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Free 1040ez

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Free 1040ez

Free 1040ez 2. Free 1040ez   Possession Source Income Table of Contents Types of IncomeCompensation for Labor or Personal Services Investment Income Sales or Other Dispositions of Property Scholarships, Fellowships, Grants, Prizes, and Awards Effectively Connected Income In order to determine where to file your return and which form(s) you need to complete, you must determine the source of each item of income you received during the tax year. Free 1040ez Income you received from sources within, or that was effectively connected with the conduct of a trade or business within, the relevant possession must be identified separately from U. Free 1040ez S. Free 1040ez or foreign source income. Free 1040ez This chapter discusses the rules for determining if the source of your income is from: American Samoa, The Commonwealth of the Northern Mariana Islands (CNMI), The Commonwealth of Puerto Rico (Puerto Rico), Guam, or The U. Free 1040ez S. Free 1040ez Virgin Islands (USVI). Free 1040ez Generally, the same rules that apply for determining U. Free 1040ez S. Free 1040ez source income also apply for determining possession source income. Free 1040ez However, there are some important exceptions to these rules. Free 1040ez Both the general rules and the exceptions are discussed in this chapter. Free 1040ez U. Free 1040ez S. Free 1040ez income rule. Free 1040ez   This rule states that income is not possession source income if, under the rules of Internal Revenue Code sections 861–865, it is treated as income: From sources within the United States, or Effectively connected with the conduct of a trade or business within the United States. Free 1040ez Table 2-1 shows the general rules for determining whether income is from sources within the United States. Free 1040ez Table 2-1. Free 1040ez General Rules for Determining U. Free 1040ez S. Free 1040ez Source of Income Item of Income Factor Determining Source Salaries, wages, and other compensation for labor or personal services Where labor or services performed Pensions Contributions: Where services were performed that earned the pension Investment earnings: Where pension trust is located Interest Residence of payer Dividends Where corporation created or organized Rents Location of property Royalties:   Natural resources Location of property Patents, copyrights, etc. Free 1040ez Where property is used Sale of business inventory—purchased Where sold Sale of business inventory—produced Allocation if produced and sold in different locations Sale of real property Location of property Sale of personal property Seller's tax home (but see Special Rules for Gains From Dispositions of Certain Property , later, for exceptions) Sale of natural resources Allocation based on fair market value of product at export terminal. Free 1040ez For more information, see Regulations section 1. Free 1040ez 863-1(b). Free 1040ez Types of Income This section looks at the most common types of income received by individuals, and the rules for determining the source of the income. Free 1040ez Generally, the same rules shown in Table 2-1 are used to determine if you have possession source income. Free 1040ez Compensation for Labor or Personal Services Income from labor or personal services includes wages, salaries, commissions, fees, per diem allowances, employee allowances and bonuses, and fringe benefits. Free 1040ez It also includes income earned by sole proprietors and general partners from providing personal services in the course of their trade or business. Free 1040ez Services performed wholly within a relevant possession. Free 1040ez   Generally, all pay you receive for services performed in a relevant possession is considered to be from sources within that possession. Free 1040ez However, there is an exception for income earned as a member of the U. Free 1040ez S. Free 1040ez Armed Forces or a civilian spouse. Free 1040ez U. Free 1040ez S. Free 1040ez Armed Forces. Free 1040ez   If you are a bona fide resident of a relevant possession, your military service pay will be sourced in that possession even if you perform the services in the United States or another possession. Free 1040ez However, if you are not a bona fide resident of a possession, your military service pay will be income from the  United States even if you perform services in a possession. Free 1040ez Civilian spouse of active duty member of the U. Free 1040ez S. Free 1040ez Armed Forces. Free 1040ez   If you are a bona fide resident of a U. Free 1040ez S. Free 1040ez possession and choose to keep that possession as your tax residence under MSRRA when relocating with your servicemember spouse under military orders, the source of income for your labor or personal services is considered to be that possession. Free 1040ez Likewise, if your tax residence is in one of the 50 states or the District of Columbia before relocating and you choose to keep it as your tax residence, the source of income for services performed in any of the U. Free 1040ez S. Free 1040ez possessions is considered to be the United States and, specifically, your state of residence or the District of Columbia. Free 1040ez Services performed partly inside and partly outside a relevant possession. Free 1040ez   If you are an employee and receive compensation for labor or personal services performed both inside and outside the relevant possession, special rules apply in determining the source of the compensation. Free 1040ez Compensation (other than certain fringe benefits) is sourced on a time basis. Free 1040ez Certain fringe benefits (such as housing and education) are sourced on a geographical basis. Free 1040ez   Or, you may