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Taxact 2011 Login Tax Return

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Taxact 2011 Login Tax Return

Taxact 2011 login tax return 21. Taxact 2011 login tax return   Medical and Dental Expenses Table of Contents What's New Introduction Useful Items - You may want to see: What Are Medical Expenses? What Expenses Can You Include This Year?Community property states. Taxact 2011 login tax return How Much of the Expenses Can You Deduct? Whose Medical Expenses Can You Include?Yourself Spouse Dependent Decedent What Medical Expenses Are Includible?Insurance Premiums Meals and Lodging Transportation Disabled Dependent Care Expenses How Do You Treat Reimbursements?Insurance Reimbursement Damages for Personal Injuries How Do You Figure and Report the Deduction on Your Tax Return?What Tax Form Do You Use? Impairment-Related Work Expenses Health Insurance Costs for Self-Employed Persons What's New Medical and dental expenses. Taxact 2011 login tax return  Beginning January 1, 2013, you can deduct only the part of your medical and dental expenses that exceed 10% of your adjusted gross income (AGI) (7. Taxact 2011 login tax return 5% if either you or your spouse is age 65 or older). Taxact 2011 login tax return Standard mileage rate. Taxact 2011 login tax return  The standard mileage rate allowed for operating expenses for a car when you use it for medical reasons is 24 cents per mile. Taxact 2011 login tax return See Transportation under What Medical Expenses Are Includible. Taxact 2011 login tax return Introduction This chapter will help you determine the following. Taxact 2011 login tax return What medical expenses are. Taxact 2011 login tax return What expenses you can include this year. Taxact 2011 login tax return How much of the expenses you can deduct. Taxact 2011 login tax return Whose medical expenses you can include. Taxact 2011 login tax return What medical expenses are includible. Taxact 2011 login tax return How to treat reimbursements. Taxact 2011 login tax return How to report the deduction on your tax return. Taxact 2011 login tax return How to report impairment-related work expenses. Taxact 2011 login tax return How to report health insurance costs if you are self-employed. Taxact 2011 login tax return Useful Items - You may want to see: Publications 502 Medical and Dental Expenses 969 Health Savings Accounts and Other Tax-Favored Health Plans Form (and Instructions) Schedule A (Form 1040) Itemized Deductions What Are Medical Expenses? Medical expenses are the costs of diagnosis, cure, mitigation, treatment, or prevention of disease, and the costs for treatments affecting any part or function of the body. Taxact 2011 login tax return These expenses include payments for legal medical services rendered by physicians, surgeons, dentists, and other medical practitioners. Taxact 2011 login tax return They include the costs of equipment, supplies, and diagnostic devices needed for these purposes. Taxact 2011 login tax return Medical care expenses must be primarily to alleviate or prevent a physical or mental defect or illness. Taxact 2011 login tax return They do not include expenses that are merely beneficial to general health, such as vitamins or a vacation. Taxact 2011 login tax return Medical expenses include the premiums you pay for insurance that covers the expenses of medical care, and the amounts you pay for transportation to get medical care. Taxact 2011 login tax return Medical expenses also include amounts paid for qualified long-term care services and limited amounts paid for any qualified long-term care insurance contract. Taxact 2011 login tax return What Expenses Can You Include This Year? You can include only the medical and dental expenses you paid this year, regardless of when the services were provided. Taxact 2011 login tax return If you pay medical expenses by check, the day you mail or deliver the check generally is the date of payment. Taxact 2011 login tax return If you use a “pay-by-phone” or “online” account to pay your medical expenses, the date reported on the statement of the financial institution showing when payment was made is the date of payment. Taxact 2011 login tax return If you use a credit card, include medical expenses you charge to your credit card in the year the charge is made, not when you actually pay the amount charged. Taxact 2011 login tax return Separate returns. Taxact 2011 login tax return   If you and your spouse live in a noncommunity property state and file separate returns, each of you can include only the medical expenses each actually paid. Taxact 2011 login tax return Any medical expenses paid out of a joint checking account in which you and your spouse have the same interest are considered to have been paid equally by each of you, unless you can show otherwise. Taxact 2011 login tax return Community property states. Taxact 2011 login tax return   If you and your spouse live in a community property state and file separate returns, or are registered domestic partners in Nevada, Washington, or California, any medical expenses paid out of community funds are divided equally. Taxact 2011 login tax return Each of you should include half the expenses. Taxact 2011 login tax return If medical expenses are paid out of the separate funds of one individual, only the individual who paid the medical expenses can include them. Taxact 2011 login tax return If you live in a community property state, and are not filing a joint return, see Publication 555, Community Property. Taxact 2011 login tax return How Much of the Expenses Can You Deduct? Generally, you can deduct on Schedule A (Form 1040) only the amount of your medical and dental expenses that is more than 10% of your AGI (7. Taxact 2011 login tax return 5% of your AGI if either you or your spouse is age 65 or older)(Form 1040, line 38). Taxact 2011 login tax return Example. Taxact 2011 login tax return You are unmarried and under age 65 and your AGI is $40,000, 10% of which is $4,000. Taxact 2011 login tax return You paid medical expenses of $2,500. Taxact 2011 login tax return You cannot deduct any of your medical expenses because they are not more than 10% of your AGI. Taxact 2011 login tax return Whose Medical Expenses Can You Include? You can generally include medical expenses you pay for yourself, as well as those you pay for someone who was your spouse or your dependent either when the services were provided or when you paid for them. Taxact 2011 login tax return There are different rules for decedents and for individuals who are the subject of multiple support agreements. Taxact 2011 login tax return See Support claimed under a multiple support agreement , later. Taxact 2011 login tax return Yourself You can include medical expenses you paid for yourself. Taxact 2011 login tax return Spouse You can include medical expenses you paid for your spouse. Taxact 2011 login tax return To include these expenses, you must have been married either at the time your spouse received the medical services or at the time you paid the medical expenses. Taxact 2011 login tax return Example 1. Taxact 2011 login tax return Mary received medical treatment before she married Bill. Taxact 2011 login tax return Bill paid for the treatment after they married. Taxact 2011 login tax return Bill can include these expenses in figuring his medical expense deduction even if Bill and Mary file separate returns. Taxact 2011 login tax return If Mary had paid the expenses, Bill could not include Mary's expenses in his separate return. Taxact 2011 login tax return Mary would include the amounts she paid during the year in her separate return. Taxact 2011 login tax return If they filed a joint return, the medical expenses both paid during the year would be used to figure their medical expense deduction. Taxact 2011 login tax return Example 2. Taxact 2011 login tax return This year, John paid medical expenses for his wife Louise, who died last year. Taxact 2011 login tax return John married Belle this year and they file a joint return. Taxact 2011 login tax return Because John was married to Louise when she received the medical services, he can include those expenses in figuring his medical expense deduction for this year. Taxact 2011 login tax return Dependent You can include medical expenses you paid for your dependent. Taxact 2011 login tax return For you to include these expenses, the person must have been your dependent either at the time the medical services were provided or at the time you paid the expenses. Taxact 2011 login tax return A person generally qualifies as your dependent for purposes of the medical expense deduction if both of the following requirements are met. Taxact 2011 login tax return The person was a qualifying child (defined later) or a qualifying relative (defined later), and The person was a U. Taxact 2011 login tax return S. Taxact 2011 login tax return citizen or national, or a resident of the United States, Canada, or Mexico. Taxact 2011 login tax return If your qualifying child was adopted, see Exception for adopted child , next. Taxact 2011 login tax return You can include medical expenses you paid for an individual that would have been your dependent except that: He or she received gross income of $3,900 or more in 2013, He or she filed a joint return for 2013, or You, or your spouse if filing jointly, could be claimed as a dependent on someone else's 2013 return. Taxact 2011 login tax return Exception for adopted child. Taxact 2011 login tax return   If you are a U. Taxact 2011 login tax return S. Taxact 2011 login tax return citizen or U. Taxact 2011 login tax return S. Taxact 2011 login tax return national and your adopted child lived with you as a member of your household for 2013, that child does not have to be a U. Taxact 2011 login tax return S. Taxact 2011 login tax return citizen or national or a resident of the United States, Canada, or Mexico. Taxact 2011 login tax return Qualifying Child A qualifying child is a child who: 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), Was: Under age 19 at the end of 2013 and younger than you (or your spouse, if filing jointly), Under age 24 at the end of 2013, a full-time student, and younger than you (or your spouse, if filing jointly), or Any age and permanently and totally disabled, Lived with you for more than half of 2013, Did not provide over half of his or her own support for 2013, and Did not file a joint return, or, if he or she did, it was only to claim a refund. Taxact 2011 login tax return Adopted child. Taxact 2011 login tax return   