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Sample 1040ez

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Sample 1040ez

Sample 1040ez 8. Sample 1040ez   Distributions and Rollovers Table of Contents DistributionsMinimum Required Distributions No Special 10-Year Tax Option Transfer of Interest in 403(b) ContractAfter-tax contributions. Sample 1040ez Permissive service credit. Sample 1040ez Tax-Free RolloversHardship exception to rollover rules. Sample 1040ez Eligible retirement plans. Sample 1040ez Nonqualifying distributions. Sample 1040ez Second rollover. Sample 1040ez Gift Tax Distributions Permissible distributions. Sample 1040ez   Generally, a distribution cannot be made from a 403(b) account until the employee: Reaches age 59½, Has a severance from employment, Dies, Becomes disabled, In the case of elective deferrals, encounters financial hardship, or Has a qualified reservist distribution. Sample 1040ez In most cases, the payments you receive or that are made available to you under your 403(b) account are taxable in full as ordinary income. Sample 1040ez In general, the same tax rules apply to distributions from 403(b) plans that apply to distributions from other retirement plans. Sample 1040ez These rules are explained in Publication 575. Sample 1040ez Publication 575 also discusses the additional tax on early distributions from retirement plans. Sample 1040ez Retired public safety officers. Sample 1040ez   If you are an eligible retired public safety officer, distributions of up to $3,000, made directly from your 403(b) plan to pay accident, health, or long-term care insurance, are not included in your taxable income. Sample 1040ez The premiums can be for you, your spouse, or your dependents. Sample 1040ez   A public safety officer is a law enforcement officer, fire fighter, chaplain, or member of a rescue squad or ambulance crew. Sample 1040ez   For additional information, see Publication 575. Sample 1040ez Distribution for active reservist. Sample 1040ez   The 10% penalty for early withdrawals will not apply to a qualified reservist distribution attributable to elective deferrals from a 403(b) plan. Sample 1040ez A qualified reservist distribution is a distribution that is made: To an individual who is a reservist or national guardsman and who was ordered or called to active duty for a period in excess of 179 days or for an indefinite period; and During the period beginning on the date of the order or call to duty and ending at the close of the active duty period. Sample 1040ez Minimum Required Distributions You must receive all, or at least a certain minimum, of your interest accruing after 1986 in the 403(b) plan by April 1 of the calendar year following the later of the calendar year in which you become age 70½, or the calendar year in which you retire. Sample 1040ez Check with your employer, plan administrator, or provider to find out whether this rule also applies to pre-1987 accruals. Sample 1040ez If not, a minimum amount of these accruals must begin to be distributed by the later of the end of the calendar year in which you reach age 75 or April 1 of the calendar year following retirement. Sample 1040ez For each year thereafter, the minimum distribution must be made by the last day of the year. Sample 1040ez If you do not receive the required minimum distribution, you are subject to a nondeductible 50% excise tax on the difference between the required minimum distribution and the amount actually distributed. Sample 1040ez No Special 10-Year Tax Option A distribution from a 403(b) plan does not qualify as a lump-sum distribution. Sample 1040ez This means you cannot use the special 10-year tax option to calculate the taxable portion of a 403(b) distribution. Sample 1040ez For more information, see Publication 575. Sample 1040ez Transfer of Interest in 403(b) Contract Contract exchanges. Sample 1040ez   If you transfer all or part of your interest from a 403(b) contract to another 403(b) contract (held in the same plan), the transfer is tax free, and is referred to as a contract exchange. Sample 1040ez This was previously known as a 90-24 transfer. Sample 1040ez A contract exchange is similar to a 90-24 transfer with one major difference. Sample 1040ez Previously, you were able to accomplish the transfer without your employer’s involvement. Sample 1040ez After September 24, 2007, all such transfers are accomplished through a contract exchange requiring your employer’s involvement. Sample 1040ez In addition, the plan must provide for the exchange and the transferred interest must be subject to the same or stricter distribution restrictions. Sample 1040ez Finally, your accumulated benefit after the exchange must be equal to what it was before the exchange. Sample 1040ez   Transfers that do not satisfy this rule are plan distributions and are generally taxable as ordinary income. Sample 1040ez Plan-to-plan transfers. Sample 1040ez   You may also transfer part or all of your interest from a 403(b) plan to another 403(b) plan if you are an employee of (or were formerly employed by) the employer of the plan to which you would like to transfer. Sample 1040ez Both the initial plan and the receiving plan must provide for transfers. Sample 1040ez Your accumulated benefit after the transfer must be at least equal to what it was before the transfer. Sample 1040ez The new plan’s restrictions