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Ri 1040nr

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Ri 1040nr

Ri 1040nr 2. Ri 1040nr   Employees' Pay Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Tests for Deducting PayTest 1—Reasonableness Test 2—For Services Performed Kinds of PayAwards Bonuses Education Expenses Fringe Benefits Loans or Advances Property Reimbursements for Business Expenses Sick and Vacation Pay Introduction You can generally deduct the amount you pay your employees for the services they perform. Ri 1040nr The pay may be in cash, property, or services. Ri 1040nr It may include wages, salaries, bonuses, commissions, or other non-cash compensation such as vacation allowances and fringe benefits. Ri 1040nr For information about deducting employment taxes, see chapter 5. Ri 1040nr You can claim employment credits, such as the following, if you hire individuals who meet certain requirements. Ri 1040nr Empowerment zone employment credit (Form 8844). Ri 1040nr Indian employment credit (Form 8845). Ri 1040nr Work opportunity credit (Form 5884). Ri 1040nr Credit for employer differential wage payments (Form 8932). Ri 1040nr Reduce your deduction for employee wages by the amount of employment credits you claim. Ri 1040nr For more information about these credits, see the form on which the credit is claimed. Ri 1040nr Topics - This chapter discusses: Tests for deducting pay Kinds of pay Useful Items - You may want to see: Publication 15 (Circular E), Employer's Tax Guide 15-A Employer's Supplemental Tax Guide 15-B Employer's Tax Guide to Fringe Benefits See chapter 12 for information about getting publications and forms. Ri 1040nr Tests for Deducting Pay To be deductible, your employees' pay must be an ordinary and necessary business expense and you must pay or incur it. Ri 1040nr These and other requirements that apply to all business expenses are explained in chapter 1. Ri 1040nr In addition, the pay must meet both of the following tests. Ri 1040nr Test 1. Ri 1040nr It must be reasonable. Ri 1040nr Test 2. Ri 1040nr It must be for services performed. Ri 1040nr The form or method of figuring the pay does not affect its deductibility. Ri 1040nr For example, bonuses and commissions based on sales or earnings, and paid under an agreement made before the services were performed, are both deductible. Ri 1040nr Test 1—Reasonableness You must be able to prove that the pay is reasonable. Ri 1040nr Whether the pay is reasonable depends on the circumstances that existed when you contracted for the services, not those that exist when reasonableness is questioned. Ri 1040nr If the pay is excessive, the excess pay is disallowed as a deduction. Ri 1040nr Factors to consider. Ri 1040nr   Determine the reasonableness of pay by the facts and circumstances. Ri 1040nr Generally, reasonable pay is the amount that a similar business would pay for the same or similar services. Ri 1040nr   To determine if pay is reasonable, also consider the following items and any other pertinent facts. Ri 1040nr The duties performed by the employee. Ri 1040nr The volume of business handled. Ri 1040nr The character and amount of responsibility. Ri 1040nr The complexities of your business. Ri 1040nr The amount of time required. Ri 1040nr The cost of living in the locality. Ri 1040nr The ability and achievements of the individual employee performing the service. Ri 1040nr The pay compared with the gross and net income of the business, as well as with distributions to shareholders if the business is a corporation. Ri 1040nr Your policy regarding pay for all your employees. Ri 1040nr The history of pay for each employee. Ri 1040nr Test 2—For Services Performed You must be able to prove the payment was made for services actually performed. Ri 1040nr Employee-shareholder salaries. Ri 1040nr   If a corporation pays an employee who is also a shareholder a salary that is unreasonably high considering the services actually performed, the excessive part of the salary may be treated as a constructive dividend to the employee-shareholder. Ri 1040nr The excessive part of the salary would not be allowed as a salary deduction by the corporation. Ri 1040nr For more information on corporate distributions to shareholders, see Publication 542, Corporations. Ri 1040nr Kinds of Pay Some of the ways you may provide pay to your employees in addition to regular wages or salaries are discussed next. Ri 1040nr For specialized and detailed information on employees' pay and the employment tax treatment of employees' pay, see Publications 15, 15-A, and 15-B. Ri 1040nr Awards You can generally deduct amounts you pay to your employees as awards, whether paid in cash or property. Ri 1040nr If you give property to an employee as an employee achievement award, your deduction may be limited. Ri 1040nr Achievement awards. Ri 1040nr   An achievement award is an item of tangible personal property that meets all the following requirements. Ri 1040nr It is given to an employee for length of service or safety achievement. Ri 1040nr It is awarded as part of a meaningful presentation. Ri 1040nr It is awarded under conditions and circumstances that do not create a significant likelihood of disguised pay. Ri 1040nr Length-of-service award. Ri 1040nr    An award will qualify as a length-of-service award only if either of the following applies. Ri 1040nr The employee receives the award after his or her first 5 years of employment. Ri 1040nr The employee did not receive another length-of-service award (other than one of very small value) during the same year or in any of the prior 4 years. Ri 1040nr Safety achievement award. Ri 1040nr    An award for safety achievement will qualify as an achievement award unless one of the following applies. Ri 1040nr It is given to a manager, administrator, clerical employee, or other