be permitted to use an alternative basis to determine the source of compensation. Free 1040ez See Alternative basis , later. Free 1040ez   If you are self-employed, determine the source of your income for labor or personal services from self-employment on the basis that most correctly reflects the proper source of that income under the facts and circumstances of your particular case. Free 1040ez In many cases, the facts and circumstances will call for an apportionment on a time basis as explained next. Free 1040ez Time basis. Free 1040ez   Use a time basis to figure your compensation for labor or personal services from the relevant possession (other than the fringe benefits discussed later). Free 1040ez Do this by multiplying your total compensation (other than the fringe benefits discussed later) by the following fraction:   Number of days you performed  services in the relevant  possession during the year     Total number of days you  performed services during the year           You can use a unit of time less than a day in the above fraction, if appropriate. Free 1040ez The time period for which the income is made does not have to be a year. Free 1040ez Instead, you can use another distinct, separate, and continuous time period if you can establish to the satisfaction of the IRS that this other period is more appropriate. Free 1040ez Example. Free 1040ez In 2013, you worked in your employer's office in the United States for 60 days and in the Puerto Rico office for 180 days, earning a total of $80,000 for the year. Free 1040ez Your Puerto Rico source income is $60,000, figured as follows. Free 1040ez       180 days 240 days × $80,000 = $60,000                 Multi-year compensation. Free 1040ez   The source of multi-year compensation is generally determined on a time basis over the period to which the compensation is attributable. Free 1040ez Multi-year compensation is compensation that is included in your income in 1 tax year but is attributable to a period that includes 2 or more tax years. Free 1040ez You determine the period to which the income is attributable based on the facts and circumstances of your case. Free 1040ez For more information on multi-year compensation, see Treasury Decision (T. Free 1040ez D. Free 1040ez ) 9212 and Regulations section 1. Free 1040ez 861-4, 2005-35 I. Free 1040ez R. Free 1040ez B. Free 1040ez 429, available at www. Free 1040ez irs. Free 1040ez gov/irb/2005-35_IRB/ar14. Free 1040ez html. Free 1040ez Certain fringe benefits sourced on a geographical basis. Free 1040ez   If you received any of the following fringe benefits as compensation for labor or services performed as an employee partly inside and partly outside a relevant possession, you must source that income on a geographical basis. Free 1040ez Housing. Free 1040ez Education. Free 1040ez Local transportation. Free 1040ez Tax reimbursement. Free 1040ez Hazardous or hardship duty pay. Free 1040ez Moving expense reimbursement. Free 1040ez For information on determining the source of the fringe benefits listed above, see Regulations section 1. Free 1040ez 861-4. Free 1040ez Alternative basis. Free 1040ez   You can determine the source of your compensation under an alternative basis if you establish to the satisfaction of the IRS that, under the facts and circumstances of your case, the alternative basis more properly determines the source of your income than the time or geographical basis. Free 1040ez If you use an alternative basis, you must keep (and have available for inspection) records to document why the alternative basis more properly determines the source of your income. Free 1040ez De minimis exception. Free 1040ez   There is an exception to the rule for determining the source of income earned in a possession. Free 1040ez Generally, you will not have income from a possession if during a tax year you: Are a U. Free 1040ez S. Free 1040ez citizen or resident, Are not a bona fide resident of that possession, Are not employed by or under contract with an individual, partnership, or corporation that is engaged in a trade or business in that possession, Temporarily perform services in that possession for 90 days or less, and Earned $3,000 or less from such services. Free 1040ez This exception began with income earned during your 2008 tax year. Free 1040ez Pensions. Free 1040ez   Generally, pension income has two components: contributions to the pension plan and the earnings accrued from investing those contributions. Free 1040ez The contribution portion is sourced according to where services were performed that earned the pension. Free 1040ez The investment earnings portion is sourced according to the location of the pension trust. Free 1040ez Example. Free 1040ez You are a U. Free 1040ez S. Free 1040ez citizen who worked in Puerto Rico for a U. Free 1040ez S. Free 1040ez company. Free 1040ez All services were performed in Puerto Rico. Free 1040ez Upon retirement you remained in Puerto Rico and began receiving your pension from the U. Free 1040ez S. Free 1040ez pension trust of your employer. Free 1040ez Distributions from the U. Free 1040ez S. Free 1040ez pension trust must be allocated between (1) contributions, which are Puerto Rico source income, and (2) investment earnings, which are U. Free 1040ez S. Free 1040ez source income. Free 1040ez Investment Income This category includes such income as interest, dividends, rents, and royalties. Free 1040ez Interest income. Free 1040ez   The source of interest income is generally determined by the residence of the payer. Free 1040ez Interest paid by corporations created or organized in a relevant possession (possession corporation) or by individuals who are bona fide residents of a relevant possession is considered income from sources within that