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Tax Forms 2011 1040

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Tax Forms 2011 1040

Tax forms 2011 1040 5. Tax forms 2011 1040   Figuring Your Tax Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Tax Year Identification NumberF-1 and M-1 visa holders. Tax forms 2011 1040 J-1 visa holders. Tax forms 2011 1040 Filing StatusResident Aliens Nonresident Aliens Reporting Your Income DeductionsResident Aliens Nonresident Aliens ExemptionsResident Aliens Nonresident Aliens Itemized DeductionsResident Aliens Nonresident Aliens Tax Credits and PaymentsResident Aliens Nonresident Aliens Bona Fide Residents of American Samoa or Puerto Rico Introduction After you have determined your alien status, the source of your income, and if and how that income is taxed in the United States, your next step is to figure your tax. Tax forms 2011 1040 The information in this chapter is not as comprehensive for resident aliens as it is for nonresident aliens. Tax forms 2011 1040 Resident aliens should get publications, forms, and instructions for U. Tax forms 2011 1040 S. Tax forms 2011 1040 citizens, because the information for filing returns for resident aliens is generally the same as for U. Tax forms 2011 1040 S. Tax forms 2011 1040 citizens. Tax forms 2011 1040 If you are both a nonresident alien and a resident alien in the same tax year, see chapter 6 for a discussion of dual-status aliens. Tax forms 2011 1040 Topics - This chapter discusses: Identification numbers, Filing status, Deductions, Exemptions, Tax credits and payments, and Special rules for bona fide residents of American Samoa and Puerto Rico. Tax forms 2011 1040 Useful Items - You may want to see: Publication 463 Travel, Entertainment, Gift, and Car Expenses 501 Exemptions, Standard Deduction, and Filing Information 521 Moving Expenses 526 Charitable Contributions 535 Business Expenses 597 Information on the United States–Canada Income Tax Treaty Form (and Instructions) W-7 Application for IRS Individual Taxpayer Identification Number 1040 U. Tax forms 2011 1040 S. Tax forms 2011 1040 Individual Income Tax Return 1040NR U. Tax forms 2011 1040 S. Tax forms 2011 1040 Nonresident Alien Income Tax Return 1040NR-EZ U. Tax forms 2011 1040 S. Tax forms 2011 1040 Income Tax Return for Certain Nonresident Aliens With No Dependents 2106 Employee Business Expenses 2106-EZ Unreimbursed Employee Business Expenses 3903 Moving Expenses 4563 Exclusion of Income for Bona Fide Residents of American Samoa 8959 Additional Medicare Tax See chapter 12 for information about getting these publications and forms. Tax forms 2011 1040 Tax Year You must figure your income and file a tax return on the basis of an annual accounting period called a tax year. Tax forms 2011 1040 If you have not previously established a fiscal tax year, your tax year is the calendar year. Tax forms 2011 1040 A calendar year is 12 consecutive months ending on December 31. Tax forms 2011 1040 If you have previously established a regular fiscal year (12 consecutive months ending on the last day of a month other than December or a 52–53 week year) and are considered to be a U. Tax forms 2011 1040 S. Tax forms 2011 1040 resident for any calendar year, you will be treated as a U. Tax forms 2011 1040 S. Tax forms 2011 1040 resident for any part of your fiscal year that falls within that calendar year. Tax forms 2011 1040 Identification Number A taxpayer identification number must be furnished on returns, statements, and other tax-related documents. Tax forms 2011 1040 For an individual, this is a social security number (SSN). Tax forms 2011 1040 If you do not have and are not eligible to get an SSN, you must apply for an individual taxpayer identification number (ITIN). Tax forms 2011 1040 An employer identification number (EIN) is required if you are engaged in a trade or business as a sole proprietor and have employees or a qualified retirement plan. Tax forms 2011 1040 You must furnish a taxpayer identification number if you are: An alien who has income effectively connected with the conduct of a U. Tax forms 2011 1040 S. Tax forms 2011 1040 trade or business at any time during the year, An alien who has a U. Tax forms 2011 1040 S. Tax forms 2011 1040 office or place of business at any time during the year, A nonresident alien spouse treated as a resident, as discussed in chapter 1, or Any other alien who files a tax return, an amended return, or a refund claim (but not information returns). Tax forms 2011 1040 Social security number (SSN). Tax forms 2011 1040   Generally, you can get an SSN if you have been lawfully admitted to the United States for permanent residence or under other immigration categories that authorize U. Tax forms 2011 1040 S. Tax forms 2011 1040 employment. Tax forms 2011 1040   To apply for this number, get Form SS-5, Application for a Social Security Card, from your local Social Security Administration (SSA) office or call the SSA at 1-800-772-1213. Tax forms 2011 1040 You can also download Form SS-5 from the SSA's website at www. Tax forms 2011 1040 socialsecurity. Tax forms 2011 1040 gov/ssnumber/ss5. Tax forms 2011 1040 htm. Tax forms 2011 1040 You must visit an SSA office in person and submit your Form SS-5 along with original documentation showing your age, identity, immigration status, and authority to work in the United States. Tax forms 2011 1040 Generally, you will receive your card about 2 weeks after the SSA has all of the necessary information. Tax forms 2011 1040 F-1 and M-1 visa holders. Tax forms 2011 1040    If you are an F-1 or M-1 student, you must also show your Form I-20. Tax forms 2011 1040 For more information, see SSA Publication 05-10181, International Students and Social Security Numbers, available online at www. Tax forms 2011 1040 socialsecurity. Tax forms 2011 1040 gov/pubs/10181. Tax forms 2011 1040 html. Tax forms 2011 1040 J-1 visa holders. Tax forms 2011 1040   If you are a J-1 exchange visitor, you will also need to show your Form DS-2019. Tax forms 2011 1040 For more information, see SSA Publication 05-10107, Foreign Workers and Social Security Numbers, available online at www. Tax forms 2011 1040 socialsecurity. Tax forms 2011 1040 gov/pubs/10107. Tax forms 2011 1040 html. Tax forms 2011 1040 Individual taxpayer identification number (ITIN). Tax forms 2011 1040   If you do not have and are not eligible to get an SSN, you must apply for an ITIN. Tax forms 2011 1040 For details on how to do so, see Form W-7 and its instructions. Tax forms 2011 1040 Allow 6 to 10 weeks for the IRS to notify you of your ITIN. Tax forms 2011 1040 If you already have an ITIN, enter it wherever an SSN is required on your tax return. Tax forms 2011 1040   An ITIN is for tax use only. Tax forms 2011 1040 It does not entitle you to social security benefits or change your employment or immigration status under U. Tax forms 2011 1040 S. Tax forms 2011 1040 law. Tax forms 2011 1040   In addition to those aliens who are required to furnish a taxpayer identification number and are not eligible for an SSN, a Form W-7 must be filed for: Alien individuals who are claimed as dependents and are not eligible for an SSN, and Alien spouses who are claimed as exemptions and are not eligible for an SSN. Tax forms 2011 1040 Employer identification number (EIN). Tax forms 2011 1040   An individual may use an SSN (or ITIN) for individual taxes and an EIN for business taxes. Tax forms 2011 1040 To apply for an EIN, file Form SS-4, Application for Employer Identification Number, with the IRS. Tax forms 2011 1040 Filing Status The amount of your tax depends on your filing status. Tax forms 2011 1040 Your filing status is important in determining whether you can take certain deductions and credits. Tax forms 2011 1040 The rules for determining your filing status are different for resident aliens and nonresident aliens. Tax forms 2011 1040 Resident Aliens Resident aliens can use the same filing statuses available to U. Tax forms 2011 1040 S. Tax forms 2011 1040 citizens. Tax forms 2011 1040 See your form instructions or Publication 501 for more information on filing status. Tax forms 2011 1040 Married filing jointly. Tax forms 2011 1040   Generally, you can file as married filing jointly only if both you and your spouse were resident aliens for the entire tax year, or if you make one of the choices discussed in chapter 1 to treat your spouse as a resident alien for the entire tax year. Tax forms 2011 1040 Qualifying widow(er). Tax forms 2011 1040   If your spouse died in 2011 or 2012, you did not remarry before the end of 2013, and you have a dependent child living with you, you may qualify to file as a qualifying widow(er) and use the joint return tax rates. Tax forms 2011 1040 This applies only if you could have filed a joint return with your spouse for the year your spouse died. Tax forms 2011 1040 Head of household. Tax forms 2011 1040   You can qualify as head of household if you are unmarried or considered unmarried on the last day of the year and you pay more than half the cost of keeping up a home for you and a qualifying person. Tax forms 2011 1040 You must be a resident alien for the entire tax year. Tax forms 2011 1040   You are considered unmarried for this purpose if your spouse was a nonresident alien at any time during the year and you do not make one of the choices discussed in chapter 1 to treat your spouse as a resident alien for the entire tax year. Tax forms 2011 1040 Note. Tax forms 2011 1040   Even if you are considered unmarried for head of household purposes because you are married to a nonresident alien, you may still be considered married for purposes of the earned income credit. Tax forms 2011 1040 In that case, you will not be entitled to the credit. Tax forms 2011 1040 See Publication 596 for more information. Tax forms 2011 1040 Nonresident Aliens If you are a nonresident alien filing Form 1040NR, you may be able to use one of the filing statuses discussed later. Tax forms 2011 1040 If you are filing Form 1040NR-EZ, you can only claim “Single nonresident alien” or “Married nonresident alien” as your filing status. Tax forms 2011 1040 Married nonresident alien. Tax forms 2011 1040   Married nonresident aliens who are not married to U. Tax forms 2011 1040 S. Tax forms 2011 1040 citizens or residents generally must use the Tax Table column or the Tax Computation Worksheet for married filing separate returns when determining the tax on income effectively connected with a U. Tax forms 2011 1040 S. Tax forms 2011 1040 trade or business. Tax forms 2011 1040 Exceptions. Tax forms 2011 1040   Married nonresident aliens normally cannot use the Tax Table column or the Tax Computation Worksheet for single individuals. Tax forms 2011 1040 However, you may be able to file as single if you lived apart from your spouse during the last 6 months of the year and you are a married resident of Canada, Mexico, South Korea, or are a married U. Tax forms 2011 1040 S. Tax forms 2011 1040 national. Tax forms 2011 1040 See the instructions for Form 1040NR or Form 1040NR-EZ to see if you qualify. Tax forms 2011 1040 U. Tax forms 2011 1040 S. Tax forms 2011 1040 national is defined later in this section under Qualifying widow(er) . Tax forms 2011 1040   A nonresident alien generally cannot file as married filing jointly. Tax forms 2011 1040 However, a nonresident