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Tax Act Online 2009

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Tax Act Online 2009

Tax act online 2009 Publication 542 - Main Content Table of Contents Businesses Taxed as CorporationsPersonal services. Tax act online 2009 Employee-owners. Tax act online 2009 Other rules. Tax act online 2009 Other rules. Tax act online 2009 Property Exchanged for StockNonqualified preferred stock. Tax act online 2009 Liabilities. Tax act online 2009 Election to reduce basis. Tax act online 2009 Capital Contributions Filing and Paying Income TaxesIncome Tax Return Penalties Estimated Tax U. Tax act online 2009 S. Tax act online 2009 Real Property Interest Accounting MethodsSection 481(a) adjustment. Tax act online 2009 Accounting Periods Recordkeeping Income, Deductions, and Special ProvisionsCosts of Going Into Business Related Persons Income From Qualifying Shipping Activities Election to Expense Qualified Refinery Property Deduction to Comply With EPA Sulfur Regulations Energy-Efficient Commercial Building Property Deduction Corporate Preference Items Dividends-Received Deduction Extraordinary Dividends Below-Market Loans Charitable Contributions Capital Losses Net Operating Losses At-Risk Limits Passive Activity Limits Figuring TaxTax Rate Schedule Alternative Minimum Tax (AMT) Credits Recapture Taxes Accumulated Earnings Tax Distributions to ShareholdersMoney or Property Distributions Distributions of Stock or Stock Rights Constructive Distributions Reporting Dividends and Other Distributions How To Get Tax Help Businesses Taxed as Corporations The rules you must use to determine whether a business is taxed as a corporation changed for businesses formed after 1996. Tax act online 2009 Business formed before 1997. Tax act online 2009   A business formed before 1997 and taxed as a corporation under the old rules will generally continue to be taxed as a corporation. Tax act online 2009 Business formed after 1996. Tax act online 2009   The following businesses formed after 1996 are taxed as corporations. Tax act online 2009 A business formed under a federal or state law that refers to it as a corporation, body corporate, or body politic. Tax act online 2009 A business formed under a state law that refers to it as a joint-stock company or joint-stock association. Tax act online 2009 An insurance company. Tax act online 2009 Certain banks. Tax act online 2009 A business wholly owned by a state or local government. Tax act online 2009 A business specifically required to be taxed as a corporation by the Internal Revenue Code (for example, certain publicly traded partnerships). Tax act online 2009 Certain foreign businesses. Tax act online 2009 Any other business that elects to be taxed as a corporation. Tax act online 2009 For example, a limited liability company (LLC) can elect to be treated as an association taxable as a corporation by filing Form 8832, Entity Classification Election. Tax act online 2009 For more information about LLCs, see Publication 3402, Taxation of Limited Liability Companies. Tax act online 2009 S corporations. Tax act online 2009   Some corporations may meet the qualifications for electing to be S corporations. Tax act online 2009 For information on S corporations, see the instructions for Form 1120S, U. Tax act online 2009 S. Tax act online 2009 Income Tax Return for an S Corporation. Tax act online 2009 Personal service corporations. Tax act online 2009   A corporation is a personal service corporation if it meets all of the following requirements. Tax act online 2009 Its principal activity during the “testing period” is performing personal services (defined later). Tax act online 2009 Generally, the testing period for any tax year is the prior tax year. Tax act online 2009 If the corporation has just been formed, the testing period begins on the first day of its tax year and ends on the earlier of: The last day of its tax year, or The last day of the calendar year in which its tax year begins. Tax act online 2009 Its employee-owners substantially perform the services in (1), above. Tax act online 2009 This requirement is met if more than 20% of the corporation's compensation cost for its activities of performing personal services during the testing period is for personal services performed by employee-owners. Tax act online 2009 Its employee-owners own more than 10% of the fair market value of its outstanding stock on the last day of the testing period. Tax act online 2009 Personal services. Tax act online 2009   Personal services include any activity performed in the fields of accounting, actuarial science, architecture, consulting, engineering, health (including veterinary services), law, and the performing arts. Tax act online 2009 Employee-owners. Tax act online 2009   A person is an employee-owner of a personal service corporation if both of the following apply. Tax act online 2009 He or she is an employee of the corporation or performs personal services for, or on behalf of, the corporation (even if he or she is an independent contractor for other purposes) on any day of the testing period. Tax act online 2009 He or she owns any stock in the corporation at any time during the testing period. Tax act online 2009 Other rules. Tax act online 2009   For other rules that apply to personal service corporations see Accounting Periods, later. Tax act online 2009 Closely held corporations. Tax act online 2009   A corporation is closely held if all of the following apply. Tax act online 2009 It is not a personal service corporation. Tax act online 2009 At any time during the last half of the tax year, more than 50% of the value of its outstanding stock is, directly or indirectly, owned by or for five or fewer individuals. Tax act online 2009 “Individual” includes certain trusts and private foundations. Tax act online 2009 Other rules. Tax act online 2009   For the at-risk rules that apply to closely held corporations, seeAt-Risk Limits, later. Tax act online 2009 Property Exchanged for Stock If you transfer property (or money and property) to a corporation in exchange for stock in that corporation (other than nonqualified preferred stock, described later), and immediately afterward you are in control of the corporation, the exchange is usually not taxable. Tax act online 2009 This rule applies both to individuals and to groups who transfer property to a corporation. Tax act online 2009 It also applies whether the corporation is being formed or is already operating. Tax act online 2009 It does not apply in the following situations. Tax act online 2009 The corporation is an investment company. Tax act online 2009 You transfer the property in a bankruptcy or similar proceeding in exchange for stock used to pay creditors. Tax act online 2009 The stock is received in exchange for the corporation's debt (other than a security) or for interest on the corporation's debt (including a security) that accrued while you held the debt. Tax act online 2009 Both the corporation and any person involved in a nontaxable exchange of property for stock must attach to their income tax returns a complete statement of all facts pertinent to the exchange. Tax act online 2009 For more information, see section 1. Tax act online 2009 351-3 of the Regulations. Tax act online 2009 Control of a corporation. Tax act online 2009   To be in control of a corporation, you or your group of transferors must own, immediately after the exchange, at least 80% of the total combined voting power of all classes of stock entitled to vote and at least 80% of the outstanding shares of each class of nonvoting stock. Tax act online 2009 Example 1. Tax act online 2009 You and Bill Jones buy property for $100,000. Tax act online 2009 You both organize a corporation when the property has a fair market value of $300,000. Tax act online 2009 You transfer the property to the corporation for all its authorized capital stock, which has a par value of $300,000. Tax act online 2009 No gain is recognized by you, Bill, or the corporation. Tax act online 2009 Example 2. Tax act online 2009 You and Bill transfer the property with a basis of $100,000 to a corporation in exchange for stock with a fair market value of $300,000. Tax act online 2009 This represents only 75% of each class of stock of the corporation. Tax act online 2009 The other 25% was already issued to someone else. Tax act online 2009 You and Bill recognize a taxable gain of $200,000 on the transaction. Tax act online 2009 Services rendered. Tax act online 2009   The term property does not include services rendered or to be rendered to the issuing corporation. Tax act online 2009 The value of stock received for services is income to the recipient. Tax act online 2009 Example. Tax act online 2009 You transfer property worth $35,000 and render services valued at $3,000 to a corporation in exchange for stock valued at $38,000. Tax act online 2009 Right after the exchange, you own 85% of the outstanding stock. Tax act online 2009 No gain is recognized on the exchange of property. Tax act online 2009 However, you recognize ordinary income of $3,000 as payment for services you rendered to the corporation. Tax act online 2009 Property of relatively small value. Tax act online 2009   The term property does not include property of a relatively small value when it is compared to the value of stock and securities already owned or to be received for services by the transferor if the main purpose of the transfer is to qualify for the nonrecognition of gain or loss by other transferors. Tax act online 2009   Property transferred will not be considered to be of relatively small value if its fair market value is at least 10% of the fair market value of the stock and securities already owned or to be received for services by the transferor. Tax act online 2009 Stock received in disproportion to property transferred. Tax act online 2009   If a group of transferors exchange property for corporate stock, each transferor does not have to receive stock in proportion to his or her interest in the property transferred. Tax act online 2009 If a disproportionate transfer takes place, it will be treated for tax purposes in accordance with its true nature. Tax act online 2009 It may be treated as if the stock were first received in proportion and then some of it used to make gifts, pay compensation for services, or satisfy the transferor's obligations. Tax act online 2009 Money or other property received. Tax act online 2009   If, in an otherwise nontaxable exchange of property for corporate stock, you also receive money or property other than stock, you may have to recognize gain. Tax act online 2009 You must recognize gain only up to the amount of money plus the fair market value of the other property you receive. Tax act online 2009 The rules for figuring the recognized gain in this situation generally follow those for a partially nontaxable exchange discussed in Publication 544 under Like-Kind Exchanges. Tax act online 2009 If the property you give up includes depreciable property, the recognized gain may have to be reported as ordinary income from depreciation. Tax act online 2009 See chapter 3 of Publication 544. Tax act online 2009 No loss is recognized. Tax act online 2009 Nonqualified preferred stock. Tax act online 2009   Nonqualified preferred stock is treated as property other than stock. Tax act online 2009 Generally, it is preferred stock with any of the following features. Tax act online 2009 The holder has the right to require the issuer or a related person to redeem or buy the stock. Tax act online 2009 The issuer or a related person is required to redeem or buy the stock. Tax act online 2009 The issuer or a related person has the right to redeem or buy the stock and, on the issue date, it is more likely than not that the right will be exercised. Tax act online 2009 The dividend rate on the stock varies with reference to interest rates, commodity prices, or similar indices. Tax act online 2009 For a detailed definition of nonqualified preferred stock, see section 351(g)(2) of the Internal Revenue Code. Tax act online 2009 Liabilities. Tax act online 2009   If the corporation assumes your liabilities, the exchange generally is not treated as if you received money or other property. Tax act online 2009 There are two exceptions to this treatment. Tax act online 2009 If the liabilities the corporation assumes are more than your adjusted basis in the property you transfer, gain is recognized up to the difference. Tax act online 2009 However, if the liabilities assumed give rise to a deduction when paid, such as a trade account payable or interest, no gain is recognized. Tax act online 2009 If there is no good business reason for the corporation to assume your liabilities, or if your main purpose in the exchange is to avoid federal income tax, the assumption is treated as if you received money in the amount of the liabilities. Tax act online 2009 For more information on the assumption of liabilities, see section 357(d) of the Internal Revenue Code. Tax act online 2009 Example. Tax act online 2009 You transfer property to a corporation for stock. Tax act online 2009 Immediately after the transfer, you control the corporation. Tax act online 2009 You also receive $10,000 in the exchange. Tax act online 2009 Your adjusted basis in the transferred property is $20,000. Tax act online 2009 The stock you receive has a fair market value (FMV) of $16,000. Tax act online 2009 The corporation also assumes a $5,000 mortgage on the property for which you are personally liable. Tax act online 2009 Gain is realized as follows. Tax act online 2009 FMV of stock received $16,000 Cash received 10,000 Liability assumed by corporation 5,000 Total received $31,000 Minus: Adjusted basis of property transferred 20,000 Realized gain $11,000   The liability assumed is not treated as money or other property. Tax act online 2009 The recognized gain is limited to $10,000, the cash received. Tax act online 2009 Loss on exchange. Tax act online 2009   If you have a loss from an exchange and own, directly or indirectly, more than 50% of the corporation's stock, you cannot deduct the loss. Tax act online 2009 For more information, see Nondeductible Loss under Sales and Exchanges Between Related Persons in chapter 2 of Publication 544. Tax act online 2009 Basis of stock or other property received. Tax act online 2009   The basis of the stock you receive is generally the adjusted basis of the property you transfer. Tax act online 2009 Increase this amount by any amount treated as a dividend, plus any gain recognized on the exchange. Tax act online 2009 Decrease this amount by any cash you received, the fair market value of any other property you received, and any loss recognized on the exchange. Tax act online 2009 Also decrease this amount by the amount of any liability the corporation or another party to the exchange assumed from you, unless payment of the liability gives rise to a deduction when paid. Tax act online 2009    Further decreases may be required when the corporation or another party to the exchange assumes from you a liability that gives rise to a deduction when paid, if the basis of the stock would otherwise be higher than its fair market value on the date of the exchange. Tax act online 2009 This rule does not apply if the entity assuming the liability acquired either substantially all of the assets or the trade or business with which the liability is associated. Tax act online 2009 The basis of any other property you receive is its fair market value on the date of the trade. Tax act online 2009 Basis of property transferred. Tax act online 2009   A corporation that receives property from you in exchange for its stock generally has the same basis you had in the property, increased by any gain you recognized on the exchange. Tax act online 2009 However, the increase for the gain recognized may be limited. Tax act online 2009 For more information, see section 362 of the Internal Revenue Code. Tax act online 2009 Election to reduce basis. Tax act online 2009   In a section 351 transaction, if the adjusted basis of the property transferred exceeds the property's fair market value, the transferor and transferee may make an irrevocable election to treat the basis of the stock received by the transferor as having a basis equal to the fair market value of the property transferred. Tax act online 2009 The transferor and transferee make this election by attaching a statement to their tax returns filed by the due date (including extensions) for the tax year in which the transaction occurred. Tax act online 2009 However, if the transferor makes the election by including the certification provided in Notice 2005-70, 2005-41, I. Tax act online 2009 R. Tax act online 2009 B. Tax act online 2009 694, on or with its tax return filed by the due date (including extensions), then no election need be made by the transferee. Tax act online 2009    For more information on making this election, see section 362(e)(2)(C) of the Internal Revenue Code, and Notice 2005-70. Tax act online 2009 Capital Contributions This section explains the tax treatment of contributions from shareholders and nonshareholders. Tax act online 2009 Paid-in capital. Tax act online 2009   Contributions to the capital of a corporation, whether or not by shareholders, are paid-in capital. Tax act online 2009 These contributions are not taxable to the corporation. Tax act online 2009 Basis. Tax act online 2009   The corporation's basis of property contributed to capital by a shareholder is the same as the basis the shareholder had in the property, increased by any gain the shareholder recognized on the exchange. Tax act online 2009 However, the increase for the gain recognized may be limited. Tax act online 2009 For more information, see Basis of property transferred, above, and section 362 of the Internal Revenue Code. Tax act online 2009   The basis of property contributed to capital by a person other than a shareholder is zero. Tax act online 2009   If a corporation receives a cash contribution from a person other than a shareholder, the corporation must reduce the basis of any property acquired with the contribution during the 12-month period beginning on the day it received the contribution by the amount of the contribution. Tax act online 2009 If the amount contributed is more than the cost of the property acquired, then reduce, but not below zero, the basis of the other properties held by the corporation on the last day of the 12-month period in the following order. Tax act online 2009 Depreciable property. Tax act online 2009 Amortizable property. Tax act online 2009 Property subject to cost depletion but not to percentage depletion. Tax act online 2009 All other remaining properties. Tax act online 2009   Reduce the basis of property in each category to zero before going on to the next category. Tax act online 2009   There may be more than one piece of property in each category. Tax act online 2009 Base the reduction of the basis of each property on the following ratio:   Basis of each piece of property   Bases of all properties (within that category) If the corporation wishes to make this adjustment in some other way, it must get IRS approval. Tax act online 2009 The corporation files a request for approval with its income tax return for the tax year in which it receives the contribution. Tax act online 2009 Filing and Paying Income Taxes The federal income tax is a pay-as-you-go tax. Tax act online 2009 A corporation generally must make estimated tax payments as it earns or receives income during its tax year. Tax act online 2009 After the end of the year, the corporation must file an income tax return. Tax act online 2009 This section will help you determine when and how to pay and file corporate income taxes. Tax act online 2009 For certain corporations affected by Presidentially declared disasters such as hurricanes, the