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Tax Planning Us File Your Own Taxes

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Tax Planning Us File Your Own Taxes

Tax planning us file your own taxes 6. Tax planning us file your own taxes   Insurance Table of Contents What's New Introduction Topics - This chapter discusses: Useful Items - You may want to see: Deductible PremiumsSelf-Employed Health Insurance Deduction Nondeductible Premiums Capitalized Premiums When To Deduct Premiums What's New Retiree drug subsidy. Tax planning us file your own taxes  Beginning in 2013, sponsors of certain qualified retiree prescription drug plans must account for the subsidy received by reducing the amount of qualified retiree prescription drug plans expense by the subsidy received (taking into account the taxpayer's accounting method). Tax planning us file your own taxes For more information, see the retiree drug subsidy frequently asked questions on IRS. Tax planning us file your own taxes gov. Tax planning us file your own taxes Introduction You generally can deduct the ordinary and necessary cost of insurance as a business expense if it is for your trade, business, or profession. Tax planning us file your own taxes However, you may have to capitalize certain insurance costs under the uniform capitalization rules. Tax planning us file your own taxes For more information, see Capitalized Premiums , later. Tax planning us file your own taxes Topics - This chapter discusses: Deductible premiums Nondeductible premiums Capitalized premiums When to deduct premiums Useful Items - You may want to see: Publication 15-B Employer's Tax Guide to Fringe Benefits 525 Taxable and Nontaxable Income 538 Accounting Periods and Methods 547 Casualties, Disasters, and Thefts Form (and Instructions) 1040 U. Tax planning us file your own taxes S. Tax planning us file your own taxes Individual Income Tax Return See chapter 12 for information about getting publications and forms. Tax planning us file your own taxes Deductible Premiums You generally can deduct premiums you pay for the following kinds of insurance related to your trade or business. Tax planning us file your own taxes Insurance that covers fire, storm, theft, accident, or similar losses. Tax planning us file your own taxes Credit insurance that covers losses from business bad debts. Tax planning us file your own taxes Group hospitalization and medical insurance for employees, including long-term care insurance. Tax planning us file your own taxes If a partnership pays accident and health insurance premiums for its partners, it generally can deduct them as guaranteed payments to partners. Tax planning us file your own taxes If an S corporation pays accident and health insurance premiums for its more-than-2% shareholder-employees, it generally can deduct them, but must also include them in the shareholder's wages subject to federal income tax withholding. Tax planning us file your own taxes See Publication 15-B. Tax planning us file your own taxes Liability insurance. Tax planning us file your own taxes Malpractice insurance that covers your personal liability for professional negligence resulting in injury or damage to patients or clients. Tax planning us file your own taxes Workers' compensation insurance set by state law that covers any claims for bodily injuries or job-related diseases suffered by employees in your business, regardless of fault. Tax planning us file your own taxes If a partnership pays workers' compensation premiums for its partners, it generally can deduct them as guaranteed payments to partners. Tax planning us file your own taxes If an S corporation pays workers' compensation premiums for its more-than-2% shareholder-employees, it generally can deduct them, but must also include them in the shareholder's wages. Tax planning us file your own taxes Contributions to a state unemployment insurance fund are deductible as taxes if they are considered taxes under state law. Tax planning us file your own taxes Overhead insurance that pays for business overhead expenses you have during long periods of disability caused by your injury or sickness. Tax planning us file your own taxes Car and other vehicle insurance that covers vehicles used in your business for liability, damages, and other losses. Tax planning us file your own taxes If you operate a vehicle partly for personal use, deduct only the part of the insurance premium that applies to the business use of the vehicle. Tax planning us file your own taxes If you use the standard mileage rate to figure your car expenses, you cannot deduct any car insurance premiums. Tax planning us file your own taxes Life insurance covering your officers and employees if you are not directly or indirectly a beneficiary under the contract. Tax planning us file your own taxes Business interruption insurance that pays for lost profits if your business is shut down due to a fire or other cause. Tax planning us file your own taxes Self-Employed Health Insurance Deduction You may be able to deduct premiums paid for medical and dental insurance and qualified long-term care insurance for yourself, your spouse, and your dependents. Tax planning us file your own taxes The insurance can also cover your child who was under age 27 at the end of 2013, even if the child was not your dependent. Tax planning us file your own taxes A child includes your son, daughter, stepchild, adopted child, or foster child. Tax planning us file your own taxes A foster child is any child placed with you by an authorized placement agency or by judgment, decree, or other order of any court of competent