI status, complete Form 14345, Qualified Intermediary Application, and Form SS-4, Application for Employer Identification Number. Form 1040ez 2012 instructions These forms, and the procedures required to obtain a QI withholding agreement are available at www. Form 1040ez 2012 instructions irs. Form 1040ez 2012 instructions gov/Businesses/Corporations/Qualified-Intermediaries-(QI). Form 1040ez 2012 instructions Documentation. Form 1040ez 2012 instructions   A QI is not required to forward documentation obtained from foreign account holders to the U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions withholding agent from whom the QI receives a payment of U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions source income. Form 1040ez 2012 instructions The QI maintains such documentation at its location and provides the U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions withholding agent with withholding rate pools. Form 1040ez 2012 instructions A withholding rate pool is a payment of a single type of income that is subject to a single rate of withholding. Form 1040ez 2012 instructions   A QI is required to provide the U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions withholding agent with information regarding U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions persons subject to Form 1099 information reporting unless the QI assumes the primary obligation to do Form 1099 reporting and backup withholding. Form 1040ez 2012 instructions   If a QI obtains documentary evidence under the “know-your-customer” rules that apply to the QI under local law, and the documentary evidence is of a type specified in an attachment to the QI agreement, the documentary evidence remains valid until there is a change in circumstances or the QI knows the information is incorrect. Form 1040ez 2012 instructions This indefinite validity period rule does not apply to Forms W-8 or to documentary evidence that is not of the type specified in the attachment to the agreement. Form 1040ez 2012 instructions Form 1042-S reporting. Form 1040ez 2012 instructions   A QI is permitted to report payments made to its direct foreign account holders on a pooled basis rather than reporting payments to each direct account holder specifically. Form 1040ez 2012 instructions Pooled basis reporting is not available for payments to certain account holders, such as a nonqualified intermediary or a flow-through entity (discussed earlier). Form 1040ez 2012 instructions Collective refund procedures. Form 1040ez 2012 instructions   A QI may seek a refund on behalf of its direct account holders. Form 1040ez 2012 instructions The direct account holders, therefore, are not required to file returns with the IRS to obtain refunds, but rather may obtain them from the QI. Form 1040ez 2012 instructions U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions branches of foreign banks and foreign insurance companies. Form 1040ez 2012 instructions   Special rules apply to a U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions branch of a foreign bank subject to Federal Reserve Board supervision or a foreign insurance company subject to state regulatory supervision. Form 1040ez 2012 instructions If you agree to treat the branch as a U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions person, you may treat the branch as a U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions payee for a payment subject to NRA withholding provided you receive a Form W-8IMY from the U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions branch on which the agreement is evidenced. Form 1040ez 2012 instructions If you treat the branch as a U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions payee, you are not required to withhold. Form 1040ez 2012 instructions Even though you agree to treat the branch as a U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions person, you must report the payment on Form 1042-S. Form 1040ez 2012 instructions   A financial institution organized in a U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions possession is treated as a U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions branch. Form 1040ez 2012 instructions The special rules discussed in this section apply to a possessions financial institution. Form 1040ez 2012 instructions   If you are paying a U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions branch an amount that is not subject to NRA withholding, treat the payment as made to a foreign person, irrespective of any agreement to treat the branch as a U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions person for amounts subject to NRA withholding. Form 1040ez 2012 instructions Consequently, amounts not subject to NRA withholding that are paid to a U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions branch are not subject to Form 1099 reporting or backup withholding. Form 1040ez 2012 instructions   Alternatively, a U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions branch may provide you with a Form W-8IMY with which it associates the documentation of the persons on whose behalf it acts. Form 1040ez 2012 instructions In this situation, the payees are the persons on whose behalf the branch acts provided you can reliably associate the payment with valid documentation from those persons. Form 1040ez 2012 instructions See Nonqualified Intermediaries under  Documentation, later. Form 1040ez 2012 instructions   If the U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions branch does not provide you with a Form W-8IMY, then you should treat a payment subject to NRA withholding as made to the foreign person of which the branch is a part and the income as effectively connected with the conduct of a trade or business in the United States. Form 1040ez 2012 instructions Withholding foreign partnership and foreign trust. Form 1040ez 2012 instructions   A withholding foreign partnership (WP) is any foreign partnership that has entered into a WP withholding agreement with the IRS and is acting in that capacity. Form 1040ez 2012 instructions A withholding foreign trust (WT) is a foreign simple or grantor trust that has entered into a WT withholding agreement with the IRS and is acting in that capacity. Form 1040ez 2012 instructions   A WP or WT may act in that capacity only for