professional employee. Ri 1040nr During the tax year, more than 10% of your employees, excluding those listed in (1), have already received a safety achievement award (other than one of very small value). Ri 1040nr Deduction limit. Ri 1040nr   Your deduction for the cost of employee achievement awards given to any one employee during the tax year is limited to the following. Ri 1040nr $400 for awards that are not qualified plan awards. Ri 1040nr $1,600 for all awards, whether or not qualified plan awards. Ri 1040nr   A qualified plan award is an achievement award given as part of an established written plan or program that does not favor highly compensated employees as to eligibility or benefits. Ri 1040nr   A highly compensated employee is an employee who meets either of the following tests. Ri 1040nr The employee was a 5% owner at any time during the year or the preceding year. Ri 1040nr The employee received more than $115,000 in pay for the preceding year. Ri 1040nr You can choose to ignore test (2) if the employee was not also in the top 20% of employees ranked by pay for the preceding year. Ri 1040nr   An award is not a qualified plan award if the average cost of all the employee achievement awards given during the tax year (that would be qualified plan awards except for this limit) is more than $400. Ri 1040nr To figure this average cost, ignore awards of nominal value. Ri 1040nr Deduct achievement awards as a nonwage business expense on your return or business schedule. Ri 1040nr You may not owe employment taxes on the value of some achievement awards you provide to an employee. Ri 1040nr See Publication 15-B. Ri 1040nr Bonuses You can generally deduct a bonus paid to an employee if you intended the bonus as additional pay for services, not as a gift, and the services were performed. Ri 1040nr However, the total bonuses, salaries, and other pay must be reasonable for the services performed. Ri 1040nr If the bonus is paid in property, see Property , later. Ri 1040nr Gifts of nominal value. Ri 1040nr    If, to promote employee goodwill, you distribute food or merchandise of nominal value to your employees at holidays, you can deduct the cost of these items as a nonwage business expense. Ri 1040nr Your deduction for de minimis gifts of food or drink are not subject to the 50% deduction limit that generally applies to meals. Ri 1040nr For more information on this deduction limit, see Meals and lodging , later. Ri 1040nr Education Expenses If you pay or reimburse education expenses for an employee, you can deduct the payments if they are part of a qualified educational assistance program. Ri 1040nr Deduct them on the “Employee benefit programs” or other appropriate line of your tax return. Ri 1040nr For information on educational assistance programs, see Educational Assistance in section 2 of Publication 15-B. Ri 1040nr Fringe Benefits A fringe benefit is a form of pay for the performance of services. Ri 1040nr You can generally deduct the cost of fringe benefits. Ri 1040nr You may be able to exclude all or part of the value of some fringe benefits from your employees' pay. Ri 1040nr You also may not owe employment taxes on the value of the fringe benefits. Ri 1040nr See Table 2-1, Special Rules for Various Types of Fringe Benefits, in Publication 15-B for details. Ri 1040nr Your deduction for the cost of fringe benefits for activities generally considered entertainment, amusement, or recreation, or for a facility used in connection with such an activity (for example, a company aircraft) for certain officers, directors, and more-than-10% shareholders is limited. Ri 1040nr Certain fringe benefits are discussed next. Ri 1040nr See Publication 15-B for more details on these and other fringe benefits. Ri 1040nr Meals and lodging. Ri 1040nr   You can usually deduct the cost of furnishing meals and lodging to your employees. Ri 1040nr Deduct the cost in whatever category the expense falls. Ri 1040nr For example, if you operate a restaurant, deduct the cost of the meals you furnish to employees as part of the cost of goods sold. Ri 1040nr If you operate a nursing home, motel, or rental property, deduct the cost of furnishing lodging to an employee as expenses for utilities, linen service, salaries, depreciation, etc. Ri 1040nr Deduction limit on meals. Ri 1040nr   You can generally deduct only 50% of the cost of furnishing meals to your employees. Ri 1040nr However, you can deduct the full cost of the following meals. Ri 1040nr Meals whose value you include in an employee's wages. Ri 1040nr Meals that qualify as a de minimis fringe benefit as discussed in section 2 of Publication 15-B. Ri 1040nr This generally includes meals you furnish to employees at your place of business if more than half of these employees are provided the meals for your convenience. Ri 1040nr Meals you furnish to your employees at the work site when you operate a restaurant or catering service. Ri 1040nr Meals you furnish to your employees as part of the expense of providing recreational or social activities, such as a company picnic. Ri 1040nr Meals you are required by federal law to furnish to crew members of certain commercial vessels (or would be required to furnish if the vessels were operated at sea). Ri 1040nr This does not include meals you furnish on vessels primarily providing luxury water transportation. Ri 1040nr Meals you furnish on an oil or gas platform or drilling rig located offshore or in Alaska. Ri 1040nr This includes meals you furnish at a support camp that is near and integral to an oil or gas drilling rig located in Alaska. Ri 1040nr Employee benefit programs. Ri 1040nr   Employee benefit programs include the following. Ri 1040nr Accident and health plans. Ri 1040nr Adoption assistance. Ri 1040nr Cafeteria plans. Ri 1040nr Dependent care assistance. Ri 1040nr Education