jurisdiction. Tax planning us file your own taxes One of the following statements must be true. Tax planning us file your own taxes You were self-employed and had a net profit for the year reported on Schedule C (Form 1040), Profit or Loss From Business; Schedule C-EZ (Form 1040), Net Profit From Business; or Schedule F (Form 1040), Profit or Loss From Farming. Tax planning us file your own taxes You were a partner with net earnings from self-employment for the year reported on Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc. Tax planning us file your own taxes , box 14, code A. Tax planning us file your own taxes You used one of the optional methods to figure your net earnings from self-employment on Schedule SE. Tax planning us file your own taxes You received wages in 2013 from an S corporation in which you were a more-than-2% shareholder. Tax planning us file your own taxes Health insurance premiums paid or reimbursed by the S corporation are shown as wages on Form W-2, Wage and Tax Statement. Tax planning us file your own taxes The insurance plan must be established, or considered to be established as discussed in the following bullets, under your business. Tax planning us file your own taxes For self-employed individuals filing a Schedule C, C-EZ, or F, a policy can be either in the name of the business or in the name of the individual. Tax planning us file your own taxes For partners, a policy can be either in the name of the partnership or in the name of the partner. Tax planning us file your own taxes You can either pay the premiums yourself or your partnership can pay them and report the premium amounts on Schedule K-1 (Form 1065) as guaranteed payments to be included in your gross income. Tax planning us file your own taxes However, if the policy is in your name and you pay the premiums yourself, the partnership must reimburse you and report the premium amounts on Schedule K-1 (Form 1065) as guaranteed payments to be included in your gross income. Tax planning us file your own taxes Otherwise, the insurance plan will not be considered to be established under your business. Tax planning us file your own taxes For more-than-2% shareholders, a policy can be either in the name of the S corporation or in the name of the shareholder. Tax planning us file your own taxes You can either pay the premiums yourself or your S corporation can pay them and report the premium amounts on Form W-2 as wages to be included in your gross income. Tax planning us file your own taxes However, if the policy is in your name and you pay the premiums yourself, the S corporation must reimburse you and report the premium amounts on Form W-2 as wages to be included in your gross income. Tax planning us file your own taxes Otherwise, the insurance plan will not be considered to be established under your business. Tax planning us file your own taxes Medicare premiums you voluntarily pay to obtain insurance in your name that is similar to qualifying private health insurance can be used to figure the deduction. Tax planning us file your own taxes If you previously filed returns without using Medicare premiums to figure the deduction, you can file timely amended returns to refigure the deduction. Tax planning us file your own taxes For more information, see Form 1040X, Amended U. Tax planning us file your own taxes S. Tax planning us file your own taxes Individual Income Tax Return. Tax planning us file your own taxes Amounts paid for health insurance coverage from retirement plan distributions that were nontaxable because you are a retired public safety officer cannot be used to figure the deduction. Tax planning us file your own taxes Take the deduction on Form 1040, line 29. Tax planning us file your own taxes Qualified long-term care insurance. Tax planning us file your own taxes   You can include premiums paid on a qualified long-term care insurance contract when figuring your deduction. Tax planning us file your own taxes But, for each person covered, you can include only the smaller of the following amounts. Tax planning us file your own taxes The amount paid for that person. Tax planning us file your own taxes The amount shown below. Tax planning us file your own taxes Use the person's age at the end of the tax year. Tax planning us file your own taxes Age 40 or younger–$360 Age 41 to 50–$680 Age 51 to 60–$1,360 Age 61 to 70–$3,640 Age 71 or older–$4,550 Qualified long-term care insurance contract. Tax planning us file your own taxes   A qualified long-term care insurance contract is an insurance contract that only provides coverage of qualified long-term care services. Tax planning us file your own taxes The contract must meet all the following requirements. Tax planning us file your own taxes It must be guaranteed renewable. Tax planning us file your own taxes It must provide that refunds, other than refunds on the death of the insured or complete surrender or cancellation of the contract, and dividends under the contract may be used only to reduce future premiums or increase future benefits. Tax planning us file your own taxes It must not provide for a cash surrender value or other money that can be paid, assigned, pledged, or borrowed. Tax planning us file your own taxes It generally must not pay or reimburse expenses incurred for services or items that would be reimbursed under Medicare, except where Medicare is a secondary payer or the contract makes per diem or other periodic payments without regard to expenses. Tax planning us file your own taxes Qualified long-term care services. Tax planning us file your own taxes   Qualified long-term care services are: Necessary