on distributions must be the same or stricter than those of the original plan. Sample 1040ez Tax-free transfers for certain cash distributions. Sample 1040ez   A tax-free transfer may also apply to a cash distribution of your 403(b) account from an insurance company that is subject to a rehabilitation, conservatorship, insolvency, or similar state proceeding. Sample 1040ez To receive tax-free treatment, you must do all of the following: Withdraw all the cash to which you are entitled in full settlement of your contract rights or, if less, the maximum permitted by the state. Sample 1040ez Reinvest the cash distribution in a single policy or contract issued by another insurance company or in a single custodial account subject to the same or stricter distribution restrictions as the original contract not later than 60 days after you receive the cash distribution. Sample 1040ez Assign all future distribution rights to the new contract or account for investment in that contract or account if you received an amount that is less than what you are entitled to because of state restrictions. Sample 1040ez   In addition to the preceding requirements, you must provide the new insurer with a written statement containing all of the following information: The gross amount of cash distributed under the old contract. Sample 1040ez The amount of cash reinvested in the new contract. Sample 1040ez Your investment in the old contract on the date you receive your first cash distribution. Sample 1040ez   Also, you must attach the following items to your timely filed income tax return in the year you receive the first distribution of cash. Sample 1040ez A copy of the statement you gave the new insurer. Sample 1040ez A statement that includes: The words ELECTION UNDER REV. Sample 1040ez PROC. Sample 1040ez 92-44, The name of the company that issued the new contract, and The new policy number. Sample 1040ez Direct trustee-to-trustee transfer. Sample 1040ez   If you make a direct trustee-to-trustee transfer, from your governmental 403(b) account to a defined benefit governmental plan, it may not be includible in gross income. Sample 1040ez   The transfer amount is not includible in gross income if it is made to: Purchase permissive service credits, or Repay contributions and earnings that were previously refunded under a forfeiture of service credit under the plan, or under another plan maintained by a state or local government employer within the same state. Sample 1040ez After-tax contributions. Sample 1040ez   For distributions beginning after December 31, 2006, after-tax contributions can be rolled over between a 403(b) plan and a defined benefit plan, IRA, or a defined contribution plan. Sample 1040ez If the rollover is to or from a 403(b) plan, it must occur through a direct trustee-to-trustee transfer. Sample 1040ez Permissive service credit. Sample 1040ez   A permissive service credit is credit for a period of service recognized by a defined benefit governmental plan only if you voluntarily contribute to the plan an amount that does not exceed the amount necessary to fund the benefit attributable to the period of service and the amount contributed is in addition to the regular employee contribution, if any, under the plan. Sample 1040ez   A permissive service credit may also include service credit for up to 5 years where there is no performance of service, or service credited to provide an increased benefit for service credit which a participant is receiving under the plan. Sample 1040ez   Check with your plan administrator as to the type and extent of service that may be purchased by this transfer. Sample 1040ez Tax-Free Rollovers You can generally roll over tax free all or any part of a distribution from a 403(b) plan to a traditional IRA or a non-Roth eligible retirement plan, except for any nonqualifying distributions, described later. Sample 1040ez You may also roll over any part of a distribution from a 403(b) plan by converting it through a direct rollover, described below, to a Roth IRA. Sample 1040ez Conversion amounts are generally includible in your taxable income in the year of the distribution from your 403(b) account. Sample 1040ez See Publication 590 for more information about conversion into a Roth IRA. Sample 1040ez Note. Sample 1040ez A participant is required to roll over distribution amounts received within 60 days in order for the amount to be treated as nontaxable. Sample 1040ez Distribution amounts that are rolled over within the 60 days are not subject to the 10% early distribution penalty. Sample 1040ez Rollovers to and from 403(b) plans. Sample 1040ez   You can generally roll over tax free all or any part of a distribution from an eligible retirement plan to a 403(b) plan. Sample 1040ez Beginning January 1, 2008, distributions from tax-qualified retirement plans and tax-sheltered annuities can be converted by making a direct rollover into a Roth IRA subject to the restrictions that currently apply to rollovers from a traditional IRA into a Roth IRA. Sample 1040ez Converted amounts are generally includible in your taxable income in the year of the distribution from your 403(b) account. Sample 1040ez See Publication 590 for more information on conversion into a Roth IRA. Sample 1040ez   If a distribution includes both pre-tax contributions and after-tax contributions, the portion of the distribution that