alien who is married to a U. Tax forms 2011 1040 S. Tax forms 2011 1040 citizen or resident can choose to be treated as a resident and file a joint return on Form 1040, Form 1040A, or Form 1040EZ. Tax forms 2011 1040 For information on these choices, see chapter 1. Tax forms 2011 1040 If you do not make the choice to file jointly, file Form 1040NR or Form 1040NR-EZ and use the Tax Table column or the Tax Computation Worksheet for married individuals filing separately. Tax forms 2011 1040 Qualifying widow(er). Tax forms 2011 1040   You may be eligible to file as a qualifying widow(er) and use the joint return tax rates if all of the following conditions apply. Tax forms 2011 1040 You were a resident of Canada, Mexico, or South Korea, or a U. Tax forms 2011 1040 S. Tax forms 2011 1040 national (defined later). Tax forms 2011 1040 Your spouse died in 2011 or 2012 and you did not remarry before the end of 2013. Tax forms 2011 1040 You have a dependent child living with you. Tax forms 2011 1040 See the instructions for Form 1040NR for the rules for filing as a qualifying widow(er) with a dependent child. Tax forms 2011 1040   A U. Tax forms 2011 1040 S. Tax forms 2011 1040 national is an individual who, although not a U. Tax forms 2011 1040 S. Tax forms 2011 1040 citizen, owes his or her allegiance to the United States. Tax forms 2011 1040 U. Tax forms 2011 1040 S. Tax forms 2011 1040 nationals include American Samoans and Northern Mariana Islanders who chose to become U. Tax forms 2011 1040 S. Tax forms 2011 1040 nationals instead of U. Tax forms 2011 1040 S. Tax forms 2011 1040 citizens. Tax forms 2011 1040 Head of household. Tax forms 2011 1040   You cannot file as head of household if you are a nonresident alien at any time during the tax year. Tax forms 2011 1040 However, if you are married, your spouse can qualify as a head of household if: Your spouse is a resident alien or U. Tax forms 2011 1040 S. Tax forms 2011 1040 citizen for the entire tax year, You do not choose to be treated as a resident alien, and Your spouse meets the other requirements for this filing status, as discussed earlier under Resident Aliens . Tax forms 2011 1040 Note. Tax forms 2011 1040   Even if your spouse is considered unmarried for head of household purposes because you are a nonresident alien, your spouse may still be considered married for purposes of the earned income credit. Tax forms 2011 1040 In that case, your spouse will not be entitled to the credit. Tax forms 2011 1040 See Publication 596 for more information. Tax forms 2011 1040 Estates and trusts. Tax forms 2011 1040   A nonresident alien estate or trust using Form 1040NR must use Tax Rate Schedule W in the Form 1040NR instructions when determining the tax on income effectively connected with a U. Tax forms 2011 1040 S. Tax forms 2011 1040 trade or business. Tax forms 2011 1040 Special rules for aliens from certain U. Tax forms 2011 1040 S. Tax forms 2011 1040 possessions. Tax forms 2011 1040   A nonresident alien who is a bona fide resident of American Samoa or Puerto Rico for the entire tax year and who is temporarily working in the United States should read Bona Fide Residents of American Samoa or Puerto Rico, at the end of this chapter, for information about special rules. Tax forms 2011 1040 Reporting Your Income You must report each item of income that is taxable according to the rules in chapters 2, 3, and 4. Tax forms 2011 1040 For resident aliens, this includes income from sources both within and outside the United States. Tax forms 2011 1040 For nonresident aliens, this includes both income that is effectively connected with a trade or business in the United States (subject to graduated tax rates) and income from U. Tax forms 2011 1040 S. Tax forms 2011 1040 sources that is not effectively connected (subject to a flat 30% tax rate or lower tax treaty rate). Tax forms 2011 1040 Deductions Resident and nonresident aliens can claim similar deductions on their U. Tax forms 2011 1040 S. Tax forms 2011 1040 tax returns. Tax forms 2011 1040 However, nonresident aliens generally can claim only deductions related to income that is effectively connected with their U. Tax forms 2011 1040 S. Tax forms 2011 1040 trade or business. Tax forms 2011 1040 Resident Aliens You can claim the same deductions allowed to U. Tax forms 2011 1040 S. Tax forms 2011 1040 citizens if you are a resident alien for the entire tax year. Tax forms 2011 1040 While the discussion that follows contains some of the same general rules and guidelines that apply to you, it is specifically directed toward nonresident aliens. Tax forms 2011 1040 You should get Form 1040 and instructions for more information on how to claim your allowable deductions. Tax forms 2011 1040 Nonresident Aliens You can claim deductions to figure your effectively connected taxable income. Tax forms 2011 1040 You generally cannot claim deductions related to income that is not connected with your U. Tax forms 2011 1040 S. Tax forms 2011 1040 business activities. Tax forms 2011 1040 Except for personal exemptions, and certain itemized deductions, discussed later, you can claim deductions only to the extent they are connected with your effectively connected income. Tax forms 2011 1040 Ordinary and necessary business expenses. Tax forms 2011 1040   You can deduct all ordinary and necessary expenses in the operation of your U. Tax forms 2011 1040 S. Tax forms 2011 1040 trade or business to the extent they relate to income effectively connected with that trade or business. Tax forms 2011 1040 The deduction for travel expenses while in the United States is discussed under Itemized Deductions, later. Tax forms 2011 1040 For information about other business expenses, see Publication 535. Tax forms 2011 1040 Losses. Tax forms 2011 1040   You can deduct losses resulting from transactions that you entered into for profit and that you were not reimbursed for by insurance, etc. Tax forms 2011 1040 to the extent that they relate to income that is effectively connected with a trade or business in the United States. Tax forms 2011 1040 Educator expenses. Tax forms 2011 1040   If you were an eligible educator in 2013, you can deduct as an adjustment to income up to $250 in unreimbursed qualified expenses you paid or incurred during 2013 for books, supplies (other than nonathletic supplies for courses of instruction in health or physical education), computer equipment, and other equipment and materials used in the classroom. Tax forms 2011 1040 For more information, see your tax form instructions. Tax forms 2011 1040 Individual retirement arrangement (IRA). Tax forms 2011 1040   If you made contributions to a traditional IRA for 2013, you may be able to take an IRA deduction. Tax forms 2011 1040 But you must have taxable compensation effectively connected with a U. Tax forms 2011 1040 S. Tax forms 2011 1040 trade or business to do so. Tax forms 2011 1040 A Form 5498 should be sent to you by May 31, 2014, that shows all contributions to your traditional IRA for 2013. Tax forms 2011 1040 If you were covered by a retirement plan (qualified pension, profit-sharing (including 401(k)), annuity, SEP, SIMPLE, etc. Tax forms 2011 1040 ) at work or through self-employment, your IRA deduction may be reduced or eliminated. Tax forms 2011 1040 But you can still make contributions to a traditional IRA even if you cannot deduct them. Tax forms 2011 1040 If you made nondeductible contributions to a traditional IRA for 2013, you must report them on Form 8606, Nondeductible IRAs. Tax forms 2011 1040   For more information, see Publication 590, Individual Retirement Arrangements (IRAs). Tax forms 2011 1040 Moving expenses. Tax forms 2011 1040   If you are a nonresident alien temporarily in the United States earning taxable income for performing personal services, you can deduct moving expenses to the United States if you meet both of the following tests. Tax forms 2011 1040 You are a full-time employee for at least 39 weeks during the 12 months right after you move, or if you are self-employed, you work full time for at least 39 weeks during the first 12 months and 78 weeks during the first 24 months right after you move. Tax forms 2011 1040 Your new job location is at least 50 miles farther (by the shortest commonly traveled route) from your former home than your former job location was. Tax forms 2011 1040 If you had no former job location, the new job location must be at least 50 miles from your former home. Tax forms 2011 1040   You cannot deduct the moving expense you have when returning to your home abroad or moving to a foreign job site. Tax forms 2011 1040   Figure your deductible moving expenses to the United States on Form 3903, and deduct them on line 26 of Form 1040NR. Tax forms 2011 1040   For more information on the moving expense deduction, see Publication 521. Tax forms 2011 1040 Reimbursements. Tax forms 2011 1040   If your employer reimbursed you for allowable moving expenses under an accountable plan, your employer should have excluded these reimbursements from your income. Tax forms 2011 1040 You can only deduct allowable moving expenses that were not reimbursed by your employer or that were reimbursed but the reimbursement was included in your income. Tax forms 2011 1040 For more information, see Publication 521. Tax forms 2011 1040 Moving expense or travel expense. Tax forms 2011 1040   If you deduct moving expenses to the United States, you cannot also deduct travel expenses (discussed later under Itemized Deductions) while temporarily away from your tax home in a foreign country. Tax forms 2011 1040 Moving expenses are based on a change in your principal place of business while travel expenses are based on your temporary absence from your principal place of business. Tax forms 2011 1040 Self-employed SEP, SIMPLE, and qualified retirement plans. Tax forms 2011 1040   If you are self-employed, you may be able to deduct contributions to a SEP, SIMPLE, or qualified retirement plan that provides retirement benefits for yourself and your common-law employees, if any. Tax forms 2011 1040 To make deductible contributions for yourself, you must have net earnings from self-employment that are effectively connected with your U. Tax forms 2011 1040 S. Tax forms 2011 1040 trade or business. Tax forms 2011 1040   Get Publication 560, Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans), for further information. Tax forms 2011 1040 Penalty on early withdrawal of savings. Tax forms 2011 1040   You must include in income all effectively connected interest income you receive or that is credited to your account during the year. Tax forms 2011 1040 Do not reduce it by any penalty you must pay on an early withdrawal from a time savings account. Tax forms 2011 1040 However, if the interest income is effectively connected with your U. Tax forms 2011 1040 S. Tax forms 2011 1040 trade or business during the year, you can deduct on line 30 of Form 1040NR the amount of the early withdrawal penalty that the banking institution charged. Tax forms 2011 1040 Student loan interest expense. Tax forms 2011 1040   If you paid interest on a student loan in 2013, you may be able to deduct up to $2,500 of the interest you paid. Tax forms 2011 1040 Generally, you can claim the deduction if all the following requirements are met. Tax forms 2011 1040 Your filing status is any filing status except