due dates for filing returns, paying taxes, and performing other time-sensitive acts may be extended. Tax act online 2009 The IRS may also forgive the interest and penalties on any underpaid tax for the length of any extension. Tax act online 2009 For more information, visit www. Tax act online 2009 irs. Tax act online 2009 gov/newsroom/article/0,,id=108362. Tax act online 2009 00. Tax act online 2009 Income Tax Return This section will help you determine when and how to report a corporation's income tax. Tax act online 2009 Who must file. Tax act online 2009   Unless exempt under section 501 of the Internal Revenue Code, all domestic corporations in existence for any part of a tax year (including corporations in bankruptcy) must file an income tax return whether or not they have taxable income. Tax act online 2009 Which form to file. Tax act online 2009   A corporation generally must file Form 1120, U. Tax act online 2009 S. Tax act online 2009 Corporation Income Tax Return, to report its income, gains, losses, deductions, credits, and to figure its income tax liability. Tax act online 2009 Certain organizations and entities must file special returns. Tax act online 2009 For more information, see Special Returns for Certain Organizations, in the Instructions for Form 1120. Tax act online 2009 Electronic filing. Tax act online 2009   Corporations can generally electronically file (e-file) Form 1120 and certain related forms, schedules, and attachments. Tax act online 2009 Certain corporations with total assets of $10 million or more, that file at least 250 returns a year must e-file Form 1120. Tax act online 2009 However, in certain instances, these corporations can request a waiver. Tax act online 2009 For more information regarding electronic filing, visit www. Tax act online 2009 irs. Tax act online 2009 gov/efile. Tax act online 2009 When to file. Tax act online 2009   Generally, a corporation must file its income tax return by the 15th day of the 3rd month after the end of its tax year. Tax act online 2009 A new corporation filing a short-period return must generally file by the 15th day of the 3rd month after the short period ends. Tax act online 2009 A corporation that has dissolved must generally file by the 15th day of the 3rd month after the date it dissolved. Tax act online 2009 Example 1. Tax act online 2009 A corporation's tax year ends December 31. Tax act online 2009 It must file its income tax return by March 15th. Tax act online 2009 Example 2. Tax act online 2009 A corporation's tax year ends June 30. Tax act online 2009 It must file its income tax return by September 15th. Tax act online 2009   If the due date falls on a Saturday, Sunday, or legal holiday, the due date is extended to the next business day. Tax act online 2009 Extension of time to file. Tax act online 2009   File Form 7004, Application for Automatic Extension of Time To File Certain Business Income Tax, Information and Other Returns, to request an extension of time to file a corporation income tax return. Tax act online 2009 The IRS will grant the extension if you complete the form properly, file it, and pay any tax due by the original due date for the return. Tax act online 2009   Form 7004 does not extend the time for paying the tax due on the return. Tax act online 2009 Interest, and possibly penalties, will be charged on any part of the final tax due not shown as a balance due on Form 7004. Tax act online 2009 The interest is figured from the original due date of the return to the date of payment. Tax act online 2009   For more information, see the instructions for Form 7004. Tax act online 2009 How to pay your taxes. Tax act online 2009   A corporation must pay its tax due in full no later than the 15th day of the 3rd month after the end of its tax year. Tax act online 2009 Electronic Federal Tax Payment System (EFTPS). Tax act online 2009   Corporations generally must use EFTPS to make deposits of all tax liabilities (including social security, Medicare, withheld income, excise, and corporate income taxes). Tax act online 2009 For more information on EFTPS and enrollment, visit www. Tax act online 2009 eftps. Tax act online 2009 gov or call 1-800-555-4477. Tax act online 2009 Also see Publication 966, The Secure Way to Pay Your Federal Taxes. Tax act online 2009 Note. Tax act online 2009 Forms 8109 and 8109-B, Federal Tax Deposit Coupon, can no longer be used to make federal tax deposits. Tax act online 2009 Penalties Generally, if the corporation receives a notice about interest and penalties after it files its return, send the IRS an explanation and we will determine if the corporation meets reasonable-cause criteria. Tax act online 2009 Do not attach an explanation when the corporation's return is filed. Tax act online 2009 See the instructions for your income tax return. Tax act online 2009 Late filing of return. Tax act online 2009    A corporation that does not file its tax return by the due date, including extensions, may be penalized 5% of the unpaid tax for each month or part of a month the return is late, up to a maximum of 25% of the unpaid tax. Tax act online 2009 If the corporation is charged a penalty for late payment of tax (discussed next) for the same period of time, the penalty for late filing is reduced by the amount of the penalty for late payment. Tax act online 2009 The minimum penalty for a return that is over 60 days late is the smaller of the tax due or $100. Tax act online 2009 The penalty will not be imposed if the corporation can show the failure to file on time was due to a reasonable cause. Tax act online 2009 Late payment of tax. Tax act online 2009    A corporation that does not pay the tax when due may be penalized ½ of 1% of the unpaid tax for each month or part of a month the tax is not paid, up to a maximum of 25% of the unpaid tax. Tax act online 2009 The penalty will not be imposed if the corporation can show that the failure to pay on time was due to a reasonable cause. Tax act online 2009 Trust fund recovery penalty. Tax act online 2009   If income, social security, and Medicare taxes that a corporation must withhold from employee wages are not withheld or are not deposited or paid to the United States Treasury, the trust fund recovery penalty may apply. Tax act online 2009 The penalty is the full amount of the unpaid trust fund tax. Tax act online 2009 This penalty may apply to you if these unpaid taxes cannot be immediately collected from the business. Tax act online 2009   The trust fund recovery penalty may be imposed on all persons who are determined by the IRS to be responsible for collecting, accounting for, and paying these taxes, and who acted willfully in not doing so. Tax act online 2009   A responsible person can be an officer or employee of a corporation, an accountant, or a volunteer director/trustee. Tax act online 2009 A responsible person also may include one who signs checks for the corporation or otherwise has authority to cause the spending of business funds. Tax act online 2009   Willfully means voluntarily, consciously, and intentionally. Tax act online 2009 A responsible person acts willfully if the person knows the required actions are not taking place. Tax act online 2009   For more information on withholding and paying these taxes, see Publication 15 (Circular E), Employer's Tax Guide, and Publication 51, (Circular A), Agricultural Employer's Tax Guide. Tax act online 2009 Other penalties. Tax act online 2009   Other penalties can be imposed for negligence, substantial understatement of tax, reportable transaction understatements, and fraud. Tax act online 2009 See sections 6662, 6662A, and 6663 of the Internal Revenue Code. Tax act online 2009 Estimated Tax Generally, a corporation must make installment payments if it expects its estimated tax for the year to be $500 or more. Tax act online 2009 If the corporation does not pay the installments when they are due, it could be subject to an underpayment penalty. Tax act online 2009 This section will explain how to avoid this penalty. Tax act online 2009 When to pay estimated tax. Tax act online 2009   Installment payments are due by the 15th day of the 4th, 6th, 9th, and 12th months of the corporation's tax year. Tax act online 2009 Example 1. Tax act online 2009 Your corporation's tax year ends December 31. Tax act online 2009 Installment payments are due on April 15, June 15, September 15, and December 15. Tax act online 2009 Example 2. Tax act online 2009 Your corporation's tax year ends June 30. Tax act online 2009 Installment payments are due on October 15, December 15, March 15, and June 15. Tax act online 2009   If any due date falls on a Saturday, Sunday, or legal holiday, the installment is due on the next business day. Tax act online 2009 How to figure each required installment. Tax act online 2009   Use Form 1120-W, Estimated Tax for Corporations, as a worksheet to figure each required installment of estimated tax. Tax act online 2009 You will generally use one of the following two methods to figure each required installment. Tax act online 2009 You should use the method that yields the smallest installment payments. Tax act online 2009 Note. Tax act online 2009 In these discussions, “return” generally refers to the corporation's original return. Tax act online 2009 However, an amended return is considered the original return if it is filed by the due date (including extensions) of the original return. Tax act online 2009 Method 1. Tax act online 2009   Each required installment is 25% of the income tax the corporation will show on its return for the current year. Tax act online 2009 Method 2. Tax act online 2009   Each required installment is 25% of the income tax shown on the corporation's return for the previous year. Tax act online 2009   To use Method 2: The corporation must have filed a return for the previous year, The return must have been for a full 12 months, and The return must have shown a positive tax liability (not zero). Tax act online 2009 Also, if the corporation is a large corporation, it can use Method 2 to figure the first installment only. Tax act online 2009   See the Instructions for Form 1120-W, for the definition of a large corporation and other special rules for large corporations. Tax act online 2009 Other methods. Tax act online 2009   If a corporation's income is expected to vary during the year because, for example, its business is seasonal, it may be able to lower the amount of one or more required installments by using one or both of the following methods. Tax act online 2009 The annualized income installment method. Tax act online 2009 The adjusted seasonal installment method. Tax act online 2009 Use Schedule A of Form 1120-W to determine if using one or both of these methods will lower the amount of any required installments. Tax act online 2009 Refiguring required installments. Tax act online 2009   If after the corporation figures and deposits its estimated tax it finds that its tax liability for the year will be more or less than originally estimated, it may have to refigure its required installments to see if an underpayment penalty may apply. Tax act online 2009 An immediate catchup payment should be made to reduce any penalty resulting from the underpayment of any earlier installments. Tax act online 2009 Underpayment penalty. Tax act online 2009   If the corporation does not pay a required installment of estimated tax by its due date, it may be subject to a penalty. Tax act online 2009 The penalty is figured separately for each installment due date. Tax act online 2009 The corporation may owe a penalty for an earlier due date, even if it paid enough tax later to make up the underpayment. Tax act online 2009 This is true even if the corporation is due a refund when its return is filed. Tax act online 2009 Form 2220. Tax act online 2009   Use Form 2220, Underpayment of Estimated Tax by Corporations, to determine if a corporation is subject to the penalty for underpayment of estimated tax and to figure the amount of the penalty. Tax act online 2009   If the corporation is charged a penalty, the amount of the penalty depends on the following three factors. Tax act online 2009 The amount of the underpayment. Tax act online 2009 The period during which the underpayment was due and unpaid. Tax act online 2009 The interest rate for underpayments published quarterly by the IRS in the Internal Revenue Bulletin. Tax act online 2009   A corporation generally does not have to file Form 2220 with its income tax return because the IRS will figure any penalty and bill the corporation. Tax act online 2009 However, even if the corporation does not owe a penalty, complete and attach the form to the corporation's tax return if any of the following apply. Tax act online 2009 The annualized income installment method was used to figure any required installment. Tax act online 2009 The adjusted seasonal installment method was used to figure any required installment. Tax act online 2009 The corporation is a large corporation figuring its first required installment based on the prior year's tax. Tax act online 2009 How to pay estimated tax. Tax act online 2009   A corporation is generally required to use EFTPS to pay its taxes. Tax act online 2009 See Electronic Federal Tax Payment System (EFTPS), earlier. Tax act online 2009 Also see the Instructions for Form 1120-W. Tax act online 2009 Quick refund of overpayments. Tax act online 2009   A corporation that has overpaid its estimated tax for the tax year may be able to apply for a quick refund. Tax act online 2009 Use Form 4466, Corporation Application for Quick Refund of Overpayment of Estimated Tax, to apply for a quick refund of an overpayment of estimated tax. Tax act online 2009 A corporation can apply for a quick refund if the overpayment is: At least 10% of its expected tax liability, and At least $500. Tax act online 2009 Use Form 4466 to figure the corporation's expected tax liability and the overpayment of estimated tax. Tax act online 2009 File Form 4466 before the 16th day of the 3rd month after the end of the tax year, but before the corporation files its income tax return. Tax act online 2009 Do not file Form 4466 before the end of the corporation's tax year. Tax act online 2009 An extension of time to file the corporation's income tax return will not extend the time for filing Form 4466. Tax act online 2009 The IRS will act on the form within 45 days from the date you file it. Tax act online 2009 U. Tax act online 2009 S. Tax act online 2009 Real Property Interest If a domestic corporation acquires a U. Tax act online 2009 S. Tax act online 2009 real property interest from a foreign person or firm, the corporation may have to withhold tax on the amount it pays for the property. Tax act online 2009 The amount paid includes cash, the fair market value of other property, and any assumed liability. Tax act online 2009 If a domestic corporation distributes a U. Tax act online 2009 S. Tax act online 2009 real property interest to a foreign person or firm, it may have to withhold tax on the fair market value of the property. Tax act online 2009 A corporation that fails to withhold may be liable for the tax, and any penalties and interest that apply. Tax act online 2009 For more information, see section 1445 of the Internal Revenue Code; Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities; Form 8288, U. Tax act online 2009 S. Tax act online 2009 Withholding Tax Return for Dispositions by Foreign Persons of U. Tax act online 2009 S. Tax act online 2009 Real Property Interests; and Form 8288-A, Statement of Withholding on Dispositions by Foreign Persons of U. Tax act online 2009 S. Tax act online 2009 Real Property Interests. Tax act online 2009 Accounting Methods An accounting method is a set of rules used to determine when and how income and expenses are reported. Tax act online 2009 Taxable income should be determined using the method of accounting regularly used in keeping the corporation's books and records. Tax act online 2009 In all cases, the method used must clearly show taxable income. Tax act online 2009 Generally, permissible methods include: Cash, Accrual, or Any other method authorized by the Internal Revenue Code. Tax act online 2009 Accrual method. Tax act online 2009   Generally, a corporation (other than a qualified personal service corporation) must use the accrual method of accounting if its average annual gross receipts exceed $5 million. Tax act online 2009 A corporation engaged in farming operations also must use the accrual method. Tax act online 2009   If inventories are required, the accrual method generally must be used for sales and purchases of merchandise. Tax act online 2009 However, qualifying taxpayers and eligible businesses of qualifying small business taxpayers are excepted from using the accrual method for eligible trades or businesses and may account for inventoriable items as materials and supplies that are not incidental. Tax act online 2009   Under the accrual method, an amount is includable in income when: All the events have occurred that fix the right to receive the income, which is the earliest of the date: The required performance takes place, Payment is due, or Payment is received; and The amount can be determined with reasonable accuracy. Tax act online 2009   Generally, an accrual basis taxpayer can deduct accrued expenses in the tax year when: All events that determine the liability have occurred, The amount of the liability can be figured with reasonable accuracy, and Economic performance takes place with respect to the expense. Tax act online 2009   There are exceptions to the economic performance rule for certain items, including recurring expenses. Tax act online 2009 See section 461(h) of the Internal Revenue Code and the related regulations for the rules for determining when economic performance takes place. Tax act online 2009 Nonaccrual experience method. Tax act online 2009   Accrual method corporations are not required to maintain accruals for certain amounts from the performance of services that, on the basis of their experience, will not be collected, if: The services are in the fields of health, law, engineering, architecture, accounting, actuarial science, performing arts, or consulting; or The corporation's average annual gross receipts for the 3 prior tax years does not exceed $5 million. Tax act online 2009   This provision does not apply if interest is required to be paid on the amount or if there is any penalty for failure to pay the amount timely. Tax act online 2009 Percentage of completion method. Tax act online 2009   Long-term contracts (except for certain real property construction contracts) must generally be accounted for using the percentage of completion method described in section 460 of the Internal Revenue Code. Tax act online 2009 Mark-to-market accounting method. Tax act online 2009   Generally, dealers in securities must use the mark-to-market accounting method described in section 475 of the Internal Revenue Code. Tax act online 2009 Under this method any security held by a dealer as inventory must be included in inventory at its FMV. Tax act online 2009 Any security not held as inventory at the close of the tax year is treated as sold at its FMV on the last business day of the tax year. Tax act online 2009 Any gain or loss must be taken into account in determining gross income. Tax act online 2009 The gain or loss taken into account is treated as ordinary gain or loss. Tax act online 2009   Dealers in commodities and traders in securities and commodities can elect to use the mark-to-market accounting method. Tax act online 2009 Change in accounting method. Tax act online 2009   A corporation can change its method of accounting used to report taxable income (for income as a whole or for the treatment of any material item). Tax act online 2009 The corporation must file Form 3115, Application for Change in Accounting Method. Tax act online 