A legally adopted child is treated as your own child. Taxact 2011 login tax return This includes a child lawfully placed with you for legal adoption. Taxact 2011 login tax return   You can include medical expenses that you paid for a child before adoption if the child qualified as your dependent when the medical services were provided or when the expenses were paid. Taxact 2011 login tax return   If you pay back an adoption agency or other persons for medical expenses they paid under an agreement with you, you are treated as having paid those expenses provided you clearly substantiate that the payment is directly attributable to the medical care of the child. Taxact 2011 login tax return   But if you pay the agency or other person for medical care that was provided and paid for before adoption negotiations began, you cannot include them as medical expenses. Taxact 2011 login tax return    You may be able to take an adoption credit for other expenses related to an adoption. Taxact 2011 login tax return See the Instructions for Form 8839, Qualified Adoption Expenses, for more information. Taxact 2011 login tax return Child of divorced or separated parents. Taxact 2011 login tax return   For purposes of the medical and dental expenses deduction, a child of divorced or separated parents can be treated as a dependent of both parents. Taxact 2011 login tax return Each parent can include the medical expenses he or she pays for the child, even if the other parent claims the child's dependency exemption, if: The child is in the custody of one or both parents for more than half the year, The child receives over half of his or her support during the year from his or her parents, and The child's parents: Are divorced or legally separated under a decree of divorce or separate maintenance, Are separated under a written separation agreement, or Live apart at all times during the last 6 months of the year. Taxact 2011 login tax return This does not apply if the child's exemption is being claimed under a multiple support agreement (discussed later). Taxact 2011 login tax return Qualifying Relative A qualifying relative is a person: Who is your: Son, daughter, stepchild, foster child, or a descendant of any of them (for example, your grandchild), Brother, sister, half brother, half sister, or a son or daughter of either of them, Father, mother, or an ancestor or sibling of either of them (for example, your grandmother, grandfather, aunt, or uncle), Stepbrother, stepsister, stepfather, stepmother, son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law, or Any other person (other than your spouse) who lived with you all year as a member of your household if your relationship did not violate local law, Who was not a qualifying child (see Qualifying Child earlier) of any other person for 2013, and For whom you provided over half of the support in 2013. Taxact 2011 login tax return But see Child of divorced or separated parents , earlier, and Support claimed under a multiple support agreement, next. Taxact 2011 login tax return Support claimed under a multiple support agreement. Taxact 2011 login tax return   If you are considered to have provided more than half of a qualifying relative's support under a multiple support agreement, you can include medical expenses you pay for that person. Taxact 2011 login tax return A multiple support agreement is used when two or more people provide more than half of a person's support, but no one alone provides more than half. Taxact 2011 login tax return   Any medical expenses paid by others who joined you in the agreement cannot be included as medical expenses by anyone. Taxact 2011 login tax return However, you can include the entire unreimbursed amount you paid for medical expenses. Taxact 2011 login tax return Example. Taxact 2011 login tax return You and your three brothers each provide one-fourth of your mother's total support. Taxact 2011 login tax return Under a multiple support agreement, you treat your mother as your dependent. Taxact 2011 login tax return You paid all of her medical expenses. Taxact 2011 login tax return Your brothers reimbursed you for three-fourths of these expenses. Taxact 2011 login tax return In figuring your medical expense deduction, you can include only one-fourth of your mother's medical expenses. Taxact 2011 login tax return Your brothers cannot include any part of the expenses. Taxact 2011 login tax return However, if you and your brothers share the nonmedical support items and you separately pay all of your mother's medical expenses, you can include the unreimbursed amount you paid for her medical expenses in your medical expenses. Taxact 2011 login tax return Decedent Medical expenses paid before death by the decedent are included in figuring any deduction for medical and dental expenses on the decedent's final income tax return. Taxact 2011 login tax return This includes expenses for the decedent's spouse and dependents as well as for the decedent. Taxact 2011 login tax return The survivor or personal representative of a decedent can choose to treat certain expenses paid by the decedent's estate for the decedent's medical care as paid by the decedent at the time the medical services were provided. Taxact 2011 login tax return The expenses must be paid within the 1-year period beginning with the day after the date of death. Taxact 2011 login tax return If you are the survivor or personal representative making this choice, you must attach a statement to the decedent's Form 1040 (or the decedent's amended return, Form 1040X) saying that the expenses have not been and will not be claimed on the estate tax return. Taxact 2011 login tax return Qualified medical expenses paid before death by the decedent are not deductible if paid with a tax-free distribution from any Archer MSA, Medicare Advantage MSA, or health savings account. Taxact 2011 login tax return Amended returns and claims for refund are discussed in chapter 1. Taxact 2011 login tax return What if you pay medical expenses of a deceased spouse or dependent?   If you paid medical expenses for your deceased spouse or dependent, include them as medical expenses on your Form 1040 in the year paid, whether they are paid before or after the decedent's death. Taxact 2011 login tax return The expenses can be included if the person was your spouse or dependent either at the time the medical services were provided or at the time you paid the expenses. Taxact 2011 login tax return What Medical Expenses Are Includible? Use Table 21-1, later, as a guide to determine which medical and dental expenses you can include on Schedule A (Form 1040). Taxact 2011 login tax return This table does not include all possible medical expenses. Taxact 2011 login tax return To determine if an expense not listed can be included in figuring your medical expense deduction, see What Are Medical Expenses , earlier. Taxact 2011 login tax return Insurance Premiums You can include in medical expenses insurance premiums you pay for policies that cover medical care. Taxact 2011 login tax return Medical care policies can provide payment for treatment that includes: Hospitalization, surgical services, X-rays, Prescription drugs and insulin, Dental care, Replacement of lost or damaged contact lenses, and Long-term care (subject to additional limitations). Taxact 2011 login tax return See Qualified Long-Term Care Insurance Contracts in Publication 502. Taxact 2011 login tax return If you have a policy that provides payments for other than medical care, you can include the premiums for the medical care part of the policy if the charge for the medical part is reasonable. Taxact 2011 login tax return The cost of the medical part must be separately stated in the insurance contract or given to you in a separate statement. Taxact 2011 login tax return Note. Taxact 2011 login tax return When figuring the amount of insurance premiums you can include in medical expenses on Schedule A, do not include any health coverage tax credit advance payments shown in box 1 of Form 1099-H, Health Coverage Tax Credit (HCTC) Advance Payments. Taxact 2011 login tax return Also, do not include insurance premiums attributable to a nondependent child under age 27 if your premiums increased as a result of adding this child to your policy. Taxact 2011 login tax return Employer-sponsored health insurance plan. Taxact 2011 login tax return   Do not include in your medical and dental expenses any insurance premiums paid by an employer-sponsored health insurance plan unless the premiums are included in box 1 of your Form W-2. Taxact 2011 login tax return Also, do not include any other medical and dental expenses paid by the plan unless the amount paid is included in box 1 of your Form W-2. Taxact 2011 login tax return Example. Taxact 2011 login tax return You are a federal employee participating in the premium conversion plan of the Federal Employee Health Benefits (FEHB) program. Taxact 2011 login tax return Your share of the FEHB premium is paid by making a pre-tax reduction in your salary. Taxact 2011 login tax return Because you are an employee whose insurance premiums are paid with money that is never included in your gross income, you cannot deduct the premiums paid with that money. Taxact 2011 login tax return Long-term care services. Taxact 2011 login tax return   Contributions made by your employer to provide coverage for qualified long-term care services under a flexible spending or similar arrangement must be included in your income. Taxact 2011 login tax return This amount will be reported as wages in box 1 of your Form W-2. Taxact 2011 login tax return Health reimbursement arrangement (HRA). Taxact 2011 login tax return   If you have medical expenses that are reimbursed by a health reimbursement arrangement, you cannot include those expenses in your medical expenses. Taxact 2011 login tax return This is because an HRA is funded solely by the employer. Taxact 2011 login tax return Retired public safety officers. Taxact 2011 login tax return   If you are a retired public safety officer, do not include as medical expenses any health or long-term care premiums that you elected to have paid with tax-free distributions from your retirement plan. Taxact 2011 login tax return This applies only to distributions that would otherwise be included in income. Taxact 2011 login tax return Medicare A. Taxact 2011 login tax return   If you are covered under social security (or if you are a government employee who paid Medicare tax), you are enrolled in Medicare A. Taxact 2011 login tax return The payroll tax paid for Medicare A