is rolled over is treated as consisting first of pre-tax amounts (contributions and earnings that would be includible in income if no rollover occurred). Sample 1040ez This means that if you roll over an amount that is at least as much as the pre-tax portion of the distribution, you do not have to include any of the distribution in income. Sample 1040ez   For more information on rollovers and eligible retirement plans, see Publication 575. Sample 1040ez If you roll over money or other property from a 403(b) plan to an eligible retirement plan, see Publication 575 for information about possible effects on later distributions from the eligible retirement plan. Sample 1040ez Hardship exception to rollover rules. Sample 1040ez   The IRS may waive the 60-day rollover period if the failure to waive such requirement would be against equity or good conscience, including cases of casualty, disaster, or other events beyond the reasonable control of an individual. Sample 1040ez   To obtain a hardship exception, you must apply to the IRS for a waiver of the 60-day rollover requirement. Sample 1040ez You apply for the waiver by following the general instructions used in requesting a letter ruling. Sample 1040ez These instructions are stated in Revenue Procedure 2013-4, 2013-1 I. Sample 1040ez R. Sample 1040ez B. Sample 1040ez 126 available at www. Sample 1040ez irs. Sample 1040ez gov/irb/2013-01_IRB/ar09. Sample 1040ez html, or see the latest annual update. Sample 1040ez You must also pay a user fee with the application. Sample 1040ez The user fee for a rollover that is less than $50,000 is $500. Sample 1040ez For rollovers that are $50,000 or more, see Revenue Procedure 2013-8, 2013-1 I. Sample 1040ez R. Sample 1040ez B. Sample 1040ez 237 available at www. Sample 1040ez irs. Sample 1040ez gov/irb/2013-01_IRB/ar13. Sample 1040ez html, or see the latest annual update. Sample 1040ez   In determining whether to grant a waiver, the IRS will consider all relevant facts and circumstances, including: Whether errors were made by the financial institution; Whether you were unable to complete the rollover due to death, disability, hospitalization, incarceration, restrictions imposed by a foreign country, or postal error; Whether you used the amount distributed (for example, in the case of payment by check, whether you cashed the check); and How much time has passed since the date of distribution. Sample 1040ez   For additional information on rollovers, see Publication 590. Sample 1040ez Eligible retirement plans. Sample 1040ez   The following are considered eligible retirement plans. Sample 1040ez Individual retirement arrangements. Sample 1040ez Roth IRA. Sample 1040ez 403(b) plans. Sample 1040ez Government eligible 457 plans. Sample 1040ez Qualified retirement plans. Sample 1040ez  If the distribution is from a designated Roth account, then the only eligible retirement plan is another designated Roth account or a Roth IRA. Sample 1040ez Nonqualifying distributions. Sample 1040ez   You cannot roll over tax free: Minimum required distributions (generally required to begin at age 70½), Substantially equal payments over your life or life expectancy, Substantially equal payments over the joint lives or life expectancies of your beneficiary and you, Substantially equal payments for a period of 10 years or more, Hardship distributions, or Corrective distributions of excess contributions or excess deferrals, and any income allocable to the excess, or excess annual additions and any allocable gains. Sample 1040ez Rollover of nontaxable amounts. Sample 1040ez    You may be able to roll over the nontaxable part of a distribution (such as your after-tax contributions) made to another eligible retirement plan, traditional IRA, or Roth IRA. Sample 1040ez The transfer must be made either through a direct rollover to an eligible plan that separately accounts for the taxable and nontaxable parts of the rollover or through a rollover to a traditional IRA or Roth IRA. Sample 1040ez   If you roll over only part of a distribution that includes both taxable and nontaxable amounts, the amount you roll over is treated as coming first from the taxable part of the distribution. Sample 1040ez Direct rollovers of 403(b) plan distributions. Sample 1040ez   You have the option of having your 403(b) plan make the rollover directly to a traditional IRA, Roth IRA, or new plan. Sample 1040ez Before you receive a distribution, your plan will give you information on this. Sample 1040ez It is generally to your advantage to choose this option because your plan will not withhold tax on the distribution if you choose it. Sample 1040ez Distribution received by you. Sample 1040ez   If you receive a distribution that qualifies to be rolled over, you can roll over all or any part of the distribution. Sample 1040ez Generally, you will receive only 80% of the distribution because 20% must be withheld. Sample 1040ez If you roll over only the 80% you receive, you must pay tax on the 20% you did not roll over. Sample 1040ez You can replace the 20% that was withheld with other money within the 60-day period to make a 100% rollover. Sample 1040ez Voluntary deductible contributions. Sample 1040ez   For tax years 1982 through 1986, employees could make deductible contributions to a 403(b) plan under the individual retirement arrangement (IRA) rules instead of deducting contributions