married filing separately. Tax forms 2011 1040 Your modified adjusted gross income is less than $75,000. Tax forms 2011 1040 No one else is claiming an exemption for you on his or her 2013 tax return. Tax forms 2011 1040 You paid interest on a loan taken out only to pay tuition and other qualified higher education expenses for yourself, your spouse, someone who was your dependent when the loan was taken out, or someone you could have claimed as a dependent for the year the loan was taken out except that: The person filed a joint return, The person had gross income that was equal to or more than the exemption amount for that year ($3,900 for 2013), or You could be claimed as a dependent on someone else's return. Tax forms 2011 1040 The loan is not from a related person or a person who borrowed the proceeds under a qualified employer plan or a contract purchased under such a plan. Tax forms 2011 1040 The education expenses were paid or incurred within a reasonable period of time before or after the loan was taken out. Tax forms 2011 1040 The person for whom the expenses were paid or incurred was an eligible student. Tax forms 2011 1040 Use the worksheet in the Form 1040NR or Form 1040NR-EZ instructions to figure the deduction. Tax forms 2011 1040 For more information, see Publication 970, Tax Benefits for Education. Tax forms 2011 1040 Exemptions Resident aliens can claim personal exemptions and exemptions for dependents in the same way as U. Tax forms 2011 1040 S. Tax forms 2011 1040 citizens. Tax forms 2011 1040 However, nonresident aliens generally can claim only a personal exemption for themselves on their U. Tax forms 2011 1040 S. Tax forms 2011 1040 tax return. Tax forms 2011 1040 Resident Aliens You can claim personal exemptions and exemptions for dependents according to the dependency rules for U. Tax forms 2011 1040 S. Tax forms 2011 1040 citizens. Tax forms 2011 1040 You can claim an exemption for your spouse on a separate return if your spouse had no gross income for U. Tax forms 2011 1040 S. Tax forms 2011 1040 tax purposes and was not the dependent of another taxpayer. Tax forms 2011 1040 You can claim this exemption even if your spouse has not been a resident alien for a full tax year or is an alien who has not come to the United States. Tax forms 2011 1040 You can claim an exemption for each person who qualifies as a dependent according to the rules for U. Tax forms 2011 1040 S. Tax forms 2011 1040 citizens. Tax forms 2011 1040 The dependent must be a citizen or national (defined earlier) of the United States or be a resident of the United States, Canada, or Mexico for some part of the calendar year in which your tax year begins. Tax forms 2011 1040 Get Publication 501 for more information. Tax forms 2011 1040 Your spouse and each dependent for whom you claim an exemption must have either an SSN or an ITIN. Tax forms 2011 1040 See Identification Number, earlier. Tax forms 2011 1040 Nonresident Aliens Generally, if you are a nonresident alien engaged in a trade or business in the United States, you can claim only one personal exemption ($3,900 for 2013). Tax forms 2011 1040 You may be able to claim an exemption for a spouse and a dependent if you are described in any of the following discussions. Tax forms 2011 1040 Your spouse and each dependent for whom you claim an exemption must have either an SSN or an ITIN. Tax forms 2011 1040 See Identification Number, earlier. Tax forms 2011 1040 Residents of Mexico or Canada or U. Tax forms 2011 1040 S. Tax forms 2011 1040 nationals. Tax forms 2011 1040   If you are a resident of Mexico or Canada or a national of the United States (defined earlier), you can also claim a personal exemption for your spouse if your spouse had no gross income for U. Tax forms 2011 1040 S. Tax forms 2011 1040 tax purposes and cannot be claimed as the dependent on another U. Tax forms 2011 1040 S. Tax forms 2011 1040 taxpayer's return. Tax forms 2011 1040 In addition, you can claim exemptions for your dependents who meet certain tests. Tax forms 2011 1040 Residents of Mexico, Canada, or nationals of the United States must use the same rules as U. Tax forms 2011 1040 S. Tax forms 2011 1040 citizens to determine who is a dependent and for which dependents exemptions can be claimed. Tax forms 2011 1040 See Publication 501 for these rules. Tax forms 2011 1040 For purposes of these rules, dependents who are U. Tax forms 2011 1040 S. Tax forms 2011 1040 nationals meet the citizenship test discussed in Publication 501. Tax forms 2011 1040 Residents of South Korea. Tax forms 2011 1040   Nonresident aliens who are residents of South Korea may be able to claim exemptions for a spouse and children. Tax forms 2011 1040 The income tax treaty with South Korea imposes two additional requirements on South Korean residents: The spouse and all children claimed must live with the alien in the United States at some time during the tax year, and The additional deduction for the exemptions must be prorated based on the ratio of the alien's U. Tax forms 2011 1040 S. Tax forms 2011 1040 source gross income effectively connected with a U. Tax forms 2011 1040 S. Tax forms 2011 1040 trade or business for the tax year to the alien's entire income from all sources during the tax year. Tax forms 2011 1040 Example. Tax forms 2011 1040 Mr. Tax forms 2011 1040 Park, a nonresident alien who is a resident of South Korea, lives temporarily in the United States with his wife and two children. Tax forms 2011 1040 During the tax year he receives U. Tax forms 2011 1040 S. Tax forms 2011 1040 compensation of $18,000. Tax forms 2011 1040 He also receives $6,000 of income from sources outside the United States that is not effectively connected with his U. Tax forms 2011 1040 S. Tax forms 2011 1040 trade or business. Tax forms 2011 1040 Thus, his total income for the year is $24,000. Tax forms 2011 1040 Mr. Tax forms 2011 1040 Park meets all requirements for claiming exemptions for his spouse and two children. Tax forms 2011 1040 The additional deduction for 2013 is $8,775 figured as follows: $18,000 $24,000 × $11,700* = $8,775               *3 × $3,900 = $11,700   Students and business apprentices from India. Tax forms 2011 1040   Students and business apprentices who are eligible for the benefits of Article 21(2) of the United States–India Income Tax Treaty may be able to claim exemptions for their spouse and dependents. Tax forms 2011 1040   You can claim an exemption for your spouse if he or she had no gross income during the year and cannot be claimed as a dependent on another U. Tax forms 2011 1040 S. Tax forms 2011 1040 taxpayer's return. Tax forms 2011 1040   You can claim exemptions for each of your dependents not admitted to the United States on “F-2,” “J-2,” or “M-2” visas if they meet the same rules that apply to U. Tax forms 2011 1040 S. Tax forms 2011 1040 citizens. Tax forms 2011 1040 See Publication 501 for these rules. Tax forms 2011 1040   List your spouse and dependents on line 7c of Form 1040NR. Tax forms 2011 1040 Enter the total on the appropriate line to the right of line 7c. Tax forms 2011 1040 Itemized Deductions Nonresident aliens can claim some of the same itemized deductions that resident aliens can claim. Tax forms 2011 1040 However, nonresident aliens can claim itemized deductions only if they have income effectively connected with their U. Tax forms 2011 1040 S. Tax forms 2011 1040 trade or business. Tax forms 2011 1040 Resident Aliens You can claim the same itemized deductions as U. Tax forms 2011 1040 S. Tax forms 2011 1040 citizens, using Schedule A of Form 1040. Tax forms 2011 1040 These deductions include certain medical and dental expenses, state and local income taxes, real estate taxes, interest you paid on a home mortgage, charitable contributions, casualty and theft losses, and miscellaneous deductions. Tax forms 2011 1040 If you do not itemize your deductions, you can claim the standard deduction for your particular filing status. Tax forms 2011 1040 For further information, see Form 1040 and instructions. Tax forms 2011 1040 Nonresident Aliens You can deduct certain itemized deductions if you receive income effectively connected with your U. Tax forms 2011 1040 S. Tax forms 2011 1040 trade or business. Tax forms 2011 1040 These deductions include state and local income taxes, charitable contributions to U. Tax forms 2011 1040 S. Tax forms 2011 1040 organizations, casualty and theft losses, and miscellaneous deductions. Tax forms 2011 1040 Use Schedule A of Form 1040NR to claim itemized deductions. Tax forms 2011 1040 If you are filing Form 1040NR-EZ, you can only claim a deduction for state or local income taxes. Tax forms 2011 1040 If you are claiming any other itemized deduction, you must file Form 1040NR. Tax forms 2011 1040 Standard deduction. Tax forms 2011 1040   Nonresident aliens cannot claim the standard deduction. Tax forms 2011 1040 However, see Students and business apprentices from India , next. Tax forms 2011 1040 Students and business apprentices from India. Tax forms 2011 1040   A special rule applies to students and business apprentices who are eligible for the benefits of Article 21(2) of the United States–India Income Tax Treaty. Tax forms 2011 1040 You can claim the standard deduction provided you do not claim itemized deductions. Tax forms 2011 1040   Use Worksheet 5-1 to figure your standard deduction. Tax forms 2011 1040 If you are married and your spouse files a return and itemizes deductions, you cannot take the standard deduction. Tax forms 2011 1040 State and local income taxes. Tax forms 2011 1040   You can deduct state and local income taxes you paid on income that is effectively connected with a trade or business in the United States. Tax forms 2011 1040 If you received a refund or rebate in 2013 of taxes you paid in an earlier year, do not reduce your deduction by that amount. Tax forms 2011 1040 Instead, you must include the refund or rebate in income if you deducted the taxes in the earlier year and the deduction reduced your tax. Tax forms 2011 1040 See Recoveries in Publication 525 for details on how to figure the amount to include in income. Tax forms 2011 1040 Charitable contributions. Tax forms 2011 1040   You can deduct your charitable contributions or gifts to qualified organizations subject to certain limits. Tax forms 2011 1040 Qualified organizations include organizations that are religious, charitable, educational, scientific, or literary in nature, or that work to prevent cruelty to children or animals. Tax forms 2011 1040 Certain organizations that promote national or international amateur sports competition are also qualified organizations. Tax forms 2011 1040 Foreign organizations. Tax forms 2011 1040   Contributions made directly to a foreign organization are not deductible. Tax forms 2011 1040 However, you can deduct contributions to a U. Tax forms 2011 1040 S. Tax forms 2011 1040 organization that transfers funds to a charitable foreign organization if the U. Tax forms 2011 1040 S. Tax forms 2011 1040 organization controls the use of the funds or if the foreign organization is only an administrative arm of the U. Tax forms 2011 1040 S. Tax forms 2011 1040 organization. Tax forms 2011 1040   For more information about organizations that qualify to receive charitable contributions, see Publication 526, Charitable Contributions. Tax forms 2011 1040 Worksheet 5-1. Tax forms 2011 1040 2013 Standard Deduction Worksheet for Students and Business Apprentices From India Caution. Tax forms 2011 1040 If you are married filing a separate return and your spouse itemizes deductions, do not complete this worksheet. Tax forms 2011 1040 You cannot take the standard deduction even if you were born before January 2, 1949, or are blind. Tax forms 2011 1040 1 Enter the amount shown below for your filing status. Tax forms 2011 1040           Single or married filing separately—$6,100 Qualifying widow(er)—$12,200 1. Tax forms 2011 1040           2 Can you be claimed as a dependent on someone else's U. Tax forms 2011 1040 S. Tax forms 2011 1040 income tax return?  