2009 For more information, see Form 3115 and Publication 538. Tax act online 2009 Section 481(a) adjustment. Tax act online 2009   The corporation may have to make an adjustment under section 481(a) of the Internal Revenue Code to prevent amounts of income or expense from being duplicated or omitted. Tax act online 2009 The section 481(a) adjustment period is generally 1 year for a net negative adjustment and 4 years for a net positive adjustment. Tax act online 2009 However, a corporation can elect to use a 1-year adjustment period if the net section 481(a) adjustment for the change is less than $25,000. Tax act online 2009 The corporation must complete the appropriate lines of Form 3115 to make the election. Tax act online 2009 See the Instructions for Form 3115. Tax act online 2009 Accounting Periods A corporation must figure its taxable income on the basis of a tax year. Tax act online 2009 A tax year is the annual accounting period a corporation uses to keep its records and report its income and expenses. Tax act online 2009 Generally, corporations can use either a calendar year or a fiscal year as its tax year. Tax act online 2009 Unless special rules apply, a corporation generally adopts a tax year by filing its first federal income tax return using that tax year. Tax act online 2009 For more information, see Publication 538. Tax act online 2009 Personal service corporation. Tax act online 2009   A personal service corporation must use a calendar year as its tax year unless: It elects to use a 52–53 week tax year that ends with reference to the calendar year; It can establish a business purpose for a different tax year and obtains approval of the IRS. Tax act online 2009 See Form 1128, Application To Adopt, Change, or Retain a Tax Year, and Publication 538; or It elects under section 444 of the Internal Revenue Code to have a tax year other than a calendar year. Tax act online 2009 Use Form 8716, Election to Have a Tax Year Other Than a Required Tax Year, to make the election. Tax act online 2009   If a personal service corporation makes a section 444 election, its deduction for certain amounts paid to employee-owners may be limited. Tax act online 2009 See Schedule H (Form 1120), Section 280H Limitations for a Personal Service Corporation (PSC), to figure the maximum deduction. Tax act online 2009 Change of tax year. Tax act online 2009   Generally, a corporation must get the consent of the IRS before changing its tax year by filing Form 1128. Tax act online 2009 However, under certain conditions, a corporation can change its tax year without getting the consent. Tax act online 2009 For more information, see Form 1128 and Publication 538. Tax act online 2009 Recordkeeping A corporation should keep its records for as long as they may be needed for the administration of any provision of the Internal Revenue Code. Tax act online 2009 Usually records that support items of income, deductions, or credits on the return must be kept for 3 years from the date the return is due or filed, whichever is later. Tax act online 2009 Keep records that verify the corporation's basis in property for as long as they are needed to figure the basis of the original or replacement property. Tax act online 2009 The corporation should keep copies of all filed returns. Tax act online 2009 They help in preparing future and amended returns and in the calculation of earnings and profits. Tax act online 2009 Income, Deductions, and Special Provisions Rules on income and deductions that apply to individuals also apply, for the most part, to corporations. Tax act online 2009 However, the following special provisions apply only to corporations. Tax act online 2009 Costs of Going Into Business When you go into business, treat all costs you incur to get your business started as capital expenses. Tax act online 2009 However, a corporation can elect to deduct a limited amount of start-up or organizational costs. Tax act online 2009 Any costs not deducted can be amortized. Tax act online 2009 Start-up costs are costs for creating an active trade or business or investigating the creation or acquisition of an active trade or business. Tax act online 2009 Organizational costs are the direct costs of creating the corporation. Tax act online 2009 For more information on deducting or amortizing start-up and organizational costs, see the instructions for your income tax return. Tax act online 2009 Also see, Publication 535, chapter 7, Costs You Can Deduct or Capitalize, and chapter 8, Amortization. Tax act online 2009 Related Persons A corporation that uses an accrual method of accounting cannot deduct business expenses and interest owed to a related person who uses the cash method of accounting until the corporation makes the payment and the corresponding amount is includible in the related person's gross income. Tax act online 2009 Determine the relationship, for this rule, as of the end of the tax year for which the expense or interest would otherwise be deductible. Tax act online 2009 If a deduction is denied, the rule will continue to apply even if the corporation's relationship with the person ends before the expense or interest is includible in the gross income of that person. Tax act online 2009 These rules also deny the deduction of losses on the sale or exchange of property between related persons. Tax act online 2009 Related persons. Tax act online 2009   For purposes of this rule, the following persons are related to a corporation. Tax act online 2009 Another corporation, that is a member of the same controlled group (as defined in section 267(f) of the Internal Revenue Code). Tax act online 2009 An individual who owns, directly or indirectly, more than 50% of the value of the outstanding stock of the corporation. Tax act online 2009 A trust fiduciary, when the trust or the grantor of the trust owns, directly or indirectly, more than 50% in value of the outstanding stock of the corporation. Tax act online 2009 An S corporation, if the same persons own more than 50% in value of the outstanding stock of each corporation. Tax act online 2009 A partnership, if the same persons own more than 50% in value of the outstanding stock of the corporation and more than 50% of the capital or profits interest in the partnership. Tax act online 2009 Any employee-owner, if the corporation is a personal service corporation (see Personal service corporation, earlier), regardless of the amount of stock owned by the employee-owner. Tax act online 2009 Ownership of stock. Tax act online 2009   To determine whether an individual directly or indirectly owns any of the outstanding stock of a corporation, the following apply. Tax act online 2009 Stock owned, directly or indirectly, by or for a corporation, partnership, estate, or trust, is treated as being owned proportionately by or for its shareholders, partners, or beneficiaries. Tax act online 2009 An individual is treated as owning the stock owned, directly or indirectly, by or for the individual's family. Tax act online 2009 Family includes only brothers and sisters (including half brothers and half sisters), a spouse, ancestors, and lineal descendants. Tax act online 2009 Any individual owning (other than by applying (2), above) stock in a corporation, is treated as also owning the stock owned directly or indirectly by that individual's partner. Tax act online 2009 To apply (1), (2), or (3), above, stock constructively owned by a person under (1) is treated as actually owned by that person. Tax act online 2009 But stock constructively owned by an individual under (2) or (3) is not treated as actually owned by the individual for applying either (2) or (3) to make another person the constructive owner of that stock. Tax act online 2009 Reallocation of income and deductions. Tax act online 2009   Where it is necessary to clearly show income or prevent tax evasion, the IRS can reallocate gross income, deductions, credits, or allowances between two or more organizations, trades, or businesses owned or controlled directly, or indirectly, by the same interests. Tax act online 2009 Complete liquidations. Tax act online 2009   The disallowance of losses from the sale or exchange of property between related persons does not apply to liquidating distributions. Tax act online 2009 More information. Tax act online 2009   For more information about the related person rules, see Publication 544. Tax act online 2009 Income From Qualifying Shipping Activities A corporation may make an election to be taxed on its notional shipping income at the highest corporate tax rate. Tax act online 2009 If a corporation makes this election it may exclude income from qualifying shipping activities from gross income. Tax act online 2009 Also if the election is made, the corporation generally may not claim any loss, deduction, or credit with respect to qualifying shipping activities. Tax act online 2009 A corporation making this election may also elect to defer gain on the disposition of a qualifying vessel. Tax act online 2009 A corporation uses Form 8902, Alternative Tax on Qualifying Shipping Activities, to make the election and figure the alternative tax. Tax act online 2009 For more information regarding the election, see Form 8902. Tax act online 2009 Election to Expense Qualified Refinery Property A corporation can make an irrevocable election on its tax return filed by the due date (including extensions) to deduct 50% of the cost of qualified refinery property (defined in section 179C(c) of the Internal Revenue Code), placed in service before January 1, 2014. Tax act online 2009 The deduction is allowed for the year in which the property is placed in service. Tax act online 2009 A subchapter T cooperative can make an irrevocable election on its return by the due date (including extensions) to allocate this deduction to its owners based on their ownership interest. Tax act online 2009 For more information, see section 179C of the Internal Revenue Code and the related Regulations. Tax act online 2009 Deduction to Comply With EPA Sulfur Regulations A small business refiner can make an irrevocable election on its tax return filed by the due date (including extensions) to deduct up to 75% of qualified costs paid or incurred to comply with the Highway Diesel Fuel Sulfur Control Requirements of the Environmental Protection Agency (EPA). Tax act online 2009 A subchapter T cooperative can make an irrevocable election on its return filed by the due date (including extensions) to allocate the deduction to its owners based on their ownership interest. Tax act online 2009 For more information, see sections 45H and 179B of the Internal Revenue Code and the related Regulations. Tax act online 2009 Energy-Efficient Commercial Building Property Deduction A corporation can claim a deduction for costs associated with energy-efficient commercial building property, placed in service before January 1, 2014. Tax act online 2009 In order to qualify for the deduction: The costs must be associated with depreciable or amortizable property in a Standard 90. Tax act online 2009 1-2001 domestic building; The property must be either a part of the interior lighting system, the heating, cooling, ventilation and hot water system, or the building envelope (defined in section 179D(c)(1)(C) of the Internal Revenue Code); and The property must be installed as part of a plan to reduce the total annual energy and power costs of the building by 50% or more. Tax act online 2009 The deduction is limited to $1. Tax act online 2009 80 per square foot of the building less the total amount of deductions taken for this property in prior tax years. Tax act online 2009 Other rules and limitations apply. Tax act online 2009 The corporation must reduce the basis of any property by any deduction taken. Tax act online 2009 The deduction is subject to recapture if the corporation fails to fully implement an energy savings plan. Tax act online 2009 For more information, see section 179D of the Internal Revenue Code. Tax act online 2009 Also see Notice 2006-52, 2006-26 I. Tax act online 2009 R. Tax act online 2009 B. Tax act online 2009 1175, clarified and amplified by Notice 2008-40, 2008-14 I. Tax act online 2009 R. Tax act online 2009 B. Tax act online 2009 725, and any successor. Tax act online 2009 Corporate Preference Items A corporation must make special adjustments to certain items before it takes them into account in determining its taxable income. Tax act online 2009 These items are known as corporate preference items and they include the following. Tax act online 2009 Gain on the disposition of section 1250 property. Tax act online 2009 For more information, see section 1250 Property under Depreciation Recapture in chapter 3 of Publication 544. Tax act online 2009 Percentage depletion for iron ore and coal (including lignite). Tax act online 2009 For more information, see Mines and Geothermal Deposits under Mineral Property in chapter 9 of Publication 535. Tax act online 2009 Amortization of pollution control facilities. Tax act online 2009 For more information, see Pollution Control Facilities in chapter 8 of Publication 535 and section 291(a)(5) of the Internal Revenue Code. Tax act online 2009 Mineral exploration and development costs. Tax act online 2009 For more information, see Exploration Costs and Development Costs in chapter 7 of Publication 535. Tax act online 2009 For more information on corporate preference items, see section 291 of the Internal Revenue Code. Tax act online 2009 Dividends-Received Deduction A corporation can deduct a percentage of certain dividends received during its tax year. Tax act online 2009 This section discusses the general rules that apply. Tax act online 2009 The deduction is figured on Form 1120, Schedule C, or the applicable schedule of your income tax return. Tax act online 2009 For more information, see the Instructions for Form 1120, or the instructions for your applicable income tax return. Tax act online 2009 Dividends from domestic corporations. Tax act online 2009   A corporation can deduct, within certain limits, 70% of the dividends received if the corporation receiving the dividend owns less than 20% of the corporation distributing the dividend. Tax act online 2009 If the corporation owns 20% or more of the distributing corporation's stock, it can, subject to certain limits, deduct 80% of the dividends received. Tax act online 2009 Ownership. Tax act online 2009   Determine ownership, for these rules, by the amount of voting power and value of the paying corporation's stock (other than certain preferred stock) the receiving corporation owns. Tax act online 2009 Small business investment companies. Tax act online 2009   Small business investment companies can deduct 100% of the dividends received from taxable domestic corporations. Tax act online 2009 Dividends from regulated investment companies. Tax act online 2009   Regulated investment company dividends received are subject to certain limits. Tax act online 2009 Capital gain dividends received from a regulated investment company do not qualify for the deduction. Tax act online 2009 For more information, see section 854 of the Internal Revenue Code. Tax act online 2009 No deduction allowed for certain dividends. Tax act online 2009   Corporations cannot take a deduction for dividends received from the following entities. Tax act online 2009 A real estate investment trust (REIT). Tax act online 2009 A corporation exempt from tax under section 501 or 521 of the Internal Revenue Code either for the tax year of the distribution or the preceding tax year. Tax act online 2009 A corporation whose stock was held less than 46 days during the 91-day period beginning 45 days before the stock became ex-dividend with respect to the dividend. Tax act online 2009 Ex-dividend means the holder has no rights to the dividend. Tax act online 2009 A corporation whose preferred stock was held less than 91 days during the 181-day period beginning 90 days before the stock became ex-dividend with respect to the dividend if the dividends received are for a period or periods totaling more than 366 days. Tax act online 2009 Any corporation, if your corporation is under an obligation (pursuant to a short sale or otherwise) to make related payments with respect to positions in substantially similar or related property. Tax act online 2009 Dividends on deposits. Tax act online 2009   Dividends on deposits or withdrawable accounts in domestic building and loan associations, mutual savings banks, cooperative banks, and similar organizations are interest, not dividends. Tax act online 2009 They do not qualify for this deduction. Tax act online 2009 Limit on deduction for dividends. Tax act online 2009   The total deduction for dividends received or accrued is generally limited (in the following order) to: 80% of the difference between taxable income and the 100% deduction allowed for dividends received from affiliated corporations, or by a small business investment company, for dividends received or accrued from 20%-owned corporations, then 70% of the difference between taxable income and the 100% deduction allowed for dividends received from affiliated corporations, or by a small business investment company, for dividends received or accrued from less-than-20%-owned corporations (reducing taxable income by the total dividends received from 20%-owned corporations). Tax act online 2009 Figuring the limit. Tax act online 2009   In figuring the limit, determine taxable income without the following items. Tax act online 2009 The net operating loss deduction. Tax act online 2009 The domestic production activities deduction. Tax act online 2009 The deduction for dividends received. Tax act online 2009 Any adjustment due to the nontaxable part of an extraordinary dividend (see Extraordinary Dividends, below). Tax act online 2009 Any capital loss carryback to the tax year. Tax act online 2009 Effect of net operating loss. Tax act online 2009   If a corporation has a net operating loss (NOL) for a tax year, the limit of 80% (or 70%) of taxable income does not apply. Tax act online 2009 To determine whether a corporation has an NOL, figure the dividends-received deduction without the 80% (or 70%) of taxable income limit. Tax act online 2009 Example 1. Tax act online 2009 A corporation loses $25,000 from operations. Tax act online 2009 It receives $100,000 in dividends from a 20%-owned corporation. Tax act online 2009 Its taxable income is $75,000 ($100,000 – $25,000) before the deduction for dividends received. Tax act online 2009 If it claims the full dividends-received deduction of $80,000 ($100,000 × 80%) and combines it with an operations loss of $25,000, it will have an NOL of ($5,000). Tax act online 2009 Therefore, the 80% of taxable income limit does not apply. Tax act online 2009 The corporation can deduct the full $80,000. Tax act online 2009 Example 2. Tax act online 2009 Assume the same facts as in Example 1, except that the corporation only loses $15,000 from operations. Tax act online 2009 Its taxable income is $85,000 before the deduction for dividends received. Tax act online 2009 After claiming the dividends-received deduction of $80,000 ($100,000 × 80%), its taxable income is $5,000. Tax act online 2009 Because the corporation will not have an NOL after applying a full dividends-received deduction, its allowable dividends-received deduction is limited to 80% of its taxable income, or $68,000 ($85,000 × 80%). Tax act online 2009 Extraordinary Dividends If a corporation receives an extraordinary dividend on stock held 2 years or less before the dividend announcement date, it generally must reduce its basis in the stock by the nontaxed part of the dividend. Tax act online 2009 The nontaxed part is any dividends-received deduction allowable for the dividends. Tax act online 2009 Extraordinary dividend. Tax act online 2009   An extraordinary dividend is any dividend on stock that equals or exceeds a