is not a medical expense. Taxact 2011 login tax return   If you are not covered under social security (or were not a government employee who paid Medicare tax), you can voluntarily enroll in Medicare A. Taxact 2011 login tax return In this situation you can include the premiums you paid for Medicare A as a medical expense. Taxact 2011 login tax return Medicare B. Taxact 2011 login tax return   Medicare B is supplemental medical insurance. Taxact 2011 login tax return Premiums you pay for Medicare B are a medical expense. Taxact 2011 login tax return Check the information you received from the Social Security Administration to find out your premium. Taxact 2011 login tax return Medicare D. Taxact 2011 login tax return    Medicare D is a voluntary prescription drug insurance program for persons with Medicare A or B. Taxact 2011 login tax return You can include as a medical expense premiums you pay for Medicare D. Taxact 2011 login tax return Prepaid insurance premiums. Taxact 2011 login tax return   Premiums you pay before you are age 65 for insurance for medical care for yourself, your spouse, or your dependents after you reach age 65 are medical care expenses in the year paid if they are: Payable in equal yearly installments, or more often, and Payable for at least 10 years, or until you reach age 65 (but not for less than 5 years). Taxact 2011 login tax return Unused sick leave used to pay premiums. Taxact 2011 login tax return   You must include in gross income cash payments you receive at the time of retirement for unused sick leave. Taxact 2011 login tax return You also must include in gross income the value of unused sick leave that, at your option, your employer applies to the cost of your continuing participation in your employer's health plan after you retire. Taxact 2011 login tax return You can include this cost of continuing participation in the health plan as a medical expense. Taxact 2011 login tax return   If you participate in a health plan where your employer automatically applies the value of unused sick leave to the cost of your continuing participation in the health plan (and you do not have the option to receive cash), do not include the value of the unused sick leave in gross income. Taxact 2011 login tax return You cannot include this cost of continuing participation in that health plan as a medical expense. Taxact 2011 login tax return Table 21-1. Taxact 2011 login tax return Medical and Dental Expenses Checklist. Taxact 2011 login tax return See Publication 502 for more information about these and other expenses. Taxact 2011 login tax return You can include: You cannot include: Bandages Birth control pills prescribed by your doctor Body scan Braille books Breast pump and supplies Capital expenses for equipment or improvements to your home needed for medical care (see the worksheet in Publication 502) Diagnostic devices Expenses of an organ donor Eye surgery—to promote the correct function of the eye Fertility enhancement, certain procedures Guide dogs or other animals aiding the blind, deaf, and disabled Hospital services fees (lab work, therapy, nursing services, surgery, etc. Taxact 2011 login tax return ) Lead-based paint removal Legal abortion Legal operation to prevent having children such as a vasectomy or tubal ligation Long-term care contracts, qualified Meals and lodging provided by a hospital during medical treatment Medical services fees (from doctors, dentists, surgeons, specialists, and other medical practitioners) Medicare Part D premiums Medical and hospital insurance premiums Nursing services Oxygen equipment and oxygen Part of life-care fee paid to retirement home designated for medical care Physical examination Pregnancy test kit Prescription medicines (prescribed by a doctor) and insulin Psychiatric and psychological treatment Social security tax, Medicare tax, FUTA, and state employment tax for worker providing medical care (see Wages for nursing services, below) Special items (artificial limbs, false teeth, eye-glasses, contact lenses, hearing aids, crutches, wheelchair, etc. Taxact 2011 login tax return ) Special education for mentally or physically disabled persons Stop-smoking programs Transportation for needed medical care Treatment at a drug or alcohol center (includes meals and lodging provided by the center) Wages for nursing services Weight-loss, certain expenses for obesity Baby sitting and childcare Bottled water Contributions to Archer MSAs (see Publication 969) Diaper service Expenses for your general health (even if following your doctor's advice) such as— —Health club dues —Household help (even if recommended by a doctor) —Social activities, such as dancing or swimming lessons —Trip for general health improvement Flexible spending account reimbursements for medical expenses (if contributions were on a pre-tax basis) Funeral, burial, or cremation expenses Health savings account payments for medical expenses Illegal operation, treatment, or medicine Life insurance or income protection policies, or policies providing payment for loss of life, limb, sight, etc. Taxact 2011 login tax return Maternity clothes Medical insurance included in a car insurance policy covering all persons injured in or by your car Medicine you buy without a prescription Nursing care for a healthy baby Prescription drugs you brought in (or ordered shipped) from another country, in most cases Nutritional supplements, vitamins, herbal supplements, “natural medicines,” etc. Taxact 2011 login tax return , unless recommended by a medical practitioner as a treatment for a specific medical condition diagnosed by a physician Surgery for purely cosmetic reasons Toothpaste, toiletries, cosmetics, etc. Taxact 2011 login tax return Teeth whitening Weight-loss expenses not for the treatment of obesity or other disease Meals and Lodging You can include in medical expenses the cost of meals and lodging at a hospital or similar institution if a principal reason for being there is to get medical care. Taxact 2011 login tax return See Nursing home , later. Taxact 2011 login tax return You may be able to include in medical expenses the cost of lodging not provided in a hospital or similar institution. Taxact 2011 login tax return You can include the cost of such lodging while away from home if all of the following requirements are met. Taxact 2011 login tax return The lodging is primarily for and essential to medical care. Taxact 2011 login tax return The medical care is provided by a doctor in a licensed hospital or in a medical care facility related to, or the equivalent of, a licensed hospital. Taxact 2011 login tax return The lodging is not lavish or extravagant under the circumstances. Taxact 2011 login tax return There is no significant element of personal pleasure, recreation, or vacation in the travel away from home. Taxact 2011 login tax return The amount you include in medical expenses for lodging cannot be more than $50 for each night for each person. Taxact 2011 login tax return You can include lodging for a person traveling with the person receiving the medical care. Taxact 2011 login tax return For example, if a parent is traveling with a sick child, up to $100 per night can be included as a medical expense for lodging. Taxact 2011 login tax return Meals are not included. Taxact 2011 login tax return Nursing home. Taxact 2011 login tax return   You can include in medical expenses the cost of medical care in a nursing home, home for the aged, or similar institution, for yourself, your spouse, or your dependents. Taxact 2011 login tax return This includes the cost of meals and lodging in the home if a principal reason for being there is to get medical care. Taxact 2011 login tax return   Do not include the cost of meals and lodging if the reason for being in the home is personal. Taxact 2011 login tax return You can, however, include in medical expenses the part of the cost that is for medical or nursing care. Taxact 2011 login tax return Transportation Include in medical expenses amounts paid for transportation primarily for, and essential to, medical care. Taxact 2011 login tax return You can include: Bus, taxi, train, or plane fares, or ambulance service, Transportation expenses of a parent who must go with a child who needs medical care, Transportation expenses of a nurse or other person who can give injections, medications, or other treatment required by a patient who is traveling to get medical care and is unable to travel alone, and Transportation expenses for regular visits to see a mentally ill dependent, if these visits are recommended as a part of treatment. Taxact 2011 login tax return Car expenses. Taxact 2011 login tax return   You can include out-of-pocket expenses, such as the cost of gas and oil, when you use your car for medical reasons. Taxact 2011 login tax return You cannot include depreciation, insurance, general repair, or maintenance expenses. Taxact 2011 login tax return   If you do not want to use your actual expenses for 2013, you can use the standard medical mileage rate of 24 cents per mile. Taxact 2011 login tax return    You can also include parking fees and tolls. Taxact 2011 login tax return You can add these fees and tolls to your medical expenses whether you use actual expenses or use the standard mileage rate. Taxact 2011 login tax return Example. Taxact 2011 login tax return In 2013, Bill Jones drove 2,800 miles for medical reasons. Taxact 2011 login tax return He spent $500 for gas, $30 for oil, and $100 for tolls and parking. Taxact 2011 login tax return He wants to figure the amount he can include in medical expenses both ways to see which gives him the greater deduction. Taxact 2011 login tax return He figures the actual expenses first. Taxact 2011 login tax return He adds the $500 for gas, the $30 for oil, and the $100 for tolls and parking for a total of $630. Taxact 2011 login tax return He then figures the standard mileage amount. Taxact 2011 login tax return He multiplies 2,800 miles by 24 cents a mile for a total of $672. Taxact 2011 login tax return He then adds the $100 tolls and parking for a total of $772. Taxact 2011 login tax return Bill includes the $772 of car expenses with his other medical expenses for the year because the $772 is more than the $630 he figured using actual expenses. Taxact 2011 login tax return Transportation expenses you cannot include. Taxact 2011 login tax return   You cannot include in medical expenses the cost of transportation in the following situations. Taxact 2011 login tax return Going to and from work, even if your condition requires an unusual means of