No. Tax forms 2011 1040 Enter the amount from line 1 on line 4. Tax forms 2011 1040 Skip line 3 and go to line 5. Tax forms 2011 1040   Yes. Tax forms 2011 1040 Go to line 3. Tax forms 2011 1040         3 Is your earned income* more than $650?           Yes. Tax forms 2011 1040 Add $350 to your earned income. Tax forms 2011 1040 Enter the total. Tax forms 2011 1040           No. Tax forms 2011 1040 Enter $1,000 3. Tax forms 2011 1040       4 Enter the smaller of line 1 or line 3 4. Tax forms 2011 1040   5 If born before January 2, 1949, OR blind, enter $1,200 ($1,500 if single). Tax forms 2011 1040 If born before January 2, 1949, AND blind, enter $2,400 ($3,000 if single). Tax forms 2011 1040 Otherwise, enter -0- 5. Tax forms 2011 1040   6 Add lines 4 and 5. Tax forms 2011 1040 Enter the total here and on Form 1040NR, line 38 (or Form 1040NR-EZ, line 11). Tax forms 2011 1040 Print “Standard Deduction Allowed Under U. Tax forms 2011 1040 S. Tax forms 2011 1040 –India Income Tax Treaty” in the space to the left of these lines. Tax forms 2011 1040 This is your standard deduction for 2013. Tax forms 2011 1040 6. Tax forms 2011 1040   *Earned income includes wages, salaries, tips, professional fees, and other compensation received for personal services you performed. Tax forms 2011 1040 It also includes any amount received as a scholarship that you must include in your income. Tax forms 2011 1040 Generally, your earned income is the total of the amount(s) you reported on Form 1040NR, lines 8,12,13, and 19, minus amounts on lines 27 and 31 (or Form 1040NR-EZ, lines 3 and 5, minus any amount on line 8). Tax forms 2011 1040 Contributions from which you benefit. Tax forms 2011 1040   If you receive a benefit as a result of making a contribution to a qualified organization, you can deduct only the amount of your contribution that is more than the value of the benefit you receive. Tax forms 2011 1040   If you pay more than the fair market value to a qualified organization for merchandise, goods, or services, the amount you pay that is more than the value of the item can be a charitable contribution. Tax forms 2011 1040 For the excess amount to qualify, you must pay it with the intent to make a charitable contribution. Tax forms 2011 1040 Cash contributions. Tax forms 2011 1040   You cannot deduct a cash contribution, regardless of the amount, unless you keep as a record of the contribution a bank record (such as a canceled check, a bank copy of a canceled check, or a bank statement containing the name of the charity, the date, and the amount) or a written record from the charity. Tax forms 2011 1040 The written record must include the name of the charity, date of the contribution, and the amount of the contribution. Tax forms 2011 1040   You may deduct a cash contribution of $250 or more only if you have a written statement from the charitable organization showing: The amount of any money contributed, Whether the organization gave you any goods or services in return for your contribution, and A description and estimate of the value of any goods or services described in (2). Tax forms 2011 1040 If you received only intangible religious benefits, the organization must state this, but it does not have to describe or value the benefit. Tax forms 2011 1040 Noncash contributions. Tax forms 2011 1040   For contributions not made in cash, the records you must keep depend on the amount of your deduction. Tax forms 2011 1040 See Publication 526 for details. Tax forms 2011 1040 For example, if you make a noncash contribution and the amount of your deduction is more than $500, you must complete and attach to your tax return Form 8283, Noncash Charitable Contributions. Tax forms 2011 1040 If you deduct more than $500 for a contribution of a motor vehicle, boat, or airplane, you must also attach a statement from the charitable organization to your return. Tax forms 2011 1040 If your total deduction is over $5,000, you also may have to get appraisals of the values of the property. Tax forms 2011 1040 If the donated property is valued at more than $5,000, you must obtain a qualified appraisal. Tax forms 2011 1040 You generally must attach to your tax return an appraisal of any property if your deduction for the property is more than $500,000. Tax forms 2011 1040 See Form 8283 and its instructions for details. Tax forms 2011 1040 Contributions of appreciated property. Tax forms 2011 1040   If you contribute property to a qualified organization, the amount of your charitable contribution is generally the fair market value of the property at the time of the contribution. Tax forms 2011 1040 However, if you contribute property with a fair market value that is more than your basis in it, you may have to reduce the fair market value by the amount of appreciation (increase in value) when you figure your deduction. Tax forms 2011 1040 Your basis in the property is generally what you paid for it. Tax forms 2011 1040 If you need more information about basis, get Publication 551, Basis of Assets. Tax forms 2011 1040   Different rules apply to figuring your deduction, depending on whether the property is: Ordinary income property, or Capital gain property. Tax forms 2011 1040 For information about these rules, see Publication 526. Tax forms 2011 1040 Limit. Tax forms 2011 1040   The amount you can deduct in a tax year is limited in the same way it is for a citizen or resident of the United States. Tax forms 2011 1040 For a discussion of limits on charitable contributions and other information, get Publication 526. Tax forms 2011 1040 Casualty and theft losses. Tax forms 2011 1040   You can deduct your loss from fire, storm, shipwreck, or other casualty, or theft of property even though your property is not connected with a U. Tax forms 2011 1040 S. Tax forms 2011 1040 trade or business. Tax forms 2011 1040 The property can be personal use property or income-producing property not connected with a U. Tax forms 2011 1040 S. Tax forms 2011 1040 trade or business. Tax forms 2011 1040 The property must be located in the United States at the time of the casualty or theft. Tax forms 2011 1040 You can deduct theft losses only in the year in which you discover the loss. Tax forms 2011 1040   The amount of the loss is the fair market value of the property immediately before the casualty or theft less its fair market value immediately after the casualty or theft (but not more than its cost or adjusted basis) less any insurance or other reimbursement. Tax forms 2011 1040 The fair market value of property immediately after a theft is considered zero, because you no longer have the property. Tax forms 2011 1040   If your property is covered by insurance, you should file a timely insurance claim for reimbursement. Tax forms 2011 1040 If you do not, you cannot deduct this loss as a casualty or theft loss. Tax forms 2011 1040   Figure your deductible casualty and theft losses on Form 4684, Casualties and Thefts. Tax forms 2011 1040 Losses from personal use property. Tax forms 2011 1040    You cannot deduct the first $100 of each casualty or theft loss to property held for personal use. Tax forms 2011 1040 You can deduct only the total of these losses for the year (reduced by the $100 limit) that is more than 10% of your adjusted gross income (line 37, Form 1040NR) for the year. Tax forms 2011 1040 Losses from income-producing property. Tax forms 2011 1040   These losses are not subject to the limitations that apply to personal use property. Tax forms 2011 1040 Use Section B of Form 4684 to figure your deduction for these losses. Tax forms 2011 1040 Job expenses and other miscellaneous deductions. Tax forms 2011 1040   You can deduct job expenses, such as allowable unreimbursed travel expenses (discussed next), and other miscellaneous deductions. Tax forms 2011 1040 Generally, the allowable deductions must be related to effectively connected income. Tax forms 2011 1040 Deductible expenses include: Union dues, Safety equipment and small tools needed for your job, Dues to professional organizations, Subscriptions to professional journals, Tax return preparation fees, and Casualty and theft losses of property used in performing services as an employee (employee property). Tax forms 2011 1040   Most miscellaneous itemized deductions are deductible only if they are more than 2% of your adjusted gross income (line 37, Form 1040NR). Tax forms 2011 1040 For more information on miscellaneous deductions, see the instructions for Form 1040NR. Tax forms 2011 1040 Travel expenses. Tax forms 2011 1040   You may be able to deduct your ordinary and necessary travel expenses while you are temporarily performing personal services in the United States. Tax forms 2011 1040 Generally, a temporary assignment in a single location is one that is realistically expected to last (and does in fact last) for one year or less. Tax forms 2011 1040 You must be able to show you were present in the United States on an activity that required your temporary absence from your regular place of work. Tax forms 2011 1040   For example, if you have established a “tax home” through regular employment in a foreign country, and intend to return to similar employment in the same country at the end of your temporary stay in the United States, you can deduct reasonable travel expenses you paid. Tax forms 2011 1040 You cannot deduct travel expenses for other members of your family or party. Tax forms 2011 1040 Deductible travel expenses. Tax forms 2011 1040   If you qualify, you can deduct your expenses for: Transportation—airfare, local transportation, including train, bus, etc. Tax forms 2011 1040 , Lodging—rent paid, utilities (do not include telephone), hotel or motel room expenses, and Meal expenses—actual expenses allowed if you keep records of the amounts, or, if you do not wish to keep detailed records, you are generally allowed a standard meal allowance amount depending on the date and area of your travel. Tax forms 2011 1040 You generally can deduct only 50% of unreimbursed meal expenses. Tax forms 2011 1040 The standard meal allowance rates for high-cost areas are available at www. Tax forms 2011 1040 gsa. Tax forms 2011 1040 gov/perdiem. Tax forms 2011 1040 The rates for other areas are in Publication 463. Tax forms 2011 1040   Use Form 2106 or 2106-EZ to figure your allowable expenses that you claim on line 7 of Schedule A (Form 1040NR). Tax forms 2011 1040 Expenses allocable to U. Tax forms 2011 1040 S. Tax forms 2011 1040 tax-exempt income. Tax forms 2011 1040   You cannot deduct an expense, or part of an expense, that is allocable to U. Tax forms 2011 1040 S. Tax forms 2011 1040 tax-exempt income, including income exempt