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Hr Block Free E File

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Hr Block Free E File

Hr block free e file Index A Accelerated death benefits, Accelerated Death Benefits Accounting periods Change in, standard deduction not allowed, Persons not eligible for the standard deduction. Hr block free e file Accrued leave payment Disability retirement and, Accrued leave payment. Hr block free e file Adjusted gross income (AGI), Adjustments to Income Adjustments to income, Adjustments to Income Age Standard deduction for age 65 or older, Higher standard deduction for age (65 or older). Hr block free e file Age 65, Qualified Individual American Association of Retired Persons (AARP), Volunteer Income Tax Assistance and Tax Counseling for the Elderly. Hr block free e file Annuities, Pensions and Annuities Assistance (see Tax help) B Base amount, social security benefits, Base Amount Benefits Accident or health, Other compensation. Hr block free e file Long-term care, Long-Term Care Insurance Contracts No-fault insurance, Other compensation. Hr block free e file Sickness and injury, Sickness and Injury Benefits Social security, Are Any of Your Benefits Taxable? Veterans', Veterans' benefits. Hr block free e file Bequests, Gifts and inheritances. Hr block free e file Blind persons Standard deduction for, Higher standard deduction for blindness. Hr block free e file C Child and dependent care credit, Child and Dependent Care Credit Children Standard deduction for, Standard Deduction for Dependents Chronically ill persons, Chronically ill individual. Hr block free e file Chronically ill, defined, Terminally or chronically ill defined. Hr block free e file Compensation For services, Compensation for Services Loss or disfigurement, Other compensation. Hr block free e file Contributions Foreign employment, Foreign employment contributions. Hr block free e file Pension or annuity, Cost. Hr block free e file Cost, pension or annuity, Cost. Hr block free e file Credit Child and dependent care, Child and Dependent Care Credit Earned income, Earned Income Credit (EIC) The elderly or the disabled, Credit for the Elderly or the Disabled Credit for the elderly or the disabled, Credit for the Elderly or the Disabled D Death benefit, accelerated, Accelerated Death Benefits Decedents, Dependents. Hr block free e file Standard deduction, Decedent's final return. Hr block free e file Deductions Generally, Deductions Insurance premiums, Medical Insurance Premiums Itemized, Itemized Deductions Meals and lodging, Meals and Lodging Medical and dental, Medical and Dental Expenses Standard, Standard Deduction Dependents, Dependents. Hr block free e file Standard deduction for, Standard Deduction for Dependents Disabilities, individuals with Ownership and use test, Exception to use test for individuals with a disability. Hr block free e file Disability Person with, Persons with disabilities. Hr block free e file Physician's statement, Physician's statement. Hr block free e file Total and permanent, Permanent and total disability. Hr block free e file Disability income, Disability Pensions, Other compensation. Hr block free e file , Disability income. Hr block free e file Distributions, retirement plan, Retirement Plan Distributions Drugs (see Medicines) Dual-status taxpayers Standard deduction, Persons not eligible for the standard deduction. Hr block free e file E Early distributions, tax, Tax on Early Distributions Earned income credit, Earned Income Credit (EIC) Elderly or disabled credit, Credit for the Elderly or the Disabled Elderly persons Standard deduction for age 65 or older, Higher standard deduction for age (65 or older). Hr block free e file Employment tax withholding, Reminders Employment taxes, Employment taxes. Hr block free e file Endowment proceeds, Endowment Contract Proceeds Estimated tax, Tax Withholding and Estimated Tax, Estimated Tax, Who Must Make Estimated Tax Payments Excess accumulation, tax on, Tax on Excess Accumulation Exclusion, gain on sale of home, Maximum Amount of Exclusion F Federal Employees Compensation Act (FECA) payments, Federal Employees' Compensation Act (FECA). Hr block free e file Filing requirements Decedents, Dependents. Hr block free e file General requirements, General Requirements Surviving spouse, Surviving spouse. Hr block free e file Final return for decedent Standard deduction, Decedent's final return. Hr block free e file First-time homebuyer credit Recapture, Repaying the first-time homebuyer credit because you sold your home. Hr block free e file Form, Credit for the Elderly or the Disabled, Physician's statement. Hr block free e file 1099-R, Form 1099-R. Hr block free e file , Form 1099-R. Hr block free e file 5329, Form 5329. Hr block free e file 8853, Accelerated Death Benefits Schedule R, Credit for the Elderly or the Disabled, Physician's statement. Hr block free e file W-4P, Withholding. Hr block free e file Free tax services, Free help with your tax return. Hr block free e file G Gain on sale of home (see Sale of home) General rule, pension or annuity, Pensions and Annuities Gifts, Gifts and inheritances. Hr block free e file H Help (see Tax help) Home care (see Nursing services) Home improvements, Home Improvements Home, sale of, Sale of Home Hospital services, Hospital Services Household help, Household Help I Income Adjustments, Adjustments to Income Disability, Disability Pensions, Disability income. Hr block free e file Gross, defined, Gross income. Hr block free e file Nontaxable, Taxable and Nontaxable Income Sale of home, Sale of Home Self-employment, Self-employed persons. Hr block free e file Taxable, Taxable and Nontaxable Income Individual retirement arrangement (IRA) Adjustments to income, Individual Retirement Arrangement (IRA) Contributions and Deductions Contributions, Contributions. Hr block free e file Deductible contribution, Deductible contribution. Hr block free e file Distributions, Individual Retirement Arrangements (IRAs) Inheritances, Gifts and inheritances. Hr block free e file Injury benefits, Sickness and Injury Benefits, Cost paid by you. Hr block free e file Insurance Accident and health, Other compensation. Hr block free e file , Medical Insurance Premiums Benefits, long-term care, Long-Term Care Insurance Contracts Benefits, no-fault insurance, Other compensation. Hr block free e file Life insurance proceeds, Life Insurance Proceeds Proceeds paid after death, Life Insurance Proceeds Proceeds paid before death, Accelerated Death Benefits Insurance premiums for retired public safety officers, Insurance Premiums for Retired Public Safety Officers Itemized deductions, Itemized Deductions Married filing separately One spouse has itemized, Persons