transportation. Taxact 2011 login tax return Travel for purely personal reasons to another city for an operation or other medical care. Taxact 2011 login tax return Travel that is merely for the general improvement of one's health. Taxact 2011 login tax return The costs of operating a specially equipped car for other than medical reasons. Taxact 2011 login tax return Disabled Dependent Care Expenses Some disabled dependent care expenses may qualify as either: Medical expenses, or Work-related expenses for purposes of taking a credit for dependent care. Taxact 2011 login tax return (See chapter 32 and Publication 503, Child and Dependent Care Expenses. Taxact 2011 login tax return ) You can choose to apply them either way as long as you do not use the same expenses to claim both a credit and a medical expense deduction. Taxact 2011 login tax return How Do You Treat Reimbursements? You can include in medical expenses only those amounts paid during the taxable year for which you received no insurance or other reimbursement. Taxact 2011 login tax return Insurance Reimbursement You must reduce your total medical expenses for the year by all reimbursements for medical expenses that you receive from insurance or other sources during the year. Taxact 2011 login tax return This includes payments from Medicare. Taxact 2011 login tax return Even if a policy provides reimbursement for only certain specific medical expenses, you must use amounts you receive from that policy to reduce your total medical expenses, including those it does not reimburse. Taxact 2011 login tax return Example. Taxact 2011 login tax return You have insurance policies that cover your hospital and doctors' bills but not your nursing bills. Taxact 2011 login tax return The insurance you receive for the hospital and doctors' bills is more than their charges. Taxact 2011 login tax return In figuring your medical deduction, you must reduce the total amount you spent for medical care by the total amount of insurance you received, even if the policies do not cover some of your medical expenses. Taxact 2011 login tax return Health reimbursement arrangement (HRA). Taxact 2011 login tax return   A health reimbursement arrangement is an employer-funded plan that reimburses employees for medical care expenses and allows unused amounts to be carried forward. Taxact 2011 login tax return An HRA is funded solely by the employer and the reimbursements for medical expenses, up to a maximum dollar amount for a coverage period, are not included in your income. Taxact 2011 login tax return Other reimbursements. Taxact 2011 login tax return   Generally, you do not reduce medical expenses by payments you receive for: Permanent loss or loss of use of a member or function of the body (loss of limb, sight, hearing, etc. Taxact 2011 login tax return ) or disfigurement to the extent the payment is based on the nature of the injury without regard to the amount of time lost from work, or Loss of earnings. Taxact 2011 login tax return   You must, however, reduce your medical expenses by any part of these payments that is designated for medical costs. Taxact 2011 login tax return See How Do You Figure and Report the Deduction on Your Tax Return , later. Taxact 2011 login tax return   For how to treat damages received for personal injury or sickness, see Damages for Personal Injuries , later. Taxact 2011 login tax return You do not have a medical deduction if you are reimbursed for all of your medical expenses for the year. Taxact 2011 login tax return Excess reimbursement. Taxact 2011 login tax return   If you are reimbursed more than your medical expenses, you may have to include the excess in income. Taxact 2011 login tax return You may want to use Figure 21-A to help you decide if any of your reimbursement is taxable. Taxact 2011 login tax return Premiums paid by you. Taxact 2011 login tax return   If you pay either the entire premium for your medical insurance or all of the costs of a plan similar to medical insurance and your insurance payments or other reimbursements are more than your total medical expenses for the year, you have an excess reimbursement. Taxact 2011 login tax return Generally, you do not include the excess reimbursement in your gross income. Taxact 2011 login tax return Premiums paid by you and your employer. Taxact 2011 login tax return   If both you and your employer contribute to your medical insurance plan and your employer's contributions are not included in your gross income, you must include in your gross income the part of your excess reimbursement that is from your employer's contribution. Taxact 2011 login tax return   See Publication 502 to figure the amount of the excess reimbursement you must include in gross income. Taxact 2011 login tax return Reimbursement in a later year. Taxact 2011 login tax return   If you are reimbursed in a later year for medical expenses you deducted in an earlier year, you generally must report the reimbursement as income up to the amount you previously deducted as medical expenses. Taxact 2011 login tax return   However, do not report as income the amount of reimbursement you received up to the amount of your medical deductions that did not reduce your tax for the earlier year. Taxact 2011 login tax return For more information about the recovery of an amount that you claimed as an itemized deduction in an earlier year, see Itemized Deduction Recoveries in chapter 12. Taxact 2011 login tax return Figure 21-A. Taxact 2011 login tax return Is Your Excess Medical Reimbursement Taxable? Please click here for the text description of the image. Taxact 2011 login tax return Figure 21-A. Taxact 2011 login tax return Is Your Excess Medical Reimbursement Taxable? Medical expenses not deducted. Taxact 2011 login tax return   If you did not deduct a medical expense in the year you paid it because your medical expenses were not more than 10% of your AGI (7. Taxact 2011 login tax return 5% of your AGI if either you or your spouse was age 65 or older), or because you did not itemize deductions, do not include the reimbursement up to the amount of the expense in income. Taxact 2011 login tax return However, if the reimbursement is more than the expense, see Excess reimbursement , earlier. Taxact 2011 login tax return Example. Taxact 2011 login tax return For 2013, you were unmarried and under age 65 and you had medical expenses of $500. Taxact 2011 login tax return You cannot deduct the $500 because it is less than 10% of your AGI. Taxact 2011 login tax return If, in a later year, you are reimbursed for any of the $500 in medical expenses, you do not include the amount reimbursed in your gross income. Taxact 2011 login tax return Damages for Personal Injuries If you receive an amount in settlement of a personal injury suit, part of that award may be for medical expenses that you deducted in an earlier year. Taxact 2011 login tax return If it is, you must include that part in your income in the year you receive it to the extent it reduced your taxable income in the earlier year. Taxact 2011 login tax return See Reimbursement in a Later Year , discussed under How Do You Treat Reimbursements, earlier. Taxact 2011 login tax return Future medical expenses. Taxact 2011 login tax return   If you receive an amount in settlement of a damage suit for personal injuries, part of that award may be for future medical expenses. Taxact 2011 login tax return If it is, you must reduce any future medical expenses for these injuries until the amount you received has been completely used. Taxact 2011 login tax return How Do You Figure and Report the Deduction on Your Tax Return? Once you have determined which medical expenses you can include, you figure and report the deduction on your tax return. Taxact 2011 login tax return What Tax Form Do You Use? You figure your medical expense deduction on Schedule A (Form 1040). Taxact 2011 login tax return You cannot claim medical expenses on Form 1040A or Form 1040EZ. Taxact 2011 login tax return If you need more information on itemized deductions or you are not sure if you can itemize, see chapter 20. Taxact 2011 login tax return Enter the amount you paid for medical and dental expenses on Schedule A (Form 1040). Taxact 2011 login tax return This should be your expenses that were not reimbursed by insurance or any other sources. Taxact 2011 login tax return Generally, you can deduct only the amount of your medical and dental expenses that is more than 10% of your AGI (7. Taxact 2011 login tax return 5% if either you or your spouse was age 65 or older) shown on line 38, Form 1040. Taxact 2011 login tax return Impairment-Related Work Expenses If you are a person with a disability, you can take a business deduction for expenses that are necessary for you to be able to work. Taxact 2011 login tax return If you take a business deduction for impairment-related work expenses, do not take a medical deduction for the same expenses. Taxact 2011 login tax return You have a disability if you have: A physical or mental disability (for example, blindness or deafness) that functionally limits your being employed, or A physical or mental impairment (for example, a sight or hearing impairment) that substantially limits one or more of your major life activities, such as performing manual tasks, walking, speaking, breathing, learning, or working. Taxact 2011 login tax return Impairment-related expenses defined. Taxact 2011 login tax return   Impairment-related expenses are those ordinary and necessary business expenses that are: Necessary for you to do your work satisfactorily, For goods and services not required or used, other than incidentally, in your personal activities, and Not specifically covered under other income tax laws. Taxact 2011 login tax return Where to report. Taxact 2011 login tax return   If you are self-employed, deduct the business expenses on the appropriate form (Schedule C, C-EZ, E, or F) used to report your business income and expenses. Taxact 2011 login tax return   If you are an employee, complete Form 2106, Employee Business Expenses, or Form 2106-EZ, Unreimbursed Employee Business Expenses. Taxact 2011 login tax return Enter on Schedule A (Form 1040), that part of the amount on Form 2106, or Form 2106-EZ, that is related to your impairment. Taxact 2011 login tax return Enter the amount that is unrelated to your impairment also on Schedule A (Form 1040). Taxact 2011 login tax return Your impairment-related work expenses are not subject to the 2%-of-adjusted-gross-income limit that applies to other employee business expenses. Taxact 2011 login tax return