possession. Free 1040ez   However, there is an exception to this rule if you are a bona fide resident of a relevant possession, receive interest from a corporation created or organized in that possession, and are a shareholder of that corporation who owns, directly or indirectly, at least 10% of the total voting stock of the corporation. Free 1040ez See Regulations section 1. Free 1040ez 937-2(i) for more information. Free 1040ez Dividends. Free 1040ez   Generally, dividends paid by a corporation created or organized in a relevant possession will be considered income from sources within that possession. Free 1040ez There are additional rules for bona fide residents of a relevant possession who receive dividend income from possession corporations, and who own, directly or indirectly, at least 10% of the voting stock of the corporation. Free 1040ez For more information, see Regulations section 1. Free 1040ez 937-2(g). Free 1040ez Rental income. Free 1040ez   Rents from property located in a relevant possession are treated as income from sources within that possession. Free 1040ez Royalties. Free 1040ez   Royalties from natural resources located in a relevant possession are considered income from sources within that possession. Free 1040ez   Also considered possession source income are royalties received for the use of, or for the privilege of using, in a relevant possession, patents, copyrights, secret processes and formulas, goodwill, trademarks, trade brands, franchises, and other like property. Free 1040ez Sales or Other Dispositions of Property The source rules for sales or other dispositions of property are varied. Free 1040ez The most common situations are discussed below. Free 1040ez Real property. Free 1040ez   Real property includes land and buildings, and generally anything built on, growing on, or attached to land. Free 1040ez The location of the property generally determines the source of income from the sale. Free 1040ez For example, if you are a bona fide resident of Guam and sell your home that is located in Guam, the gain on the sale is sourced in Guam. Free 1040ez If, however, the home you sold was located in the United States, the gain is U. Free 1040ez S. Free 1040ez source income. Free 1040ez Personal property. Free 1040ez   The term “personal property” refers to property (such as machinery, equipment, or furniture) that is not real property. Free 1040ez Generally, gain (or loss) from the sale or other disposition is sourced according to the seller's tax home. Free 1040ez If personal property is sold by a bona fide resident of a relevant possession, the gain (or loss) from the sale is treated as sourced within that possession. Free 1040ez   This rule does not apply to the sale of inventory, intangible property, depreciable personal property, or property sold through a foreign office or fixed place of business. Free 1040ez The rules applying to sales of inventory are discussed below. Free 1040ez For information on sales of the other types of property mentioned, see Internal Revenue Code section 865. Free 1040ez Inventory. Free 1040ez   Your inventory is personal property that is stock in trade or that is held primarily for sale to customers in the ordinary course of your trade or business. Free 1040ez The source of income from the sale of inventory depends on whether the inventory was purchased or produced. Free 1040ez Purchased. Free 1040ez   Income from the sale of inventory that you purchased is sourced where you sell the property. Free 1040ez Generally, this is where title to the property passes to the buyer. Free 1040ez Produced. Free 1040ez   Income from the sale of inventory that you produced in a relevant possession and sold outside that possession (or vice versa) is sourced based on an allocation. Free 1040ez For information on making the allocation, see Regulations section 1. Free 1040ez 863-3(f). Free 1040ez Special Rules for Gains From Dispositions of Certain Property There are special rules for gains from dispositions of certain investment property (for example, stocks, bonds, debt instruments, diamonds, and gold) owned by a U. Free 1040ez S. Free 1040ez citizen or resident alien prior to becoming a bona fide resident of a possession. Free 1040ez You are subject to these special rules if you meet both of the following conditions. Free 1040ez For the tax year for which the source of the gain must be determined, you are a bona fide resident of the relevant possession. Free 1040ez For any of the 10 years preceding that year, you were a citizen or resident alien of the United States (other than a bona fide resident of the relevant possession). Free 1040ez If you meet these conditions, gains from the disposition of this property will not be treated as income from sources within the relevant possession for purposes of the Internal Revenue Code. Free 1040ez Accordingly, bona fide residents of American Samoa and Puerto Rico, for example, may not exclude the gain on their U. Free 1040ez S. Free 1040ez tax return. Free 1040ez (See chapter 3 for additional filing information. Free 1040ez ) With respect to the CNMI, Guam, and the USVI, the gain from the disposition of this property will not meet the requirements for certain tax rules that may allow bona fide residents of those possessions to reduce or obtain a rebate of taxes on income from sources within the relevant possessions. Free 1040ez These rules apply to dispositions after April 11, 2005. Free 1040ez For details, see Regulations section 1. Free 1040ez 937-2(f)(1) and Examples 1 and 2 of section 1. Free 1040ez 937-2(k). Free 1040ez Example 1. Free 1040ez In 2007, Cheryl Jones, a U. Free 1040ez S. Free 1040ez citizen, lived in the United States and paid $1,000 for 100 shares of stock in the Rose Corporation, a U. Free 