to a traditional IRA. Sample 1040ez   If you made voluntary deductible contributions to a 403(b) plan under these traditional IRA rules, the distribution of all or part of the accumulated deductible contributions may be rolled over if it otherwise qualifies as a distribution you can roll over. Sample 1040ez Accumulated deductible contributions are the deductible contributions: Plus Income allocable to the contributions, Gain allocable to the contributions, and Minus Expenses and losses allocable to the contributions, and Distributions from the contributions, income, or gain. Sample 1040ez Excess employer contributions. Sample 1040ez   The portion of a distribution from a 403(b) plan transferred to a traditional IRA that was previously included in income as excess employer contributions (discussed earlier) is not an eligible rollover distribution. Sample 1040ez   Its transfer does not affect the rollover treatment of the eligible portion of the transferred amounts. Sample 1040ez However, the ineligible portion is subject to the traditional IRA contribution limits and may create an excess IRA contribution subject to a 6% excise tax (see chapter 1 of Publication 590). Sample 1040ez Qualified domestic relations order. Sample 1040ez   You may be able to roll over tax free all or any part of an eligible rollover distribution from a 403(b) plan that you receive under a qualified domestic relations order (QDRO). Sample 1040ez If you receive the interest in the 403(b) plan as an employee's spouse or former spouse under a QDRO, all of the rollover rules apply to you as if you were the employee. Sample 1040ez You can roll over your interest in the plan to a traditional IRA or another 403(b) plan. Sample 1040ez For more information on the treatment of an interest received under a QDRO, see Publication 575. Sample 1040ez Spouses of deceased employees. Sample 1040ez   If you are the spouse of a deceased employee, you can roll over the qualifying distribution attributable to the employee. Sample 1040ez You can make the rollover to any eligible retirement plan. Sample 1040ez   After you roll money and other property over from a 403(b) plan to an eligible retirement plan, and you take a distribution from that plan, you will not be eligible to receive the capital gain treatment or the special averaging treatment for the distribution. Sample 1040ez Second rollover. Sample 1040ez   If you roll over a qualifying distribution to a traditional IRA, you can, if certain conditions are satisfied, later roll the distribution into another 403(b) plan. Sample 1040ez For more information, see IRA as a holding account (conduit IRA) for rollovers to other eligible plans in chapter 1 of Publication 590. Sample 1040ez Nonspouse beneficiary. Sample 1040ez   A nonspouse beneficiary may make a direct rollover of a distribution from a 403(b) plan of a deceased participant if the rollover is a direct transfer to an inherited IRA established to receive the distribution. Sample 1040ez If the rollover is a direct trustee-to-trustee transfer to an IRA established to receive the distribution: The transfer will be treated as an eligible rollover distribution. Sample 1040ez The IRA will be considered an inherited account. Sample 1040ez The required minimum distribution rules that apply in instances where the participant dies before the entire interest is distributed will apply to the transferred IRA. Sample 1040ez    For more information on IRAs, see Publication 590. Sample 1040ez Frozen deposits. Sample 1040ez   The 60-day period usually allowed for completing a rollover is extended for any time that the amount distributed is a frozen deposit in a financial institution. Sample 1040ez The 60-day period cannot end earlier than 10 days after the deposit ceases to be a frozen deposit. Sample 1040ez   A frozen deposit is any deposit that on any day during the 60-day period cannot be withdrawn because: The financial institution is bankrupt or insolvent, or The state where the institution is located has placed limits on withdrawals because one or more banks in the state are (or are about to be) bankrupt or insolvent. Sample 1040ez Gift Tax If, by choosing or not choosing an election, or option, you provide an annuity for your beneficiary at or after your death, you may have made a taxable gift equal to the value of the annuity. Sample 1040ez Joint and survivor annuity. Sample 1040ez   If the gift is an interest in a joint and survivor annuity where only you and your spouse have the right to receive payments, the gift will generally be treated as qualifying for the unlimited marital deduction. Sample 1040ez More information. Sample 1040ez   For information on the gift tax, see Publication 559, Survivors, Executors, and Administrators. Sample 1040ez Prev  Up  Next   Home   More Online Publications
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The Sample 1040ez