certain percentage of the corporation's adjusted basis in the stock. Tax act online 2009 The percentages are: 5% for stock preferred as to dividends, or 10% for other stock. Tax act online 2009 Treat all dividends received that have ex-dividend dates within an 85-consecutive-day period as one dividend. Tax act online 2009 Treat all dividends received that have ex-dividend dates within a 365-consecutive-day period as extraordinary dividends if the total of the dividends exceeds 20% of the corporation's adjusted basis in the stock. Tax act online 2009 Disqualified preferred stock. Tax act online 2009   Any dividend on disqualified preferred stock is treated as an extraordinary dividend regardless of the period of time the corporation held the stock. Tax act online 2009   Disqualified preferred stock is any stock preferred as to dividends if any of the following apply. Tax act online 2009 The stock when issued has a dividend rate that declines (or can reasonably be expected to decline) in the future. Tax act online 2009 The issue price of the stock exceeds its liquidation rights or stated redemption price. Tax act online 2009 The stock is otherwise structured to avoid the rules for extraordinary dividends and to enable corporate shareholders to reduce tax through a combination of dividends-received deductions and loss on the disposition of the stock. Tax act online 2009   These rules apply to stock issued after July 10, 1989, unless it was issued under a written binding contract in effect on that date, and thereafter, before the issuance of the stock. Tax act online 2009 More information. Tax act online 2009   For more information on extraordinary dividends, see section 1059 of the Internal Revenue Code. Tax act online 2009 Below-Market Loans If a corporation receives a below-market loan and uses the proceeds for its trade or business, it may be able to deduct the forgone interest. Tax act online 2009 A below-market loan is a loan on which no interest is charged or on which interest is charged at a rate below the applicable federal rate. Tax act online 2009 A below-market loan generally is treated as an arm's-length transaction in which the borrower is considered as having received both the following: A loan in exchange for a note that requires payment of interest at the applicable federal rate, and An additional payment in an amount equal to the forgone interest. Tax act online 2009 Treat the additional payment as a gift, dividend, contribution to capital, payment of compensation, or other payment, depending on the substance of the transaction. Tax act online 2009 Foregone interest. Tax act online 2009   For any period, forgone interest is equal to: The interest that would be payable for that period if interest accrued on the loan at the applicable federal rate and was payable annually on December 31, minus Any interest actually payable on the loan for the period. Tax act online 2009 See Below-market loans, in chapter 4 of Publication 535 for more information. Tax act online 2009 Charitable Contributions A corporation can claim a limited deduction for charitable contributions made in cash or other property. Tax act online 2009 The contribution is deductible if made to, or for the use of, a qualified organization. Tax act online 2009 For more information on qualified organizations, see Publication 526, Charitable Contributions. Tax act online 2009 Also see, Exempt Organizations Select Check (EO Select Check) at www. Tax act online 2009 irs. Tax act online 2009 gov/charities, the on-line search tool for finding information on organizations eligible to receive tax-deductible contributions. Tax act online 2009 Note. Tax act online 2009 You cannot take a deduction if any of the net earnings of an organization receiving contributions benefit any private shareholder or individual. Tax act online 2009 Cash method corporation. Tax act online 2009   A corporation using the cash method of accounting deducts contributions in the tax year paid. Tax act online 2009 Accrual method corporation. Tax act online 2009   A corporation using an accrual method of accounting can choose to deduct unpaid contributions for the tax year the board of directors authorizes them if it pays them by the 15th day of the 3rd month after the close of that tax year. Tax act online 2009 Make the choice by reporting the contribution on the corporation's return for the tax year. Tax act online 2009 A declaration stating that the board of directors adopted the resolution during the tax year must accompany the return. Tax act online 2009 The declaration must include the date the resolution was adopted. Tax act online 2009 Limitations on deduction. Tax act online 2009   A corporation cannot deduct charitable contributions that exceed 10% of its taxable income for the tax year. Tax act online 2009 Figure taxable income for this purpose without the following. Tax act online 2009 The deduction for charitable contributions. Tax act online 2009 The dividends-received deduction. Tax act online 2009 The deduction allowed under section 249 of the Internal Revenue Code. Tax act online 2009 The domestic production activities deduction. Tax act online 2009 Any net operating loss carryback to the tax year. Tax act online 2009 Any capital loss carryback to the tax year. Tax act online 2009 Farmers and ranchers. Tax act online 2009    Corporations that are farmers and ranchers should see section 170(b)(2) of the Internal Revenue Code for special rules that may affect the deduction limit. Tax act online 2009 Carryover of excess contributions. Tax act online 2009   You can carry over, within certain limits, to each of the subsequent 5 years any charitable contributions made during the current year that exceed the 10% limit. Tax act online 2009 You lose any excess not used within that period. Tax act online 2009 For example, if a corporation has a carryover of excess contributions paid in 2010 and it does not use all the excess on its return for 2011, it can carry any excess over to 2012, 2013, 2014, and 2015, if applicable. Tax act online 2009 Any excess not used in 2015 is lost. Tax act online 2009 Do not deduct a carryover of excess contributions in the carryover year until after you deduct contributions made in that year (subject to the 10% limit). Tax act online 2009 You cannot deduct a carryover of excess contributions to the extent it increases a net operating loss carryover. Tax act online 2009 Cash contributions. Tax act online 2009   A corporation must maintain a record of any contribution of cash, check, or other monetary contribution, regardless of the amount. Tax act online 2009 The record can be a bank record, receipt, letter, or other written communication from the donee indicating the name of the organization, the date of the contribution, and the amount of the contribution. Tax act online 2009 Keep the record of the contribution with the other corporate records. Tax act online 2009 Do not attach the records to the corporation's return. Tax act online 2009 For more information on cash contributions, see Publication 526. Tax act online 2009 Gifts of $250 or more. Tax act online 2009   Generally, no deduction is allowed for any contribution of $250 or more unless the corporation gets a written acknowledgement from the donee organization. Tax act online 2009 The acknowledgement should show the amount of cash contributed, a description of the property contributed, and either gives a description and a good faith estimate of the value of any goods or services provided in return for the contribution or states that no goods or services were provided in return for the contribution. Tax act online 2009 The acknowledgement should be received by the due date (including extensions) of the return, or, if earlier, the date the return was filed. Tax act online 2009 Keep the acknowledgement with other corporate records. Tax act online 2009 Do not attach the acknowledgement to the return. Tax act online 2009 Contributions of property other than cash. Tax act online 2009   If a corporation (other than a closely-held or a personal service corporation) claims a deduction of more than $500 for contributions of property other than cash, a schedule describing the property and the method used to determine its fair market value must be attached to the corporation's return. Tax act online 2009 In addition the corporation should keep a record of: The approximate date and manner of acquisition of the donated property and The cost or other basis of the donated property held by the donor for less than 12 months prior to contribution. Tax act online 2009   Closely held and personal service corporations must complete and attach Form 8283, Noncash Charitable Contributions, to their returns if they claim a deduction of more than $500 for non-cash contributions. Tax act online 2009 For all other corporations, if the deduction claimed for donated property exceeds $5,000, complete Form 8283 and attach it to the corporation's return. Tax act online 2009   A corporation must obtain a qualified appraisal for all deductions of property claimed in excess of $5,000. Tax act online 2009 A qualified appraisal is not required for the donation of cash, publicly traded securities, inventory, and any qualified vehicles sold by a donee organization without any significant intervening use or material improvement. Tax act online 2009 The appraisal should be maintained with other corporate records and only attached to the corporation's return when the deduction claimed exceeds $500,000; $20,000 for donated art work. Tax act online 2009   See Form 8283 for more information. Tax act online 2009 Qualified conservation contributions. Tax act online 2009   If a corporation makes a qualified conservation contribution, the corporation must provide information regarding the legal interest being donated, the fair market value of the underlying property before and after the donation, and a description of the conservation purpose for which the property will be used. Tax act online 2009 For more information, see section 170(h) of the Internal Revenue Code. Tax act online 2009 Contributions of used vehicles. Tax act online 2009   A corporation is allowed a deduction for the contribution of used motor vehicles, boats, and airplanes. Tax act online 2009 The deduction is limited, and other special rules apply. Tax act online 2009 For more information, see Publication 526. Tax act online 2009 Reduction for contributions of certain property. Tax act online 2009   For a charitable contribution of property, the corporation must reduce the contribution by the sum of: The ordinary income and short-term capital gain that would have resulted if the property were sold at its FMV and For certain contributions, the long-term capital gain that would have resulted if the property were sold at its FMV. Tax act online 2009   The reduction for the long-term capital gain applies to: Contributions of tangible personal property for use by an exempt organization for a purpose or function unrelated to the basis for its exemption; Contributions of any property to or for the use of certain private foundations except for stock for which market quotations are readily available; and Contributions of any patent, certain copyrights, trademark, trade name, trade secret, know-how, software (that is a section 197 intangible), or similar property, or applications or registrations of such property. Tax act online 2009 Larger deduction. Tax act online 2009   A corporation (other than an S corporation) may be able to claim a deduction equal to the lesser of (a) the basis of the donated inventory or property plus one-half of the inventory or property's appreciation (gain if the donated inventory or property was sold at fair market value on the date of the donation), or (b) two times basis of the donated inventory or property. Tax act online 2009 This deduction may be allowed for certain contributions of: Certain inventory and other property made to a donee organization and used solely for the care of the ill, the needy, and infants. Tax act online 2009 Scientific property constructed by the corporation (other than an S corporation, personal holding company, or personal service corporation) and donated no later than 2 years after substantial completion of the construction. Tax act online 2009 The property must be donated to a qualified organization and its original use must be by the donee for research, experimentation, or research training within the United States in the area of physical or biological science. Tax act online 2009 Computer technology and equipment acquired or constructed and donated no later than 3 years after either acquisition or substantial completion of construction to an educational organization for educational purposes within the United States. Tax act online 2009 Contributions to organizations conducting lobbying activities. Tax act online 2009   Contributions made to an organization that conducts lobbying activities are not deductible if: The lobbying activities relate to matters of direct financial interest to the donor's trade or business and The principal purpose of the contribution was to avoid federal income tax by obtaining a deduction for activities that would have been nondeductible under the lobbying expense rules if conducted directly by the donor. Tax act online 2009 More information. Tax act online 2009   For more information on charitable contributions, including substantiation and recordkeeping requirements, see section 170 of the Internal Revenue Code, the related regulations, and Publication 526. Tax act online 2009 Capital Losses A corporation can deduct capital losses only up to the amount of its capital gains. Tax act online 2009 In other words, if a corporation has an excess capital loss, it cannot deduct the loss in the current tax year. Tax act online 2009 Instead, it carries the loss to other tax years and deducts it from any net capital gains that occur in those years. Tax act online 2009 A capital loss is carried to other years in the following order. Tax act online 2009 3 years prior to the loss year. Tax act online 2009 2 years prior to the loss year. Tax act online 2009 1 year prior to the loss year. Tax act online 2009 Any loss remaining is carried forward for 5 years. Tax act online 2009 When you carry a net capital loss to another tax year, treat it as a short-term loss. Tax act online 2009 It does not retain its original identity as long term or short term. Tax act online 2009 Example. Tax act online 2009 A calendar year corporation has a net short-term capital gain of $3,000 and a net long-term capital loss of $9,000. Tax act online 2009 The short-term gain offsets some of the long-term loss, leaving a net capital loss of $6,000. Tax act online 2009 The corporation treats this $6,000 as a short-term loss when carried back or forward. Tax act online 2009 The corporation carries the $6,000 short-term loss back 3 years. Tax act online 2009 In year 1, the corporation had a net short-term capital gain of $8,000 and a net long-term capital gain of $5,000. Tax act online 2009 It subtracts the $6,000 short-term loss first from the net short-term gain. Tax act online 2009 This results in a net capital gain for year 1 of $7,000. Tax act online 2009 This consists of a net short-term capital gain of $2,000 ($8,000 − $6,000) and a net long-term capital gain of $5,000. Tax act online 2009 S corporation status. Tax act online 2009   A corporation may not carry a capital loss from, or to, a year for which it is an S corporation. Tax act online 2009 Rules for carryover and carryback. Tax act online 2009   When carrying a capital loss from one year to another, the following rules apply. Tax act online 2009 When figuring the current year's net capital loss, you cannot combine it with a capital loss carried from another year. Tax act online 2009 In other words, you can carry capital losses only to years that would otherwise have a total net capital gain. Tax act online 2009 If you carry capital losses from 2 or more years to the same year, deduct the loss from the earliest year first. Tax act online 2009 You cannot use a capital loss carried from another year to produce or increase a net operating loss in the year to which you carry it back. Tax act online 2009 Refunds. Tax act online 2009   When you carry back a capital loss to an earlier tax year, refigure your tax for that year. Tax act online 2009 If your corrected tax is less than the tax you originally owed, use either Form 1139, Corporate Application for Tentative Refund, or Form 1120X, Amended U. Tax act online 2009 S. Tax act online 2009 Corporation Income Tax Return, to apply for a refund. Tax act online 2009 Form 1139. Tax act online 2009    A corporation can get a refund faster by using Form 1139. Tax act online 2009 It cannot file Form 1139 before filing the return for the corporation's capital loss year, but it must file Form 1139 no later than 1 year after the year it sustains the capital loss. Tax act online 2009 Form 1120X. Tax act online 2009   If the corporation does not file Form 1139, it must file Form 1120X to apply for a refund. Tax act online 2009 The corporation must file the Form 1120X within 3 years of the due date, includin