not eligible for the standard deduction. Hr block free e file L Life insurance proceeds, Life Insurance Proceeds Long-term care, Long-Term Care Chronically ill individuals, Chronically ill individual. Hr block free e file Maintenance and personal care services, Maintenance and personal care services. Hr block free e file Qualified insurance contracts, Qualified long-term care insurance contracts. Hr block free e file Qualified services, Qualified long-term care services. Hr block free e file Long-term care insurance, Long-Term Care Insurance Contracts Loss or disfigurement compensation, Other compensation. Hr block free e file Lump-sum distributions, Lump-sum distributions. Hr block free e file Lump-sum election, social security, Lump-Sum Election M Maintenance and personal care services, Maintenance and personal care services. Hr block free e file Married filing separately Itemized deductions One spouse has itemized so other must as well, Persons not eligible for the standard deduction. Hr block free e file Married taxpayers Age 65 or older spouse Standard deduction, Spouse 65 or older or blind. Hr block free e file Blind spouse Standard deduction, Spouse 65 or older or blind. Hr block free e file Meals and lodging expenses, Meals and Lodging Medical expenses, Medical and Dental Expenses Medicare, Medicare Part A. Hr block free e file , Medicare Part B. Hr block free e file , Medicare Part D. Hr block free e file Benefits, Medicare. Hr block free e file Medicines, Medicines Imported, Imported medicines and drugs. Hr block free e file Military retirement pay, Military Retirement Pay Minimum distributions, Tax on Excess Accumulation Minimum wage, Substantial gainful activity. Hr block free e file Missing children, Reminders Mortgage assistance payments, Mortgage assistance payments. Hr block free e file N Nonperiodic distributions, Nonperiodic Distributions Nonqualified use, Period of nonqualified use. Hr block free e file Nonresident aliens Standard deduction, Persons not eligible for the standard deduction. Hr block free e file Nontaxable income, Payments from a state fund for victims of crime. Hr block free e file Accident or health insurance benefits, Other compensation. Hr block free e file Bequests, Gifts and inheritances. Hr block free e file Generally, Taxable and Nontaxable Income Gifts, Gifts and inheritances. Hr block free e file Inheritances, Gifts and inheritances. Hr block free e file Mortgage assistance payments, Mortgage assistance payments. Hr block free e file No-fault insurance benefits, Other compensation. Hr block free e file Nutrition program for elderly, Nutrition Program for the Elderly. Hr block free e file Public assistance payments, Welfare benefits. Hr block free e file Sickness and injury benefits, Sickness and Injury Benefits Veterans' benefits, Veterans' benefits. Hr block free e file Winter energy use, Payments to reduce cost of winter energy use. Hr block free e file Workers' compensation, Workers' Compensation Nursing home, Nursing home. Hr block free e file Nursing services, Nursing Services Chronically ill individuals, Chronically ill individual. Hr block free e file Nutrition program for elderly, Nutrition Program for the Elderly. Hr block free e file O Old-age, survivors, and disability insurance benefits (OASDI), Old-age, survivors, and disability insurance benefits (OASDI). Hr block free e file Other items, Other Items Overall limitation, Overall limitation. Hr block free e file P Payments, estimated tax, Estimated Tax Pensions, Pensions and Annuities Pensions, disability, Disability Pensions Photographs, missing children, Reminders Physician's statement, disability, Physician's statement. Hr block free e file Prepaid insurance premiums, Prepaid insurance premiums. Hr block free e file Preparer, paid, Reminders Preparing your return, Return preparation assistance. Hr block free e file Profit-sharing plan, Retirement and profit-sharing plans. Hr block free e file Public assistance payments, Welfare benefits. Hr block free e file Publications (see Tax help) Q Qualified retirement plan, Tax on Early Distributions R Railroad retirement benefits, Railroad Retirement Benefits, Social Security and Equivalent Railroad Retirement Benefits Repayments Social security benefits, Repayment of Benefits Reporting pension income, How to report. Hr block free e file Residence, sale of, Sale of Home Retirement plans, distributions, Retirement Plan Distributions Returns Decedent, Dependents. Hr block free e file Executors and administrators, Dependents. Hr block free e file Filing requirements, 2013 Filing Requirements Surviving spouse, Surviving spouse. Hr block free e file Reverse mortgages, Reverse Mortgages S Salaries (see Compensation) Sale of Home First-time homebuyer credit, Repaying the first-time homebuyer credit because you sold your home. Hr block free e file Surviving spouse, Reminders Sale of home, Sale of Home Self-employed, Self-employed persons. Hr block free e file Short tax year Change in annual accounting period, Persons not eligible for the standard deduction. Hr block free e file Sickness and injury benefits, Sickness and Injury Benefits Simplified method, Pensions and Annuities Social security benefits, Social Security and Equivalent Railroad Retirement Benefits Standard deduction, Standard Deduction Age 65 or older, Higher standard deduction for age (65 or older). Hr block free e file Blind persons, Higher standard deduction for blindness. Hr block free e file Dependents, Standard Deduction for Dependents Final return of decedent, Decedent's final return. Hr block free e file Married filing separately One spouse has itemized, Persons not eligible for the standard deduction. Hr block free e file Starting date, annuity, Cost. Hr block free e file State fund for victims of crime, Payments from a state fund for victims of crime. Hr block free e file Substantial gainful activity, Substantial gainful activity. Hr block free e file Surrender of Iife insurance, Surrender of policy for cash. Hr block free e file Surviving Spouse, Reminders Surviving spouse, Surviving spouse. Hr block free e file Surviving spouse, insurance, Surviving spouse. Hr block free e file Survivors of retirees, Survivors of retirees. Hr block free e file T Tax Early distributions, Tax on Early Distributions Estimated, Tax Withholding and Estimated Tax, Estimated Tax Excess accumulation, Tax on Excess Accumulation Tax counseling for the elderly (TCE), Volunteer Income Tax Assistance and Tax Counseling for the Elderly. Hr block free e file Tax help, How To Get Tax Help Tax option, 10-year, Lump-sum distributions. Hr block free e file Tax return preparers, Reminders Taxable income, Taxable and Nontaxable Income Taxation of benefits, Are Any of Your Benefits