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H and r block login 4. H and r block login   How Income of Aliens Is Taxed Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Resident Aliens Nonresident AliensTrade or Business in the United States Effectively Connected Income The 30% Tax Income From Real Property Transportation Tax Interrupted Period of Residence Expatriation TaxExpatriation Before June 4, 2004 Expatriation After June 3, 2004, and Before June 17, 2008 Expatriation After June 16, 2008 Introduction Resident and nonresident aliens are taxed in different ways. H and r block login Resident aliens are generally taxed in the same way as U. H and r block login S. H and r block login citizens. H and r block login Nonresident aliens are taxed based on the source of their income and whether or not their income is effectively connected with a U. H and r block login S. H and r block login trade or business. H and r block login The following discussions will help you determine if income you receive during the tax year is effectively connected with a U. H and r block login S. H and r block login trade or business and how it is taxed. H and r block login Topics - This chapter discusses: Income that is effectively connected with a U. H and r block login S. H and r block login trade or business. H and r block login Income that is not effectively connected with a U. H and r block login S. H and r block login trade or business. H and r block login Interrupted period of residence. H and r block login Expatriation tax. H and r block login Useful Items - You may want to see: Publication 544 Sales and Other Dispositions of Assets 1212 List of Original Issue Discount Instruments Form (and Instructions) 6251 Alternative Minimum Tax—Individuals Schedule D (Form 1040) Capital Gains and Losses See chapter 12 for information about getting these publications and forms. H and r block login Resident Aliens Resident aliens are generally taxed in the same way as U. H and r block login S. H and r block login citizens. H and r block login This means that their worldwide income is subject to U. H and r block login S. H and r block login tax and must be reported on their U. H and r block login S. H and r block login tax return. H and r block login Income of resident aliens is subject to the graduated tax rates that apply to U. H and r block login S. H and r block login citizens. H and r block login Resident aliens use the Tax Table or Tax Computation Worksheets located in the Form 1040 instructions, which apply to U. H and r block login S. H and r block login citizens. H and r block login Nonresident Aliens A nonresident alien's income that is subject to U. H and r block login S. H and r block login income tax must be divided into two categories: Income that is effectively connected with a trade or business in the United States, and Income that is not effectively connected with a trade or business in the United States (discussed under The 30% Tax, later). H and r block login The difference between these two categories is that effectively connected income, after allowable deductions, is taxed at graduated rates. H and r block login These are the same rates that apply to U. H and r block login S. H and r block login citizens and residents. H and r block login Income that is not effectively connected is taxed at a flat 30% (or lower treaty) rate. H and r block login If you were formerly a U. H and r block login S. H and r block login citizen or resident alien, these rules may not apply. H and r block login See Expatriation Tax, later, in this chapter. H and r block login Trade or Business in the United States Generally, you must be engaged in a trade or business during the tax year to be able to treat income received in that year as effectively connected with that trade or business. H and r block login Whether you are engaged in a trade or business in the United States depends on the nature of your activities. H and r block login The discussions that follow will help you determine whether you are engaged in a trade or business in the United States. H and r block login Personal Services If you perform personal services in the United States at any time during the tax year, you usually are considered engaged in a trade or business in the United States. H and r block login Certain compensation paid to a nonresident alien by a foreign employer is not included in gross income. H and r block login For more information, see Services Performed for Foreign Employer in chapter 3. H and r block login Other Trade or Business Activities Other examples of being engaged in a trade or business in the United States follow. H and r block login Students and trainees. H and r block login   You are considered engaged in a trade or business in the United States if you are temporarily present in the United States as a nonimmigrant under an “F,” “J,” “M,” or “Q” visa. H and r block login A nonresident alien temporarily present in the United States under a “J” visa includes a nonresident alien individual admitted to the United States as an exchange visitor under the Mutual Educational and Cultural Exchange Act of 1961. H and r block login The taxable part of any scholarship or fellowship grant that is U. H and r block login S. H and r block login source income is treated as effectively connected with a trade or business in the United States. H and r block login Business operations. H and r block login   If you own and operate a business in the United States selling services, products, or merchandise, you are, with certain exceptions, engaged in a trade or business in the United States. H and r block login Partnerships. H and r block login   If you are a member of a partnership that at any time during the tax year is engaged in a trade or business in the United States, you are considered to be engaged in a trade or business in the United States. H and r block login Beneficiary of an estate or trust. H and r block login   If you are the beneficiary of an estate or trust that is engaged in a trade or business in the United States, you are treated as being engaged in the same trade or business. H and r block login Trading in stocks, securities, and commodities. H and r block login   If your only U. H and r block login S. H and r block login business activity is trading in stocks, securities, or commodities (including hedging transactions) through a U. H and r block login S. H and r block login resident broker or other agent, you are not engaged in a trade or business in the United States. H and r block login   For transactions in stocks or securities, this applies to any nonresident alien, including a dealer or broker in stocks and securities. H and r block login   For transactions in commodities, this applies to commodities that are usually traded on an organized commodity exchange and to transactions that are usually carried out at such an exchange. H and r block login   This discussion does not apply if you have a U. H and r block login S. H and r block login office or other fixed place of business at any time during the tax year through which, or by the direction of which, you carry out your transactions in stocks, securities, or commodities. H and r block login Trading for a nonresident alien's own account. H and r block login   You are not engaged in a trade or business in the United States if trading for your own account in stocks, securities, or commodities is your only U. H and r block login S. H and r block login business activity. H and r block login This applies even if the trading takes place while you are present in the United States or is done by your employee or your broker or other agent. H and r block login   This does not apply to trading for your own account if you are a dealer in stocks, securities, or commodities. H and r block login This does not necessarily mean, however, that as a dealer you are considered to be engaged in a trade or business in the United States. H and r block login Determine that based on the facts and circumstances in each case or under the rules given above in Trading in stocks, securities, and commodities . H and r block login Effectively Connected Income If you are engaged in a U. H and r block login S. H and r block login trade or business, all income, gain, or loss for the tax year that you get from sources within the United States (other than certain investment income) is treated as effectively connected income. H and r block login This applies whether or not there is any connection between the income and the trade or business being carried on in the United States during the tax year. H and r block login Two tests, described next under Investment Income, determine whether certain items of investment income (such as interest, dividends, and royalties) are treated as effectively connected with that business. H and r block login In limited circumstances, some kinds of foreign source income may be treated as effectively connected with a trade or business in the United States. H and r block login For a discussion of these rules, see Foreign Income , later. H and r block login Investment Income Investment income from U. H and r block login S. H and r block login sources that may or may not be treated as effectively connected with a U. H and r block login S. H and r block login trade or business generally falls into the following three categories. H and r block login Fixed or determinable income (interest, dividends, rents, royalties, premiums, annuities, etc. H and r block login ). H and r block login Gains (some of which are considered capital gains) from the sale or exchange of the following types of property. H and r block login Timber, coal, or domestic iron ore with a retained economic interest. H and r block login Patents, copyrights, and similar property on which you receive contingent payments after October 4, 1966. H and r block login Patents transferred before October 5, 1966. H and r block login Original issue discount obligations. H and r block login Capital gains (and losses). H and r block login Use the two tests, described next, to determine whether