1040ez S. Free 1040ez corporation listed on the New York Stock Exchange. Free 1040ez On March 1, 2010, she moved to Puerto Rico and changed her tax home to Puerto Rico on the same date. Free 1040ez Cheryl satisfied the presence test in 2010 and, under the year-of-move exception, she was considered a bona fide resident of Puerto Rico for the rest of 2010. Free 1040ez On March 1, 2010, the closing value of Cheryl's stock in the Rose Corporation was $2,000. Free 1040ez On January 5, 2013, while still a bona fide resident of Puerto Rico, Cheryl sold all her Rose Corporation stock for $7,000. Free 1040ez Under the earlier rules, none of Cheryl's $6,000 gain will be treated as income from sources within Puerto Rico. Free 1040ez The source rules discussed in the preceding paragraphs supplement, and may apply in conjunction with, an existing special rule. Free 1040ez This existing special rule applies if you are a U. Free 1040ez S. Free 1040ez citizen or resident alien who becomes a bona fide resident of American Samoa, the CNMI, or Guam, and who has gain from the disposition of certain U. Free 1040ez S. Free 1040ez assets during the 10-year period beginning when you became a bona fide resident. Free 1040ez The gain is U. Free 1040ez S. Free 1040ez source income that generally is subject to U. Free 1040ez S. Free 1040ez tax if the property is either (1) located in the United States; (2) stock issued by a U. Free 1040ez S. Free 1040ez corporation or a debt obligation of a U. Free 1040ez S. Free 1040ez person or of the United States, a state (or political subdivision), or the District of Columbia; or (3) property that has a basis in whole or in part by reference to property described in (1) or (2). Free 1040ez See chapter 3 for filing information. Free 1040ez Special election. Free 1040ez   For dispositions after April 11, 2005, you can choose to treat the part of gain (or loss) attributable to the time you held the property while a bona fide resident of the relevant possession (the possession holding period) as gain (or loss) from sources within that possession. Free 1040ez Make the election by reporting the gain attributable to the possession holding period on your income tax return for the year of disposition. Free 1040ez This election overrides both of the special rules discussed earlier. Free 1040ez   There are two methods for figuring the gain for the possession holding period, one for marketable securities and another for other types of investment property. Free 1040ez Marketable securities. Free 1040ez   Marketable securities are those actively traded on an established financial market, such as stock in a publicly held corporation. Free 1040ez Under the special election, allocate the gain (or loss) by figuring the appreciation separately for your possession and U. Free 1040ez S. Free 1040ez holding periods. Free 1040ez   Your possession holding period begins on the first day you do not have a tax home outside the relevant possession. Free 1040ez The gain (or loss) attributable to the possession holding period is the difference in fair market value of the security at the close of the market on the first and last days of this holding period. Free 1040ez This is your gain (or loss) that is treated as being from sources within the relevant possession. Free 1040ez If you were a bona fide resident of the relevant possession for more than one continuous period, combine the gains (or losses) from each possession holding period. Free 1040ez Example 2. Free 1040ez Assume the same facts as in Example 1, except that Cheryl makes the special election to allocate the gain between her U. Free 1040ez S. Free 1040ez and possession holding periods. Free 1040ez Cheryl's possession holding period began March 1, 2010, the date her tax home changed to Puerto Rico. Free 1040ez Therefore, the portion of gain attributable to her possession holding period is $5,000 ($7,000 sale price – $2,000 closing value on first day of the possession holding period). Free 1040ez By reporting $5,000 of her $6,000 gain as Puerto Rico source income on her 2013 Puerto Rico tax return (and the remainder as non-Puerto Rico source income), Cheryl elects to treat that amount as Puerto Rico source income. Free 1040ez Other personal property. Free 1040ez   For personal property other than marketable securities, use a time-based allocation. Free 1040ez Figure the gain (or loss) attributable to the possession holding period by multiplying your total gain (or loss) by the following fraction. Free 1040ez      Number of days in the  possession holding period     Total number of days  in your holding period         The result is your gain (or loss) that is treated as being from sources within the relevant possession. Free 1040ez Example 3. Free 1040ez In addition to the stock in Rose Corporation, Cheryl acquired a 5% interest in the Alder Partnership on January 1, 2009. Free 1040ez On March 1, 2010, when she established bona fide residency in Puerto Rico, her partnership interest was not considered a marketable security. Free 1040ez On September 16, 2013, while still a bona fide resident of Puerto Rico, Cheryl sold her interest in Alder Partnership for a $100,000 gain. Free 1040ez She had owned the interest for a total of 1,720 days. Free 1040ez Cheryl's possession holding period (from March 1, 2010, through September 16, 2013) is 1,296 days. Free 1040ez The portion of her gain attributable to Puerto Rico is $75,349 ($100,000 x (1,296 Puerto Rico days ÷ 1,720 total days)). Free 1040ez By reporting $75,349 of her $100,000 gain as Puerto Rico source income on her 2013 Puerto Rico tax return (and the remainder as non-Puerto Rico source income), Cheryl elects to treat that amount as Puerto Rico source income. Free 1040ez Scholarships, Fellowships, Grants, Prizes, and