Taxable? Terminally ill, defined, Terminally or chronically ill defined. Hr block free e file Total and permanent disability, defined, Permanent and total disability. Hr block free e file Transportation expenses, Transportation TTY/TDD information, How To Get Tax Help U U. Hr block free e file S. Hr block free e file citizen or resident, U. Hr block free e file S. Hr block free e file citizen or resident alien. Hr block free e file Unemployment compensation, Unemployment compensation. Hr block free e file V Veterans' benefits, Veterans' benefits. Hr block free e file Viatical settlement, Accelerated Death Benefits Victims of crime, Payments from a state fund for victims of crime. Hr block free e file Volunteer income tax assistance (VITA), Volunteer Income Tax Assistance and Tax Counseling for the Elderly. Hr block free e file Volunteer work, Volunteer work. Hr block free e file W Wages (see Compensation) Winter energy use payments, Payments to reduce cost of winter energy use. Hr block free e file Withholding Employment tax, Reminders Pensions and annuities, Withholding. Hr block free e file Workers' compensation, Workers' Compensation Worksheets, social security, Which worksheet to use. Hr block free e file Prev  Up     Home   More Online Publications
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The Hr Block Free E File

Hr block free e file 5. Hr block free e file   Exemptions, Deductions, and Credits Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: Items Related to Excluded Income Exemptions Contributions to Foreign Charitable Organizations Moving ExpensesAllocation of Moving Expenses Forms To File Contributions to Individual Retirement Arrangements Taxes of Foreign Countries and U. Hr block free e file S. Hr block free e file PossessionsCredit for Foreign Income Taxes Deduction for Foreign Income Taxes Deduction for Other Foreign Taxes How To Report Deductions Topics - This chapter discusses: The rules concerning items related to excluded income, Exemptions, Contributions to foreign charitable organizations, Moving expenses, Contributions to individual retirement arrangements (IRAs), Taxes of foreign countries and U. Hr block free e file S. Hr block free e file possessions, and How to report deductions. Hr block free e file Useful Items - You may want to see: Publication 501 Exemptions, Standard Deduction, and Filing Information 514 Foreign Tax Credit for Individuals 521 Moving Expenses 523 Selling Your Home 590 Individual Retirement Arrangements (IRAs) 597 Information on the United States—Canada Income Tax Treaty Form (and Instructions) 1116 Foreign Tax Credit 2106 Employee Business Expenses 2555 Foreign Earned Income 2555-EZ Foreign Earned Income Exclusion 3903 Moving Expenses Schedule A (Form 1040) Itemized Deductions Schedule C (Form 1040) Profit or Loss From Business SS-5 Application for a Social Security Card W-7 Application for IRS Individual Taxpayer Identification Number See chapter 7 for information about getting these publications and forms. Hr block free e file Items Related to Excluded Income U. Hr block free e file S. Hr block free e file citizens and resident aliens living outside the United States generally are allowed the same deductions as citizens and residents living in the United States. Hr block free e file If you choose to exclude foreign earned income or housing amounts, you cannot deduct, exclude, or claim a credit for any item that can be allocated to or charged against the excluded amounts. Hr block free e file This includes any expenses, losses, and other normally deductible items that are allocable to the excluded income. Hr block free e file You can deduct only those expenses connected with earning includible income. Hr block free e file These rules apply only to items definitely related to the excluded earned income and they do not apply to other items that are not definitely related to any particular type of gross income. Hr block free e file These rules do not apply to items such as: Personal exemptions, Qualified retirement contributions, Alimony payments, Charitable contributions, Medical expenses, Mortgage interest, or Real estate taxes on your personal residence. Hr block free e file For purposes of these rules, your housing deduction is not treated as allocable to your excluded income, but the deduction for self- employment tax is. Hr block free e file If you receive foreign earned income in a tax year after the year in which you earned it, you may have to file an amended return for the earlier year to properly adjust the amounts of deductions, credits, or exclusions allocable to your foreign earned income and housing exclusions. Hr block free e file Example. Hr block free e file In 2012, you had $90,400 of foreign earned income and $9,500 of deductions allocable to your foreign earned income. Hr block free e file You did not have a housing exclusion. Hr block free e file Because you excluded all of your foreign earned income, you would not have been able to claim any of the deductions on your 2012 return. Hr block free e file In 2013, you received a $12,000 bonus for work you did abroad in 2012. Hr block free e file You can exclude $4,700 of the bonus because the limit on the foreign earned income exclusion for 2012 was $95,100 and you have already excluded $90,400. Hr block free e file Since you must include $7,300 of the bonus ($12,000 − $4,700) for work you did in 2012 in income, you can file an amended return for 2012 to claim $677 of the deductions. Hr block free e file This is the deductions allocable to the foreign earned income ($9,500) multiplied by the includible portion of the foreign earned income ($7,300) and divided by the total foreign earned income for 2012 ($102,400). Hr block free e file Exemptions You can claim an exemption for your nonresident alien spouse on your separate return, provided your spouse has no gross income for U. Hr block free e file S. Hr block free e file tax purposes and is not the dependent of another U. Hr block free e file S. Hr block free e file taxpayer. Hr block free e file You also can claim exemptions for individuals who qualify as your dependents. Hr block free e file To be your dependent, the individual must be a U. Hr block free e file S. Hr block free e file citizen, U. Hr block free e file S. Hr block free e file national, U. Hr block free e file S. Hr block free e file resident alien, or a resident of Canada or Mexico for some part of the calendar year in which your tax year begins. Hr block free e file Children. Hr block free e file   Children usually are citizens or residents of the same country as their parents. Hr block free e file If you were a U. Hr block free e file S. Hr block free e file citizen when your child was born, your child generally