an item of U. H and r block login S. H and r block login source income falling in one of the three categories above and received during the tax year is effectively connected with your U. H and r block login S. H and r block login trade or business. H and r block login If the tests indicate that the item of income is effectively connected, you must include it with your other effectively connected income. H and r block login If the item of income is not effectively connected, include it with all other income discussed under The 30% Tax later, in this chapter. H and r block login Asset-use test. H and r block login   This test usually applies to income that is not directly produced by trade or business activities. H and r block login Under this test, if an item of income is from assets (property) used in, or held for use in, the trade or business in the United States, it is considered effectively connected. H and r block login   An asset is used in, or held for use in, the trade or business in the United States if the asset is: Held for the principal purpose of promoting the conduct of a trade or business in the United States, Acquired and held in the ordinary course of the trade or business conducted in the United States (for example, an account receivable or note receivable arising from that trade or business), or Otherwise held to meet the present needs of the trade or business in the United States and not its anticipated future needs. H and r block login Generally, stock of a corporation is not treated as an asset used in, or held for use in, a trade or business in the United States. H and r block login Business-activities test. H and r block login   This test usually applies when income, gain, or loss comes directly from the active conduct of the trade or business. H and r block login The business-activities test is most important when: Dividends or interest are received by a dealer in stocks or securities, Royalties are received in the trade or business of licensing patents or similar property, or Service fees are earned by a servicing business. H and r block login Under this test, if the conduct of the U. H and r block login S. H and r block login trade or business was a material factor in producing the income, the income is considered effectively connected. H and r block login Personal Service Income You usually are engaged in a U. H and r block login S. H and r block login trade or business when you perform personal services in the United States. H and r block login Personal service income you receive in a tax year in which you are engaged in a U. H and r block login S. H and r block login trade or business is effectively connected with a U. H and r block login S. H and r block login trade or business. H and r block login Income received in a year other than the year you performed the services is also effectively connected if it would have been effectively connected if received in the year you performed the services. H and r block login Personal service income includes wages, salaries, commissions, fees, per diem allowances, and employee allowances and bonuses. H and r block login The income may be paid to you in the form of cash, services, or property. H and r block login If you are engaged in a U. H and r block login S. H and r block login trade or business only because you perform personal services in the United States during the tax year, income and gains from assets, and gains and losses from the sale or exchange of capital assets are generally not effectively connected with your trade or business. H and r block login However, if there is a direct economic relationship between your holding of the asset and your trade or business of performing personal services, the income, gain, or loss is effectively connected. H and r block login Pensions. H and r block login   If you were a nonresident alien engaged in a U. H and r block login S. H and r block login trade or business after 1986 because you performed personal services in the United States, and you later receive a pension or retirement pay attributable to these services, such payments are effectively connected income in each year you receive them. H and r block login This is true whether or not you are engaged in a U. H and r block login S. H and r block login trade or business in the year you receive the retirement pay. H and r block login Transportation Income Transportation income (defined in chapter 2) is effectively connected if you meet both of the following conditions. H and r block login You had a fixed place of business in the United States involved in earning the income. H and r block login At least 90% of your U. H and r block login S. H and r block login source transportation income is attributable to regularly scheduled transportation. H and r block login “Fixed place of business” generally means a place, site, structure, or other similar facility through which you engage in a trade or business. H and r block login “Regularly scheduled transportation” means that a ship or aircraft follows a published schedule with repeated sailings or flights at regular intervals between the same points for voyages or flights that begin or end in the United States. H and r block login This definition applies to both scheduled and chartered air transportation. H and r block login If you do not meet the two conditions above, the income is not effectively connected and is taxed at a 4% rate. H and r block login See Transportation Tax, later, in this chapter. H and r block login Business Profits and Losses and Sales Transactions All profits or losses from U. H and r block login S. H and r block login sources that are from the operation of a business in the United States are effectively connected with a trade or business in the United States. H and r block login For example, profit from the sale in the United States of inventory property purchased either in this country or in a foreign country is effectively connected trade or business income. H and r block login A share of U. H and r block login S. H and r block login source profits or losses of a partnership that is engaged in a trade or business in the United States is also effectively connected with a trade or business in the United States. H and r block login Real Property Gain or Loss Gains and losses from the sale or exchange of U. H and r block login S. H and r block login real property interests (whether or not they are capital assets) are taxed as if you are engaged in a trade or business in the United States. H and r block login You must treat the gain or loss as effectively connected with that trade or business. H and r block login U. H and r block login S. H and r block login real property interest. H and r block login   This is any interest in real property located in the United States or the U. H and r block login S. H and r block login Virgin Islands or any interest (other than as a creditor) in a domestic corporation that is a U. H and r block login S. H and r block login real property holding corporation. H and r block login Real property includes the following. H and r block login Land and unsevered natural products of the land, such as growing crops and timber, and mines, wells, and other natural deposits. H and r block login Improvements on land, including buildings, other permanent structures, and their structural components. H and r block login Personal property associated with the use of real property, such as equipment used in farming, mining, forestry, or construction or property used in lodging facilities or rented office space, unless the personal property is: Disposed of more than one year before or after the disposition of the real property, or Separately sold to persons unrelated either to the seller or to the buyer of the real property. H and r block login U. H and r block login S. H and r block login real property holding corporation. H and r block login   A corporation is a U. H and r block login S. H and r block login real property holding corporation if the fair market value of the corporation's U. H and r block login S. H and r block login real property interests are at least 50% of the total fair market value of: The corporation's U. H and r block login S. H and r block login real property interests, plus The corporation's interests in real property located outside the United States, plus The corporation's other assets that are used in, or held for use in, a trade or business. H and r block login   Gain or loss on the sale of the stock in any domestic corporation is taxed as if you are engaged in a U. H and r block login S. H and r block login trade or business unless you establish that the corporation is not a U. H and r block login S. H and r block login real property holding corporation. H and r block login   A U. H and r block login S. H and r block login real property interest does not include a class of stock of a corporation that is regularly traded on an established securities market, unless you hold more than 5% of the fair market value of that class of stock. H and r block login An interest in a foreign corporation owning U. H and r block login S. H and r block login real property generally is not a U. H and r block login S. H and r block login real property interest unless the corporation chooses to be treated as a domestic corporation. H and r block login Qualified investment entities. H and r block login   Special rules apply to qualified investment entities (QIEs). H and r block login A QIE is any real estate investment trust (REIT) or any regulated investment company (RIC) that is a U. H and r block login S. H and r block login real property holding corporation. H and r block login    Generally, any distribution from a QIE to a shareholder that is attributable to gain from the sale or exchange of a U. H and r block login S. H and r block login real property interest is treated as a U. H and r block login S. H and r block login real property gain by the shareholder receiving the distribution. H and r block login A distribution by a QIE on stock regularly traded on an established securities market in the