Sample 1040ez 3. Sample 1040ez   Exclusions From Gross Income Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Resident AliensForeign Earned Income and Housing Amount Nonresident AliensInterest Income Dividend Income Services Performed for Foreign Employer Gambling Winnings From Dog or Horse Racing Gain From the Sale of Your Main Home Scholarships and Fellowship GrantsExpenses that do not qualify. Sample 1040ez Introduction Resident and nonresident aliens are allowed exclusions from gross income if they meet certain conditions. Sample 1040ez An exclusion from gross income is generally income you receive that is not included in your U. Sample 1040ez S. Sample 1040ez income and is not subject to U. Sample 1040ez S. Sample 1040ez tax. Sample 1040ez This chapter covers some of the more common exclusions allowed to resident and nonresident aliens. Sample 1040ez Topics - This chapter discusses: Nontaxable interest, Nontaxable dividends, Certain compensation paid by a foreign employer, Gain from sale of home, and Scholarships and fellowship grants. Sample 1040ez Useful Items - You may want to see: Publication 54 Tax Guide for U. Sample 1040ez S. Sample 1040ez Citizens and Resident Aliens Abroad 523 Selling Your Home See chapter 12 for information about getting these publications. Sample 1040ez Resident Aliens Resident aliens may be able to exclude the following items from their gross income. Sample 1040ez Foreign Earned Income and Housing Amount If you are physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months, you may qualify for the foreign earned income exclusion. Sample 1040ez The exclusion is $97,600 in 2013. Sample 1040ez In addition, you may be able to exclude or deduct certain foreign housing amounts. Sample 1040ez You may also qualify if you are a bona fide resident of a foreign country and you are a citizen or national of a country with which the United States has an income tax treaty. Sample 1040ez For more information, see Publication 54. Sample 1040ez Foreign country. Sample 1040ez    A foreign country is any territory under the sovereignty of a government other than that of the United States. Sample 1040ez   The term “foreign country” includes the country's territorial waters and airspace, but not international waters and the airspace above them. Sample 1040ez It also includes the seabed and subsoil of those submarine areas adjacent to the country's territorial waters over which it has exclusive rights under international law to explore and exploit the natural resources. Sample 1040ez   The term “foreign country” does not include U. Sample 1040ez S. Sample 1040ez possessions or territories. Sample 1040ez It does not include the Antarctic region. Sample 1040ez Nonresident Aliens Nonresident aliens can exclude the following items from their gross income. Sample 1040ez Interest Income Interest income that is not connected with a U. Sample 1040ez S. Sample 1040ez trade or business is excluded from income if it is from: Deposits (including certificates of deposit) with persons in the banking business, Deposits or withdrawable accounts with mutual savings banks, cooperative banks, credit unions, domestic building and loan associations, and other savings institutions chartered and supervised as savings and loan or similar associations under federal or state law (if the interest paid or credited can be deducted by the association), and Amounts held by an insurance company under an agreement to pay interest on them. Sample 1040ez State and local government obligations. Sample 1040ez   Interest on obligations of a state or political subdivision, the District of Columbia, or a U. Sample 1040ez S. Sample 1040ez possession, generally is not included in income. Sample 1040ez However, interest on certain private activity bonds, arbitrage bonds, and certain bonds not in registered form is included in income. Sample 1040ez Portfolio interest. Sample 1040ez   Interest and original issue discount that qualifies as portfolio interest is not subject to NRA withholding. Sample 1040ez To qualify as portfolio interest, the interest must be paid on obligations issued after July 18, 1984, and otherwise subject to NRA withholding. Sample 1040ez Note. Sample 1040ez For obligations issued after March 18, 2012, portfolio interest does not include interest paid on debt that is not in registered form. Sample 1040ez Before March 19, 2012, portfolio interest included interest on certain registered and nonregistered (bearer) bonds if the obligations meet the requirements described below. Sample 1040ez Obligations in registered form. Sample 1040ez   Portfolio interest includes interest paid on an obligation that is in registered form, and for which you have received documentation that the beneficial owner of the obligation is not a United States person. Sample 1040ez   Generally, an obligation is in registered form if: (i) the obligation is registered as to both principal and any stated interest with the issuer (or its agent) and any transfer of the obligation may be effected only by surrender of the old obligation and reissuance to the new holder; (ii) the right to principal and stated interest with respect to the obligation may be transferred only through a book entry system maintained by the issuer or its agent; or (iii) the obligation is registered as to both principal and stated interest with the issuer or its agent and can be transferred both by surrender and reissuance and through a book entry system. Sample 1040ez   An obligation that would otherwise be considered to be in registered form is not considered to be in registered form as of a particular time if it can be converted at any time in the future into an obligation that is not in registered form. Sample 1040ez For more information on whether obligations are considered to be in registered form, see Portfolio interest in Publication 515. Sample 1040ez Obligations