Awards The source of these types of income is generally the residence of the payer, regardless of who actually disburses the funds. Free 1040ez Therefore, in order to be possession source income, the payer must be a resident of the relevant possession, such as an individual who is a bona fide resident or a corporation created or organized in that possession. Free 1040ez These rules do not apply to amounts paid as salary or other compensation for services. Free 1040ez See Compensation for Labor or Personal Services, earlier in this chapter, for the source rules that apply. Free 1040ez Effectively Connected Income In limited circumstances, some kinds of income from sources outside the relevant possession must be treated as effectively connected with a trade or business in that possession. Free 1040ez These circumstances are listed below. Free 1040ez You have an office or other fixed place of business in the relevant possession to which the income can be attributed. Free 1040ez That office or place of business is a material factor in producing the income. Free 1040ez The income is produced in the ordinary course of the trade or business carried on through that office or other fixed place of business. Free 1040ez An office or other fixed place of business is a material factor if it significantly contributes to, and is an essential economic element in, the earning of the income. Free 1040ez The three kinds of income from sources outside the relevant possession to which these rules apply are the following. Free 1040ez Rents and royalties for the use of, or for the privilege of using, intangible personal property located outside the relevant possession or from any interest in such property. Free 1040ez Included are rents or royalties for the use of, or for the privilege of using, outside the relevant possession, patents, copyrights, secret processes and formulas, goodwill, trademarks, trade brands, franchises, and similar properties if the rents or royalties are from the active conduct of a trade or business in the relevant possession. Free 1040ez Dividends or interest from the active conduct of a banking, financing, or similar business in the relevant possession. Free 1040ez Income, gain, or loss from the sale or exchange outside the relevant possession, through the office or other fixed place of business in the relevant possession, of: Stock in trade, Property that would be included in inventory if on hand at the end of the tax year, or Property held primarily for sale to customers in the ordinary course of business. Free 1040ez Item (3) will not apply if you sold the property for use, consumption, or disposition outside the relevant possession and an office or other fixed place of business in a foreign country was a material factor in the sale. Free 1040ez Example. Free 1040ez Marcy Jackson is a bona fide resident of American Samoa. Free 1040ez Her business, which she conducts from an office in American Samoa, is developing and selling specialized computer software. Free 1040ez A software purchaser will frequently pay Marcy an additional amount to install the software on the purchaser's operating system and to ensure that the software is functioning properly. Free 1040ez Marcy installs the software at the purchaser's place of business, which may be in American Samoa, in the United States, or in another country. Free 1040ez The income from selling the software is effectively connected with the conduct of Marcy's business in American Samoa, even though the product's destination may be outside the possession. Free 1040ez However, the compensation she receives for installing the software (personal services) outside of American Samoa is not effectively connected with the conduct of her business in the possession—the income is sourced where she performs the services. Free 1040ez Prev  Up  Next   Home   More Online Publications
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The Free 1040ez

Free 1040ez 6. Free 1040ez   Dual-Status Tax Year Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Tax Year Income Subject to Tax Restrictions for Dual-Status Taxpayers Exemptions How To Figure TaxIncome Tax Credits and Payments Forms To File When and Where To File Introduction You have a dual-status tax year when you have been both a resident alien and a nonresident alien in the same year. Free 1040ez Dual status does not refer to your citizenship; it refers only to your resident status in the United States. Free 1040ez In determining your U. Free 1040ez S. Free 1040ez income tax liability for a dual-status tax year, different rules apply for the part of the year you are a resident of the United States and the part of the year you are a nonresident. Free 1040ez The most common dual-status tax years are the years of arrival and departure. Free 1040ez See Dual-Status Aliens in chapter 1. Free 1040ez If you are married and choose to be treated as a U. Free 1040ez S. Free 1040ez resident for the entire year, as explained in chapter 1, the rules of this chapter do not apply to you for that year. Free 1040ez Topics - This chapter discusses: Income subject to tax, Restrictions for dual-status taxpayers, Exemptions, How to figure the tax, Forms to file, When and where to file, and How to fill out a dual-status return. Free 1040ez Useful Items - You may want to see: Publication 503 Child and Dependent Care Expenses 514 Foreign Tax Credit for Individuals 575 Pension and Annuity Income Form (and Instructions) 1040 U. Free 1040ez S. Free 1040ez Individual Income Tax Return 1040-C U. Free 1040ez S. Free 1040ez Departing Alien Income Tax Return 1040-ES Estimated Tax for Individuals 1040-ES (NR) U. Free 1040ez S. Free 1040ez Estimated Tax for Nonresident Alien Individuals 1040NR U. Free 1040ez S. Free 1040ez