United States is not treated as gain from the sale or exchange of a U. H and r block login S. H and r block login real property interest if you did not own more than 5% of that stock at any time during the 1-year period ending on the date of the distribution. H and r block login A distribution that you do not treat as gain from the sale or exchange of a U. H and r block login S. H and r block login real property interest is included in your gross income as a regular dividend. H and r block login Note. H and r block login Beginning January 1, 2014 (unless extended by legislation), a RIC that is a U. H and r block login S. H and r block login real property holding corporation will only be treated as a QIE for certain distributions from the RIC that are directly or indirectly attributable to distributions received by the RIC from a REIT. H and r block login Domestically controlled QIE. H and r block login   The sale of an interest in a domestically controlled QIE is not the sale of a U. H and r block login S. H and r block login real property interest. H and r block login The entity is domestically controlled if at all times during the testing period less than 50% in value of its stock was held, directly or indirectly, by foreign persons. H and r block login The testing period is the shorter of (a) the 5-year period ending on the date of disposition, or (b) the period during which the entity was in existence. H and r block login Wash sale. H and r block login    If you dispose of an interest in a domestically controlled QIE in an applicable wash sale transaction, special rules apply. H and r block login An applicable wash sale transaction is one in which you: Dispose of an interest in the domestically controlled QIE during the 30-day period before the ex-dividend date of a distribution that you would (but for the disposition) have treated as gain from the sale or exchange of a U. H and r block login S. H and r block login real property interest, and Acquire, or enter into a contract or option to acquire, a substantially identical interest in that entity during the 61-day period that began on the first day of the 30-day period. H and r block login If this occurs, you are treated as having gain from the sale or exchange of a U. H and r block login S. H and r block login real property interest in an amount equal to the distribution made after June 15, 2006, that would have been treated as such gain. H and r block login This also applies to any substitute dividend payment. H and r block login   A transaction is not treated as an applicable wash sale transaction if: You actually receive the distribution from the domestically controlled QIE related to the interest disposed of, or acquired, in the transaction, or You dispose of any class of stock in a QIE that is regularly traded on an established securities market in the United States but only if you did not own more than 5% of that class of stock at any time during the 1-year period ending on the date of the distribution. H and r block login Alternative minimum tax. H and r block login   There may be a minimum tax on your net gain from the disposition of U. H and r block login S. H and r block login real property interests. H and r block login Figure the amount of this tax, if any, on Form 6251. H and r block login Withholding of tax. H and r block login   If you dispose of a U. H and r block login S. H and r block login real property interest, the buyer may have to withhold tax. H and r block login See the discussion of Tax Withheld on Real Property Sales in chapter 8. H and r block login Foreign Income You must treat three kinds of foreign source income as effectively connected with a trade or business in the United States if: You have an office or other fixed place of business in the United States to which the income can be attributed, That office or place of business is a material factor in producing the income, and The income is produced in the ordinary course of the trade or business carried on through that office or other fixed place of business. H and r block login 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. H and r block login The three kinds of foreign source income are listed below. H and r block login Rents and royalties for the use of, or for the privilege of using, intangible personal property located outside the United States or from any interest in such property. H and r block login Included are rents or royalties for the use, or for the privilege of using, outside the United States, 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 United States. H and r block login Dividends, interest, or amounts received for the provision of a guarantee of indebtedness issued after September 27, 2010, from the active conduct of a banking, financing, or similar business in the United States. H and r block login A substitute dividend or interest payment received under a securities lending transaction or a sale-repurchase transaction is treated the same as the amounts received on the transferred security. H and r block login Income, gain, or loss from the sale outside the United States, through the U. H and r block login S. H and r block login office or other fixed place of business, 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. H and r block login Item (3) will not apply if you sold the property for use, consumption, or disposition outside the United States and an office or other fixed place of business in a foreign country was a material factor in the sale. H and r block login Any foreign source income that is equivalent to any item of income described above is treated as effectively connected with a U. H and r block login S. H and r block login trade or business. H and r block login For example, foreign source interest and dividend equivalents are treated as U. H and r block login S. H and r block login effectively connected income if the income is derived by a foreign person in the active conduct of a banking, financing, or similar business within the United States. H and r block login Tax on Effectively Connected Income Income you receive during the tax year that is effectively connected with your trade or business in the United States is, after allowable deductions, taxed at the rates that apply to U. H and r block login S. H and r block login citizens and residents. H and r block login Generally, you can receive effectively connected income only if you are a nonresident alien engaged in trade or business in the United States during the tax year. H and r block login However, income you receive from the sale or exchange of property, the performance of services, or any other transaction in another tax year is treated as effectively connected in that year if it would have been effectively connected in the year the transaction took place or you performed the services. H and r block login Example. H and r block login Ted Richards, a nonresident alien, entered the United States in August 2012, to perform personal services in the U. H and r block login S. H and r block login office of his overseas employer. H and r block login He worked in the U. H and r block login S. H and r block login office until December 25, 2012, but did not leave this country until January 11, 2013. H and r block login On January 8, 2013, he received his final paycheck for services performed in the United States during 2012. H and r block login All of Ted's income during his stay here is U. H and r block login S. H and r block login source income. H and r block login During 2012, Ted was engaged in the trade or business of performing personal services in the United States. H and r block login Therefore, all amounts paid to him in 2012 for services performed in the United States during 2012 are effectively connected with that trade or business during 2012. H and r block login The salary payment Ted received in January 2013 is U. H and r block login S. H and r block login source income to him in 2013. H and r block login It is effectively connected with a trade or business in the United States because he was engaged in a trade or business in the United States during 2012 when he performed the services that earned the income. H and r block login Real property income. H and r block login   You may be able to choose to treat all income from real property as effectively connected. H and r block login See Income From Real Property , later, in this chapter. H and r block login The 30% Tax Tax at a 30% (or lower treaty) rate applies to certain items of income or gains from U. H and r block login S. H and r block login sources but only if the items are not effectively connected with your U. H and r block login S. H and r block login trade or business. H and r block login Fixed or Determinable Income The 30% (or lower treaty) rate applies to the gross amount of U. H and r block login S. H and r block login source fixed or determinable annual or periodic gains, profits, or income. H and r block login Income is fixed when it is paid in amounts known ahead of time. H and r block login Income is determinable whenever there is a basis for figuring the amount to be paid. H and r block login Income can be periodic if it is paid from time to time. H and r block login It does not have to be paid annually or at regular intervals. H and r block login Income can be determinable or periodic even if the length of time during which the payments are made is increased or decreased. H and r block login Items specifically included as fixed or determinable income are interest (other than original issue discount), dividends, dividend equivalent payments (defined in chapter 2), rents, premiums, annuities, salaries, wages, and other compensation. H and r block login A substitute dividend or interest payment received under a securities lending transaction or a sale-repurchase transaction is treated the same as the amounts received on the transferred security. H and r block login Other items of income, such as royalties, also may be subject to the 30% tax. H and r block login Some fixed or determinable income may be exempt from U. H and r block login S. H