diagnostic, preventive, therapeutic, curing, treating, mitigating, and rehabilitative services, and Maintenance or personal care services. Tax planning us file your own taxes The services must be required by a chronically ill individual and prescribed by a licensed health care practitioner. Tax planning us file your own taxes Worksheet 6-A. Tax planning us file your own taxes Self-Employed Health Insurance Deduction Worksheet Note. Tax planning us file your own taxes Use a separate worksheet for each trade or business under which an insurance plan is established. Tax planning us file your own taxes 1. Tax planning us file your own taxes Enter the total amount paid in 2013 for health insurance coverage established under your business for 2013 for you, your spouse, and your dependents. Tax planning us file your own taxes Your insurance can also cover your child who was under age 27 at the end of 2013, even if the child was not your dependent. Tax planning us file your own taxes But do not include the following. Tax planning us file your own taxes   Amounts for any month you were eligible to participate in a health plan subsidized by your or your spouse's employer or the employer of either your dependent or your child who was under the age of 27 at the end of 2013. Tax planning us file your own taxes Any amounts paid from retirement plan distributions that were nontaxable because you are a retired public safety officer. Tax planning us file your own taxes Any amounts you included on Form 8885, line 4. Tax planning us file your own taxes Any qualified health insurance premiums you paid to “U. Tax planning us file your own taxes S. Tax planning us file your own taxes Treasury-HCTC. Tax planning us file your own taxes ” Any health coverage tax credit advance payments shown in box 1 of Form 1099-H. Tax planning us file your own taxes Any payments for qualified long-term care insurance (see line 2) 1. Tax planning us file your own taxes   2. Tax planning us file your own taxes For coverage under a qualified long-term care insurance contract, enter for each person covered the smaller of the following amounts. Tax planning us file your own taxes       a) Total payments made for that person during the year. Tax planning us file your own taxes       b) The amount shown below. Tax planning us file your own taxes Use the person's age at the end of the tax year. Tax planning us file your own taxes         $360— if that person is age 40 or younger          $680— if age 41 to 50         $1,360— if age 51 to 60         $3,640— if age 61 to 70         $4,550— if age 71 or older         Do not include payments for any month you were eligible to participate in a long-term care insurance plan subsidized by your or your spouse’s employer or the employer of either your dependent or your child who was under the age of 27 at the end of 2013. Tax planning us file your own taxes If more than one person is covered, figure separately the amount to enter for each person. Tax planning us file your own taxes Then enter the total of those amounts 2. Tax planning us file your own taxes   3. Tax planning us file your own taxes Add lines 1 and 2 3. Tax planning us file your own taxes   4. Tax planning us file your own taxes Enter your net profit* and any other earned income** from the trade or business under which the insurance plan is established. Tax planning us file your own taxes Do not include Conservation Reserve Program payments exempt from self-employment tax. Tax planning us file your own taxes If the business is an S corporation, skip to line 11 4. Tax planning us file your own taxes   5. Tax planning us file your own taxes Enter the total of all net profits* from: Schedule C (Form 1040), line 31; Schedule C-EZ (Form 1040), line 3; Schedule F (Form 1040), line 34; or Schedule K-1 (Form 1065), box 14, code A; plus any other income allocable to the profitable businesses. Tax planning us file your own taxes Do not include Conservation Reserve Program payments exempt from self-employment tax. Tax planning us file your own taxes See the Instructions for Schedule SE (Form 1040). Tax planning us file your own taxes Do not include any net losses shown on these schedules. Tax planning us file your own taxes 5. Tax planning us file your own taxes   6. Tax planning us file your own taxes Divide line 4 by line 5 6. Tax planning us file your own taxes   7. Tax planning us file your own taxes Multiply Form 1040, line 27, by the percentage on line 6 7. Tax planning us file your own taxes   8. Tax planning us file your own taxes Subtract line 7 from line 4 8. Tax planning us file your own taxes   9. Tax planning us file your own taxes Enter the amount, if any, from Form 1040, line 28, attributable to the same trade or business in which the insurance plan is established 9. Tax planning us file your own taxes   10. Tax planning us file your own taxes Subtract line 9 from line 8 10. Tax planning us file your own taxes   11. Tax planning us file your own taxes Enter your Medicare wages (Form W-2, box 5) from an S corporation in which you are a more-than-2% shareholder and in which the insurance plan is established 11. Tax planning us file your own taxes   12. Tax planning us file your own taxes Enter any amount from Form 2555, line 45, attributable to the amount entered on line 4 or 11 above, or any amount from Form 2555-EZ, line 18, attributable to the amount entered on line 11 above 12. Tax planning us file your own taxes   13. Tax planning us file your own taxes Subtract line 12 from line 10 or 11, whichever applies 13. Tax planning us file your own taxes   14. Tax planning us file your own taxes Enter the