payments of amounts subject to NRA withholding that are distributed to, or included in the distributive share of, its direct partners, beneficiaries, or owners. Form 1040ez 2012 instructions A WP or WT acting in that capacity must assume NRA withholding responsibility for these amounts. Form 1040ez 2012 instructions You may treat a WP or WT as a payee if it has provided you with documentation (discussed later) that represents that it is acting as a WP or WT for such amounts. Form 1040ez 2012 instructions WP and WT withholding agreements. Form 1040ez 2012 instructions   The WP and WT withholding agreements and the application procedures for the agreements are in Revenue Procedure 2003-64. Form 1040ez 2012 instructions Also see the following items. Form 1040ez 2012 instructions Revenue Procedure 2004-21. Form 1040ez 2012 instructions Revenue Procedure 2005-77. Form 1040ez 2012 instructions Employer identification number (EIN). Form 1040ez 2012 instructions   A completed Form SS-4 must be submitted with the application for being a WP or WT. Form 1040ez 2012 instructions The WP or WT will be assigned a WP-EIN or WT-EIN to be used only when acting in that capacity. Form 1040ez 2012 instructions Documentation. Form 1040ez 2012 instructions   A WP or WT must provide you with a Form W-8IMY that certifies that the WP or WT is acting in that capacity and a written statement identifying the amounts for which it is so acting. Form 1040ez 2012 instructions The statement is not required to contain withholding rate pool information or any information relating to the identity of a direct partner, beneficiary, or owner. Form 1040ez 2012 instructions The Form W-8IMY must contain the WP-EIN or WT-EIN. Form 1040ez 2012 instructions Foreign Persons A payee is subject to NRA withholding only if it is a foreign person. Form 1040ez 2012 instructions A foreign person includes a nonresident alien individual, foreign corporation, foreign partnership, foreign trust, foreign estate, and any other person that is not a U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions person. Form 1040ez 2012 instructions It also includes a foreign branch of a U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions financial institution if the foreign branch is a qualified intermediary. Form 1040ez 2012 instructions In most cases, the U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions branch of a foreign corporation or partnership is treated as a foreign person. Form 1040ez 2012 instructions Nonresident alien. Form 1040ez 2012 instructions   A nonresident alien is an individual who is not a U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions citizen or a resident alien. Form 1040ez 2012 instructions A resident of a foreign country under the residence article of an income tax treaty is a nonresident alien individual for purposes of withholding. Form 1040ez 2012 instructions Married to U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions citizen or resident alien. Form 1040ez 2012 instructions   Nonresident alien individuals married to U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions citizens or resident aliens may choose to be treated as resident aliens for certain income tax purposes. Form 1040ez 2012 instructions However, these individuals are still subject to the NRA withholding rules that apply to nonresident aliens for all income except wages. Form 1040ez 2012 instructions Wages paid to these individuals are subject to graduated withholding. Form 1040ez 2012 instructions See Wages Paid to Employees—Graduated Withholding . Form 1040ez 2012 instructions Resident alien. Form 1040ez 2012 instructions   A resident alien is an individual who is not a citizen or national of the United States and who meets either the green card test or the substantial presence test for the calendar year. Form 1040ez 2012 instructions Green card test. Form 1040ez 2012 instructions An alien is a resident alien if the individual was a lawful permanent resident of the United States at any time during the calendar year. Form 1040ez 2012 instructions This is known as the green card test because these aliens hold immigrant visas (also known as green cards). Form 1040ez 2012 instructions Substantial presence test. Form 1040ez 2012 instructions An alien is considered a resident alien if the individual meets the substantial presence test for the calendar year. Form 1040ez 2012 instructions Under this test, the individual must be physically present in the United States on at least: 31 days during the current calendar year, and 183 days during the current year and the 2 preceding years, counting all the days of physical presence in the current year, but only 1/3 the number of days of presence in the first preceding year, and only 1/6 the number of days in the second preceding year. Form 1040ez 2012 instructions   In most cases, the days the alien is in the United States as a teacher, student, or trainee on an “F,” “J,” “M,” or “Q” visa are not counted. Form 1040ez 2012 instructions This exception is for a limited period of time. Form 1040ez 2012 instructions   For more information on resident and nonresident status, the tests for residence, and the exceptions to them, see Publication 519. Form 1040ez 2012 instructions Note. Form 1040ez 2012 instructions   If your employee is late in notifying you that his or her status changed from nonresident alien to resident alien, you may have to make an adjustment to Form 941 if that employee was exempt from withholding of social security and Medicare taxes as a nonresident alien. Form 1040ez 2012 instructions For more information on making adjustments, see chapter 13 of Publication 15 (Circular E). Form 1040ez 2012 instructions Resident of a U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions possession. Form 1040ez 2012 instructions   A bona fide resident of Puerto Rico, the U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions Virgin Islands, Guam, the Commonwealth of the Northern Mariana Islands (CNMI), or American Samoa who is not a U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions citizen or a U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions national is treated as a nonresident alien for the withholding rules explained here. Form 1040ez 2012 instructions A bona fide resident of a possession is