and r block login tax. H and r block login See chapter 3 if you are not sure whether the income is taxable. H and r block login Original issue discount (OID). H and r block login   If you sold, exchanged, or received a payment on a bond or other debt instrument that was issued at a discount after March 31, 1972, all or part of the original issue discount (OID) (other than portfolio interest) may be subject to the 30% tax. H and r block login The amount of OID is the difference between the stated redemption price at maturity and the issue price of the debt instrument. H and r block login The 30% tax applies in the following circumstances. H and r block login You received a payment on a debt instrument. H and r block login In this case, the amount of OID subject to tax is the OID that accrued while you held the debt instrument minus the OID previously taken into account. H and r block login But the tax on the OID cannot be more than the payment minus the tax on the interest payment on the debt instrument. H and r block login You sold or exchanged the debt instrument. H and r block login The amount of OID subject to tax is the OID that accrued while you held the debt instrument minus the amount already taxed in (1) above. H and r block login   Report on your return the amount of OID shown on Form 1042-S, Foreign Person's U. H and r block login S. H and r block login Source Income Subject to Withholding, if you bought the debt instrument at original issue. H and r block login However, you must recompute your proper share of OID shown on Form 1042-S if any of the following apply. H and r block login You bought the debt instrument at a premium or paid an acquisition premium. H and r block login The debt instrument is a stripped bond or a stripped coupon (including zero coupon instruments backed by U. H and r block login S. H and r block login Treasury securities). H and r block login The debt instrument is a contingent payment or inflation-indexed debt instrument. H and r block login For the definition of premium and acquisition premium and instructions on how to recompute OID, get Publication 1212. H and r block login   If you held a bond or other debt instrument that was issued at a discount before April 1, 1972, contact the IRS for further information. H and r block login See chapter 12. H and r block login Gambling Winnings In general, nonresident aliens are subject to the 30% tax on the gross proceeds from gambling won in the United States if that income is not effectively connected with a U. H and r block login S. H and r block login trade or business and is not exempted by treaty. H and r block login However, no tax is imposed on nonbusiness gambling income a nonresident alien wins playing blackjack, baccarat, craps, roulette, or big-6 wheel in the United States. H and r block login Nonresident aliens are taxed at graduated rates on net gambling income won in the United States that is effectively connected with a U. H and r block login S. H and r block login trade or business. H and r block login Social Security Benefits A nonresident alien must include 85% of any U. H and r block login S. H and r block login social security benefit (and the social security equivalent part of a tier 1 railroad retirement benefit) in U. H and r block login S. H and r block login source fixed or determinable annual or periodic income. H and r block login Social security benefits include monthly retirement, survivor, and disability benefits. H and r block login This income is exempt under some tax treaties. H and r block login See Table 1 in Publication 901, U. H and r block login S. H and r block login Tax Treaties, for a list of tax treaties that exempt U. H and r block login S. H and r block login social security benefits from U. H and r block login S. H and r block login tax. H and r block login Sales or Exchanges of Capital Assets These rules apply only to those capital gains and losses from sources in the United States that are not effectively connected with a trade or business in the United States. H and r block login They apply even if you are engaged in a trade or business in the United States. H and r block login These rules do not apply to the sale or exchange of a U. H and r block login S. H and r block login real property interest or to the sale of any property that is effectively connected with a trade or business in the United States. H and r block login See Real Property Gain or Loss , earlier, under Effectively Connected Income. H and r block login A capital asset is everything you own except: Inventory. H and r block login Business accounts or notes receivable. H and r block login Depreciable property used in a trade or business. H and r block login Real property used in a trade or business. H and r block login Supplies regularly used in a trade or business. H and r block login Certain copyrights, literary or musical or artistic compositions, letters or memoranda, or similar property. H and r block login Certain U. H and r block login S. H and r block login government publications. H and r block login Certain commodities derivative financial instruments held by a commodities derivatives dealer. H and r block login Hedging transactions. H and r block login A capital gain is a gain on the sale or exchange of a capital asset. H and r block login A capital loss is a loss on the sale or exchange of a capital asset. H and r block login If the sale is in foreign currency, for the purpose of determining gain, the cost and selling price of the property should be expressed in U. H and r block login S. H and r block login currency at the rate of exchange prevailing as of the date of the purchase and date of the sale, respectively. H and r block login You may want to read Publication 544. H and r block login However, use Publication 544 only to determine what is a sale or exchange of a capital asset, or what is treated as such. H and r block login Specific tax treatment that applies to U. H and r block login S. H and r block login citizens or residents generally does not apply to you. H and r block login The following gains are subject to the 30% (or lower treaty) rate without regard to the 183-day rule, discussed later. H and r block login Gains on the disposal of timber, coal, or domestic iron ore with a retained economic interest. H and r block login Gains on contingent payments received from the sale or exchange of patents, copyrights, and similar property after October 4, 1966. H and r block login Gains on certain transfers of all substantial rights to, or an undivided interest in, patents if the transfers were made before October 5, 1966. H and r block login Gains on the sale or exchange of original issue discount obligations. H and r block login Gains in (1) are not subject to the 30% (or lower treaty) rate if you choose to treat the gains as effectively connected with a U. H and r block login S. H and r block login trade or business. H and r block login See Income From Real Property , later. H and r block login 183-day rule. H and r block login   If you were in the United States for 183 days or more during the tax year, your net gain from sales or exchanges of capital assets is taxed at a 30% (or lower treaty) rate. H and r block login For purposes of the 30% (or lower treaty) rate, net gain is the excess of your capital gains from U. H and r block login S. H and r block login sources over your capital losses from U. H and r block login S. H and r block login sources. H and r block login This rule applies even if any of the transactions occurred while you were not in the United States. H and r block login   To determine your net gain, consider the amount of your gains and losses that would be recognized and taken into account only if, and to the extent that, they would be recognized and taken into account if you were in a U. H and r block login S. H and r block login trade or business during the year and the gains and losses were effectively connected with that trade or business during the tax year. H and r block login   In arriving at your net gain, do not take the following into consideration. H and r block login The four types of gains listed earlier. H and r block login The deduction for a capital loss carryover. H and r block login Capital losses in excess of capital gains. H and r block login Exclusion for gain from the sale or exchange of qualified small business stock (section 1202 exclusion). H and r block login Losses from the sale or exchange of property held for personal use. H and r block login However, losses resulting from casualties or thefts may be deductible on Schedule A (Form 1040NR). H and r block login See Itemized Deductions in chapter 5. H and r block login   If you are not engaged in a trade or business in the United States and have not established a tax year for a prior period, your tax year will be the calendar year for purposes of the 183-day rule. H and r block login Also, you must file your tax return on a calendar-year basis. H and r block login   If you were in the United States for less than 183 days during the tax year, capital gains (other than gains listed earlier) are tax exempt unless they are effectively connected with a trade or business in the United States during your tax year. H and r block login Reporting. H and r block login   Report your gains and losses from the sales or exchanges of capital assets that are not effectively connected with a trade or business in the United States on page 4 of Form 1040NR. H and r block login Report gains and losses from sales or exchanges of capital assets (including real property) that are effectively connected with a trade or business in the United States on a separate Schedule D (Form 1040), Form 4797, or both. H and r block login Attach them to Form 1040NR. H and r block login Income From Real Property If you have income from real property located in the United States that you own or have an interest in and hold for the production of income, you can choose to treat all income from that property as income effectively connected with a trade or business in the United States. H and r block