is a U. Hr block free e file S. Hr block free e file citizen. Hr block free e file This is true even if the child's other parent is a nonresident alien, the child was born in a foreign country, and the child lives abroad with the other parent. Hr block free e file   If you have a legally adopted child who is not a U. Hr block free e file S. Hr block free e file citizen, U. Hr block free e file S. Hr block free e file resident, or U. Hr block free e file S. Hr block free e file national, the child meets the citizen requirement if you are a U. Hr block free e file S. Hr block free e file citizen or U. Hr block free e file S. Hr block free e file national and the child lived with you as a member of your household all year. Hr block free e file Social security number. Hr block free e file   You must include on your return the social security number (SSN) of each dependent for whom you claim an exemption. Hr block free e file To get a social security number for a dependent, apply at a Social Security office or U. Hr block free e file S. Hr block free e file consulate. Hr block free e file You must provide original or certified copies of documents to verify the dependent's age, identity, and citizenship, and complete Form SS-5. Hr block free e file   If you do not have an SSN for a child who was born in 2013 and died in 2013, attach a copy of the child's birth certificate to your tax return. Hr block free e file Print “Died” in column (2) of line 6c of your Form 1040 or Form 1040A. Hr block free e file   If your dependent is a nonresident alien who is not eligible to get a social security number, you must list the dependent's individual taxpayer identification number (ITIN) instead of an SSN. Hr block free e file To apply for an ITIN, file Form W-7 with the IRS. Hr block free e file It usually takes 6 to 10 weeks to get an ITIN. Hr block free e file Enter your dependent's ITIN wherever an SSN is requested on your tax return. Hr block free e file More information. Hr block free e file   For more information about exemptions, see Publication 501. Hr block free e file Contributions to Foreign Charitable Organizations If you make contributions directly to a foreign church or other foreign charitable organization, you generally cannot deduct them. Hr block free e file Exceptions are explained under Canadian, Mexican, and Israeli charities, later. Hr block free e file You can deduct contributions to a U. Hr block free e file S. Hr block free e file organization that transfers funds to a charitable foreign organization if the U. Hr block free e file S. Hr block free e file organization controls the use of the funds by the foreign organization or if the foreign organization is just an administrative arm of the U. Hr block free e file S. Hr block free e file organization. Hr block free e file Canadian, Mexican, and Israeli charities. Hr block free e file   Under the income tax treaties with Canada, Mexico and Israel, you may be able to deduct contributions to certain Canadian, Mexican, and Israeli charitable organizations. Hr block free e file Generally, you must have income from sources in Canada, Mexico, or Israel, and the organization must meet certain requirements. Hr block free e file See Publication 597, Information on the United States-Canada Income Tax Treaty, and Publication 526, Charitable Contributions, for more information. Hr block free e file Moving Expenses If you moved to a new home in 2013 because of your job or business, you may be able to deduct the expenses of your move. Hr block free e file Generally, to be deductible, the moving expenses must have been paid or incurred in connection with starting work at a new job location. Hr block free e file See Publication 521 for a complete discussion of the deduction for moving expenses and information about moves within the United States. Hr block free e file Foreign moves. Hr block free e file   A foreign move is a move in connection with the start of work at a new job location outside the United States and its possessions. Hr block free e file A foreign move does not include a move back to the United States or its possessions. Hr block free e file Allocation of Moving Expenses When your new place of work is in a foreign country, your moving expenses are directly connected with the income earned in that foreign country. Hr block free e file If you exclude all or part of the income that you earn at the new location under the foreign earned income exclusion or the foreign housing exclusion, you cannot deduct the part of your moving expense that is allocable to the excluded income. Hr block free e file Also, you cannot deduct the part of the moving expense related to the excluded income for a move from a foreign country to the United States if you receive a reimbursement that you are able to treat as compensation for services performed in the foreign country. Hr block free e file Year to which expense is connected. Hr block free e file   The moving expense is connected with earning the income (including reimbursements, as discussed in chapter 4 under Reimbursement of moving expenses ) either entirely in the year of the move or in 2 years. Hr block free e file It is connected with earning the income entirely in the year of the move if you qualify for the foreign earned income exclusion under the bona fide residence test or physical presence test for at least 120 days during that tax year. Hr block free e file   If you do not qualify under either the bona fide residence test or the physical presence test for at least 120 days during the year of the move, the expense is connected with earning the income in 2 years. Hr block free e file The moving expense is connected with the year of the move and the following year if the move is from the United States to a foreign country. Hr block free e file The moving expense is connected with the year of the move and the preceding year if the move is from a foreign country to the United States. Hr block free e file Amount allocable to excluded income. Hr block free e file   To figure the amount of your moving expense that is allocable to your excluded foreign earned income (and not deductible), you must multiply your total moving expense deduction by a fraction. Hr block free e file The numerator (top number) of the fraction is the total of your excluded foreign earned income and housing amounts for both years and the denominator (bottom number) of the fraction is your total foreign earned income for both years. Hr block free e file Example. Hr block free e file On November 1, 2012, you transfer to Monaco. Hr block free e file Your tax home is in Monaco, and you are a bona fide resident of Monaco for the entire tax year 2013. Hr block free e file In 2012, you paid $6,000 for