Example. Taxact 2011 login tax return You are blind. Taxact 2011 login tax return You must use a reader to do your work. Taxact 2011 login tax return You use the reader both during your regular working hours at your place of work and outside your regular working hours away from your place of work. Taxact 2011 login tax return The reader's services are only for your work. Taxact 2011 login tax return You can deduct your expenses for the reader as business expenses. Taxact 2011 login tax return Health Insurance Costs for Self-Employed Persons If you were self-employed and had a net profit for the year, you may be able to deduct, as an adjustment to income, amounts paid for medical and qualified long-term care insurance on behalf of yourself, your spouse, your dependents, and, your children who were under age 27 at the end of 2013. Taxact 2011 login tax return For this purpose, you were self-employed if you were a general partner (or a limited partner receiving guaranteed payments) or you received wages from an S corporation in which you were more than a 2% shareholder. Taxact 2011 login tax return The insurance plan must be established under your trade or business and the deduction cannot be more than your earned income from that trade or business. Taxact 2011 login tax return You cannot deduct payments for medical insurance for any month in which you were eligible to participate in a health plan subsidized by your employer, your spouse's employer, or, an employer of your dependent or your child under age 27 at the end of 2013. Taxact 2011 login tax return You cannot deduct payments for a qualified long-term care insurance contract for any month in which you were eligible to participate in a long-term care insurance plan subsidized by your employer or your spouse's employer. Taxact 2011 login tax return If you qualify to take the deduction, use the Self-Employed Health Insurance Deduction Worksheet in the Form 1040 instructions to figure the amount you can deduct. Taxact 2011 login tax return But if any of the following applies, do not use that worksheet. Taxact 2011 login tax return You had more than one source of income subject to self-employment tax. Taxact 2011 login tax return You file Form 2555, Foreign Earned Income, or Form 2555-EZ, Foreign Earned Income Exclusion. Taxact 2011 login tax return You are using amounts paid for qualified long-term care insurance to figure the deduction. Taxact 2011 login tax return If you cannot use the worksheet in the Form 1040 instructions, use the worksheet in Publication 535, Business Expenses, to figure your deduction. Taxact 2011 login tax return Note. Taxact 2011 login tax return When figuring the amount you can deduct for insurance premiums, do not include any advance payments shown on Form 1099-H, Health Coverage Tax Credit (HCTC) Advance Payments. Taxact 2011 login tax return If you are claiming the health coverage tax credit, subtract the amount shown on Form 8885, from the total insurance premiums you paid. Taxact 2011 login tax return Do not include amounts paid for health insurance coverage with retirement plan distributions that were tax-free because you are a retired public safety officer. Taxact 2011 login tax return Where to report. Taxact 2011 login tax return    You take this deduction on Form 1040. Taxact 2011 login tax return If you itemize your deductions and do not claim 100% of your self-employed health insurance on Form 1040, you can generally include any remaining premiums with all other medical expenses on Schedule A (Form 1040), subject to the 10% limit (7. Taxact 2011 login tax return 5% if either you or your spouse was age 65 or older). Taxact 2011 login tax return See Self-Employed Health Insurance Deduction in chapter 6 of Publication 535, Business Expenses, and Medical and Dental Expenses in the Instructions for Schedule A (Form 1040), for more information. Taxact 2011 login tax return Prev  Up  Next   Home   More Online Publications
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The Taxact 2011 Login Tax Return

Taxact 2011 login tax return 4. Taxact 2011 login tax return   Foreign Earned Income and Housing: Exclusion – Deduction Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: Who Qualifies for the Exclusions and the Deduction? RequirementsTax Home in Foreign Country Bona Fide Residence Test Physical Presence Test Waiver of Time Requirements U. Taxact 2011 login tax return S. Taxact 2011 login tax return Travel Restrictions Foreign Earned Income Foreign Earned Income ExclusionLimit on Excludable Amount Choosing the Exclusion Foreign Housing Exclusion and DeductionHousing Amount Foreign Housing Exclusion Foreign Housing Deduction Married Couples Form 2555 and Form 2555-EZForm 2555-EZ Form 2555 Topics - This chapter discusses: Who qualifies for the foreign earned income exclusion, the foreign housing exclusion, and the foreign housing deduction, The requirements that must be met to claim either exclusion or the deduction, How to figure the foreign earned income exclusion, and How to figure the foreign housing exclusion and the foreign housing deduction. Taxact 2011 login tax return Useful Items - You may want to see: Publication 519 U. Taxact 2011 login tax return S. Taxact 2011 login tax return Tax Guide for Aliens 570 Tax Guide for Individuals With Income from U. Taxact 2011 login tax return S. Taxact 2011 login tax return Possessions 596 Earned Income Credit (EIC) Form (and Instructions) 1040X Amended U. Taxact 2011 login tax return S. Taxact 2011 login tax return Individual Income Tax Return 2555 Foreign Earned Income 2555-EZ Foreign Earned Income Exclusion See chapter 7 for information about getting these publications and forms. Taxact 2011 login tax return Who Qualifies for the Exclusions and the Deduction? If you meet certain requirements, you may qualify for the foreign earned income and foreign housing exclusions and the foreign housing deduction. Taxact 2011 login tax return If you are a U. Taxact 2011 login tax return S. Taxact 2011 login tax return citizen or a resident alien of the United States and you live abroad, you are taxed on your worldwide income. Taxact 2011 login tax return However, you may qualify to exclude from income up to $97,600 of your foreign earnings. Taxact 2011 login tax return In addition, you can exclude or deduct certain foreign housing amounts. Taxact 2011 login tax return See Foreign Earned Income Exclusion and Foreign Housing Exclusion and Deduction, later. Taxact 2011 login tax return You also may be entitled to exclude from income the value of meals and lodging provided to you by your employer. Taxact 2011 login tax return See Exclusion of Meals and Lodging, later. Taxact 2011 login tax return Requirements To claim the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction, you must meet all three of the following requirements. Taxact 2011 login tax return Your tax home must be in a foreign country. Taxact 2011 login tax return You must have foreign earned income. Taxact 2011 login tax return You must be one of the following. Taxact 2011 login tax return A U. Taxact 2011 login tax return S. Taxact 2011 login tax return citizen who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year. Taxact 2011 login tax return A U. Taxact 2011 login tax return S. Taxact 2011 login tax return resident alien who is a citizen or national of a country with which the United States has an income tax treaty in effect and who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year. Taxact 2011 login tax return A U. Taxact 2011 login tax return S. Taxact 2011 login tax return citizen or a U. Taxact 2011 login tax return S. Taxact 2011 login tax return resident alien who is physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months. Taxact 2011 login tax return See Publication 519 to find out if you are a U. Taxact 2011 login tax return S. Taxact 2011 login tax return resident alien for tax purposes and whether you keep that alien status when you temporarily work abroad. Taxact 2011 login tax return If you are a nonresident alien married to a U. Taxact 2011 login tax return S. Taxact 2011 login tax return citizen or resident alien, and both you and your spouse choose to treat you as a resident alien, you are a resident alien for tax purposes. Taxact 2011 login tax return For information on making the choice, see the discussion in chapter 1 under Nonresident Alien Spouse Treated as a Resident . Taxact 2011 login tax return Waiver of minimum time requirements. Taxact 2011 login tax return   The minimum time requirements for bona fide residence and physical presence can be waived if you must leave a foreign country because of war, civil unrest, or similar adverse conditions in that country. Taxact 2011 login tax return This is fully explained under Waiver of Time Requirements , later. Taxact 2011 login tax return   See Figure 4-A and information in this chapter to determine if you are eligible to claim either exclusion or the deduction. Taxact 2011 login tax return Tax Home in Foreign Country To qualify for the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction, your tax home must be in a foreign country throughout your period of bona fide residence or physical presence abroad. Taxact 2011 login tax return Bona fide residence and physical presence are explained later. Taxact 2011 login tax return Tax Home Your tax home is the general area of your main place of business, employment, or post of duty, regardless of where you maintain your family home. Taxact 2011 login tax return Your tax home is the place where you are permanently or indefinitely engaged to work as an employee or self-employed individual. Taxact 2011 login tax return Having a “tax home” in a given location does not necessarily mean that the given location is your residence or domicile for tax purposes. Taxact 2011 login tax return If you do not have a regular or main place of business because of the nature of your work, your tax home may be the place where you regularly live. Taxact 2011 login tax return If you have neither a regular or main place of business nor a place where you regularly live, you are considered an itinerant and your tax home is wherever you work. Taxact 2011 login tax return You are not considered to have a tax home in a foreign country for any period in which your abode is in the United States. Taxact 2011 login tax return However, your abode is not necessarily in the United States while you are temporarily in the United States. Taxact 2011 login tax return Your abode is also not necessarily in the United States merely because you maintain a dwelling in the United