by tax treaty. Tax forms 2011 1040 Example. Tax forms 2011 1040 Irina Oak, a citizen of Poland, resided in the United States for part of the year to acquire business experience from a U. Tax forms 2011 1040 S. Tax forms 2011 1040 company. Tax forms 2011 1040 During her stay in the United States, she received a salary of $8,000 from her Polish employer. Tax forms 2011 1040 She received no other U. Tax forms 2011 1040 S. Tax forms 2011 1040 source income. Tax forms 2011 1040 She spent $3,000 on travel expenses, of which $1,000 were for meals. Tax forms 2011 1040 None of these expenses were reimbursed. Tax forms 2011 1040 Under the tax treaty with Poland, $5,000 of her salary is exempt from U. Tax forms 2011 1040 S. Tax forms 2011 1040 income tax. Tax forms 2011 1040 In filling out Form 2106-EZ, she must reduce her deductible meal expenses by half ($500). Tax forms 2011 1040 She must reduce the remaining $2,500 of travel expenses by 62. Tax forms 2011 1040 5% ($1,563) because 62. Tax forms 2011 1040 5% ($5,000 ÷ $8,000) of her salary is exempt from tax. Tax forms 2011 1040 She enters the remaining total of $937 on line 7 of Schedule A (Form 1040NR). Tax forms 2011 1040 She completes the remaining lines according to the instructions for Schedule A. Tax forms 2011 1040 More information. Tax forms 2011 1040   For more information about deductible expenses, reimbursements, and recordkeeping, get Publication 463. Tax forms 2011 1040 Tax Credits and Payments This discussion covers tax credits and payments for resident aliens, followed by a discussion of the credits and payments for nonresident aliens. Tax forms 2011 1040 Resident Aliens Resident aliens generally claim tax credits and report tax payments, including withholding, using the same rules that apply to U. Tax forms 2011 1040 S. Tax forms 2011 1040 citizens. Tax forms 2011 1040 The following items are some of the credits you may be able to claim. Tax forms 2011 1040 Foreign tax credit. Tax forms 2011 1040   You can claim a credit, subject to certain limits, for income tax you paid or accrued to a foreign country on foreign source income. Tax forms 2011 1040 You cannot claim a credit for taxes paid or accrued on excluded foreign earned income. Tax forms 2011 1040 To claim a credit for income taxes paid or accrued to a foreign country, you generally will file Form 1116, Foreign Tax Credit (Individual, Estate, or Trust), with your Form 1040. Tax forms 2011 1040   For more information, get Publication 514, Foreign Tax Credit for Individuals. Tax forms 2011 1040 Child and dependent care credit. Tax forms 2011 1040   You may be able to take this credit if you pay someone to care for your qualifying child who is under age 13, or your disabled dependent or disabled spouse, so that you can work or look for work. Tax forms 2011 1040 Generally, you must be able to claim an exemption for your dependent. Tax forms 2011 1040   For more information, get Publication 503, Child and Dependent Care Expenses, and Form 2441, Child and Dependent Care Expenses. Tax forms 2011 1040 Credit for the elderly or the disabled. Tax forms 2011 1040   You may qualify for this credit if you are 65 or older or if you retired on permanent and total disability. Tax forms 2011 1040 For more information on this credit, get Publication 524, Credit for the Elderly or the Disabled, and Schedule R (Form 1040A or 1040). Tax forms 2011 1040 Education credits. Tax forms 2011 1040   You may qualify for these credits if you paid qualified education expenses for yourself, your spouse, or your dependent. Tax forms 2011 1040 There are two education credits: the American Opportunity Credit and the lifetime learning credit. Tax forms 2011 1040 You cannot claim these credits if you are married filing separately. Tax forms 2011 1040 Use Form 8863, Education Credits (American Opportunity and Lifetime Learning Credits), to figure the credit. Tax forms 2011 1040 For more information, see Publication 970. Tax forms 2011 1040 Retirement savings contributions credit. Tax forms 2011 1040   You may qualify for this credit (also known as the saver's credit) if you made eligible contributions to an employer-sponsored retirement plan or to an individual retirement arrangement (IRA) in 2013. Tax forms 2011 1040 You cannot claim this credit if: You were born after January 1, 1996, You were a full-time student, Your exemption is claimed by someone else on his or her 2013 tax return, or Your adjusted gross income is more than: $59,000, if your filing status is married filing jointly, $44,250, if your filing status is head of household, or $29,500, if your filing status is single, married filing separately, or qualifying widow(er). Tax forms 2011 1040 Use Form 8880, Credit for Qualified Retirement Savings Contributions, to figure the credit. Tax forms 2011 1040 For more information, see Publication 590. Tax forms 2011 1040 Child tax credit. Tax forms 2011 1040   You may be able to take this credit if you have a qualifying child. Tax forms 2011 1040   A qualifying child for purposes of the child tax credit is a child who: Was under age 17 at the end of 2013. Tax forms 2011 1040 Is your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, half brother, half sister, or a descendant of any of them (for example, your grandchild, niece, or nephew). Tax forms 2011 1040 Is a U. Tax forms 2011 1040 S. Tax forms 2011 1040 citizen, a U. Tax forms 2011 1040 S. Tax forms 2011 1040 national, or a resident alien. Tax forms 2011 1040 Did not provide over half of his or her own support for 2013. Tax forms 2011 1040 Lived with you more than half of 2013. Tax forms 2011 1040 Temporary absences, such as for school, vacation, or medical care, count as time lived in the home. Tax forms 2011 1040 Is claimed as a dependent on your return. Tax forms 2011 1040 An adopted child is always treated as your own child. Tax forms 2011 1040 An adopted child includes a child lawfully placed with you for legal adoption. Tax forms 2011 1040   See your form instructions for additional details. Tax forms 2011 1040 Adoption credit. Tax forms 2011 1040   You may qualify to take a tax credit of up to $12,970 for qualifying expenses paid to adopt an eligible child. Tax forms 2011 1040 This amount may be allowed for the adoption of a child with special needs regardless of whether you have qualifying expenses. Tax forms 2011 1040 To claim the adoption credit, file Form 8839, Qualified Adoption Expenses, with your Form 1040. Tax forms 2011 1040 Earned income credit. Tax forms 2011 1040   You may qualify for an earned income credit of up to $3,250 if a child lived with you in the United States and your earned income and adjusted gross income were each less than $37,870 ($43,210 if married filing jointly). Tax forms 2011 1040 If two children lived with you in the United States and your earned income and adjusted gross income were each less than $43,038 ($48,378 if married filing jointly), your credit could be as much as $5,372. Tax forms 2011 1040 If three or more children lived with you in the United States and your earned income and adjusted gross income were each less than $46,227 ($51,567 if married filing jointly), your credit could be as much as $6,044. Tax forms 2011 1040 If you do not have a qualifying child and your earned income and adjusted gross income were each less than $14,340 ($19,680 if married filing jointly), your credit could be as much as $487. Tax forms 2011 1040 You cannot claim the earned income credit if your filing status is married filing separately. Tax forms 2011 1040    You and your spouse (if filing a joint return) and any qualifying child must have valid SSNs to claim this credit. Tax forms 2011 1040 You cannot claim the credit using an ITIN. Tax forms 2011 1040 If a social security card has a legend that says Not Valid for Employment and the number was issued so that you (or your spouse or your qualifying child) could receive a federally funded benefit, you cannot claim the earned income credit. Tax forms 2011 1040 An example of a federally funded benefit is Medicaid. Tax forms 2011 1040 If a card has this legend and the individual's immigration status has changed so that the individual is now a U. Tax forms 2011 1040 S. Tax forms 2011 1040 citizen or lawful permanent resident, ask the SSA to issue a new social security card without the legend. Tax forms 2011 1040 Other information. Tax forms 2011 1040   There are other eligibility rules that are not discussed here. Tax forms 2011 1040 For more information, get Publication 596, Earned Income Credit. Tax forms 2011 1040 Nonresident Aliens You can claim some of the same credits that resident aliens can claim. Tax forms 2011 1040 You can also report certain taxes you paid, are considered to have paid, or that were withheld from your income. Tax forms 2011 1040 Credits Credits are allowed only if you receive effectively connected income. Tax forms 2011 1040 You may be able to claim some of the following credits. Tax forms 2011 1040 Foreign tax credit. Tax forms 2011 1040   If you receive foreign source income that is effectively connected with a trade or business in the United States, you can claim a credit for any income taxes paid or accrued to any foreign country or U. Tax forms 2011 1040 S. Tax forms 2011 1040 possession on that income. Tax forms 2011 1040   If you do not have foreign source income effectively connected with a U. Tax forms 2011 1040 S. Tax forms 2011 1040 trade or business, you cannot claim credits against your U. Tax forms 2011 1040 S. Tax forms 2011 1040 tax for taxes paid or accrued to a foreign country or U. Tax forms 2011 1040 S. Tax forms 2011 1040 possession. Tax forms 2011 1040   You cannot take any credit for taxes imposed by a foreign country or U. Tax forms 2011 1040 S. Tax forms 2011 1040 possession on your U. Tax forms 2011 1040 S. Tax forms 2011 1040 source income if those taxes were imposed only because you are a citizen or resident of the foreign country or possession. Tax forms 2011 1040   If you claim a foreign tax credit, you generally will have to attach to your return a Form 1116. Tax forms 2011 1040 See Publication 514 for more information. Tax forms 2011 1040 Child and dependent care credit. Tax forms 2011 1040   You may qualify for this credit if you pay someone to care for your qualifying child who is under age 13, or your disabled dependent or disabled spouse, so that you can work or look for work. Tax forms 2011 1040 Generally, you must be able to claim an exemption for your dependent. Tax forms 2011 1040   Married nonresident aliens can claim the credit only if they choose to file a joint return with a U. Tax forms 2011 1040 S. Tax forms 2011 1040 citizen or resident spouse as discussed in chapter 1, or if they qualify as certain married individuals living apart (see Joint Return Test in Publication 503). Tax forms 2011 1040   The amount of your child and dependent care expense that qualifies for the credit in any tax year cannot be more than your earned income from the United States for that tax year. Tax forms 2011 1040 Earned income generally means wages, salaries, and professional fees for personal services performed. Tax forms 2011 1040   For more information, get Publication 503. Tax forms 2011 1040 Education credits. Tax forms 2011 1040   If you are a nonresident alien for any part of the year, you generally cannot claim the education credits. Tax forms 2011 