login The choice applies to all income from real property located in the United States and held for the production of income and to all income from any interest in such property. H and r block login This includes income from rents, royalties from mines, oil or gas wells, or other natural resources. H and r block login It also includes gains from the sale or exchange of timber, coal, or domestic iron ore with a retained economic interest. H and r block login You can make this choice only for real property income that is not otherwise effectively connected with your U. H and r block login S. H and r block login trade or business. H and r block login If you make the choice, you can claim deductions attributable to the real property income and only your net income from real property is taxed. H and r block login This choice does not treat a nonresident alien, who is not otherwise engaged in a U. H and r block login S. H and r block login trade or business, as being engaged in a trade or business in the United States during the year. H and r block login Example. H and r block login You are a nonresident alien and are not engaged in a U. H and r block login S. H and r block login trade or business. H and r block login You own a single-family house in the United States that you rent out. H and r block login Your rental income for the year is $10,000. H and r block login This is your only U. H and r block login S. H and r block login source income. H and r block login As discussed earlier under The 30% Tax, the rental income is subject to a tax at a 30% (or lower treaty) rate. H and r block login You received a Form 1042-S showing that your tenants properly withheld this tax from the rental income. H and r block login You do not have to file a U. H and r block login S. H and r block login tax return (Form 1040NR) because your U. H and r block login S. H and r block login tax liability is satisfied by the withholding of tax. H and r block login If you make the choice discussed earlier, you can offset the $10,000 income by certain rental expenses. H and r block login (See Publication 527, Residential Rental Property, for information on rental expenses. H and r block login ) Any resulting net income is taxed at graduated rates. H and r block login If you make this choice, report the rental income and expenses on Schedule E (Form 1040) and attach the schedule to Form 1040NR. H and r block login For the first year you make the choice, also attach the statement discussed next. H and r block login Making the choice. H and r block login   Make the initial choice by attaching a statement to your return, or amended return, for the year of the choice. H and r block login Include the following in your statement. H and r block login That you are making the choice. H and r block login Whether the choice is under Internal Revenue Code section 871(d) (explained earlier) or a tax treaty. H and r block login A complete list of all your real property, or any interest in real property, located in the United States. H and r block login Give the legal identification of U. H and r block login S. H and r block login timber, coal, or iron ore in which you have an interest. H and r block login The extent of your ownership in the property. H and r block login The location of the property. H and r block login A description of any major improvements to the property. H and r block login The dates you owned the property. H and r block login Your income from the property. H and r block login Details of any previous choices and revocations of the real property income choice. H and r block login   This choice stays in effect for all later tax years unless you revoke it. H and r block login Revoking the choice. H and r block login   You can revoke the choice without IRS approval by filing Form 1040X, Amended U. H and r block login S. H and r block login Individual Income Tax Return, for the year you made the choice and for later tax years. H and r block login You must file Form 1040X within 3 years from the date your return was filed or 2 years from the time the tax was paid, whichever is later. H and r block login If this time period has expired for the year of choice, you cannot revoke the choice for that year. H and r block login However, you may revoke the choice for later tax years only if you have IRS approval. H and r block login For information on how to get IRS approval, see Regulation section 1. H and r block login 871-10(d)(2). H and r block login Transportation Tax A 4% tax rate applies to transportation income that is not effectively connected because it does not meet the two conditions listed earlier under Transportation Income . H and r block login If you receive transportation income subject to the 4% tax, you should figure the tax and show it on line 57 of Form 1040NR. H and r block login Attach a statement to your return that includes the following information (if applicable). H and r block login Your name, taxpayer identification number, and tax year. H and r block login A description of the types of services performed (whether on or off board). H and r block login Names of vessels or registration numbers of aircraft on which you performed the services. H and r block login Amount of U. H and r block login S. H and r block login source transportation income derived from each type of service for each vessel or aircraft for the calendar year. H and r block login Total amount of U. H and r block login S. H and r block login source transportation income derived from all types of services for the calendar year. H and r block login This 4% tax applies to your U. H and r block login S. H and r block login source gross transportation income. H and r block login This only includes transportation income that is treated as derived from sources in the United States if the transportation begins or ends in the United States. H and r block login For transportation income from personal services, the transportation must be between the United States and a U. H and r block login S. H and r block login possession. H and r block login For personal services of a nonresident alien, this only applies to income derived from, or in connection with, an aircraft. H and r block login Interrupted Period of Residence You are subject to tax under a special rule if you interrupt your period of U. H and r block login S. H and r block login residence with a period of nonresidence. H and r block login The special rule applies if you meet all of the following conditions. H and r block login You were a U. H and r block login S. H and r block login resident for a period that includes at least 3 consecutive calendar years. H and r block login You were a U. H and r block login S. H and r block login resident for at least 183 days in each of those years. H and r block login You ceased to be treated as a U. H and r block login S. H and r block login resident. H and r block login You then again became a U. H and r block login S. H and r block login resident before the end of the third calendar year after the end of the period described in (1) above. H and r block login Under this special rule, you are subject to tax on your U. H and r block login S. H and r block login source gross income and gains on a net basis at the graduated rates applicable to individuals (with allowable deductions) for the period you were a nonresident alien, unless you would be subject to a higher tax under the 30% tax (discussed earlier) on income not connected with a U. H and r block login S. H and r block login trade or business. H and r block login For information on how to figure the special tax, see How To Figure the Expatriation Tax (If You Expatriated Before June 17, 2008) under Expatriation Tax , below. H and r block login Example. H and r block login John Willow, a citizen of New Zealand, entered the United States on April 1, 2008, as a lawful permanent resident. H and r block login On August 1, 2010, John ceased to be a lawful permanent resident and returned to New Zealand. H and r block login During his period of residence, he was present in the United States for at least 183 days in each of three consecutive years (2008, 2009, and 2010). H and r block login He returned to the United States on October 5, 2013, as a lawful permanent resident. H and r block login He became a resident before the close of the third calendar year (2013) beginning after the end of his first period of residence (August 1, 2010). H and r block login Therefore, he is subject to tax under the special rule for the period of nonresidence (August 2, 2010, through October 4, 2013) if it is more than the tax that would normally apply to him as a nonresident alien. H and r block login Reporting requirements. H and r block login   If you are subject to this tax for any year in the period you were a nonresident alien, you must file Form 1040NR for that year. H and r block login The return is due by the due date (including extensions) for filing your U. H and r block login S. H and r block login income tax return for the year that you again become a U. H and r block login S. H and r block login resident. H and r block login If you already filed returns for that period, you must file amended returns. H and r block login You must attach a statement to your return that identifies the source of all of your U. H and r block login S. H and r block login and foreign gross income and the items of income subject to this special rule. H and r block login Expatriation Tax The expatriation tax provisions apply to U. H and r block login S. H and r block login citizens who have renounced their citizenship and long-term residents who have ended their residency. H and r block login The rules that apply are based on the dates of expatriation, which are described in the following sections. H and r block login Expatriation Before June 4, 2004. H and r block login Expatriation After June 3, 2004, and Before June 17, 2008. H and r block login Expatriation After June 16, 2008. H and r block login Long-term resident defined. H and r block login   You are a long-term resident if you were a lawful