smaller of line 3 or line 13 here and on Form 1040, line 29. Tax planning us file your own taxes Do not include this amount when figuring any medical expense deduction on Schedule A (Form 1040). Tax planning us file your own taxes 14. Tax planning us file your own taxes   * If you used either optional method to figure your net earnings from self-employment from any business, do not enter your net profit from the business. Tax planning us file your own taxes Instead, enter the amount attributable to that business from Schedule SE (Form 1040), Section B, line 4b. Tax planning us file your own taxes * *Earned income includes net earnings and gains from the sale, transfer, or licensing of property you created. Tax planning us file your own taxes However, it does not include capital gain income. Tax planning us file your own taxes Chronically ill individual. Tax planning us file your own taxes   A chronically ill individual is a person who has been certified as one of the following. Tax planning us file your own taxes An individual who has been unable, due to loss of functional capacity for at least 90 days, to perform at least two activities of daily living without substantial assistance from another individual. Tax planning us file your own taxes Activities of daily living are eating, toileting, transferring (general mobility), bathing, dressing, and continence. Tax planning us file your own taxes An individual who requires substantial supervision to be protected from threats to health and safety due to severe cognitive impairment. Tax planning us file your own taxes The certification must have been made by a licensed health care practitioner within the previous 12 months. Tax planning us file your own taxes Benefits received. Tax planning us file your own taxes   For information on excluding benefits you receive from a long-term care contract from gross income, see Publication 525. Tax planning us file your own taxes Other coverage. Tax planning us file your own taxes   You cannot take the deduction for any month you were eligible to participate in any employer (including your spouse's) subsidized health plan at any time during that month, even if you did not actually participate. Tax planning us file your own taxes In addition, if you were eligible for any month or part of a month to participate in any subsidized health plan maintained by the employer of either your dependent or your child who was under age 27 at the end of 2013, do not use amounts paid for coverage for that month to figure the deduction. Tax planning us file your own taxes   These rules are applied separately to plans that provide long-term care insurance and plans that do not provide long-term care insurance. Tax planning us file your own taxes However, any medical insurance payments not deductible on Form 1040, line 29, can be included as medical expenses on Schedule A (Form 1040), Itemized Deductions, if you itemize deductions. Tax planning us file your own taxes Effect on itemized deductions. Tax planning us file your own taxes   Subtract the health insurance deduction from your medical insurance when figuring medical expenses on Schedule A (Form 1040) if you itemize deductions. Tax planning us file your own taxes Effect on self-employment tax. Tax planning us file your own taxes   For tax years beginning before or after 2010, you cannot subtract the self-employed health insurance deduction when figuring net earnings for your self-employment tax from the business under which the insurance plan is established, or considered to be established as discussed earlier. Tax planning us file your own taxes For more information, see Schedule SE (Form 1040). Tax planning us file your own taxes How to figure the deduction. Tax planning us file your own taxes   Generally, you can use the worksheet in the Form 1040 instructions to figure your deduction. Tax planning us file your own taxes However, if any of the following apply, you must use Worksheet 6-A in this chapter. Tax planning us file your own taxes You had more than one source of income subject to self-employment tax. Tax planning us file your own taxes You file Form 2555, Foreign Earned Income, or Form 2555-EZ, Foreign Earned Income Exclusion. Tax planning us file your own taxes You are using amounts paid for qualified long-term care insurance to figure the deduction. Tax planning us file your own taxes If you are claiming the health coverage tax credit, complete Form 8885, Health Coverage Tax Credit, before you figure this deduction. Tax planning us file your own taxes Health coverage tax credit. Tax planning us file your own taxes   You may be able to take this credit only if you were an eligible trade adjustment assistance (TAA) recipient, alternative TAA (ATAA) recipient, reemployment trade adjustment assistance (RTAA) recipient, or Pension Benefit Guaranty Corporation (PBGC) pension recipient. Tax planning us file your own taxes Use Form 8885 to figure the amount, if any, of this credit. Tax planning us file your own taxes   When figuring the amount to enter on line 1 of Worksheet 6-A, do not include the following. Tax planning us file your own taxes Any amounts you included on Form 8885, line 4. Tax planning us file your own taxes Any qualified health insurance premiums you paid to “U. Tax planning us file your own taxes S. Tax planning us file your own taxes Treasury-HCTC. Tax planning us file your own taxes ” Any health coverage tax credit advance payments shown in box 1 of Form 1099-H, Health Coverage Tax Credit (HCTC) Advance Payments. Tax planning us file your own taxes More than one health plan and business. Tax planning us file your own