not in registered form. Sample 1040ez    For obligations issued before March 19, 2012, interest on an obligation that is not in registered form (bearer obligation) is portfolio interest if the obligation is foreign-targeted. Sample 1040ez A bearer obligation is foreign-targeted if: There are arrangements to ensure that the obligation will be sold, or resold in connection with the original issue, only to a person who is not a United States person, Interest on the obligation is payable only outside the United States and its possessions, and The face of the obligation contains a statement that any United States person who holds the obligation will be subject to limits under the United States income tax laws. Sample 1040ez   Documentation is not required for interest on bearer obligations to qualify as portfolio interest. Sample 1040ez In some cases, however, you may need documentation for purposes of Form 1099 reporting and backup withholding. Sample 1040ez Interest that does not qualify as portfolio interest. Sample 1040ez   Payments to certain persons and payments of contingent interest do not qualify as portfolio interest. Sample 1040ez You must withhold at the statutory rate on such payments unless some other exception, such as a treaty provision, applies. Sample 1040ez Contingent interest. Sample 1040ez   Portfolio interest does not include contingent interest. Sample 1040ez Contingent interest is either of the following: Interest that is determined by reference to: Any receipts, sales, or other cash flow of the debtor or related person, Income or profits of the debtor or related person, Any change in value of any property of the debtor or a related person, or Any dividend, partnership distributions, or similar payments made by the debtor or a related person. Sample 1040ez For exceptions, see Internal Revenue Code section 871(h)(4)(C). Sample 1040ez Any other type of contingent interest that is identified by the Secretary of the Treasury in regulations. Sample 1040ez Related persons. Sample 1040ez   Related persons include the following. Sample 1040ez Members of a family, including only brothers, sisters, half-brothers, half-sisters, spouse, ancestors (parents, grandparents, etc. Sample 1040ez ), and lineal descendants (children, grandchildren, etc. Sample 1040ez ). Sample 1040ez Any person who is a party to any arrangement undertaken for the purpose of avoiding the contingent interest rules. Sample 1040ez Certain corporations, partnerships, and other entities. Sample 1040ez For details, see Nondeductible Loss in chapter 2 of Publication 544. Sample 1040ez Exception for existing debt. Sample 1040ez   Contingent interest does not include interest paid or accrued on any debt with a fixed term that was issued: On or before April 7, 1993, or After April 7, 1993, pursuant to a written binding contract in effect on that date and at all times thereafter before that debt was issued. Sample 1040ez Dividend Income The following dividend income is exempt from the 30% tax. Sample 1040ez Certain dividends paid by foreign corporations. Sample 1040ez   There is no 30% tax on U. Sample 1040ez S. Sample 1040ez source dividends you receive from a foreign corporation. Sample 1040ez See Second exception under Dividends in chapter 2 for how to figure the amount of U. Sample 1040ez S. Sample 1040ez source dividends. Sample 1040ez Certain interest-related dividends. Sample 1040ez   There is no 30% tax on interest-related dividends from sources within the United States that you receive from a mutual fund or other regulated investment company in 2013. Sample 1040ez The mutual fund will designate in writing which dividends are interest-related dividends. Sample 1040ez Certain short-term capital gain dividends. Sample 1040ez   There may not be any 30% tax on certain short-term capital gain dividends from sources within the United States that you receive from a mutual fund or other regulated investment company. Sample 1040ez The mutual fund will designate in writing which dividends are short-term capital gain dividends. Sample 1040ez This tax relief will not apply to you if you are present in the United States for 183 days or more during your tax year. Sample 1040ez Services Performed for Foreign Employer If you were paid by a foreign employer, your U. Sample 1040ez S. Sample 1040ez source income may be exempt from U. Sample 1040ez S. Sample 1040ez tax, but only if you meet one of the situations discussed next. Sample 1040ez Employees of foreign persons, organizations, or offices. Sample 1040ez   Income for personal services performed in the United States as a nonresident alien is not considered to be from U. Sample 1040ez S. Sample 1040ez sources and is tax exempt if you meet all three of the following conditions. Sample 1040ez You perform personal services as an employee of or under a contract with a nonresident alien individual, foreign partnership, or foreign corporation, not engaged in a trade or business in the United States; or you work for an office or place of business maintained in a foreign country or possession of the United States by a U. Sample 1040ez S. Sample 1040ez corporation, a U. Sample 1040ez S. Sample 1040ez partnership, or a U. Sample 1040ez S. Sample 1040ez citizen or resident. Sample 1040ez You perform these services while you are a nonresident alien temporarily present in the United States for a period or