permanent resident of the United States in at least 8 of the last 15 tax years ending with the year your residency ends. H and r block login In determining if you meet the 8-year requirement, do not count any year that you are treated as a resident of a foreign country under a tax treaty and do not waive treaty benefits. H and r block login Expatriation Before June 4, 2004 If you expatriated before June 4, 2004, the expatriation rules apply if one of the principal purposes of the action is the avoidance of U. H and r block login S. H and r block login taxes. H and r block login Unless you received a ruling from the IRS that you did not expatriate to avoid U. H and r block login S. H and r block login taxes, you are presumed to have tax avoidance as a principal purpose if: Your average annual net income tax for the last 5 tax years ending before the date of your action to relinquish your citizenship or terminate your residency was more than $100,000, or Your net worth on the date of your action was $500,000 or more. H and r block login The amounts above are adjusted for inflation if your expatriation action is after 1997 (see Table 4-1). H and r block login Table 4-1. H and r block login Inflation-Adjusted Amounts for Expatriation Actions Before June 4, 2004 IF you expatriated during . H and r block login . H and r block login . H and r block login   THEN the rules outlined on this page apply if . H and r block login . H and r block login . H and r block login     Your 5-year average annual net income tax was more than . H and r block login . H and r block login . H and r block login OR Your net worth equaled or exceeded . H and r block login . H and r block login . H and r block login 1999   110,000   552,000 2000   112,000   562,000 2001   116,000   580,000 2002   120,000   599,000 2003   122,000   608,000 2004 (before June 4)*   124,000   622,000 *If you expatriated after June 3, 2004, see Expatriation After June 3, 2004, and Before June 17, 2008 or Expatriation After June 16, 2008. H and r block login Reporting requirements. H and r block login   If you lost your U. H and r block login S. H and r block login citizenship, you should have filed Form 8854 with a consular office or a federal court at the time of loss of citizenship. H and r block login If you ended your long-term residency, you should have filed Form 8854 with the Internal Revenue Service when you filed your dual-status tax return for the year your residency ended. H and r block login   Your U. H and r block login S. H and r block login residency is considered to have ended when you ceased to be a lawful permanent resident or you began to be treated as a resident of another country under a tax treaty and do not waive treaty benefits. H and r block login Penalties. H and r block login   If you failed to file Form 8854, you may have to pay a penalty equal to the greater of 5% of the expatriation tax or $1,000. H and r block login The penalty will be assessed for each year of the 10-year period beginning on the date of expatriation during which your failure to file continues. H and r block login The penalty will not be imposed if you can show that the failure is due to reasonable cause and not willful neglect. H and r block login Expatriation tax. H and r block login   The expatriation tax applies to the 10-year period following the date of expatriation or termination of residency. H and r block login It is figured in the same way as for those expatriating after June 3, 2004, and before June 17, 2008. H and r block login See How To Figure the Expatriation Tax (If You Expatriated Before June 17, 2008) in the next section. H and r block login Expatriation After June 3, 2004, and Before June 17, 2008 If you expatriated after June 3, 2004, and before June 17, 2008, the expatriation rules apply to you if any of the following statements apply. H and r block login Your average annual net income tax for the 5 tax years ending before the date of expatriation or termination of residency is more than: $124,000 if you expatriated or terminated residency in 2004. H and r block login $127,000 if you expatriated or terminated residency in 2005. H and r block login $131,000 if you expatriated or terminated residency in 2006. H and r block login $136,000 if you expatriated or terminated residency in 2007. H and r block login $139,000 if you expatriated or terminated residency in 2008. H and r block login Your net worth is $2 million or more on the date of your expatriation or termination of residency. H and r block login You fail to certify on Form 8854 that you have complied with all U. H and r block login S. H and r block login federal tax obligations for the 5 tax years preceding the date of your expatriation or termination of residency. H and r block login Exception for dual-citizens and certain minors. H and r block login   Certain dual-citizens and certain minors (defined next) are not subject to the expatriation tax even if they meet (1) or (2) earlier. H and r block login However, they still must provide the certification required in (3). H and r block login Certain dual-citizens. H and r block login   You may qualify for the exception described above if all of the following apply. H and r block login You became at birth a U. H and r block login S. H and r block login citizen and a citizen of another country and you continue to be a citizen of that other country. H and r block login You were never a resident alien of the United States (as defined in chapter 1). H and r block login You never held a U. H and r block login S. H and r block login passport. H and r block login You were present in the United States for no more than 30 days during any calendar year that is 1 of the 10 calendar years preceding your loss of U. H and r block login S. H and r block login citizenship. H and r block login Certain minors. H and r block login   You may qualify for the exception described above if you meet all of the following requirements. H and r block login You became a U. H and r block login S. H and r block login citizen at birth. H and r block login Neither of your parents was a U. H and r block login S. H and r block login citizen at the time of your birth. H and r block login You expatriated before you were 18½. H and r block login You were present in the United States for not more than 30 days during any calendar year that is 1 of the 10 calendar years preceding your expatriation. H and r block login Tax consequences of presence in the United States. H and r block login   The following rules apply if you do not meet the exception above for dual-citizens and certain minors and the expatriation rules would otherwise apply to you. H and r block login   The expatriation tax does not apply to any tax year during the 10-year period if you are physically present in the United States for more than 30 days during the calendar year ending in that year. H and r block login Instead, you are treated as a U. H and r block login S. H and r block login citizen or resident and taxed on your worldwide income for that tax year. H and r block login You must file Form 1040, 1040A, or 1040EZ and figure your tax as prescribed in the instructions for those forms. H and r block login   When counting the number of days of presence during a calendar year, count any day you were physically present in the United States at any time during the day. H and r block login However, do not count any days (up to a limit of 30 days) on which you performed personal services in the United States for an employer who is not related to you if either of the following apply. H and r block login You have ties with other countries. H and r block login You have ties with other countries if: You became (within a reasonable period after your expatriation or termination of residency) a citizen or resident of the country in which you, your spouse, or either of your parents were born, and You became fully liable for income tax in that country. H and r block login You were physically present in the United States for 30 days or less during each year in the 10-year period ending on the date of expatriation or termination of residency. H and r block login Do not count any day you were an exempt individual or were unable to leave the United States because of a medical condition that arose while you were in the United States. H and r block login See Exempt individual and Medical condition in chapter 1 under Substantial Presence Test, but disregard the information about Form 8843. H and r block login Related employer. H and r block login   If your employer in the United States is any of the following, then your employer is related to you. H and r block login You must count any days you performed services in the United States for that employer as days of presence in the United States. H and r block login Members of your family. H and r block login This includes only your brothers and sisters, half-brothers and half-sisters, spouse, ancestors (parents, grandparents, etc. H and r block login ), and lineal descendants (children, grandchildren, etc. H and r block login ). H and r block login A partnership in which you directly or indirectly own more than 50% of the capital interest or the profits interest. H and r block login A corporation in which you directly or indirectly own more than 50% in value of the outstanding stock. H and r block login (See Publication 550, chapter 4, Constructive ownership of stock, for how to determine whether you directly or indirectly own outstanding stock. H and r block login ) A tax-exempt charitable or educational organization that is directly or indirectly controlled, in any manner or by any method, by you or by a member of your family, whether or not this control is legally enforceable. H and r block login Date of tax expatriation. H and r block login   For purposes of U. H and r block login S. H and r block login tax rules, the date of your expatriation or termination of residency is the later of the dates on which you perform the following actions. H and r block login You notify either the Department of State or the Department of Homeland