taxes   If you have more than one health plan during the year and each plan is established under a different business, you must use separate worksheets (Worksheet 6-A) to figure each plan's net earnings limit. Tax planning us file your own taxes Include the premium you paid under each plan on line 1 or line 2 of that separate worksheet and your net profit (or wages) from that business on line 4 (or line 11). Tax planning us file your own taxes For a plan that provides long-term care insurance, the total of the amounts entered for each person on line 2 of all worksheets cannot be more than the appropriate limit shown on line 2 for that person. Tax planning us file your own taxes Nondeductible Premiums You cannot deduct premiums on the following kinds of insurance. Tax planning us file your own taxes Self-insurance reserve funds. Tax planning us file your own taxes You cannot deduct amounts credited to a reserve set up for self-insurance. Tax planning us file your own taxes This applies even if you cannot get business insurance coverage for certain business risks. Tax planning us file your own taxes However, your actual losses may be deductible. Tax planning us file your own taxes See Publication 547. Tax planning us file your own taxes Loss of earnings. Tax planning us file your own taxes You cannot deduct premiums for a policy that pays for lost earnings due to sickness or disability. Tax planning us file your own taxes However, see the discussion on overhead insurance, item (8), under Deductible Premiums , earlier. Tax planning us file your own taxes Certain life insurance and annuities. Tax planning us file your own taxes For contracts issued before June 9, 1997, you cannot deduct the premiums on a life insurance policy covering you, an employee, or any person with a financial interest in your business if you are directly or indirectly a beneficiary of the policy. Tax planning us file your own taxes You are included among possible beneficiaries of the policy if the policy owner is obligated to repay a loan from you using the proceeds of the policy. Tax planning us file your own taxes A person has a financial interest in your business if the person is an owner or part owner of the business or has lent money to the business. Tax planning us file your own taxes For contracts issued after June 8, 1997, you generally cannot deduct the premiums on any life insurance policy, endowment contract, or annuity contract if you are directly or indirectly a beneficiary. Tax planning us file your own taxes The disallowance applies without regard to whom the policy covers. Tax planning us file your own taxes Partners. Tax planning us file your own taxes If, as a partner in a partnership, you take out an insurance policy on your own life and name your partners as beneficiaries to induce them to retain their investments in the partnership, you are considered a beneficiary. Tax planning us file your own taxes You cannot deduct the insurance premiums. Tax planning us file your own taxes Insurance to secure a loan. Tax planning us file your own taxes If you take out a policy on your life or on the life of another person with a financial interest in your business to get or protect a business loan, you cannot deduct the premiums as a business expense. Tax planning us file your own taxes Nor can you deduct the premiums as interest on business loans or as an expense of financing loans. Tax planning us file your own taxes In the event of death, the proceeds of the policy are generally not taxed as income even if they are used to liquidate the debt. Tax planning us file your own taxes Capitalized Premiums Under the uniform capitalization rules, you must capitalize the direct costs and part of the indirect costs for certain production or resale activities. Tax planning us file your own taxes Include these costs in the basis of property you produce or acquire for resale, rather than claiming them as a current deduction. Tax planning us file your own taxes You recover the costs through depreciation, amortization, or cost of goods sold when you use, sell, or otherwise dispose of the property. Tax planning us file your own taxes Indirect costs include premiums for insurance on your plant or facility, machinery, equipment, materials, property produced, or property acquired for resale. Tax planning us file your own taxes Uniform capitalization rules. Tax planning us file your own taxes   You may be subject to the uniform capitalization rules if you do any of the following, unless the property is produced for your use other than in a business or an activity carried on for profit. Tax planning us file your own taxes Produce real property or tangible personal property. Tax planning us file your own taxes For this purpose, tangible personal property includes a film, sound recording, video tape, book, or similar property. Tax planning us file your own taxes Acquire property for resale. Tax planning us file your own taxes However, these rules do not apply to the following property. Tax planning us file your own taxes Personal property you acquire for resale if your average annual gross receipts are $10 million or less for the 3 prior tax years. Tax planning us file your own taxes Property you produce if you meet either of the following conditions. Tax planning us file your own taxes Your indirect costs of producing the property are $200,000 or less. Tax planning us file your own taxes You use the cash method of accounting and do not account for inventories. Tax planning us file your own taxes More information. Tax planning us file your own taxes   For more information on these rules, see Uniform