Nonresident Alien Income Tax Return 1116 Foreign Tax Credit See chapter 12 for information about getting these publications and forms. Free 1040ez Tax Year You must file your tax return on the basis of an annual accounting period called a tax year. Free 1040ez If you have not previously established a fiscal tax year, your tax year is the calendar year. Free 1040ez A calendar year is 12 consecutive months ending on December 31. Free 1040ez If you have previously established a regular fiscal year (12 consecutive months ending on the last day of a month other than December, or a 52–53 week year) and are considered to be a U. Free 1040ez S. Free 1040ez resident for any calendar year, you will be treated as a U. Free 1040ez S. Free 1040ez resident for any part of your fiscal year that falls within that calendar year. Free 1040ez Income Subject to Tax For the part of the year you are a resident alien, you are taxed on income from all sources. Free 1040ez Income from sources outside the United States is taxable if you receive it while you are a resident alien. Free 1040ez The income is taxable even if you earned it while you were a nonresident alien or if you became a nonresident alien after receiving it and before the end of the year. Free 1040ez For the part of the year you are a nonresident alien, you are taxed on income from U. Free 1040ez S. Free 1040ez sources and on certain foreign source income treated as effectively connected with a U. Free 1040ez S. Free 1040ez trade or business. Free 1040ez (The rules for treating foreign source income as effectively connected are discussed in chapter 4 under Foreign Income. Free 1040ez ) Income from sources outside the United States that is not effectively connected with a trade or business in the United States is not taxable if you receive it while you are a nonresident alien. Free 1040ez The income is not taxable even if you earned it while you were a resident alien or if you became a resident alien or a U. Free 1040ez S. Free 1040ez citizen after receiving it and before the end of the year. Free 1040ez Income from U. Free 1040ez S. Free 1040ez sources is taxable whether you receive it while a nonresident alien or a resident alien unless specifically exempt under the Internal Revenue Code or a tax treaty provision. Free 1040ez Generally, tax treaty provisions apply only to the part of the year you were a nonresident. Free 1040ez In certain cases, however, treaty provisions may apply while you were a resident alien. Free 1040ez See chapter 9 for more information. Free 1040ez When determining what income is taxed in the United States, you must consider exemptions under U. Free 1040ez S. Free 1040ez tax law as well as the reduced tax rates and exemptions provided by tax treaties between the United States and certain foreign countries. Free 1040ez For a further discussion of tax treaties, see chapter 9. Free 1040ez Restrictions for Dual-Status Taxpayers The following restrictions apply if you are filing a tax return for a dual-status tax year. Free 1040ez 1) Standard deduction. Free 1040ez   You cannot use the standard deduction allowed on Form 1040. Free 1040ez However, you can itemize any allowable deductions. Free 1040ez 2) Exemptions. Free 1040ez   Your total deduction for the exemptions for your spouse and allowable dependents cannot be more than your taxable income (figured without deducting personal exemptions) for the period you are a resident alien. Free 1040ez 3) Head of household. Free 1040ez   You cannot use the head of household Tax Table column or Tax Computation Worksheet. Free 1040ez 4) Joint return. Free 1040ez   You cannot file a joint return. Free 1040ez However, see Choosing Resident Alien Status under Dual-Status Aliens in chapter 1. Free 1040ez 5) Tax rates. Free 1040ez   If you are married and a nonresident of the United States for all or part of the tax year and you do not choose to file jointly as discussed in chapter 1, you must use the Tax Table column or Tax Computation Worksheet for married filing separately to figure your tax on income effectively connected with a U. Free 1040ez S. Free 1040ez trade or business. Free 1040ez You cannot use the Tax Table column or Tax Computation Worksheet for married filing jointly or single. Free 1040ez However, you may be able to file as single if you lived apart from your spouse during the last 6 months of the year and you are a: Married resident of Canada, Mexico, or South Korea, or Married U. Free 1040ez S. Free 1040ez national. Free 1040ez  See the instructions for Form 1040NR to see if you qualify. Free 1040ez    A U. Free 1040ez S. Free 1040ez national is an individual who, although not a U. Free 1040ez S. Free 1040ez citizen, owes his or her allegiance to the United States. Free 1040ez U. Free 1040ez S. Free 1040ez nationals include American Samoans and Northern Mariana Islanders who chose to become U. Free 1040ez S. Free 1040ez nationals instead of U. Free 1040ez S. Free 1040ez citizens. Free 1040ez 6) Tax credits. Free 1040ez   You cannot claim the education credits, the earned income credit, or the credit for the elderly or the disabled unless: You are married, and You choose to be treated as a resident for all of 2013 by filing a joint return with your spouse who is a U. Free 1040ez S. Free 1040ez citizen or resident, as discussed in chapter 1. Free 1040ez Exemptions As a dual-status taxpayer, you usually will be able to claim your own personal exemption. Free 1040ez Subject to the general rules for qualification, you can claim exemptions for your spouse and dependents when you figure taxable income for the part of the year you are a resident alien. Free 1040ez The amount you can claim for these exemptions is limited to your taxable income (figured before subtracting exemptions) for