assistance. Ri 1040nr Life insurance coverage. Ri 1040nr Welfare benefit funds. Ri 1040nr   You can generally deduct amounts you spend on employee benefit programs on the applicable line of your tax return. Ri 1040nr For example, if you provide dependent care by operating a dependent care facility for your employees, deduct your costs in whatever categories they fall (utilities, salaries, etc. Ri 1040nr ). Ri 1040nr Life insurance coverage. Ri 1040nr   You cannot deduct the cost of life insurance coverage for you, an employee, or any person with a financial interest in your business, if you are directly or indirectly the beneficiary of the policy. Ri 1040nr See Regulations section 1. Ri 1040nr 264-1 for more information. Ri 1040nr Welfare benefit funds. Ri 1040nr   A welfare benefit fund is a funded plan (or a funded arrangement having the effect of a plan) that provides welfare benefits to your employees, independent contractors, or their beneficiaries. Ri 1040nr Welfare benefits are any benefits other than deferred compensation or transfers of restricted property. Ri 1040nr   Your deduction for contributions to a welfare benefit fund is limited to the fund's qualified cost for the tax year. Ri 1040nr If your contributions to the fund are more than its qualified cost, carry the excess over to the next tax year. Ri 1040nr   Generally, the fund's “qualified cost” is the total of the following amounts, reduced by the after-tax income of the fund. Ri 1040nr The cost you would have been able to deduct using the cash method of accounting if you had paid for the benefits directly. Ri 1040nr The contributions added to a reserve account that are needed to fund claims incurred but not paid as of the end of the year. Ri 1040nr These claims can be for supplemental unemployment benefits, severance pay, or disability, medical, or life insurance benefits. Ri 1040nr   For more information, see sections 419(c) and 419A of the Internal Revenue Code and the related regulations. Ri 1040nr Loans or Advances You generally can deduct as wages an advance you make to an employee for services performed if you do not expect the employee to repay the advance. Ri 1040nr However, if the employee performs no services, treat the amount you advanced as a loan. Ri 1040nr If the employee does not repay the loan, treat it as income to the employee. Ri 1040nr Below-market interest rate loans. Ri 1040nr   On certain loans you make to an employee or shareholder, you are treated as having received interest income and as having paid compensation or dividends equal to that interest. Ri 1040nr See Below-Market Loans in chapter 4. Ri 1040nr Property If you transfer property (including your company's stock) to an employee as payment for services, you can generally deduct it as wages. Ri 1040nr The amount you can deduct is the property's fair market value on the date of the transfer less any amount the employee paid for the property. Ri 1040nr You can claim the deduction only for the tax year in which your employee includes the property's value in income. Ri 1040nr Your employee is deemed to have included the value in income if you report it on Form W-2, Wage and Tax Statement, in a timely manner. Ri 1040nr You treat the deductible amount as received in exchange for the property, and you must recognize any gain or loss realized on the transfer, unless it is the company's stock transferred as payment for services. Ri 1040nr Your gain or loss is the difference between the fair market value of the property and its adjusted basis on the date of transfer. Ri 1040nr These rules also apply to property transferred to an independent contractor for services, generally reported on Form 1099-MISC, Miscellaneous Income. Ri 1040nr Restricted property. Ri 1040nr   If the property you transfer for services is subject to restrictions that affect its value, you generally cannot deduct it and do not report gain or loss until it is substantially vested in the recipient. Ri 1040nr However, if the recipient pays for the property, you must report any gain at the time of the transfer up to the amount paid. Ri 1040nr    “Substantially vested” means the property is not subject to a substantial risk of forfeiture. Ri 1040nr This means that the recipient is not likely to have to give up his or her rights in the property in the future. Ri 1040nr Reimbursements for Business Expenses You can generally deduct the amount you pay or reimburse employees for business expenses incurred for your business. Ri 1040nr However, your deduction may be limited. Ri 1040nr If you make the payment under an accountable plan, deduct it in the category of the expense paid. Ri 1040nr For example, if you pay an employee for travel expenses incurred on your behalf, deduct this payment as a travel expense. Ri 1040nr If you make the payment under a nonaccountable plan, deduct it as wages and include it in the employee's Form W-2. Ri 1040nr See Reimbursement of Travel, Meals, and Entertainment in chapter 11 for more information about deducting reimbursements and an explanation of accountable and nonaccountable plans. Ri 1040nr Sick and Vacation Pay Sick pay. Ri 1040nr   You can deduct amounts you pay to your employees for sickness and injury, including lump-sum amounts, as wages. Ri 1040nr However, your deduction is limited to amounts not compensated by insurance or other means. Ri 1040nr Vacation pay. Ri 1040nr   Vacation pay is an employee benefit. Ri 1040nr It includes amounts paid for unused vacation leave. Ri 1040nr You can deduct vacation pay only in the tax year in which the employee actually receives it. Ri 1040nr This rule applies regardless of whether you use the cash or accrual method of accounting. Ri 1040nr Prev  Up  Next   Home   More Online Publications
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SOI Tax Stats - Personal Wealth Statistics