Capitalization Rules in Publication 538 and the regulations under Internal Revenue Code section 263A. Tax planning us file your own taxes When To Deduct Premiums You can usually deduct insurance premiums in the tax year to which they apply. Tax planning us file your own taxes Cash method. Tax planning us file your own taxes   If you use the cash method of accounting, you generally deduct insurance premiums in the tax year you actually paid them, even if you incurred them in an earlier year. Tax planning us file your own taxes However, see Prepayment , later. Tax planning us file your own taxes Accrual method. Tax planning us file your own taxes   If you use an accrual method of accounting, you cannot deduct insurance premiums before the tax year in which you incur a liability for them. Tax planning us file your own taxes In addition, you cannot deduct insurance premiums before the tax year in which you actually pay them (unless the exception for recurring items applies). Tax planning us file your own taxes For more information about the accrual method of accounting, see chapter 1. Tax planning us file your own taxes For information about the exception for recurring items, see Publication 538. Tax planning us file your own taxes Prepayment. Tax planning us file your own taxes   You cannot deduct expenses in advance, even if you pay them in advance. Tax planning us file your own taxes This rule applies to any expense paid far enough in advance to, in effect, create an asset with a useful life extending substantially beyond the end of the current tax year. Tax planning us file your own taxes   Expenses such as insurance are generally allocable to a period of time. Tax planning us file your own taxes You can deduct insurance expenses for the year to which they are allocable. Tax planning us file your own taxes Example. Tax planning us file your own taxes In 2013, you signed a 3-year insurance contract. Tax planning us file your own taxes Even though you paid the premiums for 2013, 2014, and 2015 when you signed the contract, you can only deduct the premium for 2013 on your 2013 tax return. Tax planning us file your own taxes You can deduct in 2014 and 2015 the premium allocable to those years. Tax planning us file your own taxes Dividends received. Tax planning us file your own taxes   If you receive dividends from business insurance and you deducted the premiums in prior years, at least part of the dividends generally are income. Tax planning us file your own taxes For more information, see Recovery of amount deducted (tax benefit rule) in chapter 1 under How Much Can I Deduct. Tax planning us file your own taxes Prev  Up  Next   Home   More Online Publications
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The Tax Planning Us File Your Own Taxes

Tax planning us file your own taxes Publication 54 - Introductory Material Table of Contents Future Developments What's New Reminders IntroductionOrdering forms and publications. Tax planning us file your own taxes Tax questions. Tax planning us file your own taxes Future Developments For the latest information about developments related to Publication 54, such as legislation enacted after it was published, go to www. Tax planning us file your own taxes irs. Tax planning us file your own taxes gov/pub54. Tax planning us file your own taxes What's New Exclusion amount. Tax planning us file your own taxes  The maximum foreign earned income exclusion is adjusted annually for inflation. Tax planning us file your own taxes For 2013, the maximum exclusion has increased to $97,600. Tax planning us file your own taxes See Limit on Excludable Amount under Foreign Earned Income Exclusion in chapter 4. Tax planning us file your own taxes Housing expenses — base amount. Tax planning us file your own taxes  The computation of the base housing amount (line 32 of Form 2555) is tied to the maximum foreign earned income exclusion. Tax planning us file your own taxes The amount is 16 percent of the exclusion amount (computed on a daily basis), multiplied by the number of days in your qualifying period that fall within your 2013 tax year. Tax planning us file your own taxes For 2013, this amount is $42. Tax planning us file your own taxes 78 per day ($15,616 per year). Tax planning us file your own taxes See Housing Amount under Foreign Housing Exclusion and Deduction in chapter 4. Tax planning us file your own taxes Housing expenses — maximum amount. Tax planning us file your own taxes  The amount of qualified housing expenses eligible for the housing exclusion and housing deduction has changed for some locations. Tax planning us file your own taxes See Limit on housing expenses under Foreign Housing Exclusion and Deduction in chapter 4. Tax planning us file your own taxes Filing requirements. Tax planning us file your own taxes  Generally, the amount of income you can receive before you must file an income tax return has increased. Tax planning us file your own taxes These amounts are shown in chapter 1 under Filing Requirements . Tax planning us file your own taxes Self-employment tax rate. Tax planning us file your own taxes  For 2013, the self-employment tax rate of 13. Tax planning us file your own taxes 3% has increased to 15. Tax planning us file your own taxes 3%. Tax planning us file your own taxes The maximum amount of net earnings from self-employment that is subject to the social security part of the self-employment tax has increased to $113,700. Tax planning us file your own taxes All net earnings are subject to the Medicare part of the tax. Tax planning us file your own taxes For more information, see chapter 3. Tax planning us