someone who: Meets the presence test, Does not have a tax home outside the possession, and Does not have a closer connection to the United States or to a foreign country than to the possession. Form 1040ez 2012 instructions   For more information, see Publication 570, Tax Guide for Individuals With Income From U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions Possessions. Form 1040ez 2012 instructions Foreign corporations. Form 1040ez 2012 instructions   A foreign corporation is one that does not fit the definition of a domestic corporation. Form 1040ez 2012 instructions A domestic corporation is one that was created or organized in the United States or under the laws of the United States, any of its states, or the District of Columbia. Form 1040ez 2012 instructions Guam or Northern Mariana Islands corporations. Form 1040ez 2012 instructions   A corporation created or organized in, or under the laws of, Guam or the CNMI is not considered a foreign corporation for the purpose of withholding tax for the tax year if: At all times during the tax year less than 25% in value of the corporation's stock is owned, directly or indirectly, by foreign persons; and At least 20% of the corporation's gross income is derived from sources within Guam or the CNMI for the 3-year period ending with the close of the preceding tax year of the corporation (or the period the corporation has been in existence, if less). Form 1040ez 2012 instructions Note. Form 1040ez 2012 instructions   The provisions discussed below under U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions Virgin Islands and American Samoa corporations will apply to Guam or CNMI corporations when an implementing agreement is in effect between the United States and that possession. Form 1040ez 2012 instructions U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions Virgin Islands and American Samoa corporations. Form 1040ez 2012 instructions   A corporation created or organized in, or under the laws of, the U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions Virgin Islands or American Samoa is not considered a foreign corporation for the purposes of withholding tax for the tax year if: At all times during the tax year less than 25% in value of the corporation's stock is owned, directly or indirectly, by foreign persons, At least 65% of the corporation's gross income is effectively connected with the conduct of a trade or business in the U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions Virgin Islands, American Samoa, Guam, the CNMI, or the United States for the 3-year period ending with the close of the tax year of the corporation (or the period the corporation or any predecessor has been in existence, if less), and No substantial part of the income of the corporation is used, directly or indirectly, to satisfy obligations to a person who is not a bona fide resident of the U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions Virgin Islands, American Samoa, Guam, the CNMI, or the United States. Form 1040ez 2012 instructions Foreign private foundations. Form 1040ez 2012 instructions   A private foundation that was created or organized under the laws of a foreign country is a foreign private foundation. Form 1040ez 2012 instructions Gross investment income from sources within the United States paid to a qualified foreign private foundation is subject to NRA withholding at a 4% rate (unless exempted by a treaty) rather than the ordinary statutory 30% rate. Form 1040ez 2012 instructions Other foreign organizations, associations, and charitable institutions. Form 1040ez 2012 instructions   An organization may be exempt from income tax under section 501(a) of the Internal Revenue Code even if it was formed under foreign law. Form 1040ez 2012 instructions In most cases, you do not have to withhold tax on payments of income to these foreign tax-exempt organizations unless the IRS has determined that they are foreign private foundations. Form 1040ez 2012 instructions   Payments to these organizations, however, must be reported on Form 1042-S, even though no tax is withheld. Form 1040ez 2012 instructions   You must withhold tax on the unrelated business income (as described in Publication 598, Tax on Unrelated Business Income of Exempt Organizations) of foreign tax-exempt organizations in the same way that you would withhold tax on similar income of nonexempt organizations. Form 1040ez 2012 instructions U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions branches of foreign persons. Form 1040ez 2012 instructions   In most cases, a payment to a U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions branch of a foreign person is a payment made to the foreign person. Form 1040ez 2012 instructions However, you may treat payments to U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions branches of foreign banks and foreign insurance companies (discussed earlier) that are subject to U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions regulatory supervision as payments made to a U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions person, if you and the U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions branch have agreed to do so, and if their agreement is evidenced by a withholding certificate, Form W-8IMY. Form 1040ez 2012 instructions For this purpose, a financial institution organized under the laws of a U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions possession is treated as a U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions branch. Form 1040ez 2012 instructions Documentation In most cases, you must withhold 30% from the gross amount paid to a foreign payee unless you can reliably associate the payment with valid documentation that establishes either of the following. Form 1040ez 2012 instructions The payee is a U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions person. Form 1040ez 2012 instructions The payee is a foreign person that is the beneficial owner of the income and is entitled to a reduced rate of withholding. Form 1040ez 2012 instructions In most cases, you must get the documentation before you make the payment. Form 1040ez 2012 instructions The documentation is not valid if you know, or have reason to know, that it is unreliable or incorrect. Form 1040ez 2012 instructions See Standards