allowable moving expenses for your move from the United States to Monaco. Hr block free e file You were fully reimbursed (under a nonaccountable plan) for these expenses in the same year. Hr block free e file The reimbursement is included in your income. Hr block free e file Your only other income consists of $16,000 wages earned in 2012 after the date of your move, and $100,100 wages earned in Monaco for 2013. Hr block free e file Because you did not meet the bona fide residence test for at least 120 days during 2012, the year of the move, the moving expenses are for services you performed in both 2012 and the following year, 2013. Hr block free e file Your total foreign earned income for both years is $122,100, consisting of $16,000 wages for 2012, $100,100 wages for 2013, and $6,000 moving expense reimbursement for both years. Hr block free e file You have no housing exclusion. Hr block free e file The total amount you can exclude is $113,190, consisting of the $97,600 full-year exclusion for 2013 and a $15,590 part-year exclusion for 2012 ($95,100 times the fraction of 60 qualifying bona fide residence days over 366 total days in the year). Hr block free e file To find the part of your moving expenses that is not deductible, multiply your $6,000 total expenses by the fraction $113,190 over $122,100. Hr block free e file The result, $5,562, is your nondeductible amount. Hr block free e file    You must report the full amount of the moving expense reimbursement in the year in which you received the reimbursement. Hr block free e file In the preceding example, this year was 2012. Hr block free e file You attribute the reimbursement to both 2012 and 2013 only to figure the amount of foreign earned income eligible for exclusion for each year. Hr block free e file Move between foreign countries. Hr block free e file   If you move between foreign countries, your moving expense is allocable to income earned in the year of the move if you qualified under either the bona fide residence test or the physical presence test for a period that includes at least 120 days in the year of the move. Hr block free e file New place of work in U. Hr block free e file S. Hr block free e file   If your new place of work is in the United States, the deductible moving expenses are directly connected with the income earned in the United States. Hr block free e file If you treat a reimbursement from your employer as foreign earned income (see the discussion in chapter 4), you must allocate deductible moving expenses to foreign earned income. Hr block free e file Storage expenses. Hr block free e file   These expenses are attributable to work you do during the year in which you incur the storage expenses. Hr block free e file You cannot deduct the amount allocable to excluded income. Hr block free e file Moving Expense Attributable to Foreign Earnings in 2 Years If your moving expense deduction is attributable to your foreign earnings in 2 years (the year of the move and the following year), you should request an extension of time to file your return for the year of the move until after the end of the second year. Hr block free e file By then, you should have all the information needed to properly figure the moving expense deduction. Hr block free e file See Extensions under When To File and Pay in chapter 1. Hr block free e file If you do not request an extension, you should figure the part of the moving expense that you cannot deduct because it is allocable to the foreign earned income you are excluding. Hr block free e file You do this by multiplying the moving expense by a fraction, the numerator (top number) of which is your excluded foreign earned income for the year of the move, and the denominator (bottom number) of which is your total foreign earned income for the year of the move. Hr block free e file Once you know your foreign earnings and exclusion for the following year, you must either: Adjust the moving expense deduction by filing an amended return for the year of the move, or Recapture any additional unallowable amount as income on your return for the following year. Hr block free e file If, after you make the final computation, you have an additional amount of allowable moving expense deduction, you can claim this only on an amended return for the year of the move. Hr block free e file You cannot claim it on the return for the second year. Hr block free e file Forms To File Report your moving expenses on Form 3903. Hr block free e file Report your moving expense deduction on line 26 of Form 1040. Hr block free e file If you must reduce your moving expenses by the amount allocable to excluded income (as explained later under How To Report Deductions ), attach a statement to your return showing how you figured this amount. Hr block free e file For more information about figuring moving expenses, see Publication 521. Hr block free e file Contributions to Individual Retirement Arrangements Contributions to your individual retirement arrangements (IRAs) that are traditional IRAs or Roth IRAs are generally limited to the lesser of $5,500 ($6,500 if 50 or older) or your compensation that is includible in your gross income for the tax year. Hr block free e file In determining compensation for this purpose, do not take into account amounts you exclude under either the foreign earned income exclusion or the foreign housing exclusion. Hr block free e file Do not reduce your compensation by the foreign housing deduction. Hr block free e file If you are covered by an employer retirement plan at work, your deduction for your contributions to your traditional IRAs is generally limited based on your modified adjusted gross income. Hr block free e file This is your adjusted gross income figured without taking into account the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction. Hr block free e file Other modifications are also required. Hr block free e file For more information on IRAs, see Publication 590. Hr block free e file Taxes of Foreign Countries and U. Hr block free e file S. Hr block free e file Possessions You can take either a credit or a deduction for income taxes paid to a foreign country or a U. Hr block free e file S. Hr block free e file possession. Hr block free e file Taken as a deduction, foreign income taxes reduce your taxable income. Hr block free e file Taken as a credit, foreign income taxes reduce your tax liability. Hr block free e file You must treat all foreign income taxes the same way. Hr block free e file If you take a credit for any foreign income taxes, you cannot deduct any foreign income taxes. Hr block free e file However, you may be able to deduct other foreign taxes. Hr block free e file See Deduction for Other Foreign Taxes, later. Hr block