periods of not more than a total of 90 days during the tax year. Sample 1040ez Your pay for these services is not more than $3,000. Sample 1040ez If you do not meet all three conditions, your income from personal services performed in the United States is U. Sample 1040ez S. Sample 1040ez source income and is taxed according to the rules in chapter 4. Sample 1040ez   If your pay for these services is more than $3,000, the entire amount is income from a trade or business within the United States. Sample 1040ez To find if your pay is more than $3,000, do not include any amounts you get from your employer for advances or reimbursements of business travel expenses, if you were required to and did account to your employer for those expenses. Sample 1040ez If the advances or reimbursements are more than your expenses, include the excess in your pay for these services. Sample 1040ez   A day means a calendar day during any part of which you are physically present in the United States. Sample 1040ez Example 1. Sample 1040ez During 2013, Henry Smythe, a nonresident alien from a nontreaty country, worked for an overseas office of a U. Sample 1040ez S. Sample 1040ez partnership. Sample 1040ez Henry, who uses the calendar year as his tax year, was temporarily present in the United States for 60 days during 2013 performing personal services for the overseas office of the partnership. Sample 1040ez That office paid him a total gross salary of $2,800 for those services. Sample 1040ez During 2013, he was not engaged in a trade or business in the United States. Sample 1040ez The salary is not considered U. Sample 1040ez S. Sample 1040ez source income and is exempt from U. Sample 1040ez S. Sample 1040ez tax. Sample 1040ez Example 2. Sample 1040ez The facts are the same as in Example 1, except that Henry's total gross salary for the services performed in the United States during 2013 was $4,500. Sample 1040ez He received $2,875 in 2013, and $1,625 in 2014. Sample 1040ez During 2013, he was engaged in a trade or business in the United States because the compensation for his personal services in the United States was more than $3,000. Sample 1040ez Henry's salary is U. Sample 1040ez S. Sample 1040ez source income and is taxed under the rules in chapter 4. Sample 1040ez Crew members. Sample 1040ez   Compensation for services performed by a nonresident alien in connection with the individual's temporary presence in the United States as a regular crew member of a foreign vessel (for example, a boat or ship) engaged in transportation between the United States and a foreign country or U. Sample 1040ez S. Sample 1040ez possession is not U. Sample 1040ez S. Sample 1040ez source income and is exempt from U. Sample 1040ez S. Sample 1040ez tax. Sample 1040ez This exemption does not apply to compensation for services performed on foreign aircraft. Sample 1040ez Students and exchange visitors. Sample 1040ez   Nonresident alien students and exchange visitors present in the United States under “F,” “J,” or “Q” visas can exclude from gross income pay received from a foreign employer. Sample 1040ez   This group includes bona fide students, scholars, trainees, teachers, professors, research assistants, specialists, or leaders in a field of specialized knowledge or skill, or persons of similar description. Sample 1040ez It also includes the alien's spouse and minor children if they come with the alien or come later to join the alien. Sample 1040ez   A nonresident alien temporarily present in the United States under a “J” visa includes an alien individual entering the United States as an exchange visitor under the Mutual Educational and Cultural Exchange Act of 1961. Sample 1040ez Foreign employer. Sample 1040ez   A foreign employer is: A nonresident alien individual, foreign partnership, or foreign corporation, or An office or place of business maintained in a foreign country or in a U. Sample 1040ez S. Sample 1040ez possession by a U. Sample 1040ez S. Sample 1040ez corporation, a U. Sample 1040ez S. Sample 1040ez partnership, or an individual who is a U. Sample 1040ez S. Sample 1040ez citizen or resident. Sample 1040ez   The term “foreign employer” does not include a foreign government. Sample 1040ez Pay from a foreign government that is exempt from U. Sample 1040ez S. Sample 1040ez income tax is discussed in chapter 10. Sample 1040ez Income from certain annuities. Sample 1040ez   Do not include in income any annuity received under a qualified annuity plan or from a qualified trust exempt from U. Sample 1040ez S. Sample 1040ez income tax if you meet both of the following conditions. Sample 1040ez You receive the annuity only because: You performed personal services outside the United States while you were a nonresident alien, or You performed personal services inside the United States while you were a nonresident alien and you met the three conditions, described earlier, under Employees of foreign persons, organizations, or offices . Sample 1040ez At the time the first amount is paid as an annuity under the plan (or by the trust), 90% or more of the employees for whom contributions or benefits are provided under the annuity plan (or under the plan of which the trust is a part) are U. Sample 1040ez S. Sample 1040ez citizens or residents. Sample 1040ez   If the annuity qualifies under condition (1) but not condition (2) above, you do not have to include