of Knowledge , later. Form 1040ez 2012 instructions If you cannot reliably associate a payment with valid documentation, you must use the presumption rules discussed later. Form 1040ez 2012 instructions For example, if you do not have documentation or you cannot determine the part of a payment that is allocable to specific documentation, you must use the presumption rules. Form 1040ez 2012 instructions The specific types of documentation are discussed in this section. Form 1040ez 2012 instructions However, see Withholding on Specific Income , later, as well as the instructions to the particular forms. Form 1040ez 2012 instructions As the withholding agent, you also may want to see the Instructions for the Requester of Forms W-8BEN, W-8ECI, W-8EXP, and W-8IMY. Form 1040ez 2012 instructions Section 1446 withholding. Form 1040ez 2012 instructions   Under section 1446 of the Code, a partnership must withhold tax on its effectively connected income allocable to a foreign partner. Form 1040ez 2012 instructions In most cases, a partnership determines if a partner is a foreign partner and the partner's tax classification based on the withholding certificate provided by the partner. Form 1040ez 2012 instructions This is the same documentation that is filed for NRA withholding, but may require additional information as discussed under each of the forms in this section. Form 1040ez 2012 instructions Joint owners. Form 1040ez 2012 instructions    If you make a payment to joint owners, you need to get documentation from each owner. Form 1040ez 2012 instructions Form W-9. Form 1040ez 2012 instructions   In most cases, you can treat the payee as a U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions person if the payee gives you a Form W-9. Form 1040ez 2012 instructions The Form W-9 can be used only by a U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions person and must contain the payee's taxpayer identification number (TIN). Form 1040ez 2012 instructions If there is more than one owner, you may treat the total amount as paid to a U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions person if any one of the owners gives you a Form W-9. Form 1040ez 2012 instructions See U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions Taxpayer Identification Numbers , later. Form 1040ez 2012 instructions U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions persons are not subject to NRA withholding, but may be subject to Form 1099 reporting and backup withholding. Form 1040ez 2012 instructions Form W-8. Form 1040ez 2012 instructions   In most cases, a foreign payee of the income should give you a form in the Form W-8 series. Form 1040ez 2012 instructions Until further notice, you can rely upon Forms W-8 that contain a P. Form 1040ez 2012 instructions O. Form 1040ez 2012 instructions box as a permanent residence address provided you do not know, or have reason to know, that the person providing the form is a U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions person and that a street address is available. Form 1040ez 2012 instructions You may rely on Forms W-8 for which there is a U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions mailing address provided you received the form prior to December 31, 2001. Form 1040ez 2012 instructions   If certain requirements are met, the foreign person can give you documentary evidence, rather than a Form W-8. Form 1040ez 2012 instructions You can rely on documentary evidence in lieu of a Form W-8 for a payment made in a U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions possession. Form 1040ez 2012 instructions Other documentation. Form 1040ez 2012 instructions   Other documentation may be required to claim an exemption from, or a reduced rate of, withholding on pay for personal services. Form 1040ez 2012 instructions The nonresident alien individual may have to give you a Form W-4 or a Form 8233, Exemption From Withholding on Compensation for Independent (and Certain Dependent) Personal Services of a Nonresident Alien Individual. Form 1040ez 2012 instructions These forms are discussed in Pay for Personal Services Performed under Withholding on Specific Income. Form 1040ez 2012 instructions Beneficial Owners If all the appropriate requirements have been established on a Form W-8BEN, W-8ECI, W-8EXP or, if applicable, on documentary evidence, you may treat the payee as a foreign beneficial owner. Form 1040ez 2012 instructions Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding. Form 1040ez 2012 instructions   This form is used by a foreign person to: Establish foreign status; Claim that such person is the beneficial owner of the income for which the form is being furnished or a partner in a partnership subject to section 1446 withholding; and If applicable, claim a reduced rate of, or exemption from, withholding under an income tax treaty. Form 1040ez 2012 instructions   Form W-8BEN also may be used to claim that the foreign person is exempt from Form 1099 reporting and backup withholding for income that is not subject to NRA withholding. Form 1040ez 2012 instructions For example, a foreign person may provide a Form W-8BEN to a broker to establish that the gross proceeds from the sale of securities are not subject to Form 1099 reporting or backup withholding. Form 1040ez 2012 instructions Claiming treaty benefits. Form 1040ez 2012 instructions   You may apply a reduced rate of withholding to a foreign person that provides a Form W-8BEN claiming a reduced rate of withholding under an income tax treaty only if the person provides a U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions TIN and certifies that: It is a resident of a treaty country; It is the beneficial owner of the income; If it is an entity, it derives the income within the meaning of section 894 of the Internal Revenue Code (it is not fiscally transparent); and It meets any limitation on benefits provision contained in the treaty, if applicable. Form 1040ez 2012 instructions   If the foreign beneficial owner claiming a treaty benefit is related to you, the foreign beneficial owner also must certify on Form W-8BEN that it will file Form 8833, Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b), if the amount subject to NRA withholding received during a calendar year exceeds, in the aggregate, $500,000. Form 