Security (whichever is appropriate) of your expatriating act or termination of residency. H and r block login You file Form 8854 in accordance with the form instructions. H and r block login Annual return. H and r block login   If the expatriation tax applies to you, you must file Form 8854 each year during the 10-year period following the date of expatriation. H and r block login You must file this form even if you owe no U. H and r block login S. H and r block login tax. H and r block login Penalty. H and r block login   If you fail to file Form 8854 for any tax year, fail to include all information required to be shown on the form, or include incorrect information, you may have to pay a penalty of $10,000. H and r block login You will not have to pay a penalty if you show that the failure is due to reasonable cause and not to willful neglect. H and r block login How To Figure the Expatriation Tax (If You Expatriated Before June 17, 2008) If the expatriation tax applies to you, you are generally subject to tax on your U. H and r block login S. H and r block login source gross income and gains on a net basis at the graduated rates applicable to individuals (with allowable deductions) unless you would be subject to a higher tax under the 30% tax (discussed earlier) on income not connected with a U. H and r block login S. H and r block login trade or business. H and r block login For this purpose, U. H and r block login S. H and r block login source gross income (defined in chapter 2) includes gains from the sale or exchange of: Property (other than stock or debt obligations) located in the United States, Stock issued by a U. H and r block login S. H and r block login domestic corporation, and Debt obligations of U. H and r block login S. H and r block login persons or of the United States, a state or political subdivision thereof, or the District of Columbia. H and r block login U. H and r block login S. H and r block login source income also includes any income or gain derived from stock in certain controlled foreign corporations if you owned, or were considered to own, at any time during the 2-year period ending on the date of expatriation, more than 50% of: The total combined voting power of all classes of that corporation's stock, or The total value of the stock. H and r block login The income or gain is considered U. H and r block login S. H and r block login source income only to the extent of your share of earnings and profits earned or accumulated before the date of expatriation and during the periods you met the ownership requirements discussed above. H and r block login Any exchange of property is treated as a sale of the property at its fair market value on the date of the exchange and any gain is treated as U. H and r block login S. H and r block login source gross income in the tax year of the exchange unless you enter into a gain recognition agreement under Notice 97-19. H and r block login Other information. H and r block login   For more information on the expatriation tax provisions, including exceptions to the tax and special U. H and r block login S. H and r block login source rules, see section 877 of the Internal Revenue Code. H and r block login Expatriation Tax Return If you expatriated or terminated your U. H and r block login S. H and r block login residency, or you are subject to the expatriation tax, you must file Form 8854, Initial and Annual Expatriation Statement. H and r block login Attach it to Form 1040NR if you are required to file that form. H and r block login If you are present in the United States following your expatriation and are subject to tax as a U. H and r block login S. H and r block login citizen or resident, file Form 8854 with Form 1040. H and r block login Expatriation After June 16, 2008 If you expatriated after June 16, 2008, the expatriation rules apply to you if you meet any of the following conditions. H and r block login Your average annual net income tax for the 5 years ending before the date of expatriation or termination of residency is more than: $139,000 if you expatriated or terminated residency in 2008. H and r block login $145,000 if you expatriated or terminated residency in 2009 or 2010. H and r block login $147,000 if you expatriated or terminated residency in 2011. H and r block login $151,000 if you expatriated or terminated residency in 2012. H and r block login $155,000 if you expatriated or terminated residency in 2013. H and r block login Your net worth is $2 million or more on the date of your expatriation or termination of residency. H and r block login You fail to certify on Form 8854 that you have complied with all U. H and r block login S. H and r block login federal tax obligations for the 5 years preceding the date of your expatriation or termination of residency. H and r block login Exception for dual-citizens and certain minors. H and r block login   Certain dual-citizens and certain minors (defined next) are not subject to the expatriation tax even if they meet (1) or (2) above. H and r block login However, they still must provide the certification required in (3) above. H and r block login Certain dual-citizens. H and r block login   You may qualify for the exception described above if both of the following apply. H and r block login You became at birth a U. H and r block login S. H and r block login citizen and a citizen of another country and you continue to be a citizen of, and are taxed as a resident of, that other country. H and r block login You have been a resident of the United States for not more than 10 years during the 15-year tax period ending with the tax year during which the expatriation occurs. H and r block login For the purpose of determining U. H and r block login S. H and r block login residency, use the substantial presence test described in chapter 1. H and r block login Certain minors. H and r block login   You may qualify for the exception described earlier if you meet both of the following requirements. H and r block login You expatriated before you were 18½. H and r block login You have been a resident of the United States for not more than 10 tax years before the expatriation occurs. H and r block login For the purpose of determining U. H and r block login S. H and r block login residency, use the substantial presence test described in chapter 1. H and r block login Expatriation date. H and r block login   Your expatriation date is the date you relinquish U. H and r block login S. H and r block login citizenship (in the case of a former citizen) or terminate your long-term residency (in the case of a former U. H and r block login S. H and r block login resident). H and r block login Former U. H and r block login S. H and r block login citizen. H and r block login   You are considered to have relinquished your U. H and r block login S. H and r block login citizenship on the earliest of the following dates. H and r block login The date you renounced U. H and r block login S. H and r block login citizenship before a diplomatic or consular officer of the United States (provided that the voluntary renouncement was later confirmed by the issuance of a certificate of loss of nationality). H and r block login The date you furnished to the State Department a signed statement of voluntary relinquishment of U. H and r block login S. H and r block login nationality confirming the performance of an expatriating act (provided that the voluntary relinquishment was later confirmed by the issuance of a certificate of loss of nationality). H and r block login The date the State Department issued a certificate of loss of nationality. H and r block login The date that a U. H and r block login S. H and r block login court canceled your certificate of naturalization. H and r block login Former long-term resident. H and r block login   You are considered to have terminated your long-term residency on the earliest of the following dates. H and r block login The date you voluntarily relinquished your lawful permanent resident status by filing Department of Homeland Security Form I-407 with a U. H and r block login S. H and r block login consular or immigration officer, and the Department of Homeland Security determined that you have, in fact, abandoned your lawful permanent resident status. H and r block login The date you became subject to a final administrative order for your removal from the United States under the Immigration and Nationality Act and you actually left the United States as a result of that order. H and r block login If you were a dual resident of the United States and a country with which the United States has an income tax treaty, the date you began to be treated as a resident of that country and you determined that, for purposes of the treaty, you are a resident of the treaty country and notify the IRS of that treatment on Forms 8833 and 8854. H and r block login See Effect of Tax Treaties in chapter 1 for more information about dual residents. H and r block login How To Figure the Expatriation Tax (If You Expatriate After June 16, 2008) In the year you expatriate, you are subject to income tax on the net unrealized gain (or loss) in your property as if the property had been sold for its fair market value on the day before your expatriation date (“mark-to-market tax”). H and r block login This applies to most types of property interests you held on the date of relinquishment of citizenship or termination of residency. H and r block login But see Exceptions , later. H and r block login Gains arising from deemed sales must be taken into account for the tax year of the deemed sale without regard to other U. H and r block login S. H and r block login internal revenue laws. H and r block login Losses from deemed sales must be taken into account to the extent otherwise provided under U. H and r block login S. H and r block login internal revenue laws. H and r block login However, Internal Revenue Code section 1091 (relating to the disallowance of losses on wash sales of stock and securities) does not apply. H and r block login The net gain that you otherwise