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Tax act online 2009 Publication 519 - Additional Material Table of Contents Appendix A—Tax Treaty Exemption Procedure for StudentsBelgium Bulgaria China, People's Republic of Cyprus Czech Republic, Estonia, Latvia, Lithuania, and Slovak Republic Egypt France Germany Iceland Indonesia Israel, Philippines and Thailand Korea, Norway, Poland, and Romania Morocco Netherlands Pakistan Portugal and Spain Slovenia and Venezuela Trinidad and Tobago Tunisia Appendix B—Tax Treaty Exemption Procedure for Teachers and ResearchersBelgium Bulgaria China, People's Republic of Commonwealth of Independent States Czech Republic and Slovak Republic Egypt, Hungary, Korea, Philippines, Poland, and Romania France Germany Greece India Indonesia Israel Italy Jamaica Luxembourg Netherlands Norway Pakistan Portugal Slovenia and Venezuela Thailand Trinidad and Tobago United Kingdom Frequently Asked Questions This section answers tax-related questions commonly asked by aliens. Tax act online 2009 . Tax act online 2009 What is the difference between a resident alien and a nonresident alien for tax purposes? . Tax act online 2009 What is the difference between the taxation of income that is effectively connected with a trade or business in the United States and income that is not effectively connected with a trade or business in the United States? . Tax act online 2009 I am a student with an F-1 Visa. Tax act online 2009 I was told that I was an exempt individual. Tax act online 2009 Does this mean I am exempt from paying U. Tax act online 2009 S. Tax act online 2009 tax? . Tax act online 2009 I am a resident alien. Tax act online 2009 Can I claim any treaty benefits? . Tax act online 2009 I am a nonresident alien with no dependents. Tax act online 2009 I am working temporarily for a U. Tax act online 2009 S. Tax act online 2009 company. Tax act online 2009 What return do I file? . Tax act online 2009 I came to the United States on June 30th of last year. Tax act online 2009 I have an H-1B Visa. Tax act online 2009 What is my tax status, resident alien or nonresident alien? What tax return do I file? . Tax act online 2009 When is my Form 1040NR due? . Tax act online 2009 My spouse is a nonresident alien. Tax act online 2009 Does he need a social security number? . Tax act online 2009 I am a nonresident alien. Tax act online 2009 Can I file a joint return with my spouse? . Tax act online 2009 I have an H-1B Visa and my husband has an F-1 Visa. Tax act online 2009 We both lived in the United States all of last year and had income. Tax act online 2009 What kind of form should we file? Do we file separate returns or a joint return? . Tax act online 2009 Is a dual-resident taxpayer the same as a dual-status taxpayer? . Tax act online 2009 I am a nonresident alien and invested money in the U. Tax act online 2009 S. Tax act online 2009 stock market through a U. Tax act online 2009 S. Tax act online 2009 brokerage company. Tax act online 2009 Are the dividends and the capital gains taxable? If yes, how are they taxed? . Tax act online 2009 I am a nonresident alien. Tax act online 2009 I receive U. Tax act online 2009 S. Tax act online 2009 social security benefits. Tax act online 2009 Are my benefits taxable? . Tax act online 2009 Do I have to pay taxes on my scholarship? . Tax act online 2009 I am a nonresident alien. Tax act online 2009 Can I claim the standard deduction? . Tax act online 2009 I am a dual-status taxpayer. Tax act online 2009 Can I claim the standard deduction? . Tax act online 2009 I am filing Form 1040NR. Tax act online 2009 Can I claim itemized deductions? . Tax act online 2009 I am not a U. Tax act online 2009 S. Tax act online 2009 citizen. Tax act online 2009 What exemptions can I claim? . Tax act online 2009 What exemptions can I claim as a dual-status taxpayer? . Tax act online 2009 I am single with a dependent child. Tax act online 2009 I was a dual-status alien in 2013. Tax act online 2009 Can I claim the earned income credit on my 2013 tax return? . Tax act online 2009 I am a nonresident alien student. Tax act online 2009 Can I claim an education credit on my Form 1040NR? . Tax act online 2009 I am a nonresident alien, temporarily working in the U. Tax act online 2009 S. Tax act online 2009 under a J visa. Tax act online 2009 Am I subject to social security and Medicare taxes? . Tax act online 2009 I am a nonresident alien student. Tax act online 2009 Social security taxes were withheld from my pay in error. Tax act online 2009 How do I get a refund of these taxes? . Tax act online 2009 I am an alien who will be leaving the United States. Tax act online 2009 What forms do I have to file before I leave? . Tax act online 2009 I filed a Form 1040-C when I left the United States. Tax act online 2009 Do I still have to file an annual U. Tax act online 2009 S. Tax act online 2009 tax return? . Tax act online 2009 What is the difference between a resident alien and a nonresident alien for tax purposes? For tax purposes, an alien is an individual who is not a U. Tax act online 2009 S. Tax act online 2009 citizen. Tax act online 2009 Aliens are classified as resident aliens and nonresident aliens. Tax act online 2009 Resident aliens are taxed on their worldwide income, the same as U. Tax act online 2009 S. Tax act online 2009 citizens. Tax act online 2009 Nonresident aliens are taxed only on their U. Tax act online 2009 S. Tax act online 2009 source income and certain foreign source income that is effectively connected with a U. Tax act online 2009 S. Tax act online 2009 trade or business. Tax act online 2009 The difference between these two categories is that effectively connected income, after allowable deductions, is taxed at graduated rates. Tax act online 2009 These are the same rates that apply to U. Tax act online 2009 S. Tax act online 2009 citizens and residents. Tax act online 2009 Income that is not effectively connected is taxed at a flat 30% (or lower treaty) rate. Tax act online 2009 The term “exempt individual” does not refer to someone exempt from U. Tax act online 2009 S. Tax act online 2009 tax. Tax act online 2009 You were referred to as an exempt individual because as a student temporarily in the United States on an F Visa, you do not have to count the days you were present in the United States as a student during the first 5 years in determining if you are a resident alien under the substantial presence test. Tax act online 2009 See chapter 1 . Tax act online 2009 Generally, you cannot claim tax treaty benefits as a resident alien. Tax act online 2009 However, there are exceptions. Tax act online 2009 See Effect of Tax Treaties in chapter 1. Tax act online 2009 See also Resident Aliens under Some Typical Tax Treaty Benefits in chapter 9. Tax act online 2009 You must file Form 1040NR if you are engaged in a trade or business in the United States, or have any other U. Tax act online 2009 S. Tax act online 2009 source income on which tax was not fully paid by the amount withheld. Tax act online 2009 You can use Form 1040NR-EZ instead of Form 1040NR if you meet all 11 conditions listed under Form 1040NR-EZ in chapter 7. Tax act online 2009 You were a dual-status alien last year. Tax act online 2009 As a general rule, because you were in the United States for 183 days or more, you have met the substantial presence test and you are taxed as a resident. Tax act online 2009 However, for the part of the year that you were not present in the United States, you are a nonresident. Tax act online 2009 File Form 1040. Tax act online 2009 Print “Dual-Status Return” across the top. Tax act online 2009 Attach a statement showing your U. Tax act online 2009 S. Tax act online 2009 source income for the part of the year you were a nonresident. Tax act online 2009 You may use Form 1040NR as the statement. Tax act online 2009 Print “Dual-Status Statement” across the top. Tax act online 2009 See First Year of Residency in chapter 1 for rules on determining your residency starting date. Tax act online 2009 If you are an employee and you receive wages subject to U. Tax act online 2009 S. Tax act online 2009 income tax withholding, you must generally file by the 15th day of the 4th month after your tax year ends. Tax act online 2009 If you file for the 2013 calendar year, your return is due April 15, 2014. Tax act online 2009 If you are not an employee who receives wages subject to U. Tax act online 2009 S. Tax act online 2009 income tax withholding, you must file by the 15th day of the 6th month after your tax year ends. Tax act online 2009 For the 2013 calendar year, file your return by June 16, 2014. Tax act online 2009 For more information on when and where to file, see chapter 7 . Tax act online 2009 A social security number (SSN) must be furnished on returns, statements, and other tax-related documents. Tax act online 2009 If your spouse does not have and is not eligible to get an SSN, he must apply for an individual taxpayer identification number (ITIN). Tax act online 2009 If you are a U. Tax act online 2009 S. Tax act online 2009 citizen or resident and you choose to treat your nonresident spouse as a resident and file a joint tax return, your nonresident spouse needs an SSN or an ITIN. Tax act online 2009 Alien spouses who are claimed as exemptions or dependents are also required to furnish an SSN or an ITIN. Tax act online 2009 See Identification Number in chapter 5 for more information. Tax act online 2009 Generally, you cannot file as married filing jointly if either spouse was a nonresident alien at any time during the tax year. Tax act online 2009 However, nonresident aliens married to U. Tax act online 2009 S. Tax act online 2009 citizens or residents can choose to be treated as U. Tax act online 2009 S. Tax act online 2009 residents and file joint returns. Tax act online 2009 For more information on this choice, see Nonresident Spouse Treated as a Resident in chapter 1. Tax act online 2009 Assuming both of you had these visas for all of last year, you are a resident alien. Tax act online 2009 Your husband is a nonresident alien if he has not been in the United States as a student for more than 5 years. Tax act online 2009 You and your husband can file a joint tax return on Form 1040, 1040A, or 1040EZ if he makes the choice to be treated as a resident for the entire year. Tax act online 2009 See Nonresident Spouse Treated as a Resident in chapter 1. Tax act online 2009 If your husband does not make this choice, you must file a separate return on Form 1040 or Form 1040A. Tax act online 2009 Your husband must file Form 1040NR or 1040NR-EZ. Tax act online 2009 No. Tax act online 2009 A dual-resident taxpayer is one who is a resident of both the United States and another country under each country's tax laws. Tax act online 2009 See Effect of Tax Treaties in chapter 1. Tax act online 2009 You are a dual-status taxpayer when you are both a resident alien and a nonresident alien in the same year. Tax act online 2009 See chapter 6 . Tax act online 2009 The following rules apply if the dividends and capital gains are not effectively connected with a U. Tax act online 2009 S. Tax act online 2009 trade or business. Tax act online 2009 Capital gains are generally not taxable if you were in the United States for less than 183 days during the year. Tax act online 2009 See Sales or Exchanges of Capital Assets in chapter 4 for more information and exceptions. Tax act online 2009 Dividends are generally taxed at a 30% (or lower treaty) rate. Tax act online 2009 The brokerage company or payor of the dividends should withhold this tax at source. Tax act online 2009 If tax is not withheld at the correct rate, you must file Form 1040NR to receive a refund or pay any additional tax due. Tax act online 2009 If the capital gains and dividends are effectively connected with a U. Tax act online 2009 S. Tax act online 2009 trade or business, they are taxed according to the same rules and at the same rates that apply to U. Tax act online 2009 S. Tax act online 2009 citizens and residents. Tax act online 2009 If you are a nonresident alien, 85% of any U. Tax act online 2009 S. Tax act online 2009 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. Tax act online 2009 See The 30% Tax in chapter 4. Tax act online 2009 If you are a nonresident alien and the scholarship is not from U. Tax act online 2009 S. Tax act online 2009 sources, it is not subject to U. Tax act online 2009 S. Tax act online 2009 tax. Tax act online 2009 See Scholarships, Grants, Prizes, and Awards in chapter 2 to determine whether your scholarship is from U. Tax act online 2009 S. Tax act online 2009 sources. Tax act online 2009 If your scholarship is from U. Tax act online 2009 S. Tax act online 2009 sources or you are a resident alien, your scholarship is subject to U. Tax act online 2009 S. Tax act online 2009 tax according to the following rules. Tax act online 2009 If you are a candidate for a degree, you may be able to exclude from your income the part of the scholarship you use to pay for tuition, fees, books, supplies, and equipment required by the educational institution. Tax act online 2009 However, the part of the scholarship you use to pay for other expenses, such as room and board, is taxable. Tax act online 2009 See Scholarships and Fellowship Grants in chapter 3 for more information. Tax act online 2009 If you are not a candidate for a degree, your scholarship is taxable. Tax act online 2009 Nonresident aliens cannot claim the standard deduction. Tax act online 2009 However, see Students and business apprentices from India , under Itemized Deductions in chapter 5 for an exception. Tax act online 2009 You cannot claim the standard deduction allowed on Form 1040. Tax act online 2009 However, you can itemize any allowable deductions. Tax act online 2009 Nonresident aliens can claim some of the same itemized deductions that resident aliens can claim. Tax act online 2009 However, nonresident aliens can claim itemized deductions only if they have income effectively connected with their U. Tax act online 2009 S. Tax act online 2009 trade or business. Tax act online 2009 See Itemized Deductions in chapter 5. Tax act online 2009 Resident aliens can claim personal exemptions and exemptions for dependents in the same way as U. Tax act online 2009 S. Tax act online 2009 citizens. Tax act online 2009 However, nonresident aliens generally can claim only a personal exemption for themselves on their U. Tax act online 2009 S. Tax act online 2009 tax return. Tax act online 2009 There are special rules for residents of Mexico, Canada, and South Korea; for U. Tax act online 2009 S. Tax act online 2009 nationals; and for students and business apprentices from India. Tax act online 2009 See Exemptions in chapter 5. Tax act online 2009 As a dual-status taxpayer, you usually will be able to claim your own personal exemption. Tax act online 2009 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. Tax act online 2009 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. Tax act online 2009 You cannot use exemptions (other than your own) to reduce taxable income to less than zero for that period. Tax act online 2009 If you are a nonresident alien for any part of the year, you cannot claim the earned income credit. Tax act online 2009 See chapter 6 for more information on dual-status aliens. Tax act online 2009 If you are a nonresident alien for any part of the year, you generally cannot claim the education credits. Tax act online 2009 However, if you are married and choose to file a joint return with a U. Tax act online 2009 S. Tax act online 2009 citizen or resident spouse, you may be eligible for these credits. Tax act online 2009 See Nonresident Spouse Treated as a Resident in chapter 1. Tax act online 2009 Generally, services you perform as a nonresident alien temporarily in the United States as a nonimmigrant under subparagraph (F), (J), (M), or (Q) of section 101(a)(15) of the Immigration and Nationality Act are not covered under the social security program if you perform the services to carry out the purpose for which you were admitted to the United States. Tax act online 2009 See Social Security and Medicare Taxes in chapter 8. Tax act online 2009 If social security or Medicare taxes were withheld in error from pay that is not subject to these taxes, contact the employer who withheld the taxes for a refund. Tax act online 2009 If you are unable to get a full refund of the amount from your employer, file a claim for refund with the Internal Revenue Service on Form 843, Claim for Refund and Request for Abatement. Tax act online 2009 Do not use Form 843 to request a refund of Additional Medicare Tax. Tax act online 2009 See Refund of Taxes Withheld in Error in chapter 8. Tax act online 2009 Before leaving the United States, aliens generally must obtain a certificate of compliance. Tax act online 2009 This document, also popularly known as the sailing permit or departure permit, is part of the income tax form you must file before leaving. Tax act online 2009 You will receive a sailing or departure permit after filing a Form 1040-C or Form 2063. Tax act online 2009 These forms are discussed in chapter 11. Tax act online 2009 Form 1040-C is not an annual U. Tax act online 2009 S. Tax act online 2009 income tax return. Tax act online 2009 If an income tax return is required by law, you must file that return even though you already filed a Form 1040-C. Tax act online 2009 Chapters 5 and 7 discuss filing an annual U. Tax act online 2009 S. Tax act online 2009 income tax return. Tax act online 2009 . Tax act online 2009 What is the difference between the taxation of income that is effectively connected with a trade or business in the United States and income that is not effectively connected with a trade or business in the United States? The difference between these two categories is that effectively connected income, after allowable deductions, is taxed at graduated rates. Tax act online 2009 These are the same rates that apply to U. Tax act online 2009 S. Tax act online 2009 citizens and residents. Tax act online 2009 Income that is not effectively connected is taxed at a flat 30% (or lower treaty) rate. Tax act online 2009 The term “exempt individual” does not refer to someone exempt from U. Tax act online 2009 S. Tax act online 2009 tax. Tax act online 2009 You were referred to as an exempt individual because as a student temporarily in the United States on an F Visa, you do not have to count the days you were present in the United States as a student during the first 5 years in determining if you are a resident alien under the substantial presence test. Tax act online 2009 See chapter 1 . Tax act online 2009 Generally, you cannot claim tax treaty benefits as a resident alien. Tax act online 2009 However, there are exceptions. Tax act online 2009 See Effect of Tax Treaties in chapter 1. Tax act online 2009 See also Resident Aliens under Some Typical Tax Treaty Benefits in chapter 9. Tax act online 2009 You must file Form 1040NR if you are engaged in a trade or business in the United States, or have any other U. Tax act online 2009 S. Tax act online 2009 source income on which tax was not fully paid by the amount withheld. Tax act online 2009 You can use Form 1040NR-EZ instead of Form 1040NR if you meet all 11 conditions listed under Form 1040NR-EZ in chapter 7. Tax act online 2009 You were a dual-status alien last year. Tax act online 2009 As a general rule, because you were in the United States for 183 days or more, you have met the substantial presence test and you are taxed as a resident. Tax act online 2009 However, for the part of the year that you were not present in the United States, you are a nonresident. Tax act online 2009 File Form 1040. Tax act online 2009 Print “Dual-Status Return” across the top. Tax act online 2009 Attach a statement showing your U. Tax act online 2009 S. Tax act online 2009 source income for the part of the year you were a nonresident. Tax act online 2009 You may use Form 1040NR as the statement. Tax act online 2009 Print “Dual-Status Statement” across the top. Tax act online 2009 See First Year of Residency in chapter 1 for rules on determining your residency starting date. Tax act online 2009 If you are an employee and you receive wages subject to U. Tax act online 2009 S. Tax act online 2009 income tax withholding, you must generally file by the 15th day of the 4th month after your tax year ends. Tax act online 2009 If you file for the 2013 calendar year, your return is due April 15, 2014. Tax act online 2009 If you are not an employee who receives wages subject to U. Tax act online 2009 S. Tax act online 2009 income tax withholding, you must file by the 15th day of the 6th month after your tax year ends. Tax act online 2009 For the 2013 calendar year, file your return by June 16, 2014. Tax act online 2009 For more information on when and where to file, see chapter 7 . Tax act online 2009 A social security number (SSN) must be furnished on returns, statements, and other tax-related documents. Tax act online 2009 If your spouse does not have and is not eligible to get an SSN, he must apply for an individual taxpayer identification number (ITIN). Tax act online 2009 If you are a U. Tax act online 2009 S. Tax act online 2009 citizen or resident and you choose to treat your nonresident spouse as a resident and file a joint tax return, your nonresident spouse needs an SSN or an ITIN. Tax act online 2009 Alien spouses who are claimed as exemptions or dependents are also required to furnish an SSN or an ITIN. Tax act online 2009 See Identification Number in chapter 5 for more information. Tax act online 2009 Generally, you cannot file as married filing jointly if either spouse was a nonresident alien at any time during the tax year. Tax act online 2009 However, nonresident aliens married to U. Tax act online 2009 S. Tax act online 2009 citizens or residents can choose to be treated as U. Tax act online 2009 S. Tax act online 2009 residents and file joint returns. Tax act online 2009 For more information on this choice, see Nonresident Spouse Treated as a Resident in chapter 1. Tax act online 2009 Assuming both of you had these visas for all of last year, you are a resident alien. Tax act online 2009 Your husband is a nonresident alien if he has not been in the United States as a student for more than 5 years. Tax act online 2009 You and your husband can file a joint tax return on Form 1040, 1040A, or 1040EZ if he makes the choice to be treated as a resident for the entire year. Tax act online 2009 See Nonresident Spouse Treated as a Resident in chapter 1. Tax act online 2009 If your husband does not make this choice, you must file