file your own taxes IRA limitations for 2013. Tax planning us file your own taxes . Tax planning us file your own taxes  The 2013 contribution limit to an IRA has increased to $5,500 ($6,500 if age 50 or older). Tax planning us file your own taxes You may be able to take an IRA deduction if you were covered by a retirement plan and your 2013 modified adjusted gross income (AGI) is less than $69,000 ($115,000 if married filing jointly or a qualifying widow(er)). Tax planning us file your own taxes If your spouse was covered by a retirement plan, but you were not, you may be able to take an IRA deduction if your 2013 modified AGI is less than $188,000. Tax planning us file your own taxes See the Instructions for Form 1040 or the Instructions for Form 1040A for details and exceptions. Tax planning us file your own taxes Reminders Figuring tax on income not excluded. Tax planning us file your own taxes  If you claim the foreign earned income exclusion, the housing exclusion, or both, you must figure the tax on your nonexcluded income using the tax rates that would have applied had you not claimed the exclusions. Tax planning us file your own taxes See the Instructions for Form 1040 and complete the Foreign Earned Income Tax Worksheet to figure the amount of tax to enter on Form 1040, line 44. Tax planning us file your own taxes If you must attach Form 6251 to your return, use the Foreign Earned Income Tax Worksheet provided in the Instructions for Form 6251. Tax planning us file your own taxes Form 8938. Tax planning us file your own taxes  If you had foreign financial assets in 2013, you may have to file Form 8938 with your return. Tax planning us file your own taxes See Form 8938 in chapter 1. Tax planning us file your own taxes Change of address. Tax planning us file your own taxes  If you change your home mailing address, notify the Internal Revenue Service using Form 8822, Change of Address. Tax planning us file your own taxes If you are changing your business address, use Form 8822-B, Change of Address or Responsible Party—Business. Tax planning us file your own taxes Photographs of missing children. Tax planning us file your own taxes  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Tax planning us file your own taxes Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Tax planning us file your own taxes You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. Tax planning us file your own taxes Introduction This publication discusses special tax rules for U. Tax planning us file your own taxes S. Tax planning us file your own taxes citizens and resident aliens who work abroad or who have income earned in foreign countries. Tax planning us file your own taxes If you are a U. Tax planning us file your own taxes S. Tax planning us file your own taxes citizen or resident alien, your worldwide income generally is subject to U. Tax planning us file your own taxes S. Tax planning us file your own taxes income tax, regardless of where you are living. Tax planning us file your own taxes Also, you are subject to the same income tax filing requirements that apply to U. Tax planning us file your own taxes S. Tax planning us file your own taxes citizens or resident aliens living in the United States. Tax planning us file your own taxes Expatriation tax provisions apply to U. Tax planning us file your own taxes S. Tax planning us file your own taxes citizens who have renounced their citizenship and long-term residents who have ended their residency. Tax planning us file your own taxes These provisions are discussed in chapter 4 of Publication 519, U. Tax planning us file your own taxes S. Tax planning us file your own taxes Tax Guide for Aliens. Tax planning us file your own taxes Resident alien. Tax planning us file your own taxes   A resident alien is an individual who is not a citizen or national of the United States and who meets either the green card test or the substantial presence test for the calendar year. Tax planning us file your own taxes Green card test. Tax planning us file your own taxes You are a U. Tax planning us file your own taxes S. Tax planning us file your own taxes resident if you were a lawful permanent resident of the United States at any time during the calendar year. Tax planning us file your own taxes This is known as the green card test because resident aliens hold immigrant visas (also known as green cards). Tax planning us file your own taxes Substantial presence test. Tax planning us file your own taxes You are considered a U. Tax planning us file your own taxes S. Tax planning us file your own taxes resident if you meet the substantial presence test for the calendar year. Tax planning us file your own taxes To meet this test, you must be physically present in the United States on at least: 31 days during the current calendar year, and A total of 183 days during the current year and the 2 preceding years, counting all the days of physical presence in the current year, but only 1/3 the number of days of presence in the first preceding year, and only 1/6 the number of days in the second preceding year. Tax planning us file your own taxes Example. Tax planning us file your own taxes You were physically present in the United States on 120 days in each of the years 2011, 2012, and 2013. Tax planning us file your own taxes To determine if you meet the substantial presence test for 2013, count the full 120 days of presence in 2013, 40 days in 2012 (1/3 of 120), and 20 days in 2011 (1/6 of 120). Tax planning us file your own taxes Because the total for the 3-year period is 180 days, you are not considered a resident under the substantial presence