the amount in income if: You are a resident of a country that gives a substantially equal exclusion to U. Sample 1040ez S. Sample 1040ez citizens and residents, or You are a resident of a beneficiary developing country under Title V of the Trade Act of 1974. Sample 1040ez   If you are not sure whether the annuity is from a qualified annuity plan or qualified trust, ask the person who made the payment. Sample 1040ez Income affected by treaties. Sample 1040ez   Income of any kind that is exempt from U. Sample 1040ez S. Sample 1040ez tax under a treaty to which the United States is a party is excluded from your gross income. Sample 1040ez Income on which the tax is only limited by treaty, however, is included in gross income. Sample 1040ez See chapter 9. Sample 1040ez Gambling Winnings From Dog or Horse Racing You can exclude from your gross income winnings from legal wagers initiated outside the United States in a parimutuel pool with respect to a live horse or dog race in the United States. Sample 1040ez Gain From the Sale of Your Main Home If you sold your main home, you may be able to exclude up to $250,000 of the gain on the sale of your home. Sample 1040ez If you are married and file a joint return, you may be able to exclude up to $500,000. Sample 1040ez For information on the requirements for this exclusion, see Publication 523. Sample 1040ez This exclusion does not apply to nonresident aliens who are subject to the expatriation tax rules discussed in chapter 4. Sample 1040ez Scholarships and Fellowship Grants If you are a candidate for a degree, you may be able to exclude from your income part or all of the amounts you receive as a qualified scholarship. Sample 1040ez The rules discussed here apply to both resident and nonresident aliens. Sample 1040ez If a nonresident alien receives a grant that is not from U. Sample 1040ez S. Sample 1040ez sources, it is not subject to U. Sample 1040ez S. Sample 1040ez tax. Sample 1040ez See Scholarships, Grants, Prizes, and Awards in chapter 2 to determine whether your grant is from U. Sample 1040ez S. Sample 1040ez sources. Sample 1040ez A scholarship or fellowship is excludable from income only if: You are a candidate for a degree at an eligible educational institution, and You use the scholarship or fellowship to pay qualified education expenses. Sample 1040ez Candidate for a degree. Sample 1040ez   You are a candidate for a degree if you: Attend a primary or secondary school or are pursuing a degree at a college or university, or Attend an accredited educational institution that is authorized to provide: A program that is acceptable for full credit toward a bachelor's or higher degree, or A program of training to prepare students for gainful employment in a recognized occupation. Sample 1040ez Eligible educational institution. Sample 1040ez   An eligible educational institution is one that maintains a regular faculty and curriculum and normally has a regularly enrolled body of students in attendance at the place where it carries on its educational activities. Sample 1040ez Qualified education expenses. Sample 1040ez   These are expenses for: Tuition and fees required to enroll at or attend an eligible educational institution, and Course-related expenses, such as fees, books, supplies, and equipment that are required for the courses at the eligible educational institution. Sample 1040ez These items must be required of all students in your course of instruction. Sample 1040ez However, in order for these to be qualified education expenses, the terms of the scholarship or fellowship cannot require that it be used for other purposes, such as room and board, or specify that it cannot be used for tuition or course-related expenses. Sample 1040ez Expenses that do not qualify. Sample 1040ez   Qualified education expenses do not include the cost of: Room and board, Travel, Research, Clerical help, or Equipment and other expenses that are not required for enrollment in or attendance at an eligible educational institution. Sample 1040ez This is true even if the fee must be paid to the institution as a condition of enrollment or attendance. Sample 1040ez Scholarship or fellowship amounts used to pay these costs are taxable. Sample 1040ez Amounts used to pay expenses that do not qualify. Sample 1040ez   A scholarship amount used to pay any expense that does not qualify is taxable, even if the expense is a fee that must be paid to the institution as a condition of enrollment or attendance. Sample 1040ez Payment for services. Sample 1040ez   You cannot exclude from income the portion of any scholarship, fellowship, or tuition reduction that represents payment for past, present, or future teaching, research, or other services. Sample 1040ez This is true even if all candidates for a degree are required to perform the services as a condition for receiving the degree. Sample 1040ez Example. Sample 1040ez On January 7, Maria Gomez is notified of a scholarship of $2,500 for the spring semester. Sample 1040ez As a condition for receiving the scholarship, Maria must serve as a part-time teaching assistant. Sample 1040ez Of the $2,500 scholarship, $1,000 represents payment for her services. Sample 1040ez Assuming that Maria meets all other conditions, she can exclude no more than $1,500 from income as a qualified scholarship. Sample 1040ez Prev  Up  Next   Home   More Online Publications