1040ez 2012 instructions   An entity derives income for which it is claiming treaty benefits only if the entity is not treated as fiscally transparent for that income. Form 1040ez 2012 instructions See Fiscally transparent entity discussed earlier under Flow-Through Entities. Form 1040ez 2012 instructions   Limitations on benefits provisions generally prohibit third country residents from obtaining treaty benefits. Form 1040ez 2012 instructions For example, a foreign corporation may not be entitled to a reduced rate of withholding unless a minimum percentage of its owners are citizens or residents of the United States or the treaty country. Form 1040ez 2012 instructions   The exemptions from, or reduced rates of, U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions tax vary under each treaty. Form 1040ez 2012 instructions You must check the provisions of the tax treaty that apply. Form 1040ez 2012 instructions Tables at the end of this publication show the countries with which the United States has income tax treaties and the rates of withholding that apply in cases where all conditions of the particular treaty articles are satisfied. Form 1040ez 2012 instructions   If you know, or have reason to know, that an owner of income is not eligible for treaty benefits claimed, you must not apply the treaty rate. Form 1040ez 2012 instructions You are not, however, responsible for misstatements on a Form W-8, documentary evidence, or statements accompanying documentary evidence for which you did not have actual knowledge, or reason to know, that the statements were incorrect. Form 1040ez 2012 instructions Exceptions to TIN requirement. Form 1040ez 2012 instructions   A foreign person does not have to provide a TIN to claim a reduced rate of withholding under a treaty if the requirements for the following exceptions are met. Form 1040ez 2012 instructions Income from marketable securities (discussed next). Form 1040ez 2012 instructions Unexpected payments to an individual (discussed under U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions Taxpayer Identification Numbers ). Form 1040ez 2012 instructions Marketable securities. Form 1040ez 2012 instructions   A Form W-8BEN provided to claim treaty benefits does not need a U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions TIN if the foreign beneficial owner is claiming the benefits on income from marketable securities. Form 1040ez 2012 instructions For this purpose, income from a marketable security consists of the following items. Form 1040ez 2012 instructions Dividends and interest from stocks and debt obligations that are actively traded. Form 1040ez 2012 instructions Dividends from any redeemable security issued by an investment company registered under the Investment Company Act of 1940 (mutual fund). Form 1040ez 2012 instructions Dividends, interest, or royalties from units of beneficial interest in a unit investment trust that are (or were upon issuance) publicly offered and are registered with the SEC under the Securities Act of 1933. Form 1040ez 2012 instructions Income related to loans of any of the above securities. Form 1040ez 2012 instructions Offshore accounts. Form 1040ez 2012 instructions   If a payment is made outside the United States to an offshore account, a payee may give you documentary evidence, rather than Form W-8BEN. Form 1040ez 2012 instructions   In most cases, a payment is made outside the United States if you complete the acts necessary to effect the payment outside the United States. Form 1040ez 2012 instructions However, an amount paid by a bank or other financial institution on a deposit or account usually will be treated as paid at the branch or office where the amount is credited. Form 1040ez 2012 instructions An offshore account is an account maintained at an office or branch of a U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions or foreign bank or other financial institution at any location outside the United States. Form 1040ez 2012 instructions   You may rely on documentary evidence given to you by a nonqualified intermediary or a flow-through entity with its Form W-8IMY. Form 1040ez 2012 instructions This rule applies even though you make the payment to a nonqualified intermediary or flow-through entity in the United States. Form 1040ez 2012 instructions In most cases, the nonqualified intermediary or flow-through entity that gives you documentary evidence also will have to give you a withholding statement, discussed later. Form 1040ez 2012 instructions Documentary evidence. Form 1040ez 2012 instructions   You may apply a reduced rate of withholding to income from marketable securities (discussed earlier) paid outside the United States to an offshore account if the beneficial owner gives you documentary evidence in place of a Form W-8BEN. Form 1040ez 2012 instructions To claim treaty benefits, the documentary evidence must be one of the following: A certificate of residence that: Is issued by a tax official of the treaty country of which the foreign beneficial owner claims to be a resident, States that the person has filed its most recent income tax return as a resident of that country, and Is issued within 3 years prior to being presented to you. Form 1040ez 2012 instructions Documentation for an individual that: Includes the individual's name, address, and photograph, Is an official document issued by an authorized governmental body, and Is issued no more than 3 years prior to being presented to you. Form 1040ez 2012 instructions Documentation for an entity that: Includes the name of the entity, Includes the address of its principal office in the treaty country, and Is an official document issued by an authorized governmental body. Form 1040ez 2012 instructions In addition to the documentary evidence, a foreign beneficial owner that is an entity must provide a statement that it derives the income for which it claims treaty benefits and that it meets one or more of the conditions set forth in a limitation on benefits article, if any, (or similar provision) contained in the applicable treaty. Form 1040ez 2012 instructions Form 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. Form 1040ez 2012 instructions   This form is used by a foreign person to: Establish foreign status, Claim that such person is the beneficial