Return to the Tax Stats home page

What is the Personal Wealth Study?

The Personal Wealth Study uses information reported on Form 706, United States Estate (and Generation Skipping Transfer) Tax Return, to estimate the wealth of the living population. These estimates, based on the Estate Multiplier technique, appear every three years. The estimates are limited to that segment of the population for whom personal wealth is at least equal to the estate tax filing threshold in effect for the estimation period.

For information about selected terms and concepts and a description of the data sources and limitations, please visit Personal Wealth Study Metadata.

SOI Data Tables SOI Bulletin Articles Research Papers
 
Additional Information

Compendium of Federal 
Estate Tax & Personal 
Wealth Studies: Volume 1
 

Compendium of Federal 
Transfer Tax & Personal 
Wealth Studies: Volume 2

 

SOI Data Tables

Included Items: Total and selected assets, debts and mortgages, and net worth.

All Top Wealthholders by Size of Net Worth

Female Top Wealthholders by Size of Net Worth

Male Top Wealthholders by Size of Net Worth

Female Top Wealthholders by Age

Male Top Wealthholders by Age

Top Wealthholders by State of Residence


SOI Bulletin Articles

The articles below contain detailed analysis, including some year-to-year comparisons, as well as an explanation of estimation methodology and data tables. All of the articles are in .pdf format. These articles were also published in the quarterly SOI Bulletin.

2007      2004      2001     1998     1995     1992      1989      1986

The Underlying Methodology of the Estate Multiplier Technique Recent Improvements for 1989

Preliminary Estimates of Personal Wealth, 1982: Composition of Assets

Estimates of Personal Wealth, 1982: A Second Look

Trends in Personal Wealth, 1976-1981


Research Papers

The following are research papers written by SOI analysts.  The papers below are in .pdf format.

Consider the Source: Differences in Estimates of Income and Wealth From Survey and Tax Data
Author: Barry W. Johnson                 Kevin Moore
Statistics of Income, IRS     Federal Reserve Board of Governors
This paper examines the comparability of administrative and survey data, focusing specifically on data from Federal income and estate tax returns collected by the Statistics of Income (SOI) Division of the U.S. Internal Revenue Service (IRS), and the Survey of Consumer Finances (SCF) sponsored by the Board of Governors of the Federal Reserve System.

 

Updating Techniques for Estimating Wealth from Federal Estate Tax Returns
Author: Barry W. Johnson
Statistics of Income, IRS
This paper documents the history and development of the estate multiplier technique, a statistical methodology for estimating the wealth of a living population using data reported on returns filed for wealthy decedents, with an emphasis on recent methodological improvements.

 


Additional Information

The Federal Reserve Board of Governor's triennial Survey of Consumer Finances, which is supported by the Statistics of Income Division, provides estimates of household finances, including wealth, income, and debts.  Analyses of survey results, as well as public-use data sets, can be accessed online at through the Federal Reserve.
 


File readers

Bulletin articles and research papers are available in Adobe PDF format, which requires the free Adobe Acrobat reader to view and print these files.  Data tables are available in Excel version 4.0.  A free Excel viewer is available for download, if needed.

Return to the Tax Stats home page

Page Last Reviewed or Updated: 31-Jan-2014

The Ri 1040nr

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