free e file There is no rule to determine whether it is to your advantage to take a deduction or a credit for foreign income taxes. Hr block free e file In most cases, it is to your advantage to take foreign income taxes as a tax credit, which you subtract directly from your U. Hr block free e file S. Hr block free e file tax liability, rather than as a deduction in figuring taxable income. Hr block free e file However, if foreign income taxes were imposed at a high rate and the proportion of foreign income to U. Hr block free e file S. Hr block free e file income is small, a lower final tax may result from deducting the foreign income taxes. Hr block free e file In any event, you should figure your tax liability both ways and then use the one that is better for you. Hr block free e file You can make or change your choice within 10 years from the due date for filing the tax return on which you are entitled to take either the deduction or the credit. Hr block free e file Foreign income taxes. Hr block free e file   These are generally income taxes you pay to any foreign country or possession of the United States. Hr block free e file Foreign income taxes on U. Hr block free e file S. Hr block free e file return. Hr block free e file   Foreign income taxes can only be taken as a credit on Form 1040, line 47, or as an itemized deduction on Schedule A. Hr block free e file These amounts cannot be included as withheld income taxes on Form 1040, line 62. Hr block free e file Foreign taxes paid on excluded income. Hr block free e file   You cannot take a credit or deduction for foreign income taxes paid on earnings you exclude from tax under any of the following. Hr block free e file Foreign earned income exclusion. Hr block free e file Foreign housing exclusion. Hr block free e file Possession exclusion. Hr block free e file If your wages are completely excluded, you cannot deduct or take a credit for any of the foreign taxes paid on your wages. Hr block free e file   If only part of your wages is excluded, you cannot deduct or take a credit for the foreign income taxes allocable to the excluded part. Hr block free e file You find the taxes allocable to your excluded wages by applying a fraction to the foreign taxes paid on foreign earned income received during the tax year. Hr block free e file The numerator (top number) of the fraction is your excluded foreign earned income received during the tax year minus deductible expenses allocable to that income (not including the foreign housing deduction). Hr block free e file The denominator (bottom number) of the fraction is your total foreign earned income received during the tax year minus all deductible expenses allocable to that income (including the foreign housing deduction). Hr block free e file   If foreign law taxes both earned income and some other type of income and the taxes on the other type cannot be separated, the denominator of the fraction is the total amount of income subject to foreign tax minus deductible expenses allocable to that income. Hr block free e file    If you take a foreign tax credit for tax on income you could have excluded under your choice to exclude foreign earned income or your choice to exclude foreign housing costs, one or both of the choices may be considered revoked. Hr block free e file Credit for Foreign Income Taxes If you take the foreign tax credit, you may have to file Form 1116 with Form 1040. Hr block free e file Form 1116 is used to figure the amount of foreign tax paid or accrued that can be claimed as a foreign tax credit. Hr block free e file Do not include the amount of foreign tax paid or accrued as withheld federal income taxes on Form 1040, line 62. Hr block free e file The foreign income tax for which you can claim a credit is the amount of legal and actual tax liability you pay or accrue during the year. Hr block free e file The amount for which you can claim a credit is not necessarily the amount withheld by the foreign country. Hr block free e file You cannot take a foreign tax credit for income tax you paid to a foreign country that would be refunded by the foreign country if you made a claim for refund. Hr block free e file Subsidies. Hr block free e file   If a foreign country returns your foreign tax payments to you in the form of a subsidy, you cannot claim a foreign tax credit based on these payments. Hr block free e file This rule applies to a subsidy provided by any means that is determined, directly or indirectly, by reference to the amount of tax, or to the base used to figure the tax. Hr block free e file   Some ways of providing a subsidy are refunds, credits, deductions, payments, or discharges of obligations. Hr block free e file A credit is also not allowed if the subsidy is given to a person related to you, or persons who participated in a transaction or a related transaction with you. Hr block free e file Limit The foreign tax credit is limited to the part of your total U. Hr block free e file S. Hr block free e file tax that is in proportion to your taxable income from sources outside the United States compared to your total taxable income. Hr block free e file The allowable foreign tax credit cannot be more than your actual foreign tax liability. Hr block free e file Exemption from limit. Hr block free e file   You will not be subject to this limit and will not have to file Form 1116 if you meet all three of the following requirements. Hr block free e file Your only foreign source income for the year is passive income (dividends, interest, royalties, etc. Hr block free e file ) that is reported to you on a payee statement (such as a Form 1099-DIV or 1099-INT). Hr block free e file Your foreign taxes for the year that qualify for the credit are not more than $300 ($600 if you are filing a joint return) and are reported on a payee statement. Hr block free e file You elect this procedure. Hr block free e file If you make this election, you cannot carry back or carry over any unused foreign tax to or from this year. Hr block free e file Separate limit. Hr block free e file   You must figure the limit on a separate basis with regard to “passive category income” and “general category income” (see the instructions for Form 1116). Hr block free e file Figuring the limit. Hr block free e file   In figuring taxable income in each category, you take into account only the amount that you must include in income on your federal tax return. Hr block free e file Do not take any excluded amount into account. Hr block free e file   To determine your taxable income in each category, deduct expenses and losses that are definitely related to that income. Hr block free e file   Other expenses (such as itemized deductions or the standard deduction) not definitely