owner of the income for which the form is being furnished, and Claim that the income is effectively connected with the conduct of a trade or business in the United States. Form 1040ez 2012 instructions (See Effectively Connected Income , later. Form 1040ez 2012 instructions )   Effectively connected income for which a valid Form W-8ECI has been provided is generally not subject to NRA withholding. Form 1040ez 2012 instructions   If a partner submits this form to a partnership, the income claimed to be effectively connected with the conduct of a U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions trade or business is subject to withholding under section 1446. Form 1040ez 2012 instructions If the partner has made, or will make, an election under section 871(d) or 882(d), the partner must submit Form W-8ECI, and attach a copy of the election, or a statement of intent to elect, to the form. Form 1040ez 2012 instructions    If the partner's only effectively connected income is the income allocated from the partnership and the partner is not making the election under section 871(d) or 882(d), the partner should provide Form W-8BEN to the partnership. Form 1040ez 2012 instructions Form W-8EXP, Certificate of Foreign Government or Other Foreign Organization for United States Tax Withholding. Form 1040ez 2012 instructions   This form is used by a foreign government, international organization, foreign central bank of issue, foreign tax-exempt organization, foreign private foundation, or government of a U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions possession to: Establish foreign status, Claim that such person is the beneficial owner of the income for which the form is being furnished, and Claim a reduced rate of, or an exemption from, withholding as such an entity. Form 1040ez 2012 instructions   If the government or organization is a partner in a partnership carrying on a trade or business in the United States, the effectively connected income allocable to the partner is subject to withholding under section 1446. Form 1040ez 2012 instructions   See Foreign Governments and Certain Other Foreign Organizations , later. Form 1040ez 2012 instructions Foreign Intermediaries and Foreign Flow-Through Entities Payments made to a foreign intermediary or foreign flow-through entity are treated as made to the payees on whose behalf the intermediary or entity acts. Form 1040ez 2012 instructions The Form W-8IMY provided by a foreign intermediary or flow-through entity must be accompanied by additional information for you to be able to reliably associate the payment with a payee. Form 1040ez 2012 instructions The additional information required depends on the type of intermediary or flow-through entity and the extent of the withholding responsibilities it assumes. Form 1040ez 2012 instructions Form W-8IMY, Certificate of Foreign Intermediary, Foreign Flow-Through Entity, or Certain U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions Branches for United States Tax Withholding. Form 1040ez 2012 instructions   This form is used by foreign intermediaries and foreign flow-through entities, as well as certain U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions branches, to: Represent that a foreign person is a qualified intermediary or nonqualified intermediary, Represent, if applicable, that the qualified intermediary is assuming primary NRA withholding responsibility and/or primary Form 1099 reporting and backup withholding responsibility, Represent that a foreign partnership or a foreign simple or grantor trust is a withholding foreign partnership or a withholding foreign trust, Represent that a foreign flow-through entity is a nonwithholding foreign partnership, or a nonwithholding foreign trust and that the income is not effectively connected with the conduct of a trade or business in the United States, Represent that the provider is a U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions branch of a foreign bank or insurance company and either is agreeing to be treated as a U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions person or is transmitting documentation of the persons on whose behalf it is acting, or Represent that, for purposes of section 1446, it is an upper-tier foreign partnership or a foreign grantor trust and that the form is being used to transmit the required documentation. Form 1040ez 2012 instructions For information on qualifying as an upper-tier foreign partnership, see Regulations section 1. Form 1040ez 2012 instructions 1446-5. Form 1040ez 2012 instructions Qualified Intermediaries In most cases, a QI is any foreign intermediary that has entered into a QI withholding agreement (discussed earlier) with the IRS. Form 1040ez 2012 instructions A foreign intermediary that has received a QI employer identification number (QI-EIN) may represent on Form W-8IMY that it is a QI before it receives a fully executed agreement. Form 1040ez 2012 instructions The intermediary can claim that it is a QI until the IRS revokes its QI-EIN. Form 1040ez 2012 instructions The IRS will revoke a QI-EIN if the QI agreement is not executed and returned to the IRS within a reasonable period of time after the agreement was sent to the intermediary for signature. Form 1040ez 2012 instructions Responsibilities. Form 1040ez 2012 instructions   Payments made to a QI that does not assume NRA withholding responsibility are treated as paid to its account holders and customers. Form 1040ez 2012 instructions However, a QI is not required to provide you with documentation it obtains from its foreign account holders and customers. Form 1040ez 2012 instructions Instead, it provides you with a withholding statement that contains withholding rate pool information. Form 1040ez 2012 instructions A withholding rate pool is a payment of a single type of income, determined in accordance with the categories of income reported on Form 1042-S that is subject to a single rate of withholding. Form 1040ez 2012 instructions A qualified intermediary is required to provide you with information regarding U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions persons subject to Form 1099 reporting and to provide you withholding rate pool information separately for each such U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions person unless it has assumed Form 1099 reporting and backup withholding responsibility. Form 1040ez 2012 instructions For the alternative procedure for providing rate pool information for U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions non-exempt persons, see the Form W-8IMY instructions. Form 1040ez 2012 instructions   The withholding statement must: Designate those accounts for which it acts as a qualified intermediary, Designate those accounts for which it assumes primary NRA withholding responsibility and/or primary Form 1099 and backup withholding responsibility, and Provide sufficient information for you to allocate the payment to a withholding rate pool. Form 1040ez 2012 instructions   The extent to which you must have withholding rate pool information depends on the withholding and reporting obligations assumed by the QI. Form 1040ez 2012 instructions Primary responsibility not assumed. Form 1040ez 2012 instructions   If a QI does not assume primary NRA withholding responsibility or primary Form 1099 reporting and backup withholding responsibility for the payment, you can reliably associate the payment with valid documentation only to the extent you can reliably determine the part of the payment that relates to each withholding rate pool for foreign payees. Form 1040ez 2012 instructions Unless the alternative procedure applies, the qualified intermediary must provide you with a separate withholding rate pool for each U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions person subject to Form 1099 reporting and/or backup withholding. Form 1040ez 2012 instructions The QI must provide a Form W-9 or, in the absence of the form, the name, address, and TIN, if available, for such person. Form 1040ez 2012 instructions Primary NRA withholding responsibility assumed. Form 1040ez 2012 instructions   If you make a payment to a QI that assumes primary NRA withholding responsibility (but not primary Form 1099 reporting and backup withholding responsibility), you can reliably associate the payment with valid documentation only to the extent you can reliably determine the part of the payment that relates to the withholding rate pool for which the QI assumes primary NRA withholding responsibility and the part of the payment attributable to withholding rate pools for each U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions person, unless the alternative procedure applies, subject to Form 1099 reporting and/or backup withholding. Form 1040ez 2012 instructions The QI must provide a Form W-9 or, in the absence of the form, the name, address, and TIN, if available, for such person. Form 1040ez 2012 instructions Primary NRA and Form 1099 responsibility assumed. Form 1040ez 2012 instructions   If you make a payment to a QI that assumes both primary NRA withholding responsibility and primary Form 1099 reporting and backup withholding responsibility, you can reliably associate a payment with valid documentation provided that you receive a valid Form W-8IMY. Form 1040ez 2012 instructions It is not necessary to associate the payment with withholding rate pools. Form 1040ez 2012 instructions Example. Form 1040ez 2012 instructions You make a payment of dividends to a QI. Form 1040ez 2012 instructions It has five customers: two are foreign persons who have provided documentation entitling them to a 15% rate of withholding on dividends; two are foreign persons subject to a 30% rate of withholding on dividends; and one is a U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions individual who provides it with a Form W-9. Form 1040ez 2012 instructions Each customer is entitled to 20% of the dividend payment. Form 1040ez 2012 instructions The QI does not assume any primary withholding responsibility. Form 1040ez 2012 instructions The QI gives you a Form W-8IMY with which it associates the Form W-9 and a withholding statement that allocates 40% of the dividend to a 15% withholding rate pool, 40% to a 30% withholding rate pool, and 20% to the U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions individual. Form 1040ez 2012 instructions You should report on Forms 1042-S 40% of the payment as made to a 15% rate dividend pool and 40% of the payment as made to a 30% rate dividend pool. Form 1040ez 2012 instructions The part of the payment allocable to the U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions individual (20%) is reportable on Form 1099-DIV. Form 1040ez 2012 instructions Smaller partnerships and trusts. Form 1040ez 2012 instructions   A QI may apply special rules to a smaller partnership or trust (Joint Account Provision) only if the partnership or trust meets the following conditions. Form 1040ez 2012 instructions It is a foreign partnership or foreign simple or grantor trust. Form 1040ez 2012 instructions It is a direct account holder of the QI. Form 1040ez 2012 instructions It does not have any partner, beneficiary, or owner that is a U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions person or a pass- through partner, beneficiary, or owner. Form 1040ez 2012 instructions   For information on these rules, see section 4A. Form 1040ez 2012 instructions 01 of the QI agreement. Form 1040ez 2012 instructions This is found in Appendix 3 of Revenue Procedure 2003-64. Form 1040ez 2012 instructions Also see Revenue Procedure 2004-21. Form 1040ez 2012 instructions Related partnerships and trusts. Form 1040ez 2012 instructions    A QI may apply special rules to a related partnership or trust only if the partnership or trust meets the following conditions. Form 1040ez 2012 instructions It is a foreign partnership or foreign simple or grantor trust. Form 1040ez 2012 instructions It is either: A direct account holder of the QI, or An indirect account holder of the QI that is a direct partner, beneficiary, or owner of a partnership or trust to which the QI has applied this rule. Form 1040ez 2012 instructions For information on these rules, see section 4A. Form 1040ez 2012 instructions 02 of the QI agreement. Form 1040ez 2012 instructions This is found in Appendix 3 of Revenue Procedure 2003-64. Form 1040ez 2012 instructions Also see Revenue Procedure 2005-77. Form 1040ez 2012 instructions Nonqualified Intermediaries If you are making a payment to an NQI, foreign flow-through entity, or U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions branch that is using Form W-8IMY to transmit information about the branch's account holders or customers, you can treat the payment (or a part of the payment) as reliably associated with valid documentation from a specific payee only if, prior to making the payment: You can allocate the payment to a valid Form W-8IMY, You can reliably determine how much of the payment relates to valid documentation provided by a payee (a person that is not itself a foreign intermediary, flow- through entity, or U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions branch), and You have sufficient information to report the payment on Form 1042-S or Form 1099, if reporting is required. Form 1040ez 2012 instructions The NQI, flow-through entity, or U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions branch must give you certain information on a withholding statement that is associated with the Form W-8IMY. Form 1040ez 2012 instructions A withholding statement must be updated to keep the information accurate prior to each payment. Form 1040ez 2012 instructions Withholding statement. Form 1040ez 2012 instructions   In most cases, a withholding statement must contain the following information. Form 1040ez 2012 instructions The name, address, and TIN (if any, or if required) of each person for whom documentation is provided. Form 1040ez 2012 instructions The type of documentation (documentary evidence, Form W-8, or Form W-9) for every person for whom documentation has been provided. Form 1040ez 2012 instructions The status of the person for whom the documentation has been provided, such as whether the person is a U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions exempt recipient (U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions person exempt from Form 1099 reporting), U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions non-exempt recipient (U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions person subject to Form 1099 reporting), or a foreign person. Form 1040ez 2012 instructions For a foreign person, the statement must indicate whether the person is a beneficial owner or a foreign intermediary, flow-through entity, or a U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions branch. Form 1040ez 2012 instructions The type of recipient the person is, based on the recipient codes used on Form 1042-S. Form 1040ez 2012 instructions Information allocating each payment, by income type, to each payee (including U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions exempt and U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions non-exempt recipients) for whom documentation has been provided. Form 1040ez 2012 instructions The rate of withholding that applies to each foreign person to whom a payment is allocated. Form 1040ez 2012 instructions A foreign payee's country of residence. Form 1040ez 2012 instructions If a reduced rate of withholding is claimed, the basis for a reduced rate of withholding (for example, portfolio interest, treaty benefit, etc. Form 1040ez 2012 instructions ). Form 1040ez 2012 instructions In the case of treaty benefits claimed by entities, whether the applicable limitation on benefits statement and the statement that the foreign person derives the income for which treaty benefits are claimed, have been made. Form 1040ez 2012 instructions The name, address, and TIN (if any) of any other NQI, flow-through entity, or U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions branch from which the payee will directly receive a payment. Form 1040ez 2012 instructions Any other information a withholding agent requests to fulfill its reporting and withholding obligations. Form 1040ez 2012 instructions Alternative procedure. Form 1040ez 2012 instructions   Under this alternative procedure the NQI can give you the information that allocates each payment to each foreign and U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions exempt recipient by January 31 following the calendar year of payment, rather than prior to the payment being made as otherwise required. Form 1040ez 2012 instructions To take advantage of this procedure, the NQI must: (a) inform you, on its withholding statement, that it is using the alternative procedure; and (b) obtain your consent. Form 1040ez 2012 instructions You must receive the withholding statement with all the required information (other than item 5) prior to making the payment. Form 1040ez 2012 instructions    This alternative procedure cannot be used for payments to U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions non-exempt recipients. Form 1040ez 2012 instructions Therefore, an NQI must always provide you with allocation information for all U. Form 1040ez 2012 instructions S. Form 1040ez 2012 instructions non-exempt recipients prior to a payment being made. Form 1040ez 2012 instructions Pooled withholding information. Form 1040ez 2012 instructions   If an NQI uses the alternative procedure, it must provide you with withholding rate pool information, as opposed to individual allocation information, prior to the payment of a reportable amount. Form 1040ez 2012 instructions A withholding rate pool is a payment of a single type of income (as determined by the income categories on Form 1042-S) that is subject to a single rate of withholding. Form 1040ez 2012 instructions For example, an NQI that has foreign account holders receiving royalties and dividends, both subject to the 15% rate, will provide you with information for two withholding rate pools (one for royalties and one for dividends). Form 1040ez 2012 instructions The NQI must provide you with the payee specific allocation information (information allocating each payment to each payee) by January 31 following the calendar year of payment. Form 1040ez 2012 instructions Failure to provide allocation information. Form 1040ez 2012 instructions   If an NQI fails to provide you with the payee specific allocation information for a withholding rate pool by January 31, you must not apply the alternative procedure to any of the NQI's withholding rate pools from that date forward. Form 1040ez 2012 instructions You must treat the payees as undocumented and apply the presumption rules, discussed later in Presumption Rules . Form 1040ez 2012 instructions An NQI is deemed to have f