the part of the year you are a resident alien. Free 1040ez You cannot use exemptions (other than your own) to reduce taxable income to less than zero for that period. Free 1040ez Special rules apply to exemptions for the part of the tax year you are a nonresident alien if you are a: Resident of Canada, Mexico, or South Korea, U. Free 1040ez S. Free 1040ez national, or Student or business apprentice from India. Free 1040ez For more information, see Exemptions in chapter 5. Free 1040ez How To Figure Tax When you figure your U. Free 1040ez S. Free 1040ez tax for a dual-status year, you are subject to different rules for the part of the year you are a resident and the part of the year you are a nonresident. Free 1040ez Income All income for your period of residence and all income that is effectively connected with a trade or business in the United States for your period of nonresidence, after allowable deductions, is added and taxed at the rates that apply to U. Free 1040ez S. Free 1040ez citizens and residents. Free 1040ez Income that is not connected with a trade or business in the United States for your period of nonresidence is subject to the flat 30% rate or lower treaty rate. Free 1040ez You cannot take any deductions against this income. Free 1040ez Social security and railroad retirement benefits. Free 1040ez   During the part of the year you are a nonresident alien, 85% of any U. Free 1040ez S. Free 1040ez social security benefits (and the equivalent portion of tier 1 railroad retirement benefits) you receive is subject to the flat 30% tax, unless exempt, or subject to a lower treaty rate. Free 1040ez (See The 30% Tax in chapter 4. Free 1040ez )   During the part of the year you are a resident alien, part of the social security and the equivalent portion of tier 1 railroad retirement benefits will be taxed at graduated rates if your modified adjusted gross income plus half of these benefits is more than a certain base amount. Free 1040ez Use the Social Security Benefits Worksheet in the Form 1040 instructions to help you figure the taxable part of your social security and equivalent tier 1 railroad retirement benefits for the part of the year you were a resident alien. Free 1040ez If you received U. Free 1040ez S. Free 1040ez social security benefits while you were a nonresident alien, the Social Security Administration will send you Form SSA-1042S showing your combined benefits for the entire year and the amount of tax withheld. Free 1040ez You will not receive separate statements for the benefits received during your periods of U. Free 1040ez S. Free 1040ez residence and nonresidence. Free 1040ez Therefore, it is important for you to keep careful records of these amounts. Free 1040ez You will need this information to properly complete your return and determine your tax liability. Free 1040ez If you received railroad retirement benefits while you were a nonresident alien, the U. Free 1040ez S. Free 1040ez Railroad Retirement Board (RRB) will send you Form RRB-1042S, Statement for Nonresident Alien Recipients of Payments by the Railroad Retirement Board, and/or Form RRB-1099-R, Annuities or Pensions by the Railroad Retirement Board. Free 1040ez If your country of legal residence changed or your rate of tax changed during the tax year, you may receive more than one form. Free 1040ez Tax Credits and Payments This discussion covers tax credits and payments for dual-status aliens. Free 1040ez Credits As a dual-status alien, you generally can claim tax credits using the same rules that apply to resident aliens. Free 1040ez There are certain restrictions that may apply. Free 1040ez These restrictions are discussed here, along with a brief explanation of credits often claimed by individuals. Free 1040ez Foreign tax credit. Free 1040ez   If you have paid or are liable for the payment of income tax to a foreign country on income from foreign sources, you may be able to claim a credit for the foreign taxes. Free 1040ez   If you claim the foreign tax credit, you generally must file Form 1116 with your income tax return. Free 1040ez For more information, see the Instructions for Form 1116 and Publication 514. Free 1040ez Child and dependent care credit. Free 1040ez   You may qualify for this credit if you pay someone to care for your qualifying child who is under age 13, or your disabled dependent or disabled spouse so that you can work or look for work. Free 1040ez Generally, you must be able to claim an exemption for your dependent. Free 1040ez   Married dual-status aliens can claim the credit only if they choose to file a joint return as discussed in chapter 1, or if they qualify as certain married individuals living apart. Free 1040ez   The amount of your child and dependent care expense that qualifies for the credit in any tax year cannot be more than your earned income for that tax year. Free 1040ez   For more information, get Publication 503 and Form 2441. Free 1040ez Retirement savings contributions credit. Free 1040ez   You may qualify for this credit (also known as the saver's credit) if you made eligible contributions to an employer-sponsored retirement plan or to an individual retirement arrangement (IRA) in 2013. Free 1040ez You cannot claim this credit if: You were born after January 1, 1996, You were a full-time student, Your exemption is claimed by someone else on his or her 2013 tax return, or Your adjusted gross income is more than $29,500. Free 1040ez Use Form 8880 to figure the credit. Free 1040ez For more information, see Publication 590. Free 1040ez Child tax credit. Free 1040ez   You may be able to take this credit if you have a qualifying child. Free 1040ez   A qualifying child for purposes of the child tax credit is a child who: Was under age 17 at the end of 2013. Free 1040ez