related to specific items of income must be apportioned to the foreign income in each category by multiplying them by a fraction. Hr block free e file The numerator (top number) of the fraction is your gross foreign income in the separate limit category. Hr block free e file The denominator (bottom number) of the fraction is your gross income from all sources. Hr block free e file For this purpose, gross income includes income that is excluded under the foreign earned income provisions but does not include any other exempt income. Hr block free e file You must use special rules for deducting interest expenses. Hr block free e file For more information on allocating and apportioning your deductions, see Publication 514. Hr block free e file Exemptions. Hr block free e file   Do not take the deduction for exemptions for yourself, your spouse, or your dependents in figuring taxable income for purposes of the limit. Hr block free e file Recapture of foreign losses. Hr block free e file   If you have an overall foreign loss and the loss reduces your U. Hr block free e file S. Hr block free e file source income (resulting in a reduction of your U. Hr block free e file S. Hr block free e file tax liability), you must recapture the loss in later years when you have taxable income from foreign sources. Hr block free e file This is done by treating a part of your taxable income from foreign sources in later years as U. Hr block free e file S. Hr block free e file source income. Hr block free e file This reduces the numerator of the limiting fraction and the resulting foreign tax credit limit. Hr block free e file Recapture of domestic losses. Hr block free e file   If you have an overall domestic loss (resulting in no U. Hr block free e file S. Hr block free e file tax liability), you cannot claim a foreign tax credit for taxes paid during that year. Hr block free e file You must recapture the loss in later years when you have U. Hr block free e file S. Hr block free e file source taxable income. Hr block free e file This is done by treating a part of your taxable income from U. Hr block free e file S. Hr block free e file sources in later years as foreign source income. Hr block free e file This increases the numerator of the limiting fraction and the resulting foreign tax credit limit. Hr block free e file Foreign tax credit carryback and carryover. Hr block free e file   The amount of foreign income tax not allowed as a credit because of the limit can be carried back 1 year and carried forward 10 years. Hr block free e file   More information on figuring the foreign tax credit can be found in Publication 514. Hr block free e file Deduction for Foreign Income Taxes Instead of taking the foreign tax credit, you can deduct foreign income taxes as an itemized deduction on Schedule A (Form 1040). Hr block free e file You can deduct only foreign income taxes paid on income that is subject to U. Hr block free e file S. Hr block free e file tax. Hr block free e file You cannot deduct foreign taxes paid on earnings you exclude from tax under any of the following. Hr block free e file Foreign earned income exclusion. Hr block free e file Foreign housing exclusion. Hr block free e file Possession exclusion. Hr block free e file Example. Hr block free e file You are a U. Hr block free e file S. Hr block free e file citizen and qualify to exclude your foreign earned income. Hr block free e file Your excluded wages in Country X are $70,000 on which you paid income tax of $10,000. Hr block free e file You received dividends from Country X of $2,000 on which you paid income tax of $600. Hr block free e file You can deduct the $600 tax payment because the dividends relating to it are subject to U. Hr block free e file S. Hr block free e file tax. Hr block free e file Because you exclude your wages, you cannot deduct the income tax of $10,000. Hr block free e file If you exclude only a part of your wages, see the earlier discussion under Foreign taxes paid on excluded income. Hr block free e file Deduction for Other Foreign Taxes You can deduct real property taxes you pay that are imposed on you by a foreign country. Hr block free e file You take this deduction on Schedule A (Form 1040). Hr block free e file You cannot deduct other foreign taxes, such as personal property taxes, unless you incurred the expenses in a trade or business or in the production of income. Hr block free e file On the other hand, you generally can deduct personal property taxes when you pay them to U. Hr block free e file S. Hr block free e file possessions. Hr block free e file But if you claim the possession exclusion, see Publication 570. Hr block free e file The deduction for foreign taxes other than foreign income taxes is not related to the foreign tax credit. Hr block free e file You can take deductions for these miscellaneous foreign taxes and also claim the foreign tax credit for income taxes imposed by a foreign country. Hr block free e file How To Report Deductions If you exclude foreign earned income or housing amounts, how you show your deductions on your tax return and how you figure the amount allocable to your excluded income depends on whether the expenses are used in figuring adjusted gross income (Form 1040, line 38) or are itemized deductions. Hr block free e file If you have deductions used in figuring adjusted gross income, enter the total amount for each of these items on the appropriate lines and schedules of Form 1040. Hr block free e file Generally, you figure the amount of a deduction related to the excluded income by multiplying the deduction by a fraction, the numerator of which is your foreign earned income exclusion and the denominator of which is your foreign earned income. Hr block free e file Enter the amount of the deduction(s) related to excluded income on line 44 of Form 2555. Hr block free e file If you have itemized deductions related to excluded income, enter on Schedule A (Form 1040) only the part not related to excluded income. Hr block free e file You figure that amount by subtracting from the total deduction the amount related to excluded income. Hr block free e file Generally, you figure the amount that is related to the excluded income by multiplying the total deduction by a fraction, the numerator of which is your foreign earned income exclusion and the denominator of which is your foreign earned income. Hr block free e file Attach a statement to your return showing how you figured the deductible amount. Hr block free e file Example 1. Hr block free e file You are a U. Hr block free e file S. Hr block free e file citizen employed as an accountant. Hr block free e file Your tax home is in Germany for the entire tax year. Hr block free e file You meet the physical