States, whether or not your spouse or dependents use the dwelling. Taxact 2011 login tax return “Abode” has been variously defined as one's home, habitation, residence, domicile, or place of dwelling. Taxact 2011 login tax return It does not mean your principal place of business. Taxact 2011 login tax return “Abode” has a domestic rather than a vocational meaning and does not mean the same as “tax home. Taxact 2011 login tax return ” The location of your abode often will depend on where you maintain your economic, family, and personal ties. Taxact 2011 login tax return Example 1. Taxact 2011 login tax return You are employed on an offshore oil rig in the territorial waters of a foreign country and work a 28-day on/28-day off schedule. Taxact 2011 login tax return You return to your family residence in the United States during your off periods. Taxact 2011 login tax return You are considered to have an abode in the United States and do not satisfy the tax home test in the foreign country. Taxact 2011 login tax return You cannot claim either of the exclusions or the housing deduction. Taxact 2011 login tax return Example 2. Taxact 2011 login tax return For several years, you were a marketing executive with a producer of machine tools in Toledo, Ohio. Taxact 2011 login tax return In November of last year, your employer transferred you to London, England, for a minimum of 18 months to set up a sales operation for Europe. Taxact 2011 login tax return Before you left, you distributed business cards showing your business and home addresses in London. Taxact 2011 login tax return You kept ownership of your home in Toledo but rented it to another family. Taxact 2011 login tax return You placed your car in storage. Taxact 2011 login tax return In November of last year, you moved your spouse, children, furniture, and family pets to a home your employer rented for you in London. Taxact 2011 login tax return Shortly after moving, you leased a car and you and your spouse got British driving licenses. Taxact 2011 login tax return Your entire family got library cards for the local public library. Taxact 2011 login tax return You and your spouse opened bank accounts with a London bank and secured consumer credit. Taxact 2011 login tax return You joined a local business league and both you and your spouse became active in the neighborhood civic association and worked with a local charity. Taxact 2011 login tax return Your abode is in London for the time you live there. Taxact 2011 login tax return You satisfy the tax home test in the foreign country. Taxact 2011 login tax return Please click here for the text description of the image. Taxact 2011 login tax return Figure 4–A Can I Claim the Exclusion or Deduction? Temporary or Indefinite Assignment The location of your tax home often depends on whether your assignment is temporary or indefinite. Taxact 2011 login tax return If you are temporarily absent from your tax home in the United States on business, you may be able to deduct your away-from-home expenses (for travel, meals, and lodging), but you would not qualify for the foreign earned income exclusion. Taxact 2011 login tax return If your new work assignment is for an indefinite period, your new place of employment becomes your tax home and you would not be able to deduct any of the related expenses that you have in the general area of this new work assignment. Taxact 2011 login tax return If your new tax home is in a foreign country and you meet the other requirements, your earnings may qualify for the foreign earned income exclusion. Taxact 2011 login tax return If you expect your employment away from home in a single location to last, and it does last, for 1 year or less, it is temporary unless facts and circumstances indicate otherwise. Taxact 2011 login tax return If you expect it to last for more than 1 year, it is indefinite. Taxact 2011 login tax return If you expect it to last for 1 year or less, but at some later date you expect it to last longer than 1 year, it is temporary (in the absence of facts and circumstances indicating otherwise) until your expectation changes. Taxact 2011 login tax return Once your expectation changes, it is indefinite. Taxact 2011 login tax return Foreign Country To meet the bona fide residence test or the physical presence test, you must live in or be present in a foreign country. Taxact 2011 login tax return A foreign country includes any territory under the sovereignty of a government other than that of the United States. Taxact 2011 login tax return The term “foreign country” includes the country's airspace and territorial waters, but not international waters and the airspace above them. Taxact 2011 login tax return It also includes the seabed and subsoil of those submarine areas adjacent to the country's territorial waters over which it has exclusive rights under international law to explore and exploit the natural resources. Taxact 2011 login tax return The term “foreign country” does not include Antarctica or U. Taxact 2011 login tax return S. Taxact 2011 login tax return possessions such as Puerto Rico, Guam, the Commonwealth of the Northern Mariana Islands, the U. Taxact 2011 login tax return S. Taxact 2011 login tax return Virgin Islands, and Johnston Island. Taxact 2011 login tax return For purposes of the foreign earned income exclusion, the foreign housing exclusion, and the foreign housing deduction, the terms “foreign,” “abroad,” and “overseas” refer to areas outside the United States and those areas listed or described in the previous sentence. Taxact 2011 login tax return American Samoa, Guam, and the Commonwealth of the Northern Mariana Islands Residence or presence in a U. Taxact 2011 login tax return S. Taxact 2011 login tax return possession does not qualify you for the foreign earned income exclusion. Taxact 2011 login tax return You may, however, qualify for an exclusion of your possession income on your U. Taxact 2011 login tax return S. Taxact 2011 login tax return return. Taxact 2011 login tax return American Samoa. Taxact 2011 login tax return   There is a possession exclusion available to individuals who are bona fide residents of American Samoa for the entire tax year. Taxact 2011 login tax return Gross income from sources within American Samoa may be eligible for this exclusion. Taxact 2011 login tax return Income that is effectively connected with the conduct of a trade or business within American Samoa also may be eligible for this exclusion. Taxact 2011 login tax return Use Form 4563, Exclusion of Income for Bona Fide Residents of American Samoa, to figure the exclusion. Taxact 2011 login tax return Guam and the Commonwealth of the Northern Mariana Islands. Taxact 2011 login tax return   An exclusion will be available to residents of Guam and the Commonwealth of the Northern Mariana Islands if, and when, new implementation agreements take effect between the United States and those possessions. Taxact 2011 login tax return   For more information, see Publication 570. Taxact 2011 login tax return Puerto Rico and U. Taxact 2011 login tax return S. Taxact 2011 login tax return Virgin Islands Residents of Puerto Rico and the U. Taxact 2011 login tax return S. Taxact 2011 login tax return Virgin Islands cannot claim the foreign earned income exclusion or the foreign housing exclusion. Taxact 2011 login tax return Puerto Rico. Taxact 2011 login tax return   Generally, if you are a U. Taxact 2011 login tax return S. Taxact 2011 login tax return citizen who is a bona fide resident of Puerto Rico for the entire tax year, you are not subject to U. Taxact 2011 login tax return S. Taxact 2011 login tax return tax on income from Puerto Rican sources. Taxact 2011 login tax return This does not include amounts paid for services performed as an employee of the United States. Taxact 2011 login tax return However, you are subject to U. Taxact 2011 login tax return S. Taxact 2011 login tax return tax on your income from sources outside Puerto Rico. Taxact 2011 login tax return In figuring your U. Taxact 2011 login tax return S. Taxact 2011 login tax return tax, you cannot deduct expenses allocable to income not subject to tax. Taxact 2011 login tax return Bona Fide Residence Test You meet the bona fide residence test if you are a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year. Taxact 2011 login tax return You can use the bona fide residence test to qualify for the exclusions and the deduction only if you are either: A U. Taxact 2011 login tax return S. Taxact 2011 login tax return citizen, or A U. Taxact 2011 login tax return S. Taxact 2011 login tax return resident alien who is a citizen or national of a country with which the United States has an income tax treaty in effect. Taxact 2011 login tax return You do not automatically acquire bona fide resident status merely by living in a foreign country or countries for 1 year. Taxact 2011 login tax return If you go to a foreign country to work on a particular job for a specified period of time, you ordinarily will not be regarded as a bona fide resident of that country even though you work there for 1 tax year or longer. Taxact 2011 login tax return The length of your stay and the nature of your job are only two of the factors to be considered in determining whether you meet the bona fide residence test. Taxact 2011 login tax return Bona fide residence. Taxact 2011 login tax return   To meet the bona fide residence test, you must have established a bona fide residence in a foreign country. Taxact 2011 login tax return   Your bona fide residence is not necessarily the same as your domicile. Taxact 2011 login tax return Your domicile is your permanent home, the place to which you always return or intend to return. Taxact 2011 login tax return Example. Taxact 2011 login tax return You could have your domicile in Cleveland, Ohio, and a bona fide residence in Edinburgh, Scotland, if you intend to return eventually to Cleveland. Taxact 2011 login tax return The fact that you go to Scotland does not automatically make Scotland your bona fide residence. Taxact 2011 login tax return If you go there as a tourist, or on a short business trip, and return to the United States, you have not established bona fide residence in Scotland. Taxact 2011 login tax return But if you go to Scotland to work for an indefinite or extended period and you set up permanent quarters there for yourself and your family, you probably have established a bona fide residence in a foreign country, even though you intend to return eventually to the United States. Taxact 2011 login tax return You are