Is your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, half brother, half sister, or a descendant of any of them (for example, your grandchild, niece, or nephew). Free 1040ez Is a U. Free 1040ez S. Free 1040ez citizen, a U. Free 1040ez S. Free 1040ez national, or a resident alien. Free 1040ez Did not provide over half of his or her own support for 2013. Free 1040ez Lived with you more than half of 2013. Free 1040ez Temporary absences, such as for school, vacation, or medical care, count as time lived in the home. Free 1040ez Is claimed as a dependent on your return. Free 1040ez An adopted child is always treated as your own child. Free 1040ez An adopted child includes a child lawfully placed with you for legal adoption. Free 1040ez   See your form instructions for additional details. Free 1040ez Adoption credit. Free 1040ez   You may qualify to take a tax credit of up to $12,970 for qualifying expenses paid to adopt an eligible child. Free 1040ez This amount may be allowed for the adoption of a child with special needs regardless of whether you have qualifying expenses. Free 1040ez To claim the adoption credit, file Form 8839 with the U. Free 1040ez S. Free 1040ez income tax return that you file. Free 1040ez   Married dual-status aliens can claim the credit only if they choose to file a joint return with a U. Free 1040ez S. Free 1040ez citizen or resident spouse as discussed in chapter 1, or if they qualify as certain married individuals living apart (see Married Persons Not Filing Jointly in the Form 8839 instructions). Free 1040ez Payments You can report as payments against your U. Free 1040ez S. Free 1040ez income tax liability certain taxes you paid, are considered to have paid, or that were withheld from your income. Free 1040ez These include: Tax withheld from wages earned in the United States, Taxes withheld at the source from various items of income from U. Free 1040ez S. Free 1040ez sources other than wages, Estimated tax paid with Form 1040-ES or Form 1040-ES (NR), and Tax paid with Form 1040-C, at the time of departure from the United States. Free 1040ez Forms To File The U. Free 1040ez S. Free 1040ez income tax return you must file as a dual-status alien depends on whether you are a resident alien or a nonresident alien at the end of the tax year. Free 1040ez Resident at end of year. Free 1040ez   You must file Form 1040 if you are a dual-status taxpayer who becomes a resident during the year and who is a U. Free 1040ez S. Free 1040ez resident on the last day of the tax year. Free 1040ez Write “Dual-Status Return” across the top of the return. Free 1040ez Attach a statement to your return to show the income for the part of the year you are a nonresident. Free 1040ez You can use Form 1040NR or Form 1040NR-EZ as the statement, but be sure to mark “Dual-Status Statement” across the top. Free 1040ez Nonresident at end of year. Free 1040ez   You must file Form 1040NR or Form 1040NR-EZ if you are a dual-status taxpayer who gives up residence in the United States during the year and who is not a U. Free 1040ez S. Free 1040ez resident on the last day of the tax year. Free 1040ez Write “Dual-Status Return” across the top of the return. Free 1040ez Attach a statement to your return to show the income for the part of the year you are a resident. Free 1040ez You can use Form 1040 as the statement, but be sure to mark “Dual-Status Statement” across the top. Free 1040ez   If you expatriated or terminated your residency in 2013, you may be required to file an expatriation statement (Form 8854) with your tax return. Free 1040ez For more information, see Expatriation Tax in chapter 4. Free 1040ez Statement. Free 1040ez   Any statement must have your name, address, and taxpayer identification number on it. Free 1040ez You do not need to sign a separate statement or schedule accompanying your return, because your signature on the return also applies to the supporting statements and schedules. Free 1040ez When and Where To File If you are a resident alien on the last day of your tax year and report your income on a calendar year basis, you must file no later than April 15 of the year following the close of your tax year. Free 1040ez If you report your income on other than a calendar year basis, file your return no later than the 15th day of the 4th month following the close of your tax year. Free 1040ez In either case, file your return with the address for dual-status aliens shown on the back page of the Form 1040 instructions. Free 1040ez If you are a nonresident alien on the last day of your tax year and you report your income on a calendar year basis, you must file no later than April 15 of the year following the close of your tax year if you receive wages subject to withholding. Free 1040ez If you report your income on other than a calendar year basis, file your return no later than the 15th day of the 4th month following the close of your tax year. Free 1040ez If you did not receive wages subject to withholding and you report your income on a calendar year basis, you must file no later than June 15 of the year following the close of your tax year. Free 1040ez If you report your income on other than a calendar year basis, file your return no later than the 15th day of the 6th month following the close of your tax year. Free 1040ez In any case, mail your return to:  Department of the Treasury Internal Revenue Service  Austin, TX 73301-0215 If enclosing a payment, mail your return to:  Internal Revenue Service  P. Free 1040ez O. Free 1040ez Box 1303 Charlotte, NC 28201-1303 If the regular due date for filing falls on a Saturday, Sunday, or legal holiday, the due date is the next day that is not a Saturday, Sunday, or legal holiday. Free 1040ez Prev  Up  Next   Home   More Online Publications