1040 However, if you are married and choose to file a joint return with a U. Tax forms 2011 1040 S. Tax forms 2011 1040 citizen or resident spouse as discussed in chapter 1, you may be eligible for these credits. Tax forms 2011 1040 Retirement savings contributions credit. Tax forms 2011 1040   You may qualify for this credit (also known as the saver's credit) if you made eligible contributions to an employer-sponsored retirement plan or to an individual retirement arrangement (IRA) in 2013. Tax forms 2011 1040 You cannot claim this credit if: You were born after January 1, 1996, You were a full-time student, Your exemption is claimed by someone else on his or her 2013 tax return, or Your adjusted gross income is more than $29,500. Tax forms 2011 1040 Use Form 8880 to figure the credit. Tax forms 2011 1040 For more information, see Publication 590. Tax forms 2011 1040 Child tax credit. Tax forms 2011 1040   You may be able to take this credit if you have a qualifying child. Tax forms 2011 1040   A qualifying child for purposes of the child tax credit is a child who: Was under age 17 at the end of 2013. Tax forms 2011 1040 Is your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, half brother, half sister, or a descendant of any of them (for example, your grandchild, niece, or nephew). Tax forms 2011 1040 Is a U. Tax forms 2011 1040 S. Tax forms 2011 1040 citizen, a U. Tax forms 2011 1040 S. Tax forms 2011 1040 national, or a resident alien. Tax forms 2011 1040 Did not provide over half of his or her own support for 2013. Tax forms 2011 1040 Lived with you more than half of 2013. Tax forms 2011 1040 Temporary absences, such as for school, vacation, or medical care, count as time lived in the home. Tax forms 2011 1040 Is claimed as a dependent on your return. Tax forms 2011 1040 An adopted child is always treated as your own child. Tax forms 2011 1040 An adopted child includes a child lawfully placed with you for legal adoption. Tax forms 2011 1040   See your form instructions for additional details. Tax forms 2011 1040 Adoption credit. Tax forms 2011 1040   You may qualify to take a tax credit of up to $12,970 for qualifying expenses paid to adopt an eligible child. Tax forms 2011 1040 This amount may be allowed for the adoption of a child with special needs regardless of whether you have qualifying expenses. Tax forms 2011 1040 To claim the adoption credit, file Form 8839 with your Form 1040NR. Tax forms 2011 1040   Married nonresident aliens can claim the credit only if they choose to file a joint return with a U. Tax forms 2011 1040 S. Tax forms 2011 1040 citizen or resident spouse as discussed in chapter 1, or if they qualify as certain married individuals living apart (see Married Persons Not Filing Jointly in the Form 8839 instructions). Tax forms 2011 1040 Credit for prior year minimum tax. Tax forms 2011 1040   If you paid alternative minimum tax in a prior year, get Form 8801, Credit for Prior Year Minimum Tax—Individuals, Estates, and Trusts, to see if you qualify for this credit. Tax forms 2011 1040 Earned income credit. Tax forms 2011 1040   If you are a nonresident alien for any part of the tax year, you generally cannot get the earned income credit. Tax forms 2011 1040 However, if you are married and choose to file a joint return with a U. Tax forms 2011 1040 S. Tax forms 2011 1040 citizen or resident spouse as discussed in chapter 1, you may be eligible for the credit. Tax forms 2011 1040    You, your spouse, and any qualifying child must have valid SSNs to claim this credit. Tax forms 2011 1040 You cannot claim the credit using an ITIN. Tax forms 2011 1040 If a social security card has a legend that says Not Valid for Employment and the number was issued so that you (or your spouse or your qualifying child) could receive a federally funded benefit, you cannot claim the earned income credit. Tax forms 2011 1040 An example of a federally funded benefit is Medicaid. Tax forms 2011 1040 If a card has this legend and the individual's immigration status has changed so that the individual is now a U. Tax forms 2011 1040 S. Tax forms 2011 1040 citizen or lawful permanent resident, ask the SSA to issue a new social security card without the legend. Tax forms 2011 1040   See Publication 596 for more information on the credit. Tax forms 2011 1040 Tax Withheld You can claim the tax withheld during the year as a payment against your U. Tax forms 2011 1040 S. Tax forms 2011 1040 tax. Tax forms 2011 1040 You claim it on line 61 of Form 1040NR or on line 18 of Form 1040NR-EZ. Tax forms 2011 1040 The tax withheld reduces any tax you owe with Form 1040NR or Form 1040NR-EZ. Tax forms 2011 1040 Withholding from wages. Tax forms 2011 1040   Any federal income tax withheld from your wages during the tax year while you were a nonresident alien is allowed as a payment against your U. Tax forms 2011 1040 S. Tax forms 2011 1040 income tax liability for the same year. Tax forms 2011 1040 You can claim the income tax withheld whether or not you were engaged in a trade or business in the United States during the year, and whether or not the wages (or any other income) were connected with a trade or business in the United States. Tax forms 2011 1040 Excess social security tax withheld. Tax forms 2011 1040   If you have two or more employers, you may be able to claim a credit against your U. Tax forms 2011 1040 S. Tax forms 2011 1040 income tax liability for social security tax withheld in excess of the maximum required. Tax forms 2011 1040 See Social Security and Medicare Taxes in chapter 8 for more information. Tax forms 2011 1040 Additional Medicare Tax. Tax forms 2011 1040   Your employer is responsible for withholding the 0. Tax forms 2011 1040 9% Additional Medicare Tax on Medicare wages or RRTA compensation it pays to you in excess of $200,000 in 2013. Tax forms 2011 1040 If you do not owe Additional Medicare Tax, you can claim a credit for any withheld Additional Medicare Tax against the total tax liability shown on your tax return by filing Form 8959. Tax forms 2011 1040 Tax paid on undistributed long-term capital gains. Tax forms 2011 1040   If you are a shareholder in a mutual fund (or other regulated investment company) or real estate investment trust, you can claim a credit for your share of any taxes paid by the company on its undistributed long-term capital gains. Tax forms 2011 1040 You will receive information on Form 2439, Notice to Shareholder of Undistributed Long-Term Capital Gains, which you must attach to your return. Tax forms 2011 1040 Tax withheld at the source. Tax forms 2011 1040   You can claim as a payment any tax withheld at the source on investment and other fixed or determinable annual or periodic income paid to you. Tax forms 2011 1040 Fixed or determinable income includes interest, dividend, rental, and royalty income that you do not claim to be effectively connected income. Tax forms 2011 1040 Wage or salary payments can be fixed or determinable income to you, but usually are subject to withholding as discussed above. Tax forms 2011 1040 Taxes on fixed or determinable income are withheld at a 30% rate or at a lower treaty rate. Tax forms 2011 1040 Tax withheld on partnership income. Tax forms 2011 1040   If you are a foreign partner in a partnership, the partnership will withhold tax on your share of effectively connected taxable income from the partnership. Tax forms 2011 1040 The partnership will give you a statement on Form 8805, Foreign Partner's Information Statement of Section 1446 Withholding Tax, showing the tax withheld. Tax forms 2011 1040 A partnership that is publicly traded may withhold on your actual distributions of effectively connected income. Tax forms 2011 1040 In this case, the partnership will give you a statement on Form 1042-S. Tax forms 2011 1040 Claim the tax withheld as a payment on line 61b or 61d of Form 1040NR, as appropriate. Tax forms 2011 1040 Claiming tax withheld on your return. Tax forms 2011 1040   When you fill out your tax return, take extra care to enter the correct amount of any tax withheld shown on your information documents. Tax forms 2011 1040 The following table lists some of the more common information documents and shows where to find the amount of tax withheld. Tax forms 2011 1040 Form number Location  of tax  withheld RRB-1042S Box 12 SSA-1042S Box 9 W-2 Box 2 W-2c Box 2 1042-S Box 9 8805 Line 10 8288-A Box 2 Bona Fide Residents of American Samoa or Puerto Rico If you are a nonresident alien who is a bona fide resident of American Samoa or Puerto Rico for the entire tax year, you generally are taxed the same as resident aliens. Tax forms 2011 1040 You should file Form 1040 and report all income from sources both in and outside the United States. Tax forms 2011 1040 However, you can exclude the income discussed in the following paragraphs. Tax forms 2011 1040 For tax purposes other than reporting income, however, you will be treated as a nonresident alien. Tax forms 2011 1040 For example, you are not allowed the standard deduction, you cannot file a joint return, and you are not allowed a deduction for a dependent unless that person is a citizen or national of the United States. Tax forms 2011 1040 There are also limits on what deductions and credits are allowed. Tax forms 2011 1040 See Nonresident Aliens under Deductions , Itemized Deductions , and Tax Credits and Payments in this chapter. Tax forms 2011 1040 Residents of Puerto Rico. Tax forms 2011 1040   If you are a bona fide resident of Puerto Rico for the entire year, you can exclude from gross income all income from sources in Puerto Rico (other than amounts for services performed as an employee of the United States or any of its agencies). Tax forms 2011 1040   If you report income on a calendar year basis and you do not have wages subject to withholding, file your return and pay your tax by June 15. Tax forms 2011 1040 You must also make your first payment of estimated tax by June 15. Tax forms 2011 1040 You cannot file a joint income tax return or make joint payments of estimated tax. Tax forms 2011 1040 However, if you are married to a U. Tax forms 2011 1040 S. Tax forms 2011 1040 citizen or resident, see Nonresident Spouse Treated as a Resident in chapter 1. Tax forms 2011 1040   If you earn wages subject to withholding, your U. Tax forms 2011 1040 S. Tax forms 2011 1040 income tax return is due by April 15. Tax forms 2011 1040 Your first payment of estimated tax is also due by April 15. Tax forms 2011 1040 For information on withholding and estimated tax, see chapter 8 . Tax forms 2011 1040 Residents of American Samoa. Tax forms 2011 1040   If you are a bona fide resident of American Samoa for the entire year, you can exclude from gross income all income from sources in American Samoa (other than amounts for services performed as an employee of the U. Tax forms 2011 1040 S. Tax forms 2011 1040 government or any of its agencies). Tax forms 2011 1040 An employee of the American Samoan government is not considered an employee of the U. Tax forms 2011 1040 S. Tax forms 2011 1040 government or any of its agencies for purposes of the exclusion. Tax forms 2011 1040 For more information about this exclusion, get Form 4563 and Publication 570, Tax Guide for Individuals With Income From U. Tax forms 2011 1040 S. Tax forms 2011 1040 Possessions. 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The Tax Forms 2011 1040