clearly not a resident of Scotland in the first instance. Taxact 2011 login tax return However, in the second, you are a resident because your stay in Scotland appears to be permanent. Taxact 2011 login tax return If your residency is not as clearly defined as either of these illustrations, it may be more difficult to decide whether you have established a bona fide residence. Taxact 2011 login tax return Determination. Taxact 2011 login tax return   Questions of bona fide residence are determined according to each individual case, taking into account factors such as your intention, the purpose of your trip, and the nature and length of your stay abroad. Taxact 2011 login tax return   To meet the bona fide residence test, you must show the Internal Revenue Service (IRS) that you have been a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year. Taxact 2011 login tax return The IRS decides whether you are a bona fide resident of a foreign country largely on the basis of facts you report on Form 2555. Taxact 2011 login tax return IRS cannot make this determination until you file Form 2555. Taxact 2011 login tax return Statement to foreign authorities. Taxact 2011 login tax return   You are not considered a bona fide resident of a foreign country if you make a statement to the authorities of that country that you are not a resident of that country, and the authorities: Hold that you are not subject to their income tax laws as a resident, or Have not made a final decision on your status. Taxact 2011 login tax return Special agreements and treaties. Taxact 2011 login tax return   An income tax exemption provided in a treaty or other international agreement will not in itself prevent you from being a bona fide resident of a foreign country. Taxact 2011 login tax return Whether a treaty prevents you from becoming a bona fide resident of a foreign country is determined under all provisions of the treaty, including specific provisions relating to residence or privileges and immunities. Taxact 2011 login tax return Example 1. Taxact 2011 login tax return You are a U. Taxact 2011 login tax return S. Taxact 2011 login tax return citizen employed in the United Kingdom by a U. Taxact 2011 login tax return S. Taxact 2011 login tax return employer under contract with the U. Taxact 2011 login tax return S. Taxact 2011 login tax return Armed Forces. Taxact 2011 login tax return You are not subject to the North Atlantic Treaty Status of Forces Agreement. Taxact 2011 login tax return You may be a bona fide resident of the United Kingdom. Taxact 2011 login tax return Example 2. Taxact 2011 login tax return You are a U. Taxact 2011 login tax return S. Taxact 2011 login tax return citizen in the United Kingdom who qualifies as an “employee” of an armed service or as a member of a “civilian component” under the North Atlantic Treaty Status of Forces Agreement. Taxact 2011 login tax return You are not a bona fide resident of the United Kingdom. Taxact 2011 login tax return Example 3. Taxact 2011 login tax return You are a U. Taxact 2011 login tax return S. Taxact 2011 login tax return citizen employed in Japan by a U. Taxact 2011 login tax return S. Taxact 2011 login tax return employer under contract with the U. Taxact 2011 login tax return S. Taxact 2011 login tax return Armed Forces. Taxact 2011 login tax return You are subject to the agreement of the Treaty of Mutual Cooperation and Security between the United States and Japan. Taxact 2011 login tax return Being subject to the agreement does not make you a bona fide resident of Japan. Taxact 2011 login tax return Example 4. Taxact 2011 login tax return You are a U. Taxact 2011 login tax return S. Taxact 2011 login tax return citizen employed as an “official” by the United Nations in Switzerland. Taxact 2011 login tax return You are exempt from Swiss taxation on the salary or wages paid to you by the United Nations. Taxact 2011 login tax return This does not prevent you from being a bona fide resident of Switzerland. Taxact 2011 login tax return Effect of voting by absentee ballot. Taxact 2011 login tax return   If you are a U. Taxact 2011 login tax return S. Taxact 2011 login tax return citizen living abroad, you can vote by absentee ballot in any election held in the United States without risking your status as a bona fide resident of a foreign country. Taxact 2011 login tax return   However, if you give information to the local election officials about the nature and length of your stay abroad that does not match the information you give for the bona fide residence test, the information given in connection with absentee voting will be considered in determining your status, but will not necessarily be conclusive. Taxact 2011 login tax return Uninterrupted period including entire tax year. Taxact 2011 login tax return   To meet the bona fide residence test, you must reside in a foreign country or countries for an uninterrupted period that includes an entire tax year. Taxact 2011 login tax return An entire tax year is from January 1 through December 31 for taxpayers who file their income tax returns on a calendar year basis. Taxact 2011 login tax return   During the period of bona fide residence in a foreign country, you can leave the country for brief or temporary trips back to the United States or elsewhere for vacation or business. Taxact 2011 login tax return To keep your status as a bona fide resident of a foreign country, you must have a clear intention of returning from such trips, without unreasonable delay, to your foreign residence or to a new bona fide residence in another foreign country. Taxact 2011 login tax return Example 1. Taxact 2011 login tax return You arrived with your family in Lisbon, Portugal, on November 1, 2011. Taxact 2011 login tax return Your assignment is indefinite, and you intend to live there with your family until your company sends you to a new post. Taxact 2011 login tax return You immediately established residence there. Taxact 2011 login tax return You spent April of 2012 at a business conference in the United States. Taxact 2011 login tax return Your family stayed in Lisbon. Taxact 2011 login tax return Immediately following the conference, you returned to Lisbon and continued living there. Taxact 2011 login tax return On January 1, 2013, you completed an uninterrupted period of residence for a full tax year (2012), and you meet the bona fide residence test. Taxact 2011 login tax return Example 2. Taxact 2011 login tax return Assume the same facts as in Example 1, except that you transferred back to the United States on December 13, 2012. Taxact 2011 login tax return You would not meet the bona fide residence test because your bona fide residence in the foreign country, although it lasted more than a year, did not include a full tax year. Taxact 2011 login tax return You may, however, qualify for the foreign earned income exclusion or the housing exclusion or deduction under the physical presence test (discussed later). Taxact 2011 login tax return Bona fide resident for part of a year. Taxact 2011 login tax return   Once you have established bona fide residence in a foreign country for an uninterrupted period that includes an entire tax year, you are a bona fide resident of that country for the period starting with the date you actually began the residence and ending with the date you abandon the foreign residence. Taxact 2011 login tax return Your period of bona fide residence can include an entire tax year plus parts of 2 other tax years. Taxact 2011 login tax return Example. Taxact 2011 login tax return You were a bona fide resident of Singapore from March 1, 2011, through September 14, 2013. Taxact 2011 login tax return On September 15, 2013, you returned to the United States. Taxact 2011 login tax return Since you were a bona fide resident of a foreign country for all of 2012, you were also a bona fide resident of a foreign country from March 1, 2011, through the end of 2011 and from January 1, 2013, through September 14, 2013. Taxact 2011 login tax return Reassignment. Taxact 2011 login tax return   If you are assigned from one foreign post to another, you may or may not have a break in foreign residence between your assignments, depending on the circumstances. Taxact 2011 login tax return Example 1. Taxact 2011 login tax return You were a resident of Pakistan from October 1, 2012, through November 30, 2013. Taxact 2011 login tax return On December 1, 2013, you and your family returned to the United States to wait for an assignment to another foreign country. Taxact 2011 login tax return Your household goods also were returned to the United States. Taxact 2011 login tax return Your foreign residence ended on November 30, 2013, and did not begin again until after you were assigned to another foreign country and physically entered that country. Taxact 2011 login tax return Since you were not a bona fide resident of a foreign country for the entire tax year of 2012 or 2013 you do not meet the bona fide residence test in either year. Taxact 2011 login tax return You may, however, qualify for the foreign earned income exclusion or the housing exclusion or deduction under the physical presence test, discussed later. Taxact 2011 login tax return Example 2. Taxact 2011 login tax return Assume the same facts as in Example 1, except that upon completion of your assignment in Pakistan you were given a new assignment to Turkey. Taxact 2011 login tax return On December 1, 2013, you and your family returned to the United States for a month's vacation. Taxact 2011 login tax return On January 2, 2014, you arrived in Turkey for your new assignment. Taxact 2011 login tax return Because you did not interrupt your bona fide residence abroad, you meet the bona fide residence test. Taxact 2011 login tax return Physical Presence Test You meet the physical presence test if you are physically present in a foreign country or countries 330 full days during a period of 12 consecutive months. Taxact 2011 login tax return The 330 days do not have to be consecutive. Taxact 2011 login tax return Any U. Taxact 2011 login tax return S. Taxact 2011 login tax return citizen or resident alien can use the physical presence test to qualify for the exclusions and the deduction. Taxact 2011 login tax return The physical presence test is based only on how long you stay in a foreign country or countries. Taxact 2011 login tax return This test does not depend on the kind of residence you establish, your intentions about returning, or the nature and purpose of your stay abroad. Taxact 2011 login tax return 330 full days. Taxact 2011 