presence test. Hr block free e file Your foreign earned income for the year was $122,000 and your investment income was $10,380. Hr block free e file After excluding $97,600, your AGI is $34,780. Hr block free e file You had unreimbursed business expenses of $2,500 for travel and entertainment in earning your foreign income, of which $500 was for meals and entertainment. Hr block free e file These expenses are deductible only as miscellaneous deductions on Schedule A (Form 1040). Hr block free e file You also have $500 of miscellaneous expenses that are not related to your foreign income that you enter on line 23 of Schedule A. Hr block free e file You must fill out Form 2106. Hr block free e file On that form, reduce your deductible meal and entertainment expenses by 50% ($250). Hr block free e file You must reduce the remaining $2,250 of travel and entertainment expenses by 80% ($1,800) because you excluded 80% ($97,600/$122,000) of your foreign earned income. Hr block free e file You carry the remaining total of $450 to line 21 of Schedule A. Hr block free e file Add the $450 to the $500 that you have on line 23 and enter the total ($950) on line 24. Hr block free e file On line 26 of Schedule A, enter $696, which is 2% of your adjusted gross income of $34,780 (line 38, Form 1040) and subtract it from the amount on line 24. Hr block free e file Enter $254 on line 27 of Schedule A. Hr block free e file Example 2. Hr block free e file You are a U. Hr block free e file S. Hr block free e file citizen, have a tax home in Spain, and meet the physical presence test. Hr block free e file You are self-employed and personal services produce the business income. Hr block free e file Your gross income was $116,931, business expenses $66,895, and net income (profit) $50,036. Hr block free e file You choose the foreign earned income exclusion and exclude $97,600 of your gross income. Hr block free e file Since your excluded income is 83. Hr block free e file 47% of your total income, 83. Hr block free e file 47% of your business expenses are not deductible. Hr block free e file Report your total income and expenses on Schedule C (Form 1040). Hr block free e file On Form 2555 you will show the following: Line 20a, $116,931, gross income, Lines 42 and 43, $97,600, foreign earned income exclusion, and Line 44, $55,837 (83. Hr block free e file 47% × $66,895) business expenses attributable to the exclusion. Hr block free e file In this situation (Example 2), you cannot use Form 2555-EZ since you had self-employment income and business expenses. Hr block free e file Example 3. Hr block free e file Assume in Example 2 that both capital and personal services combine to produce the business income. Hr block free e file No more than 30% of your net income, or $15,011, assuming that this amount is a reasonable allowance for your services, is considered earned and can be excluded. Hr block free e file Your exclusion of $15,011 is 12. Hr block free e file 84% of your gross income ($15,011 ÷ $116,931). Hr block free e file Because you excluded 12. Hr block free e file 84% of your total income, $8,589 (. Hr block free e file 1284 x $66,895) of your business expenses is attributable to the excluded income and is not deductible. Hr block free e file Example 4. Hr block free e file You are a U. Hr block free e file S. Hr block free e file citizen, have a tax home in Brazil, and meet the physical presence test. Hr block free e file You are self-employed and both capital and personal services combine to produce business income. Hr block free e file Your gross income was $146,000, business expenses were $172,000, and your net loss was $26,000. Hr block free e file A reasonable allowance for the services you performed for the business is $77,000. Hr block free e file Because you incurred a net loss, the earned income limit of 30% of your net profit does not apply. Hr block free e file The $77,000 is foreign earned income. Hr block free e file If you choose to exclude the $77,000, you exclude 52. Hr block free e file 74% of your gross income ($77,000 ÷ $146,000), and 52. Hr block free e file 74% of your business expenses ($90,713) is attributable to that income and is not deductible. Hr block free e file Show your total income and expenses on Schedule C (Form 1040). Hr block free e file On Form 2555, exclude $77,000 and show $90,713 on line 44. Hr block free e file Subtract line 44 from line 43, and enter the difference as a negative (in parentheses) on line 45. Hr block free e file Because this amount is negative, enter it as a positive (no parentheses) on line 21, Form 1040, and combine it with your other income to arrive at total income on line 22 of Form 1040. Hr block free e file In this situation (Example 4), you would probably not want to choose the foreign earned income exclusion if this was the first year you were eligible. Hr block free e file If you had chosen the exclusion in an earlier year, you might want to revoke the choice for this year. Hr block free e file To do so would mean that you could not claim the exclusion again for the next 5 tax years without IRS approval. Hr block free e file See Choosing the Exclusion in chapter 4. Hr block free e file Example 5. Hr block free e file You are a U. Hr block free e file S. Hr block free e file citizen, have a tax home in Panama, and meet the bona fide residence test. Hr block free e file You have been performing services for clients as a partner in a firm that provides services exclusively in Panama. Hr block free e file Capital investment is not material in producing the partnership's income. Hr block free e file Under the terms of the partnership agreement, you are to receive 50% of the net profits. Hr block free e file The partnership received gross income of $244,000 and incurred operating expenses of $98,250. Hr block free e file Of the net profits of $145,750, you received $72,875 as your distributive share. Hr block free e file You choose to exclude $97,600 of your share of the gross income. Hr block free e file Because you exclude 80% ($97,600 ÷ $122,000) of your share of the gross income, you cannot deduct $39,300, 80% of your share of the operating expenses (. Hr block free e file 80 × $49,125). Hr block free e file Report $72,875, your distributive share of the partnership net profit, on Schedule E (Form 1040), Supplemental Income and Loss. Hr block free e file On Form 2555, show $97,600 on line 42 and show $39,300 on line 44. Hr block free e file Your exclusion on Form 2555 is $58,300. Hr block free e file In this situation (Example 5), you cannot use Form 2555-EZ since you had earned income other than salaries and wages and you had business expenses. Hr block free e file Prev  Up  Next   Home   More Online Publications