a separate return on Form 1040 or Form 1040A. Tax act online 2009 Your husband must file Form 1040NR or 1040NR-EZ. Tax act online 2009 No. Tax act online 2009 A dual-resident taxpayer is one who is a resident of both the United States and another country under each country's tax laws. Tax act online 2009 See Effect of Tax Treaties in chapter 1. Tax act online 2009 You are a dual-status taxpayer when you are both a resident alien and a nonresident alien in the same year. Tax act online 2009 See chapter 6 . Tax act online 2009 The following rules apply if the dividends and capital gains are not effectively connected with a U. Tax act online 2009 S. Tax act online 2009 trade or business. Tax act online 2009 Capital gains are generally not taxable if you were in the United States for less than 183 days during the year. Tax act online 2009 See Sales or Exchanges of Capital Assets in chapter 4 for more information and exceptions. Tax act online 2009 Dividends are generally taxed at a 30% (or lower treaty) rate. Tax act online 2009 The brokerage company or payor of the dividends should withhold this tax at source. Tax act online 2009 If tax is not withheld at the correct rate, you must file Form 1040NR to receive a refund or pay any additional tax due. Tax act online 2009 If the capital gains and dividends are effectively connected with a U. Tax act online 2009 S. Tax act online 2009 trade or business, they are taxed according to the same rules and at the same rates that apply to U. Tax act online 2009 S. Tax act online 2009 citizens and residents. Tax act online 2009 If you are a nonresident alien, 85% of any U. Tax act online 2009 S. Tax act online 2009 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. Tax act online 2009 See The 30% Tax in chapter 4. Tax act online 2009 If you are a nonresident alien and the scholarship is not from U. Tax act online 2009 S. Tax act online 2009 sources, it is not subject to U. Tax act online 2009 S. Tax act online 2009 tax. Tax act online 2009 See Scholarships, Grants, Prizes, and Awards in chapter 2 to determine whether your scholarship is from U. Tax act online 2009 S. Tax act online 2009 sources. Tax act online 2009 If your scholarship is from U. Tax act online 2009 S. Tax act online 2009 sources or you are a resident alien, your scholarship is subject to U. Tax act online 2009 S. Tax act online 2009 tax according to the following rules. Tax act online 2009 If you are a candidate for a degree, you may be able to exclude from your income the part of the scholarship you use to pay for tuition, fees, books, supplies, and equipment required by the educational institution. Tax act online 2009 However, the part of the scholarship you use to pay for other expenses, such as room and board, is taxable. Tax act online 2009 See Scholarships and Fellowship Grants in chapter 3 for more information. Tax act online 2009 If you are not a candidate for a degree, your scholarship is taxable. Tax act online 2009 Nonresident aliens cannot claim the standard deduction. Tax act online 2009 However, see Students and business apprentices from India , under Itemized Deductions in chapter 5 for an exception. Tax act online 2009 You cannot claim the standard deduction allowed on Form 1040. Tax act online 2009 However, you can itemize any allowable deductions. Tax act online 2009 Nonresident aliens can claim some of the same itemized deductions that resident aliens can claim. Tax act online 2009 However, nonresident aliens can claim itemized deductions only if they have income effectively connected with their U. Tax act online 2009 S. Tax act online 2009 trade or business. Tax act online 2009 See Itemized Deductions in chapter 5. Tax act online 2009 Resident aliens can claim personal exemptions and exemptions for dependents in the same way as U. Tax act online 2009 S. Tax act online 2009 citizens. Tax act online 2009 However, nonresident aliens generally can claim only a personal exemption for themselves on their U. Tax act online 2009 S. Tax act online 2009 tax return. Tax act online 2009 There are special rules for residents of Mexico, Canada, and South Korea; for U. Tax act online 2009 S. Tax act online 2009 nationals; and for students and business apprentices from India. Tax act online 2009 See Exemptions in chapter 5. Tax act online 2009 As a dual-status taxpayer, you usually will be able to claim your own personal exemption. Tax act online 2009 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. Tax act online 2009 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. Tax act online 2009 You cannot use exemptions (other than your own) to reduce taxable income to less than zero for that period. Tax act online 2009 If you are a nonresident alien for any part of the year, you cannot claim the earned income credit. Tax act online 2009 See chapter 6 for more information on dual-status aliens. Tax act online 2009 If you are a nonresident alien for any part of the year, you generally cannot claim the education credits. Tax act online 2009 However, if you are married and choose to file a joint return with a U. Tax act online 2009 S. Tax act online 2009 citizen or resident spouse, you may be eligible for these credits. Tax act online 2009 See Nonresident Spouse Treated as a Resident in chapter 1. Tax act online 2009 Generally, services you perform as a nonresident alien temporarily in the United States as a nonimmigrant under subparagraph (F), (J), (M), or (Q) of section 101(a)(15) of the Immigration and Nationality Act are not covered under the social security program if you perform the services to carry out the purpose for which you were admitted to the United States. Tax act online 2009 See Social Security and Medicare Taxes in chapter 8. Tax act online 2009 If social security or Medicare taxes were withheld in error from pay that is not subject to these taxes, contact the employer who withheld the taxes for a refund. Tax act online 2009 If you are unable to get a full refund of the amount from your employer, file a claim for refund with the Internal Revenue Service on Form 843, Claim for Refund and Request for Abatement. Tax act online 2009 Do not use Form 843 to request a refund of Additional Medicare Tax. Tax act online 2009 See Refund of Taxes Withheld in Error in chapter 8. Tax act online 2009 Before leaving the United States, aliens generally must obtain a certificate of compliance. Tax act online 2009 This document, also popularly known as the sailing permit or departure permit, is part of the income tax form you must file before leaving. Tax act online 2009 You will receive a sailing or departure permit after filing a Form 1040-C or Form 2063. Tax act online 2009 These forms are discussed in chapter 11. Tax act online 2009 Form 1040-C is not an annual U. Tax act online 2009 S. Tax act online 2009 income tax return. Tax act online 2009 If an income tax return is required by law, you must file that return even though you already filed a Form 1040-C. Tax act online 2009 Chapters 5 and 7 discuss filing an annual U. Tax act online 2009 S. Tax act online 2009 income tax return. Tax act online 2009 . Tax act online 2009 I am a student with an F-1 Visa. Tax act online 2009 I was told that I was an exempt individual. Tax act online 2009 Does this mean I am exempt from paying U. Tax act online 2009 S. Tax act online 2009 tax? The term “exempt individual” does not refer to someone exempt from U. Tax act online 2009 S. Tax act online 2009 tax. Tax act online 2009 You were referred to as an exempt individual because as a student temporarily in the United States on an F Visa, you do not have to count the days you were present in the United States as a student during the first 5 years in determining if you are a resident alien under the substantial presence test. Tax act online 2009 See chapter 1 . Tax act online 2009 Generally, you cannot claim tax treaty benefits as a resident alien. Tax act online 2009 However, there are exceptions. Tax act online 2009 See Effect of Tax Treaties in chapter 1. Tax act online 2009 See also Resident Aliens under Some Typical Tax Treaty Benefits in chapter 9. Tax act online 2009 You must file Form 1040NR if you are engaged in a trade or business in the United States, or have any other U. Tax act online 2009 S. Tax act online 2009 source income on which tax was not fully paid by the amount withheld. Tax act online 2009 You can use Form 1040NR-EZ instead of Form 1040NR if you meet all 11 conditions listed under Form 1040NR-EZ in chapter 7. Tax act online 2009 You were a dual-status alien last year. Tax act online 2009 As a general rule, because you were in the United States for 183 days or more, you have met the substantial presence test and you are taxed as a resident. Tax act online 2009 However, for the part of the year that you were not present in the United States, you are a nonresident. Tax act online 2009 File Form 1040. Tax act online 2009 Print “Dual-Status Return” across the top. Tax act online 2009 Attach a statement showing your U. Tax act online 2009 S. Tax act online 2009 source income for the part of the year you were a nonresident. Tax act online 2009 You may use Form 1040NR as the statement. Tax act online 2009 Print “Dual-Status Statement” across the top. Tax act online 2009 See First Year of Residency in chapter 1 for rules on determining your residency starting date. Tax act online 2009 If you are an employee and you receive wages subject to U. Tax act online 2009 S. Tax act online 2009 income tax withholding, you must generally file by the 15th day of the 4th month after your tax year ends. Tax act online 2009 If you file for the 2013 calendar year, your return is due April 15, 2014. Tax act online 2009 If you are not an employee who receives wages subject to U. Tax act online 2009 S. Tax act online 2009 income tax withholding, you must file by the 15th day of the 6th month after your tax year ends. Tax act online 2009 For the 2013 calendar year, file your return by June 16, 2014. Tax act online 2009 For more information on when and where to file, see chapter 7 . Tax act online 2009 A social security number (SSN) must be furnished on returns, statements, and other tax-related documents. Tax act online 2009 If your spouse does not have and is not eligible to get an SSN, he must apply for an individual taxpayer identification number (ITIN). Tax act online 2009 If you are a U. Tax act online 2009 S. Tax act online 2009 citizen or resident and you choose to treat your nonresident spouse as a resident and file a joint tax return, your nonresident spouse needs an SSN or an ITIN. Tax act online 2009 Alien spouses who are claimed as exemptions or dependents are also required to furnish an SSN or an ITIN. Tax act online 2009 See Identification Number in chapter 5 for more information. Tax act online 2009 Generally, you cannot file as married filing jointly if either spouse was a nonresident alien at any time during the tax year. Tax act online 2009 However, nonresident aliens married to U. Tax act online 2009 S. Tax act online 2009 citizens or residents can choose to be treated as U. Tax act online 2009 S. Tax act online 2009 residents and file joint returns. Tax act online 2009 For more information on this choice, see Nonresident Spouse Treated as a Resident in chapter 1. Tax act online 2009 Assuming both of you had these visas for all of last year, you are a resident alien. Tax act online 2009 Your husband is a nonresident alien if he has not been in the United States as a student for more than 5 years. Tax act online 2009 You and your husband can file a joint tax return on Form 1040, 1040A, or 1040EZ if he makes the choice to be treated as a resident for the entire year. Tax act online 2009 See Nonresident Spouse Treated as a Resident in chapter 1. Tax act online 2009 If your husband does not make this choice, you must file a separate return on Form 1040 or Form 1040A. Tax act online 2009 Your husband must file Form 1040NR or 1040NR-EZ. Tax act online 2009 No. Tax act online 2009 A dual-resident taxpayer is one who is a resident of both the United States and another country under each country's tax laws. Tax act online 2009 See Effect of Tax Treaties in chapter 1. Tax act online 2009 You are a dual-status taxpayer when you are both a resident alien and a nonresident alien in the same year. Tax act online 2009 See chapter 6 . Tax act online 2009 The following rules apply if the dividends and capital gains are not effectively connected with a U. Tax act online 2009 S. Tax act online 2009 trade or business. Tax act online 2009 Capital gains are generally not taxable if you were in the United States for less than 183 days during the year. Tax act online 2009 See Sales or Exchanges of Capital Assets in chapter 4 for more information and exceptions. Tax act online 2009 Dividends are generally taxed at a 30% (or lower treaty) rate. Tax act online 2009 The brokerage company or payor of the dividends should withhold this tax at source. Tax act online 2009 If tax is not withheld at the correct rate, you must file Form 1040NR to receive a refund or pay any additional tax due. Tax act online 2009 If the capital gains and dividends are effectively connected with a U. Tax act online 2009 S. Tax act online 2009 trade or business, they are taxed according to the same rules and at the same rates that apply to U. Tax act online 2009 S. Tax act online 2009 citizens and residents. Tax act online 2009 If you are a nonresident alien, 85% of any U. Tax act online 2009 S. Tax act online 2009 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. Tax act online 2009 See The 30% Tax in chapter 4. Tax act online 2009 If you are a nonresident alien and the scholarship is not from U. Tax act online 2009 S. Tax act online 2009 sources, it is not subject to U. Tax act online 2009 S. Tax act online 2009 tax. Tax act online 2009 See Scholarships, Grants, Prizes, and Awards in chapter 2 to determine whether your scholarship is from U. Tax act online 2009 S. Tax act online 2009 sources. Tax act online 2009 If your scholarship is from U. Tax act online 2009 S. Tax act online 2009 sources or you are a resident alien, your scholarship is subject to U. Tax act online 2009 S. Tax act online 2009 tax according to the following rules. Tax act online 2009 If you are a candidate for a degree, you may be able to exclude from your income the part of the scholarship you use to pay for tuition, fees, books, supplies, and equipment required by the educational institution. Tax act online 2009 However, the part of the scholarship you use to pay for other expenses, such as room and board, is taxable. Tax act online 2009 See Scholarships and Fellowship Grants in chapter 3 for more information. Tax act online 2009 If you are not a candidate for a degree, your scholarship is taxable. Tax act online 2009 Nonresident aliens cannot claim the standard deduction. Tax act online 2009 However, see Students and business apprentices from India , under Itemized Deductions in chapter 5 for an exception. Tax act online 2009 You cannot claim the standard deduction allowed on Form 1040. Tax act online 2009 However, you can itemize any allowable deductions. Tax act online 2009 Nonresident aliens can claim some of the same itemized deductions that resident aliens can claim. Tax act online 2009 However, nonresident aliens can claim itemized deductions only if they have income effectively connected with their U. Tax act online 2009 S. Tax act online 2009 trade or business. Tax act online 2009 See Itemized Deductions in chapter 5. Tax act online 2009 Resident aliens can claim personal exemptions and exemptions for dependents in the same way as U. Tax act online 2009 S. Tax act online 2009 citizens. Tax act online 2009 However, nonresident aliens generally can claim only a personal exemption for themselves on their U. Tax act online 2009 S. Tax act online 2009 tax return. Tax act online 2009 There are special rules for residents of Mexico, Canada, and South Korea; for U. Tax act online 2009 S. Tax act online 2009 nationals; and for students and business apprentices from India. Tax act online 2009 See Exemptions in chapter 5. Tax act online 2009 As a dual-status taxpayer, you usually will be able to claim your own personal exemption. Tax act online 2009 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. Tax act online 2009 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. Tax act online 2009 You cannot use exemptions (other than your own) to reduce taxable income to less than zero for that period. Tax act online 2009 If you are a nonresident alien for any part of the year, you cannot claim the earned income credit. Tax act online 2009 See chapter 6 for more information on dual-status aliens. Tax act online 2009 If you are a nonresident alien for any part of the year, you generally cannot claim the education credits. Tax act online 2009 However, if you are married and choose to file a joint return with a U. Tax act online 2009 S. Tax act online 2009 citizen or resident spouse, you may be eligible for these credits. Tax act online 2009 See Nonresident Spouse Treated as a Resident in chapter 1. Tax act online 2009 Generally, services you perform as a nonresident alien temporarily in the United States as a nonimmigrant under subparagraph (F), (J), (M), or (Q) of section 101(a)(15) of the Immigration and Nationality Act are not covered under the social security program if you perform the services to carry out the purpose for which you were admitted to the United States. Tax act online 2009 See Social Security and Medicare Taxes in chapter 8. Tax act online 2009 If social security or Medicare taxes were withheld in error from pay that is not subject to these taxes, contact the employer who withheld the taxes for a refund. Tax act online 2009 If you are unable to get a full refund of the amount from your employer, file a claim for refund with the Internal Revenue Service on Form 843, Claim for Refund and Request for Abatement. Tax act online 2009 Do not use Form 843 to request a refund of Additional Medicare Tax. Tax act online 2009 See Refund of Taxes Withheld in Error in chapter 8. Tax act online 2009 Before leaving the United States, aliens generally must obtain a certificate of compliance. Tax act online 2009 This document, also popularly known as the sailing permit or departure permit, is part of the income tax form you must file before leaving. Tax act online 2009 You will receive a sailing or departure permit after filing a Form 1040-C or Form 2063. Tax act online 2009 These forms are discussed in chapter 11. Tax act online 2009 Form 1040-C is not an annual U. Tax act online 2009 S. Tax act online 2009 income tax return. Tax act online 2009 If an income tax return is required by law, you must file that return even though you already filed a Form 1040-C. Tax act online 2009 Chapters 5 and 7 discuss filing an annual U. Tax act online 2009 S. Tax act online 2009 income tax return. Tax act online 2009 . Tax act online 2009 I am a resident alien. Tax act online 2009 Can I claim any treaty benefits? Generally, you cannot claim tax treaty benefits as a resident alien. Tax act online 2009 However, there are exceptions. Tax act online 2009 See Effect of Tax Treaties in chapter 1. Tax act online 2009 See also Resident Aliens under Some Typical Tax Treaty Benefits in chapter 9. Tax act online 2009 You must file Form 1040NR if you are engaged in a trade or business in the United States, or have any other U. Tax act online 2009 S. Tax act online 2009 source income on which tax was not fully paid by the amount withheld. Tax act online 2009 You can use Form 1040NR-EZ instead of Form 1040NR if you meet all 11 conditions listed under Form 1040NR-EZ in chapter 7. Tax act online 2009 You were a dual-status alien last year. Tax act online 2009 As a general rule, because you were in the United States for 183 days or more, you have met the substantial presence test and you are taxed as a resident. Tax act online 2009 However, for the part of the year