test for 2013. Tax planning us file your own taxes   For more information on resident and nonresident status, the tests for residence, and the exceptions to them, see Publication 519. Tax planning us file your own taxes Filing information. Tax planning us file your own taxes    Chapter 1 contains general filing information, such as: Whether you must file a U. Tax planning us file your own taxes S. Tax planning us file your own taxes tax return, When and where to file your return, How to report your income if it is paid in foreign currency, How to treat a nonresident alien spouse as a U. Tax planning us file your own taxes S. Tax planning us file your own taxes resident, and Whether you must pay estimated tax. Tax planning us file your own taxes Withholding tax. Tax planning us file your own taxes    Chapter 2 discusses the withholding of income, social security, and Medicare taxes from the pay of U. Tax planning us file your own taxes S. Tax planning us file your own taxes citizens and resident aliens. Tax planning us file your own taxes Self-employment tax. Tax planning us file your own taxes    Chapter 3 discusses who must pay self-employment tax. Tax planning us file your own taxes Foreign earned income exclusion and housing exclusion and deduction. Tax planning us file your own taxes    Chapter 4 discusses income tax benefits that apply if you meet certain requirements while living abroad. Tax planning us file your own taxes You may qualify to treat up to $97,600 of your income as not taxable by the United States. Tax planning us file your own taxes You also may be able to either deduct part of your housing expenses from your income or treat a limited amount of income used for housing expenses as not taxable by the United States. Tax planning us file your own taxes These benefits are called the foreign earned income exclusion and the foreign housing deduction and exclusion. Tax planning us file your own taxes   To qualify for either of the exclusions or the deduction, you must have a tax home in a foreign country and earn income from personal services performed in a foreign country. Tax planning us file your own taxes These rules are explained in chapter 4. Tax planning us file your own taxes   If you are going to exclude or deduct your income as discussed above, you must file Form 2555, Foreign Earned Income, or Form 2555-EZ, Foreign Earned Income Exclusion. Tax planning us file your own taxes Exemptions, deductions, and credits. Tax planning us file your own taxes    Chapter 5 discusses exemptions, deductions, and credits you may be able to claim on your return. Tax planning us file your own taxes These are generally the same as if you were living in the United States. Tax planning us file your own taxes However, if you choose to exclude foreign earned income or housing amounts, you cannot deduct or exclude any item or take a credit for any item that is related to the amounts you exclude. Tax planning us file your own taxes Among the topics discussed in chapter 5 are: Exemptions, Contributions to foreign organizations, Foreign moving expenses, Contributions to individual retirement arrangements (IRAs), and Foreign taxes. Tax planning us file your own taxes Tax treaty benefits. Tax planning us file your own taxes    Chapter 6 discusses some benefits that are common to most tax treaties and explains how to get help if you think you are not receiving a treaty benefit to which you are entitled. Tax planning us file your own taxes It also explains how to get copies of tax treaties. Tax planning us file your own taxes How to get tax help. Tax planning us file your own taxes    Chapter 7 is an explanation of how to get information and assistance from the IRS. Tax planning us file your own taxes Questions and answers. Tax planning us file your own taxes   Frequently asked questions and answers to those questions are presented in the back of the publication. Tax planning us file your own taxes Comments and suggestions. Tax planning us file your own taxes   We welcome your comments about this publication and your suggestions for future editions. Tax planning us file your own taxes   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. Tax planning us file your own taxes NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Tax planning us file your own taxes Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Tax planning us file your own taxes   You can send us comments from www. Tax planning us file your own taxes irs. Tax planning us file your own taxes gov/formspubs/. Tax planning us file your own taxes Click on “More Information” and then on “Comment on Tax Forms and Publications. Tax planning us file your own taxes ”   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. Tax planning us file your own taxes Ordering forms and publications. Tax planning us file your own taxes   Visit www. Tax planning us file your own taxes irs. Tax planning us file your own taxes gov/formspubs/ to download forms and publications, call 1-800-829-3676, or write to the address below and receive a response within 10 days after your request is received. Tax planning us file your own taxes Internal Revenue Service 1201 N. Tax planning us file your own taxes Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Tax planning us file your own taxes   If you have a tax question, check the information available on IRS. Tax planning us file your own taxes gov or call 1-800-TAX–FORM (1-800-829-1040). Tax planning us file your own taxes We cannot answer tax questions sent to either of the above addresses. Tax planning us file your own taxes Prev  Up  Next   Home   More Online Publications