Tax forms 2011 1040 10. Tax forms 2011 1040   Self-Employment (SE) Tax Table of Contents Who Must Pay SE Tax?Special Rules and Exceptions Figuring Earnings Subject to SE Tax Farm Optional Method Using Both Optional Methods Reporting Self-Employment Tax The SE tax rules apply no matter how old you are and even if you are already receiving social security and Medicare benefits. Tax forms 2011 1040 Who Must Pay SE Tax? Generally, you must pay SE tax and file Schedule SE (Form 1040) if your net earnings from self-employment were $400 or more. Tax forms 2011 1040 Use Schedule SE to figure net earnings from self-employment. Tax forms 2011 1040 Sole proprietor or independent contractor. Tax forms 2011 1040   If you are self-employed as a sole proprietor or independent contractor, you generally use Schedule C or C-EZ (Form 1040) to figure your earnings subject to SE tax. Tax forms 2011 1040 SE tax rate. Tax forms 2011 1040    For 2013, the SE tax rate on net earnings is 15. Tax forms 2011 1040 3% (12. Tax forms 2011 1040 4% social security tax plus 2. Tax forms 2011 1040 9% Medicare tax). Tax forms 2011 1040 Maximum earnings subject to self-employment tax. Tax forms 2011 1040    Only the first $113,700 of your combined wages, tips, and net earnings in 2013 is subject to any combination of the 12. Tax forms 2011 1040 4% social security part of SE tax, social security tax, or railroad retirement (tier 1) tax. Tax forms 2011 1040   All of your combined wages, tips, and net earnings in 2013 are subject to any combination of the 2. Tax forms 2011 1040 9% Medicare part of SE tax, social security tax, or railroad retirement (tier 1) tax. Tax forms 2011 1040   If your wages and tips are subject to either social security or railroad retirement (tier 1) tax, or both, and total at least $113,700, do not pay the 12. Tax forms 2011 1040 4% social security part of the SE tax on any of your net earnings. Tax forms 2011 1040 However, you must pay the 2. Tax forms 2011 1040 9% Medicare part of the SE tax on all your net earnings. Tax forms 2011 1040 Special Rules and Exceptions Aliens. Tax forms 2011 1040   Generally, resident aliens must pay self-employment tax under the same rules that apply to U. Tax forms 2011 1040 S. Tax forms 2011 1040 citizens. Tax forms 2011 1040 Nonresident aliens are not subject to SE tax unless an international social security agreement in effect determines that they are covered under the U. Tax forms 2011 1040 S. Tax forms 2011 1040 social security system. Tax forms 2011 1040 However, residents of the Virgin Islands, Puerto Rico, Guam, the Commonwealth of the Northern Mariana Islands, or American Samoa are subject to self-employment tax, as they are considered U. Tax forms 2011 1040 S. Tax forms 2011 1040 residents for self-employment tax purposes. Tax forms 2011 1040 For more information on aliens, see Publication 519, U. Tax forms 2011 1040 S. Tax forms 2011 1040 Tax Guide for Aliens. Tax forms 2011 1040 Child employed by parent. Tax forms 2011 1040   You are not subject to SE tax if you are under age 18 and you are working for your father or mother. Tax forms 2011 1040 Church employee. Tax forms 2011 1040    If you work for a church or a qualified church-controlled organization (other than as a minister or member of a religious order) that elected an exemption from social security and Medicare taxes, you are subject to SE tax if you receive $108. Tax forms 2011 1040 28 or more in wages from the church or organization. Tax forms 2011 1040 For more information, see Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers. Tax forms 2011 1040 Fishing crew member. Tax forms 2011 1040   If you are a member of the crew on a boat that catches fish or other water life, your earnings are subject to SE tax if all the following conditions apply. Tax forms 2011 1040 You do not get any pay for the work except your share of the catch or a share of the proceeds from the sale of the catch, unless the pay meets all the following conditions. Tax forms 2011 1040 The pay is not more than $100 per trip. Tax forms 2011 1040 The pay is received only if there is a minimum catch. Tax forms 2011 1040 The pay is solely for additional duties (such as mate, engineer, or cook) for which additional cash pay is traditional in the fishing industry. Tax forms 2011 1040 You get a share of the catch or a share of the proceeds from the sale of the catch. Tax forms 2011 1040 Your share depends on the amount of the catch. Tax forms 2011 1040 The boat's operating crew normally numbers fewer than 10 individuals. Tax forms 2011 1040 (An operating crew is considered as normally made up of fewer than 10 if the average size of the crew on trips made during the last four calendar quarters is fewer than 10. Tax forms 2011 1040 ) Notary public. Tax forms 2011 1040   Fees you receive for services you perform as a notary public are reported on Schedule C or C-EZ but are not subject to self-employment tax (see the Instructions for Schedule SE (Form 1040)). Tax forms 2011 1040 State or local government employee. Tax forms 2011 1040   You are subject to SE tax if you are an employee of a state or local government, are paid solely on a fee basis, and your services are not covered under a federal-state social security agreement. Tax forms 2011 1040 Foreign government or international organization employee. Tax forms 2011 1040   You are subject to SE tax if both the following conditions are true. Tax forms 2011 1040 You are a U. Tax forms 2011 1040 S. Tax forms 2011 1040 citizen employed in the United States, Puerto Rico, Guam, American Samoa, the Commonwealth of the Northern Mariana Islands, or the Virgin Islands by: A foreign government, A wholly-owned agency of a foreign government, or An international organization. Tax forms 2011 1040 Your employer is not required to withhold social security and Medicare taxes from your wages. Tax forms 2011 1040 U. Tax forms 2011 1040 S. Tax forms 2011 1040 citizen or resident alien residing abroad. Tax forms 2011 1040    If you are a self-employed U. Tax forms 2011 1040 S. Tax forms 2011 1040 citizen or resident alien living outside the United States, in most cases you must pay SE tax. Tax forms 2011 1040 Do not reduce your foreign earnings from self-employment by your foreign earned income exclusion. Tax forms 2011 1040 Exception. Tax forms 2011 1040    The United States has social security agreements with many countries to eliminate double taxation under two social security systems. Tax forms 2011 1040 Under these agreements, you generally must only pay social security and Medicare taxes to the country in which you live. Tax forms 2011 1040 The country to which you must pay the tax will issue a certificate which serves as proof of exemption from social security tax in the other country. Tax forms 2011 1040   For more information, see the Instructions for Schedule SE (Form 1040). Tax forms 2011 1040 More Than One Business If you have earnings subject to SE tax from more than one trade, business, or profession, you must combine the net profit (or loss) from each to determine your total earnings subject to SE tax. Tax forms 2011 1040 A loss from one business reduces your profit from another business. Tax forms 2011 1040 Community Property Income If any of the income from a trade or business, other than a partnership, is community property income under state law, it is included in the earnings subject to SE tax of the spouse carrying on the trade or business. Tax forms 2011 1040 Gain or Loss Do not include in earnings subject to SE tax a gain or loss from the disposition of property that is neither stock in trade nor held primarily for sale to customers. Tax forms 2011 1040 It does not matter whether the disposition is a sale, exchange, or an involuntary conversion. Tax forms 2011 1040 Lost Income Payments If you are self-employed and reduce or stop your business activities, any payment you receive from insurance or other sources for the lost business income is included in earnings subject to SE tax. Tax forms 2011 1040 If you are not working when you receive the payment, it still relates to your business and is included in earnings subject to SE tax, even though your business is temporarily inactive. Tax forms 2011 1040 Figuring Earnings Subject to SE Tax Methods for Figuring Net Earnings There are three ways to figure your net earnings from self-employment. Tax forms 2011 1040 The regular method. Tax forms 2011 1040 The nonfarm optional method. Tax forms 2011 1040 The farm optional method. Tax forms 2011 1040 You must use the regular method unless you are eligible to use one or both of the optional methods. Tax forms 2011 1040 Why use an optional method?    You may want to use the optional methods (discussed later) when you have a loss or a small net profit and any one of the following applies. Tax forms 2011 1040 You want to receive credit for social security benefit coverage. Tax forms 2011 1040 You incurred child or dependent care expenses for which you could claim a credit. Tax forms 2011 1040 (An optional method may increase your earned income, which could increase your credit. Tax forms 2011 1040 ) You are entitled to the earned income credit. Tax forms 2011 1040 (An optional method may increase your earned income, which could increase your credit. Tax forms 2011 1040 ) You are entitled to the additional child tax credit. Tax forms 2011 1040 (An optional method may increase your earned income, which could increase your credit. Tax forms 2011 1040 ) Effects of using an optional method. Tax forms 2011 1040   Using an optional method could increase your SE tax. Tax forms 2011 1040 Paying more SE tax could result in your getting higher benefits when you retire. Tax forms 2011 1040   If you use either or both optional methods, you must figure and pay the SE tax due under these methods even if you would have had a smaller tax or no tax using the regular method. Tax forms 2011 1040   The optional methods may be used only to figure your SE tax. Tax forms 2011 1040 To figure your income tax, include your actual earnings in gross income, regardless of which method you use to determine SE tax. Tax forms 2011 1040 Regular Method Multiply your total earnings subject to SE tax by 92. Tax forms 2011 1040 35% (. Tax forms 2011 1040 9235) to get your net earnings under the regular method. Tax forms 2011 1040 See Short Schedule SE, line 4, or Long Schedule SE, line 4a. Tax forms 2011 1040 Net earnings figured using the regular method are also called actual net earnings. Tax forms 2011 1040 Nonfarm Optional Method Use the nonfarm optional method only for earnings that do not come from farming. Tax forms 2011 1040 You may use this method if you meet all the following tests. Tax forms 2011 1040 You are self-employed on a regular basis. Tax forms 2011 1040 This means that your actual net earnings from self-employment were $400 or more in at least 2 of the 3 tax years before the one for which you use this method. Tax forms 2011 1040 The net earnings can be from either farm or nonfarm earnings or both. Tax forms 2011 1040 You have used this method less than 5 years. Tax forms 2011 1040 (There is a 5-year lifetime limit. Tax forms 2011 1040 ) The years do not have to be one after another. Tax forms 2011 1040 Your net nonfarm profits were: Less than $5,024, and Less than 72. Tax forms 2011 1040 189% of your gross nonfarm income. Tax forms 