that you were not present in the United States, you are a nonresident. Tax act online 2009 File Form 1040. Tax act online 2009 Print “Dual-Status Return” across the top. Tax act online 2009 Attach a statement showing your U. Tax act online 2009 S. Tax act online 2009 source income for the part of the year you were a nonresident. Tax act online 2009 You may use Form 1040NR as the statement. Tax act online 2009 Print “Dual-Status Statement” across the top. Tax act online 2009 See First Year of Residency in chapter 1 for rules on determining your residency starting date. Tax act online 2009 If you are an employee and you receive wages subject to U. Tax act online 2009 S. Tax act online 2009 income tax withholding, you must generally file by the 15th day of the 4th month after your tax year ends. Tax act online 2009 If you file for the 2013 calendar year, your return is due April 15, 2014. Tax act online 2009 If you are not an employee who receives wages subject to U. Tax act online 2009 S. Tax act online 2009 income tax withholding, you must file by the 15th day of the 6th month after your tax year ends. Tax act online 2009 For the 2013 calendar year, file your return by June 16, 2014. Tax act online 2009 For more information on when and where to file, see chapter 7 . Tax act online 2009 A social security number (SSN) must be furnished on returns, statements, and other tax-related documents. Tax act online 2009 If your spouse does not have and is not eligible to get an SSN, he must apply for an individual taxpayer identification number (ITIN). Tax act online 2009 If you are a U. Tax act online 2009 S. Tax act online 2009 citizen or resident and you choose to treat your nonresident spouse as a resident and file a joint tax return, your nonresident spouse needs an SSN or an ITIN. Tax act online 2009 Alien spouses who are claimed as exemptions or dependents are also required to furnish an SSN or an ITIN. Tax act online 2009 See Identification Number in chapter 5 for more information. Tax act online 2009 Generally, you cannot file as married filing jointly if either spouse was a nonresident alien at any time during the tax year. Tax act online 2009 However, nonresident aliens married to U. Tax act online 2009 S. Tax act online 2009 citizens or residents can choose to be treated as U. Tax act online 2009 S. Tax act online 2009 residents and file joint returns. Tax act online 2009 For more information on this choice, see Nonresident Spouse Treated as a Resident in chapter 1. Tax act online 2009 Assuming both of you had these visas for all of last year, you are a resident alien. Tax act online 2009 Your husband is a nonresident alien if he has not been in the United States as a student for more than 5 years. Tax act online 2009 You and your husband can file a joint tax return on Form 1040, 1040A, or 1040EZ if he makes the choice to be treated as a resident for the entire year. Tax act online 2009 See Nonresident Spouse Treated as a Resident in chapter 1. Tax act online 2009 If your husband does not make this choice, you must file a separate return on Form 1040 or Form 1040A. Tax act online 2009 Your husband must file Form 1040NR or 1040NR-EZ. Tax act online 2009 No. Tax act online 2009 A dual-resident taxpayer is one who is a resident of both the United States and another country under each country's tax laws. Tax act online 2009 See Effect of Tax Treaties in chapter 1. Tax act online 2009 You are a dual-status taxpayer when you are both a resident alien and a nonresident alien in the same year. Tax act online 2009 See chapter 6 . Tax act online 2009 The following rules apply if the dividends and capital gains are not effectively connected with a U. Tax act online 2009 S. Tax act online 2009 trade or business. Tax act online 2009 Capital gains are generally not taxable if you were in the United States for less than 183 days during the year. Tax act online 2009 See Sales or Exchanges of Capital Assets in chapter 4 for more information and exceptions. Tax act online 2009 Dividends are generally taxed at a 30% (or lower treaty) rate. Tax act online 2009 The brokerage company or payor of the dividends should withhold this tax at source. Tax act online 2009 If tax is not withheld at the correct rate, you must file Form 1040NR to receive a refund or pay any additional tax due. Tax act online 2009 If the capital gains and dividends are effectively connected with a U. Tax act online 2009 S. Tax act online 2009 trade or business, they are taxed according to the same rules and at the same rates that apply to U. Tax act online 2009 S. Tax act online 2009 citizens and residents. Tax act online 2009 If you are a nonresident alien, 85% of any U. Tax act online 2009 S. Tax act online 2009 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. Tax act online 2009 See The 30% Tax in chapter 4. Tax act online 2009 If you are a nonresident alien and the scholarship is not from U. Tax act online 2009 S. Tax act online 2009 sources, it is not subject to U. Tax act online 2009 S. Tax act online 2009 tax. Tax act online 2009 See Scholarships, Grants, Prizes, and Awards in chapter 2 to determine whether your scholarship is from U. Tax act online 2009 S. Tax act online 2009 sources. Tax act online 2009 If your scholarship is from U. Tax act online 2009 S. Tax act online 2009 sources or you are a resident alien, your scholarship is subject to U. Tax act online 2009 S. Tax act online 2009 tax according to the following rules. Tax act online 2009 If you are a candidate for a degree, you may be able to exclude from your income the part of the scholarship you use to pay for tuition, fees, books, supplies, and equipment required by the educational institution. Tax act online 2009 However, the part of the scholarship you use to pay for other expenses, such as room and board, is taxable. Tax act online 2009 See Scholarships and Fellowship Grants in chapter 3 for more information. Tax act online 2009 If you are not a candidate for a degree, your scholarship is taxable. Tax act online 2009 Nonresident aliens cannot claim the standard deduction. Tax act online 2009 However, see Students and business apprentices from India , under Itemized Deductions in chapter 5 for an exception. Tax act online 2009 You cannot claim the standard deduction allowed on Form 1040. Tax act online 2009 However, you can itemize any allowable deductions. Tax act online 2009 Nonresident aliens can claim some of the same itemized deductions that resident aliens can claim. Tax act online 2009 However, nonresident aliens can claim itemized deductions only if they have income effectively connected with their U. Tax act online 2009 S. Tax act online 2009 trade or business. Tax act online 2009 See Itemized Deductions in chapter 5. Tax act online 2009 Resident aliens can claim personal exemptions and exemptions for dependents in the same way as U. Tax act online 2009 S. Tax act online 2009 citizens. Tax act online 2009 However, nonresident aliens generally can claim only a personal exemption for themselves on their U. Tax act online 2009 S. Tax act online 2009 tax return. Tax act online 2009 There are special rules for residents of Mexico, Canada, and South Korea; for U. Tax act online 2009 S. Tax act online 2009 nationals; and for students and business apprentices from India. Tax act online 2009 See Exemptions in chapter 5. Tax act online 2009 As a dual-status taxpayer, you usually will be able to claim your own personal exemption. Tax act online 2009 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. Tax act online 2009 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. Tax act online 2009 You cannot use exemptions (other than your own) to reduce taxable income to less than zero for that period. Tax act online 2009 If you are a nonresident alien for any part of the year, you cannot claim the earned income credit. Tax act online 2009 See chapter 6 for more information on dual-status aliens. Tax act online 2009 If you are a nonresident alien for any part of the year, you generally cannot claim the education credits. Tax act online 2009 However, if you are married and choose to file a joint return with a U. Tax act online 2009 S. Tax act online 2009 citizen or resident spouse, you may be eligible for these credits. Tax act online 2009 See Nonresident Spouse Treated as a Resident in chapter 1. Tax act online 2009 Generally, services you perform as a nonresident alien temporarily in the United States as a nonimmigrant under subparagraph (F), (J), (M), or (Q) of section 101(a)(15) of the Immigration and Nationality Act are not covered under the social security program if you perform the services to carry out the purpose for which you were admitted to the United States. Tax act online 2009 See Social Security and Medicare Taxes in chapter 8. Tax act online 2009 If social security or Medicare taxes were withheld in error from pay that is not subject to these taxes, contact the employer who withheld the taxes for a refund. Tax act online 2009 If you are unable to get a full refund of the amount from your employer, file a claim for refund with the Internal Revenue Service on Form 843, Claim for Refund and Request for Abatement. Tax act online 2009 Do not use Form 843 to request a refund of Additional Medicare Tax. Tax act online 2009 See Refund of Taxes Withheld in Error in chapter 8. Tax act online 2009 Before leaving the United States, aliens generally must obtain a certificate of compliance. Tax act online 2009 This document, also popularly known as the sailing permit or departure permit, is part of the income tax form you must file before leaving. Tax act online 2009 You will receive a sailing or departure permit after filing a Form 1040-C or Form 2063. Tax act online 2009 These forms are discussed in chapter 11. Tax act online 2009 Form 1040-C is not an annual U. Tax act online 2009 S. Tax act online 2009 income tax return. Tax act online 2009 If an income tax return is required by law, you must file that return even though you already filed a Form 1040-C. Tax act online 2009 Chapters 5 and 7 discuss filing an annual U. Tax act online 2009 S. Tax act online 2009 income tax return. Tax act online 2009 . Tax act online 2009 I am a nonresident alien with no dependents. Tax act online 2009 I am working temporarily for a U. Tax act online 2009 S. Tax act online 2009 company. Tax act online 2009 What return do I file? You must file Form 1040NR if you are engaged in a trade or business in the United States, or have any other U. Tax act online 2009 S. Tax act online 2009 source income on which tax was not fully paid by the amount withheld. Tax act online 2009 You can use Form 1040NR-EZ instead of Form 1040NR if you meet all 11 conditions listed under Form 1040NR-EZ in chapter 7. Tax act online 2009 You were a dual-status alien last year. Tax act online 2009 As a general rule, because you were in the United States for 183 days or more, you have met the substantial presence test and you are taxed as a resident. Tax act online 2009 However, for the part of the year that you were not present in the United States, you are a nonresident. Tax act online 2009 File Form 1040. Tax act online 2009 Print “Dual-Status Return” across the top. Tax act online 2009 Attach a statement showing your U. Tax act online 2009 S. Tax act online 2009 source income for the part of the year you were a nonresident. Tax act online 2009 You may use Form 1040NR as the statement. Tax act online 2009 Print “Dual-Status Statement” across the top. Tax act online 2009 See First Year of Residency in chapter 1 for rules on determining your residency starting date. Tax act online 2009 If you are an employee and you receive wages subject to U. Tax act online 2009 S. Tax act online 2009 income tax withholding, you must generally file by the 15th day of the 4th month after your tax year ends. Tax act online 2009 If you file for the 2013 calendar year, your return is due April 15, 2014. Tax act online 2009 If you are not an employee who receives wages subject to U. Tax act online 2009 S. Tax act online 2009 income tax withholding, you must file by the 15th day of the 6th month after your tax year ends. Tax act online 2009 For the 2013 calendar year, file your return by June 16, 2014. Tax act online 2009 For more information on when and where to file, see chapter 7 . Tax act online 2009 A social security number (SSN) must be furnished on returns, statements, and other tax-related documents. Tax act online 2009 If your spouse does not have and is not eligible to get an SSN, he must apply for an individual taxpayer identification number (ITIN). Tax act online 2009 If you are a U. Tax act online 2009 S. Tax act online 2009 citizen or resident and you choose to treat your nonresident spouse as a resident and file a joint tax return, your nonresident spouse needs an SSN or an ITIN. Tax act online 2009 Alien spouses who are claimed as exemptions or dependents are also required to furnish an SSN or an ITIN. Tax act online 2009 See Identification Number in chapter 5 for more information. Tax act online 2009 Generally, you cannot file as married filing jointly if either spouse was a nonresident alien at any time during the tax year. Tax act online 2009 However, nonresident aliens married to U. Tax act online 2009 S. Tax act online 2009 citizens or residents can choose to be treated as U. Tax act online 2009 S. Tax act online 2009 residents and file joint returns. Tax act online 2009 For more information on this choice, see Nonresident Spouse Treated as a Resident in chapter 1. Tax act online 2009 Assuming both of you had these visas for all of last year, you are a resident alien. Tax act online 2009 Your husband is a nonresident alien if he has not been in the United States as a student for more than 5 years. Tax act online 2009 You and your husband can file a joint tax return on Form 1040, 1040A, or 1040EZ if he makes the choice to be treated as a resident for the entire year. Tax act online 2009 See Nonresident Spouse Treated as a Resident in chapter 1. Tax act online 2009 If your husband does not make this choice, you must file a separate return on Form 1040 or Form 1040A. Tax act online 2009 Your husband must file Form 1040NR or 1040NR-EZ. Tax act online 2009 No. Tax act online 2009 A dual-resident taxpayer is one who is a resident of both the United States and another country under each country's tax laws. Tax act online 2009 See Effect of Tax Treaties in chapter 1. Tax act online 2009 You are a dual-status taxpayer when you are both a resident alien and a nonresident alien in the same year. Tax act online 2009 See chapter 6 . Tax act online 2009 The following rules apply if the dividends and capital gains are not effectively connected with a U. Tax act online 2009 S. Tax act online 2009 trade or business. Tax act online 2009 Capital gains are generally not taxable if you were in the United States for less than 183 days during the year. Tax act online 2009 See Sales or Exchanges of Capital Assets in chapter 4 for more information and exceptions. Tax act online 2009 Dividends are generally taxed at a 30% (or lower treaty) rate. Tax act online 2009 The brokerage company or payor of the dividends should withhold this tax at source. Tax act online 2009 If tax is not withheld at the correct rate, you must file Form 1040NR to receive a refund or pay any additional tax due. Tax act online 2009 If the capital gains and dividends are effectively connected with a U. Tax act online 2009 S. Tax act online 2009 trade or business, they are taxed according to the same rules and at the same rates that apply to U. Tax act online 2009 S. Tax act online 2009 citizens and residents. Tax act online 2009 If you are a nonresident alien, 85% of any U. Tax act online 2009 S. Tax act online 2009 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. Tax act online 2009 See The 30% Tax in chapter 4. Tax act online 2009 If you are a nonresident alien and the scholarship is not from U. Tax act online 2009 S. Tax act online 2009 sources, it is not subject to U. Tax act online 2009 S. Tax act online 2009 tax. Tax act online 2009 See Scholarships, Grants, Prizes, and Awards in chapter 2 to determine whether your scholarship is from U. Tax act online 2009 S. Tax act online 2009 sources. Tax act online 2009 If your scholarship is from U. Tax act online 2009 S. Tax act online 2009 sources or you are a resident alien, your scholarship is subject to U. Tax act online 2009 S. Tax act online 2009 tax according to the following rules. Tax act online 2009 If you are a candidate for a degree, you may be able to exclude from your income the part of the scholarship you use to pay for tuition, fees, books, supplies, and equipment required by the educational institution. Tax act online 2009 However, the part of the scholarship you use to pay for other expenses, such as room and board, is taxable. Tax act online 2009 See Scholarships and Fellowship Grants in chapter 3 for more information. Tax act online 2009 If you are not a candidate for a degree, your scholarship is taxable. Tax act online 2009 Nonresident aliens cannot claim the standard deduction. Tax act online 2009 However, see Students and business apprentices from India , under Itemized Deductions in chapter 5 for an exception. Tax act online 2009 You cannot claim the standard deduction allowed on Form 1040. Tax act online 2009 However, you can itemize any allowable deductions. Tax act online 2009 Nonresident aliens can claim some of the same itemized deductions that resident aliens can claim. Tax act online 2009 However, nonresident aliens can claim itemized deductions only if they have income effectively connected with their U. Tax act online 2009 S. Tax act online 2009 trade or business. Tax act online 2009 See Itemized Deductions in chapter 5. Tax act online 2009 Resident aliens can claim personal exemptions and exemptions for dependents in the same way as U. Tax act online 2009 S. Tax act online 2009 citizens. Tax act online 2009 However, nonresident aliens generally can claim only a personal exemption for themselves on their U. Tax act online 2009 S. Tax act online 2009 tax return. Tax act online 2009 There are special rules for residents of Mexico, Canada, and South Korea; for U. Tax act online 2009 S. Tax act online 2009 nationals; and for students and business apprentices from India. Tax act online 2009 See Exemptions in chapter 5. Tax act online 2009 As a dual-status taxpayer, you usually will be able to claim your own personal exemption. Tax act online 2009 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. Tax act online 2009 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. Tax act online 2009 You cannot use exemptions (other than your own) to reduce taxable income to less than zero for that period. Tax act online 2009 If you are a nonresident alien for any part of the year, you cannot claim the earned income credit. Tax act online 2009 See chapter 6 for more information on dual-status aliens. Tax act online 2009 If you are a nonresident alien for any part of the year, you generally cannot claim the education credits. Tax act online 2009 However, if you are married and choose to file a joint return with a U. Tax act online 2009 S. Tax act online 2009 citizen or resident spouse, you may be eligible for these credits. Tax act online 2009 See Nonresident Spouse Treated as a Resident in chapter 1. Tax act online 2009 Generally, services you perform as a nonresident alien temporarily in the United States as a nonimmigrant under subparagraph (F), (J), (M), or (Q) of section 101(a)(15) of the Immigration and Nationality Act are not covered under the social security program if you perform the services to carry out the purpose for which you were admitted to the United States. Tax act online 2009 See Social Security and Medicare Taxes in chapter 8. Tax act online 2009 If social security or Medicare taxes were withheld in error from pay that is not subject to these taxes, contact the employer who withheld the taxes