must include in your income is reduced (but not below zero) by: $600,000 if you expatriated or terminated residency before January 1, 2009. H and r block login $626,000 if you expatriated or terminated residency in 2009. H and r block login $627,000 if you expatriated or terminated residency in 2010. H and r block login $636,000 if you expatriated or terminated residency in 2011. H and r block login $651,000 if you expatriated or terminated residency in 2012. H and r block login $668,000 if you expatriated or terminated residency in 2013. H and r block login Exceptions. H and r block login   The mark-to-market tax does not apply to the following. H and r block login Eligible deferred compensation items. H and r block login Ineligible deferred compensation items. H and r block login Interests in nongrantor trusts. H and r block login Specified tax deferred accounts. H and r block login Instead, items (1) and (3) may be subject to withholding at source. H and r block login In the case of item (2), you are treated as receiving the present value of your accrued benefit as of the day before the expatriation date. H and r block login In the case of item (4), you are treated as receiving a distribution of your entire interest in the account on the day before your expatriation date. H and r block login See paragraphs (d), (e), and (f) of section 877A for more information. H and r block login Expatriation Tax Return If you expatriated or terminated your U. H and r block login S. H and r block login residency, or you are subject to the expatriation rules (as discussed earlier in the first paragraph under Expatriation After June 16, 2008), you must file Form 8854. H and r block login Attach it to Form 1040 or Form 1040NR if you are required to file either of those forms. H and r block login Deferral of payment of mark-to-market tax. H and r block login   You can make an irrevocable election to defer payment of the mark-to-market tax imposed on the deemed sale of property. H and r block login If you make this election, the following rules apply. H and r block login You can make the election on a property-by-property basis. H and r block login The deferred tax attributable to a particular property is due on the return for the tax year in which you dispose of the property. H and r block login Interest is charged for the period the tax is deferred. H and r block login The due date for the payment of the deferred tax cannot be extended beyond the earlier of the following dates. H and r block login The due date of the return required for the year of death. H and r block login The time that the security provided for the property fails to be adequate. H and r block login See item (6) below. H and r block login You make the election on Form 8854. H and r block login You must provide adequate security (such as a bond). H and r block login You must make an irrevocable waiver of any right under any treaty of the United States which would preclude assessment or collection of the mark-to-market tax. H and r block login   For more information about the deferral of payment, see the Instructions for Form 8854. H and r block login Prev  Up  Next   Home   More Online Publications

Topic 157 - Change of Address – How to Notify the IRS

If your address has changed, you need to notify the IRS to ensure you receive any IRS refunds or correspondence. There are several ways to notify the IRS of an address change. If you change your address before filing your return, write the new address in the appropriate boxes on your return when you file. When your return is processed, we will update your records.

If you change your address after filing your return, you should notify the post office that services your old address. Because not all post offices forward government checks, notifying the post office that services your old address ensures that your mail will be forwarded, but not necessarily your refund check. To change your address with the IRS, you may complete a Form 8822 (PDF), Change of Address, and/or a Form 8822-B (PDF), Change of Address — Business, and send them to the address shown on the forms. Note: Beginning January 1, 2014, any entity with an EIN must file Form 8822-B to report to the IRS the latest change to its responsible party. For more information, see "responsible party" in Form 8822-B. You may download Forms 8822 and 8822-B from www.irs.gov or order them by calling 800-TAX-FORM (800-829-3676).

You may also write to inform us of your address change. If you write, we need your full name, old and new addresses, social security number, individual taxpayer identification number or employer identification number and signature. If you filed a joint return, you should provide the same information and signatures for both spouses. Send your written address change information to the campus where you filed your last return. The campus addresses are listed in the instructions to the tax forms.

If you filed a joint return and you and/or your spouse have since established separate residences, you both should notify the IRS of your new addresses.

Page Last Reviewed or Updated: March 20, 2014

The H And R Block Login

H and r block login Publication 971 - Introductory Material Table of Contents What's New IntroductionOrdering forms and publications. H and r block login Questions about innocent spouse relief. H and r block login Useful Items - You may want to see: What's New Expanded filing deadline for equitable relief. H and r block login  The period of time in which you may request equitable relief has been expanded. H and r block login See How To Request Relief later. H and r block login More information. H and r block login   For more information about the latest developments on Publication 971, go to www. H and r block login irs. H and r block login gov/pub971. H and r block login Introduction When you file a joint income tax return, the law makes both you and your spouse responsible for the entire tax liability. H and r block login This is called joint and several liability. H and r block login Joint and several liability applies not only to the tax liability you show on the return but also to any additional tax liability the IRS determines to be due, even if the additional tax is due to income, deductions, or credits of your spouse or former spouse. H and r block login You remain jointly and severally liable for the taxes, and the IRS still can collect from you, even if you later divorce and the divorce decree states that your former spouse will be solely responsible for the tax. H and r block login In some cases, a spouse (or former spouse) will be relieved of the tax, interest, and penalties on a joint tax return. H and r block login Three types of relief are available to married persons who filed joint returns. H and r block login Innocent spouse relief. H and r block login Separation of liability relief. H and r block login Equitable relief. H and r block login Married persons who did not file joint returns, but who live in community property states, may also qualify for relief. H and r block login See Community Property Laws , later. H and r block login This publication explains these types of relief, who may qualify for them, and how to get them. H and r block login You can also use the Innocent Spouse Tax Relief Eligibility Explorer at IRS. H and r block login gov by entering “Innocent Spouse” in the search box. H and r block login What this publication does not cover. H and r block login   This publication does not discuss injured spouse relief. H and r block login You are an injured spouse if your share of the overpayment shown on your joint return was, or is expected to be, applied (offset) against your spouse's legally enforceable past-due federal taxes, state income taxes, state unemployment compensation debts, child or spousal support payments, or a federal nontax debt, such as a student loan. H and r block login If you are an injured spouse, you may be entitled to receive a refund of your share of the overpayment. H and r block login For more information, see Form 8379, Injured Spouse Allocation. H and r block login Comments and suggestions. H and r block login   We welcome your comments about this publication and your suggestions for future editions. H and r block login   You can write to us at the following address:  Internal Revenue Service Individual Forms and Publications Branch SE:W:CAR:MP:T:I 1111 Constitution Ave. H and r block login NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. H and r block login Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. H and r block login   You can email us at taxforms@irs. H and r block login gov. H and r block login Please put “Publications Comment” on the subject line. H and r block login You can also send us comments from www. H and r block login irs. H and r block login gov/formspubs/, select “Comment on Tax Forms and Publications” under “Information about. H and r block login ”   Although we cannot respond individually to each email, we do appreciate your feedback and will consider your comments as we revise our tax products. H and r block login Ordering forms and publications. H and r block login   Visit www. H and r block login irs. H and r block login gov/formspubs to download forms and publications, call 1-800-829-3676, or write to the address below and receive a response within 10 days after your request is received. H and r block login  Internal Revenue Service 1201 N. H and r block login Mitsubishi Motorway Bloomington, IL 61705-6613 Questions about innocent spouse relief. H and r block login The IRS can help you with your request for innocent spouse relief. H and r block login If you are working with an IRS employee, you can ask that employee, or you can call 866-897-4270. H and r block login Useful Items - You may want to see: Publications 504 Divorced or Separated Individuals 555 Community Property 556 Examination of Returns, Appeal Rights, and Claims for Refund 594 The IRS Collection Process Forms (and Instructions) 8857 Request for Innocent Spouse Relief Prev  Up  Next   Home   More Online Publications