2011 1040 Net nonfarm profits. Tax forms 2011 1040   Net nonfarm profit generally is the total of the amounts from: Line 31, Schedule C (Form 1040), Line 3, Schedule C-EZ (Form 1040), Box 14, code A, Schedule K-1 (Form 1065) (from nonfarm partnerships), and Box 9, code J1, Schedule K-1 (Form 1065-B). Tax forms 2011 1040   However, you may need to adjust the amount reported on Schedule K-1 if you are a general partner or if it is a loss. Tax forms 2011 1040 Gross nonfarm income. Tax forms 2011 1040   Your gross nonfarm income generally is the total of the amounts from: Line 7, Schedule C (Form 1040), Line 1, Schedule C-EZ (Form 1040), Box 14, code C, Schedule K-1 (Form 1065) (from nonfarm partnerships), and Box 9, code J2, Schedule K-1 (Form 1065-B). Tax forms 2011 1040 Figuring Nonfarm Net Earnings If you meet the three tests explained earlier, use the following table to figure your net earnings from self-employment under the nonfarm optional method. Tax forms 2011 1040 Table 10-1. Tax forms 2011 1040 Figuring Nonfarm Net Earnings IF your gross nonfarm income is. Tax forms 2011 1040 . Tax forms 2011 1040 . Tax forms 2011 1040 THEN your net earnings are equal to. Tax forms 2011 1040 . Tax forms 2011 1040 . Tax forms 2011 1040 $6,960 or less Two-thirds of your gross nonfarm income. Tax forms 2011 1040 More than $6,960 $4,640 Actual net earnings. Tax forms 2011 1040   Your actual net earnings are 92. Tax forms 2011 1040 35% of your total earnings subject to SE tax (that is, multiply total earnings subject to SE tax by 92. Tax forms 2011 1040 35% (. Tax forms 2011 1040 9235) to get actual net earnings). Tax forms 2011 1040 Actual net earnings are equivalent to net earnings figured using the regular method. Tax forms 2011 1040 Optional net earnings less than actual net earnings. Tax forms 2011 1040   You cannot use this method to report an amount less than your actual net earnings from self-employment. Tax forms 2011 1040 Gross nonfarm income of $6,960 or less. Tax forms 2011 1040   The following examples illustrate how to figure net earnings when gross nonfarm income is $6,960 or less. Tax forms 2011 1040 Example 1. Tax forms 2011 1040 Net nonfarm profit less than $5,024 and less than 72. Tax forms 2011 1040 189% of gross nonfarm income. Tax forms 2011 1040 Ann Green runs a craft business. Tax forms 2011 1040 Her actual net earnings from self-employment were $800 in 2011 and $900 in 2012. Tax forms 2011 1040 She meets the test for being self-employed on a regular basis. Tax forms 2011 1040 She has used the nonfarm optional method less than 5 years. Tax forms 2011 1040 Her gross income and net profit in 2013 are as follows: Gross nonfarm income $5,400 Net nonfarm profit $1,200 Ann's actual net earnings for 2013 are $1,108 ($1,200 × . Tax forms 2011 1040 9235). Tax forms 2011 1040 Because her net profit is less than $5,024 and less than 72. Tax forms 2011 1040 189% of her gross income, she can use the nonfarm optional method to figure net earnings of $3,600 (2/3 × $5,400). Tax forms 2011 1040 Because these net earnings are higher than her actual net earnings, she can report net earnings of $3,600 for 2013. Tax forms 2011 1040 Example 2. Tax forms 2011 1040 Net nonfarm profit less than $5,024 but not less than 72. Tax forms 2011 1040 189% of gross nonfarm income. Tax forms 2011 1040 Assume that in Example 1 Ann's gross income is $1,000 and her net profit is $800. Tax forms 2011 1040 She must use the regular method to figure her net earnings. Tax forms 2011 1040 She cannot use the nonfarm optional method because her net profit is not less than 72. Tax forms 2011 1040 189% of her gross income. Tax forms 2011 1040 Example 3. Tax forms 2011 1040 Net loss from a nonfarm business. Tax forms 2011 1040 Assume that in Example 1 Ann has a net loss of $700. Tax forms 2011 1040 She can use the nonfarm optional method and report $3,600 (2/3 × $5,400) as her net earnings. Tax forms 2011 1040 Example 4. Tax forms 2011 1040 Nonfarm net earnings less than $400. Tax forms 2011 1040 Assume that in Example 1 Ann has gross income of $525 and a net profit of $175. Tax forms 2011 1040 In this situation, she would not pay any SE tax under either the regular method or the nonfarm optional method because her net earnings under both methods are less than $400. Tax forms 2011 1040 Gross nonfarm income of more than $6,960. Tax forms 2011 1040   The following examples illustrate how to figure net earnings when gross nonfarm income is more than $6,960. Tax forms 2011 1040 Example 1. Tax forms 2011 1040 Net nonfarm profit less than $5,024 and less than 72. Tax forms 2011 1040 189% of gross nonfarm income. Tax forms 2011 1040 John White runs an appliance repair shop. Tax forms 2011 1040 His actual net earnings from self-employment were $10,500 in 2011 and $9,500 in 2012. Tax forms 2011 1040 He meets the test for being self-employed on a regular basis. Tax forms 2011 1040 He has used the nonfarm optional method less than 5 years. Tax forms 2011 1040 His gross income and net profit in 2013 are as follows: Gross nonfarm income $12,000 Net nonfarm profit $1,200 John's actual net earnings for 2013 are $1,108 ($1,200 × . Tax forms 2011 1040 9235). Tax forms 2011 1040 Because his net profit is less than $5,024 and less than 72. Tax forms 2011 1040 189% of his gross income, he can use the nonfarm optional method to figure net earnings of $4,640. Tax forms 2011 1040 Because these net earnings are higher than his actual net earnings, he can report net earnings of $4,640 for 2013. Tax forms 2011 1040 Example 2. Tax forms 2011 1040 Net nonfarm profit not less than $5,024. Tax forms 2011 1040 Assume that in Example 1 John's net profit is $5,400. Tax forms 2011 1040 He must use the regular method. Tax forms 2011 1040 He cannot use the nonfarm optional method because his net nonfarm profit is not less than $5,024. Tax forms 2011 1040 Example 3. Tax forms 2011 1040 Net loss from a nonfarm business. Tax forms 2011 1040 Assume that in Example 1 John has a net loss of $700. Tax forms 2011 1040 He can use the nonfarm optional method and report $4,640 as his net earnings from self-employment. Tax forms 2011 1040 Farm Optional Method Use the farm optional method only for earnings from a farming business. Tax forms 2011 1040 See Publication 225 for information about this method. Tax forms 2011 1040 Using Both Optional Methods If you have both farm and nonfarm earnings, you may be able to use both optional methods to determine your net earnings from self-employment. Tax forms 2011 1040 To figure your net earnings using both optional methods, you must: Figure your farm and nonfarm net earnings separately under each method. Tax forms 2011 1040 Do not combine farm earnings with nonfarm earnings to figure your net earnings under either method. Tax forms 2011 1040 Add the net earnings figured under each method to arrive at your total net earnings from self-employment. Tax forms 2011 1040 You can report less than your total actual farm and nonfarm net earnings but not less than actual nonfarm net earnings. Tax forms 2011 1040 If you use both optional methods, you can report no more than $4,640 as your combined net earnings from self-employment. Tax forms 2011 1040 Example. Tax forms 2011 1040 You are a self-employed farmer. Tax forms 2011 1040 You also operate a retail grocery store. Tax forms 2011 1040 Your gross income, actual net earnings from self-employment, and optional farm and optional nonfarm net earnings from self-employment are shown in Table 10-2. Tax forms 2011 1040 Table 10-2. Tax forms 2011 1040 Example—Farm and Nonfarm Earnings Income and Earnings Farm Nonfarm Gross income $3,000 $6,000 Actual net earnings $900 $500 Optional net earnings (2/3 of gross income) $2,000 $4,000 Table 10-3 shows four methods or combinations of methods you can use to figure net earnings from self-employment using the farm and nonfarm gross income and actual net earnings shown in Table 10-2. Tax forms 2011 1040 Method 1. Tax forms 2011 1040 Using the regular method for both farm and nonfarm income. Tax forms 2011 1040 Method 2. Tax forms 2011 1040 Using the optional method for farm income and the regular method for nonfarm income. Tax forms 2011 1040 Method 3. Tax forms 2011 1040 Using the regular method for farm income and the optional method for nonfarm income. Tax forms 2011 1040 Method 4. Tax forms 2011 1040 Using the optional method for both farm and nonfarm income. Tax forms 2011 1040 Note. Tax forms 2011 1040 Actual net earnings is the same as net earnings figured using the regular method. Tax forms 2011 1040 Table 10-3. Tax forms 2011 1040 Example—Net Earnings Net Earnings 1 2 3 4 Actual  farm $ 900   $ 900   Optional  farm   $ 2,000   $ 2,000 Actual nonfarm $ 500 $ 500     Optional nonfarm     $4,000 $4,000 Amount you can report: $1,400 $2,500 $4,900 $4,640* *Limited to $4,640 because you used both optional methods. Tax forms 2011 1040 Fiscal Year Filer If you use a tax year other than the calendar year, you must use the tax rate and maximum earnings limit in effect at the beginning of your tax year. Tax forms 2011 1040 Even if the tax rate or maximum earnings limit changes during your tax year, continue to use the same rate and limit throughout your tax year. Tax forms 2011 1040 Reporting Self-Employment Tax Use Schedule SE (Form 1040) to figure and report your SE tax. Tax forms 2011 1040 Then enter the SE tax on line 56 of Form 1040 and attach Schedule SE to Form 1040. Tax forms 2011 1040 Most taxpayers can use Section A—Short Schedule SE to figure their SE tax. Tax forms 2011 1040 However, certain taxpayers must use Section B—Long Schedule SE. Tax forms 2011 1040 If you have to pay SE tax, you must file Form 1040 (with Schedule SE attached) even if you do not otherwise have to file a federal income tax return. Tax forms 2011 1040 Joint return. Tax forms 2011 1040   Even if you file a joint return, you cannot file a joint Schedule SE. Tax forms 2011 1040 This is true whether one spouse or both spouses have earnings subject to SE tax. Tax forms 2011 1040 If both of you have earnings subject to SE tax, each of you must complete a separate Schedule SE. Tax forms 2011 1040 However, if one spouse uses the Short Schedule SE and the other spouse has to use the Long Schedule SE, both can use the same form. Tax forms 2011 1040 Attach both schedules to the joint return. Tax forms 2011 1040 More than one business. Tax forms 2011 1040   If you have more than one trade or business, you must combine the net profit (or loss) from each business to figure your SE tax. Tax forms 2011 1040 A loss from one business will reduce your profit from another business. Tax forms 2011 1040 File one Schedule SE showing the earnings from self-employment, but file a separate Schedule C, C-EZ, or F for each business. Tax forms 2011 1040 Example. Tax forms 2011 1040 You are the sole proprietor of two separate businesses. Tax forms 2011 1040 You operate a restaurant that made a net profit of $25,000. Tax forms 2011 1040 You also have a cabinetmaking business that had a net loss of $500. Tax forms 2011 1040 You must file a Schedule C for the restaurant showing your net profit of $25,000 and another Schedule C for the cabinetmaking business showing your net loss of $500. Tax forms 2011 1040 You file Schedule SE showing total earnings subject to SE tax of $24,500. Tax forms 2011 1040 Prev  Up  Next   Home   More Online Publications