for a refund. Tax act online 2009 If you are unable to get a full refund of the amount from your employer, file a claim for refund with the Internal Revenue Service on Form 843, Claim for Refund and Request for Abatement. Tax act online 2009 Do not use Form 843 to request a refund of Additional Medicare Tax. Tax act online 2009 See Refund of Taxes Withheld in Error in chapter 8. Tax act online 2009 Before leaving the United States, aliens generally must obtain a certificate of compliance. Tax act online 2009 This document, also popularly known as the sailing permit or departure permit, is part of the income tax form you must file before leaving. Tax act online 2009 You will receive a sailing or departure permit after filing a Form 1040-C or Form 2063. Tax act online 2009 These forms are discussed in chapter 11. Tax act online 2009 Form 1040-C is not an annual U. Tax act online 2009 S. Tax act online 2009 income tax return. Tax act online 2009 If an income tax return is required by law, you must file that return even though you already filed a Form 1040-C. Tax act online 2009 Chapters 5 and 7 discuss filing an annual U. Tax act online 2009 S. Tax act online 2009 income tax return. Tax act online 2009 . Tax act online 2009 I came to the United States on June 30th of last year. Tax act online 2009 I have an H-1B Visa. Tax act online 2009 What is my tax status, resident alien or nonresident alien? What tax return do I file? You were a dual-status alien last year. Tax act online 2009 As a general rule, because you were in the United States for 183 days or more, you have met the substantial presence test and you are taxed as a resident. Tax act online 2009 However, for the part of the year that you were not present in the United States, you are a nonresident. Tax act online 2009 File Form 1040. Tax act online 2009 Print “Dual-Status Return” across the top. Tax act online 2009 Attach a statement showing your U. Tax act online 2009 S. Tax act online 2009 source income for the part of the year you were a nonresident. Tax act online 2009 You may use Form 1040NR as the statement. Tax act online 2009 Print “Dual-Status Statement” across the top. Tax act online 2009 See First Year of Residency in chapter 1 for rules on determining your residency starting date. Tax act online 2009 If you are an employee and you receive wages subject to U. Tax act online 2009 S. Tax act online 2009 income tax withholding, you must generally file by the 15th day of the 4th month after your tax year ends. Tax act online 2009 If you file for the 2013 calendar year, your return is due April 15, 2014. Tax act online 2009 If you are not an employee who receives wages subject to U. Tax act online 2009 S. Tax act online 2009 income tax withholding, you must file by the 15th day of the 6th month after your tax year ends. Tax act online 2009 For the 2013 calendar year, file your return by June 16, 2014. Tax act online 2009 For more information on when and where to file, see chapter 7 . Tax act online 2009 A social security number (SSN) must be furnished on returns, statements, and other tax-related documents. Tax act online 2009 If your spouse does not have and is not eligible to get an SSN, he must apply for an individual taxpayer identification number (ITIN). Tax act online 2009 If you are a U. Tax act online 2009 S. Tax act online 2009 citizen or resident and you choose to treat your nonresident spouse as a resident and file a joint tax return, your nonresident spouse needs an SSN or an ITIN. Tax act online 2009 Alien spouses who are claimed as exemptions or dependents are also required to furnish an SSN or an ITIN. Tax act online 2009 See Identification Number in chapter 5 for more information. Tax act online 2009 Generally, you cannot file as married filing jointly if either spouse was a nonresident alien at any time during the tax year. Tax act online 2009 However, nonresident aliens married to U. Tax act online 2009 S. Tax act online 2009 citizens or residents can choose to be treated as U. Tax act online 2009 S. Tax act online 2009 residents and file joint returns. Tax act online 2009 For more information on this choice, see Nonresident Spouse Treated as a Resident in chapter 1. Tax act online 2009 Assuming both of you had these visas for all of last year, you are a resident alien. Tax act online 2009 Your husband is a nonresident alien if he has not been in the United States as a student for more than 5 years. Tax act online 2009 You and your husband can file a joint tax return on Form 1040, 1040A, or 1040EZ if he makes the choice to be treated as a resident for the entire year. Tax act online 2009 See Nonresident Spouse Treated as a Resident in chapter 1. Tax act online 2009 If your husband does not make this choice, you must file a separate return on Form 1040 or Form 1040A. Tax act online 2009 Your husband must file Form 1040NR or 1040NR-EZ. Tax act online 2009 No. Tax act online 2009 A dual-resident taxpayer is one who is a resident of both the United States and another country under each country's tax laws. Tax act online 2009 See Effect of Tax Treaties in chapter 1. Tax act online 2009 You are a dual-status taxpayer when you are both a resident alien and a nonresident alien in the same year. Tax act online 2009 See chapter 6 . Tax act online 2009 The following rules apply if the dividends and capital gains are not effectively connected with a U. Tax act online 2009 S. Tax act online 2009 trade or business. Tax act online 2009 Capital gains are generally not taxable if you were in the United States for less than 183 days during the year. Tax act online 2009 See Sales or Exchanges of Capital Assets in chapter 4 for more information and exceptions. Tax act online 2009 Dividends are generally taxed at a 30% (or lower treaty) rate. Tax act online 2009 The brokerage company or payor of the dividends should withhold this tax at source. Tax act online 2009 If tax is not withheld at the correct rate, you must file Form 1040NR to receive a refund or pay any additional tax due. Tax act online 2009 If the capital gains and dividends are effectively connected with a U. Tax act online 2009 S. Tax act online 2009 trade or business, they are taxed according to the same rules and at the same rates that apply to U. Tax act online 2009 S. Tax act online 2009 citizens and residents. Tax act online 2009 If you are a nonresident alien, 85% of any U. Tax act online 2009 S. Tax act online 2009 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. Tax act online 2009 See The 30% Tax in chapter 4. Tax act online 2009 If you are a nonresident alien and the scholarship is not from U. Tax act online 2009 S. Tax act online 2009 sources, it is not subject to U. Tax act online 2009 S. Tax act online 2009 tax. Tax act online 2009 See Scholarships, Grants, Prizes, and Awards in chapter 2 to determine whether your scholarship is from U. Tax act online 2009 S. Tax act online 2009 sources. Tax act online 2009 If your scholarship is from U. Tax act online 2009 S. Tax act online 2009 sources or you are a resident alien, your scholarship is subject to U. Tax act online 2009 S. Tax act online 2009 tax according to the following rules. Tax act online 2009 If you are a candidate for a degree, you may be able to exclude from your income the part of the scholarship you use to pay for tuition, fees, books, supplies, and equipment required by the educational institution. Tax act online 2009 However, the part of the scholarship you use to pay for other expenses, such as room and board, is taxable. Tax act online 2009 See Scholarships and Fellowship Grants in chapter 3 for more information. Tax act online 2009 If you are not a candidate for a degree, your scholarship is taxable. Tax act online 2009 Nonresident aliens cannot claim the standard deduction. Tax act online 2009 However, see Students and business apprentices from India , under Itemized Deductions in chapter 5 for an exception. Tax act online 2009 You cannot claim the standard deduction allowed on Form 1040. Tax act online 2009 However, you can itemize any allowable deductions. Tax act online 2009 Nonresident aliens can claim some of the same itemized deductions that resident aliens can claim. Tax act online 2009 However, nonresident aliens can claim itemized deductions only if they have income effectively connected with their U. Tax act online 2009 S. Tax act online 2009 trade or business. Tax act online 2009 See Itemized Deductions in chapter 5. Tax act online 2009 Resident aliens can claim personal exemptions and exemptions for dependents in the same way as U. Tax act online 2009 S. Tax act online 2009 citizens. Tax act online 2009 However, nonresident aliens generally can claim only a personal exemption for themselves on their U. Tax act online 2009 S. Tax act online 2009 tax return. Tax act online 2009 There are special rules for residents of Mexico, Canada, and South Korea; for U. Tax act online 2009 S. Tax act online 2009 nationals; and for students and business apprentices from India. Tax act online 2009 See Exemptions in chapter 5. Tax act online 2009 As a dual-status taxpayer, you usually will be able to claim your own personal exemption. Tax act online 2009 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. Tax act online 2009 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. Tax act online 2009 You cannot use exemptions (other than your own) to reduce taxable income to less than zero for that period. Tax act online 2009 If you are a nonresident alien for any part of the year, you cannot claim the earned income credit. Tax act online 2009 See chapter 6 for more information on dual-status aliens. Tax act online 2009 If you are a nonresident alien for any part of the year, you generally cannot claim the education credits. Tax act online 2009 However, if you are married and choose to file a joint return with a U. Tax act online 2009 S. Tax act online 2009 citizen or resident spouse, you may be eligible for these credits. Tax act online 2009 See Nonresident Spouse Treated as a Resident in chapter 1. Tax act online 2009 Generally, services you perform as a nonresident alien temporarily in the United States as a nonimmigrant under subparagraph (F), (J), (M), or (Q) of section 101(a)(15) of the Immigration and Nationality Act are not covered under the social security program if you perform the services to carry out the purpose for which you were admitted to the United States. Tax act online 2009 See Social Security and Medicare Taxes in chapter 8. Tax act online 2009 If social security or Medicare taxes were withheld in error from pay that is not subject to these taxes, contact the employer who withheld the taxes for a refund. Tax act online 2009 If you are unable to get a full refund of the amount from your employer, file a claim for refund with the Internal Revenue Service on Form 843, Claim for Refund and Request for Abatement. Tax act online 2009 Do not use Form 843 to request a refund of Additional Medicare Tax. Tax act online 2009 See Refund of Taxes Withheld in Error in chapter 8. Tax act online 2009 Before leaving the United States, aliens generally must obtain a certificate of compliance. Tax act online 2009 This document, also popularly known as the sailing permit or departure permit, is part of the income tax form you must file before leaving. Tax act online 2009 You will receive a sailing or departure permit after filing a Form 1040-C or Form 2063. Tax act online 2009 These forms are discussed in chapter 11. Tax act online 2009 Form 1040-C is not an annual U. Tax act online 2009 S. Tax act online 2009 income tax return. Tax act online 2009 If an income tax return is required by law, you must file that return even though you already filed a Form 1040-C. Tax act online 2009 Chapters 5 and 7 discuss filing an annual U. Tax act online 2009 S. Tax act online 2009 income tax return. Tax act online 2009 . Tax act online 2009 When is my Form 1040NR due? If you are an employee and you receive wages subject to U. Tax act online 2009 S. Tax act online 2009 income tax withholding, you must generally file by the 15th day of the 4th month after your tax year ends. Tax act online 2009 If you file for the 2013 calendar year, your return is due April 15, 2014. Tax act online 2009 If you are not an employee who receives wages subject to U. Tax act online 2009 S. Tax act online 2009 income tax withholding, you must file by the 15th day of the 6th month after your tax year ends. Tax act online 2009 For the 2013 calendar year, file your return by June 16, 2014. Tax act online 2009 For more information on when and where to file, see chapter 7 . Tax act online 2009 A social security number (SSN) must be furnished on returns, statements, and other tax-related documents. Tax act online 2009 If your spouse does not have and is not eligible to get an SSN, he must apply for an individual taxpayer identification number (ITIN). Tax act online 2009 If you are a U. Tax act online 2009 S. Tax act online 2009 citizen or resident and you choose to treat your nonresident spouse as a resident and file a joint tax return, your nonresident spouse needs an SSN or an ITIN. Tax act online 2009 Alien spouses who are claimed as exemptions or dependents are also required to furnish an SSN or an ITIN. Tax act online 2009 See Identification Number in chapter 5 for more information. Tax act online 2009 Generally, you cannot file as married filing jointly if either spouse was a nonresident alien at any time during the tax year. Tax act online 2009 However, nonresident aliens married to U. Tax act online 2009 S. Tax act online 2009 citizens or residents can choose to be treated as U. Tax act online 2009 S. Tax act online 2009 residents and file joint returns. Tax act online 2009 For more information on this choice, see Nonresident Spouse Treated as a Resident in chapter 1. Tax act online 2009 Assuming both of you had these visas for all of last year, you are a resident alien. Tax act online 2009 Your husband is a nonresident alien if he has not been in the United States as a student for more than 5 years. Tax act online 2009 You and your husband can file a joint tax return on Form 1040, 1040A, or 1040EZ if he makes the choice to be treated as a resident for the entire year. Tax act online 2009 See Nonresident Spouse Treated as a Resident in chapter 1. Tax act online 2009 If your husband does not make this choice, you must file a separate return on Form 1040 or Form 1040A. Tax act online 2009 Your husband must file Form 1040NR or 1040NR-EZ. Tax act online 2009 No. Tax act online 2009 A dual-resident taxpayer is one who is a resident of both the United States and another country under each country's tax laws. Tax act online 2009 See Effect of Tax Treaties in chapter 1. Tax act online 2009 You are a dual-status taxpayer when you are both a resident alien and a nonresident alien in the same year. Tax act online 2009 See chapter 6 . Tax act online 2009 The following rules apply if the dividends and capital gains are not effectively connected with a U. Tax act online 2009 S. Tax act online 2009 trade or business. Tax act online 2009 Capital gains are generally not taxable if you were in the United States for less than 183 days during the year. Tax act online 2009 See Sales or Exchanges of Capital Assets in chapter 4 for more information and exceptions. Tax act online 2009 Dividends are generally taxed at a 30% (or lower treaty) rate. Tax act online 2009 The brokerage company or payor of the dividends should withhold this tax at source. Tax act online 2009 If tax is not withheld at the correct rate, you must file Form 1040NR to receive a refund or pay any additional tax due. Tax act online 2009 If the capital gains and dividends are effectively connected with a U. Tax act online 2009 S. Tax act online 2009 trade or business, they are taxed according to the same rules and at the same rates that apply to U. Tax act online 2009 S. Tax act online 2009 citizens and residents. Tax act online 2009 If you are a nonresident alien, 85% of any U. Tax act online 2009 S. Tax act online 2009 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. Tax act online 2009 See The 30% Tax in chapter 4. Tax act online 2009 If you are a nonresident alien and the scholarship is not from U. Tax act online 2009 S. Tax act online 2009 sources, it is not subject to U. Tax act online 2009 S. Tax act online 2009 tax. Tax act online 2009 See Scholarships, Grants, Prizes, and Awards in chapter 2 to determine whether your scholarship is from U. Tax act online 2009 S. Tax act online 2009 sources. Tax act online 2009 If your scholarship is from U. Tax act online 2009 S. Tax act online 2009 sources or you are a resident alien, your scholarship is subject to U. Tax act online 2009 S. Tax act online 2009 tax according to the following rules. Tax act online 2009 If you are a candidate for a degree, you may be able to exclude from your income the part of the scholarship you use to pay for tuition, fees, books, supplies, and equipment required by the educational institution. Tax act online 2009 However, the part of the scholarship you use to pay for other expenses, such as room and board, is taxable. Tax act online 2009 See Scholarships and Fellowship Grants in chapter 3 for more information. Tax act online 2009 If you are not a candidate for a degree, your scholarship is taxable. Tax act online 2009 Nonresident aliens cannot claim the standard deduction. Tax act online 2009 However, see Students and business apprentices from India , under Itemized Deductions in chapter 5 for an exception. Tax act online 2009 You cannot claim the standard deduction allowed on Form 1040. Tax act online 2009 However, you can itemize any allowable deductions. Tax act online 2009 Nonresident aliens can claim some of the same itemized deductions that resident aliens can claim. Tax act online 2009 However, nonresident aliens can claim itemized deductions only if they have income effectively connected with their U. Tax act online 2009 S. Tax act online 2009 trade or business. Tax act online 2009 See Itemized Deductions in chapter 5. Tax act online 2009 Resident aliens can claim personal exemptions and exemptions for dependents in the same way as U. Tax act online 2009 S. Tax act online 2009 citizens. Tax act online 2009 However, nonresident aliens generally can claim only a personal exemption for themselves on their U. Tax act online 2009 S. Tax act online 2009 tax return. Tax act online 2009 There are special rules for residents of Mexico, Canada, and South Korea; for U. Tax act online 2009 S. Tax act online 2009 nationals; and for students and business apprentices from India. Tax act online 2009 See Exemptions in chapter 5. Tax act online 2009 As a dual-status taxpayer, you usually will be able to claim your own personal exemption. Tax act online 2009 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. Tax act online 2009 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. Tax act online 2009 You cannot use exemptions (other than your own) to reduce taxable income to less than zero for that period. Tax act online 2009 If you are a nonresident alien for any part of the year, you cannot claim the earned income credit. Tax act online 2009 See chapter 6 for more information on dual-status aliens. Tax act online 2009 If you are a nonresident alien for any part of the year, you generally cannot claim the education credits. Tax act online 2009 However, if you are married and choose to file a joint return with a U. Tax act online 2009 S. Tax act online 2009 citizen or resident spouse, you may be eligible for these credits. Tax act online 2009 See Nonresident Spouse Treated as a Resident in chapter 1. Tax act online 2009 Generally, services you perform as a nonresident alien temporarily in the United States as a nonimmigrant under subparagraph (F), (J), (M), or (Q) of section 101(a)(15) of the Immigration and Nationality Act are not covered under the social security program if you perform the services to carry out the purpose