login tax return   Generally, to meet the physical presence test, you must be physically present in a foreign country or countries for at least 330 full days during a 12-month period. Taxact 2011 login tax return You can count days you spent abroad for any reason. Taxact 2011 login tax return You do not have to be in a foreign country only for employment purposes. Taxact 2011 login tax return You can be on vacation. Taxact 2011 login tax return   You do not meet the physical presence test if illness, family problems, a vacation, or your employer's orders cause you to be present for less than the required amount of time. Taxact 2011 login tax return Exception. Taxact 2011 login tax return   You can be physically present in a foreign country or countries for less than 330 full days and still meet the physical presence test if you are required to leave a country because of war or civil unrest. Taxact 2011 login tax return See Waiver of Time Requirements, later. Taxact 2011 login tax return Full day. Taxact 2011 login tax return   A full day is a period of 24 consecutive hours, beginning at midnight. Taxact 2011 login tax return Travel. Taxact 2011 login tax return    When you leave the United States to go directly to a foreign country or when you return directly to the United States from a foreign country, the time you spend on or over international waters does not count toward the 330-day total. Taxact 2011 login tax return Example. Taxact 2011 login tax return You leave the United States for France by air on June 10. Taxact 2011 login tax return You arrive in France at 9:00 a. Taxact 2011 login tax return m. Taxact 2011 login tax return on June 11. Taxact 2011 login tax return Your first full day of physical presence in France is June 12. Taxact 2011 login tax return Passing over foreign country. Taxact 2011 login tax return   If, in traveling from the United States to a foreign country, you pass over a foreign country before midnight of the day you leave, the first day you can count toward the 330-day total is the day following the day you leave the United States. Taxact 2011 login tax return Example. Taxact 2011 login tax return You leave the United States by air at 9:30 a. Taxact 2011 login tax return m. Taxact 2011 login tax return on June 10 to travel to Kenya. Taxact 2011 login tax return You pass over western Africa at 11:00 p. Taxact 2011 login tax return m. Taxact 2011 login tax return on June 10 and arrive in Kenya at 12:30 a. Taxact 2011 login tax return m. Taxact 2011 login tax return on June 11. Taxact 2011 login tax return Your first full day in a foreign country is June 11. Taxact 2011 login tax return Change of location. Taxact 2011 login tax return   You can move about from one place to another in a foreign country or to another foreign country without losing full days. Taxact 2011 login tax return If any part of your travel is not within any foreign country and takes less than 24 hours, you are considered to be in a foreign country during that part of travel. Taxact 2011 login tax return Example 1. Taxact 2011 login tax return You leave Ireland by air at 11:00 p. Taxact 2011 login tax return m. Taxact 2011 login tax return on July 6 and arrive in Sweden at 5:00 a. Taxact 2011 login tax return m. Taxact 2011 login tax return on July 7. Taxact 2011 login tax return Your trip takes less than 24 hours and you lose no full days. Taxact 2011 login tax return Example 2. Taxact 2011 login tax return You leave Norway by ship at 10:00 p. Taxact 2011 login tax return m. Taxact 2011 login tax return on July 6 and arrive in Portugal at 6:00 a. Taxact 2011 login tax return m. Taxact 2011 login tax return on July 8. Taxact 2011 login tax return Since your travel is not within a foreign country or countries and the trip takes more than 24 hours, you lose as full days July 6, 7, and 8. Taxact 2011 login tax return If you remain in Portugal, your next full day in a foreign country is July 9. Taxact 2011 login tax return In United States while in transit. Taxact 2011 login tax return   If you are in transit between two points outside the United States and are physically present in the United States for less than 24 hours, you are not treated as present in the United States during the transit. Taxact 2011 login tax return You are treated as traveling over areas not within any foreign country. Taxact 2011 login tax return    Please click here for the text description of the image. Taxact 2011 login tax return Figure 4-B How to figure the 12-month period. Taxact 2011 login tax return   There are four rules you should know when figuring the 12-month period. Taxact 2011 login tax return Your 12-month period can begin with any day of the month. Taxact 2011 login tax return It ends the day before the same calendar day, 12 months later. Taxact 2011 login tax return Your 12-month period must be made up of consecutive months. Taxact 2011 login tax return Any 12-month period can be used if the 330 days in a foreign country fall within that period. Taxact 2011 login tax return You do not have to begin your 12-month period with your first full day in a foreign country or end it with the day you leave. Taxact 2011 login tax return You can choose the 12-month period that gives you the greatest exclusion. Taxact 2011 login tax return In determining whether the 12-month period falls within a longer stay in the foreign country, 12-month periods can overlap one another. Taxact 2011 login tax return Example 1. Taxact 2011 login tax return You are a construction worker who works on and off in a foreign country over a 20-month period. Taxact 2011 login tax return You might pick up the 330 full days in a 12-month period only during the middle months of the time you work in the foreign country because the first few and last few months of the 20-month period are broken up by long visits to the United States. Taxact 2011 login tax return Example 2. Taxact 2011 login tax return You work in New Zealand for a 20-month period from January 1, 2012, through August 31, 2013, except that you spend 28 days in February 2012 and 28 days in February 2013 on vacation in the United States. Taxact 2011 login tax return You are present in New Zealand for at least 330 full days during each of the following two 12-month periods: January 1, 2012 – December 31, 2012 and September 1, 2012 – August 31, 2013. Taxact 2011 login tax return By overlapping the 12-month periods in this way, you meet the physical presence test for the whole 20-month period. Taxact 2011 login tax return See Figure 4-B, on the previous page. Taxact 2011 login tax return Waiver of Time Requirements Both the bona fide residence test and the physical presence test contain minimum time requirements. Taxact 2011 login tax return The minimum time requirements can be waived, however, if you must leave a foreign country because of war, civil unrest, or similar adverse conditions in that country. Taxact 2011 login tax return You must be able to show that you reasonably could have expected to meet the minimum time requirements if not for the adverse conditions. Taxact 2011 login tax return To qualify for the waiver, you must actually have your tax home in the foreign country and be a bona fide resident of, or be physically present in, the foreign country on or before the beginning date of the waiver. Taxact 2011 login tax return Early in 2014, the IRS will publish in the Internal Revenue Bulletin a list of the only countries that qualify for the waiver for 2013 and the effective dates. Taxact 2011 login tax return If you left one of the countries on or after the date listed for each country, you can meet the bona fide residence test or physical presence test for 2013 without meeting the minimum time requirement. Taxact 2011 login tax return However, in figuring your exclusion, the number of your qualifying days of bona fide residence or physical presence includes only days of actual residence or presence within the country. Taxact 2011 login tax return U. Taxact 2011 login tax return S. Taxact 2011 login tax return Travel Restrictions If you are present in a foreign country in violation of U. Taxact 2011 login tax return S. Taxact 2011 login tax return law, you will not be treated as a bona fide resident of a foreign country or as physically present in a foreign country while you are in violation of the law. Taxact 2011 login tax return Income that you earn from sources within such a country for services performed during a period of violation does not qualify as foreign earned income. Taxact 2011 login tax return Your housing expenses within that country (or outside that country for housing your spouse or dependents) while you are in violation of the law cannot be included in figuring your foreign housing amount. Taxact 2011 login tax return For 2013, the only country to which travel restrictions applied was Cuba. Taxact 2011 login tax return The restrictions applied for the entire year. Taxact 2011 login tax return However, individuals working at the U. Taxact 2011 login tax return S. Taxact 2011 login tax return Naval Base at Guantanamo Bay in Cuba are not in violation of U. Taxact 2011 login tax return S. Taxact 2011 login tax return law. Taxact 2011 login tax return Personal service income earned by individuals at the base is eligible for the foreign earned income exclusion provided the other requirements are met. Taxact 2011 login tax return Foreign Earned Income To claim the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction, you must have foreign earned income. Taxact 2011 login tax return Foreign earned income generally is income you receive for services you perform during a period in which you meet both of the following requirements. Taxact 2011 login tax return Your tax home is in a foreign country. Taxact 2011 login tax return You meet either the bona fide residence test or the physical presence test. Taxact 2011 login tax return To determine whether your tax home is in a foreign country, see Tax Home in Foreign Country, earlier. Taxact 2011 login tax return To determine whether you meet either the bona fide residence test or the physical presence test, see Bona Fide Residence Test and Physical Presence Test, earlier. Taxact 2011 login tax return Foreign earned income does not include the following amounts. Taxact 2011 login tax return The value of meals and lodging that you exclude from your income because the meals and lodging were furnished for the convenience of your employer. Taxact 2011 login tax return Pension or annuity payments you receive, including social security benefits (see Pensions and annuities, later). Taxact 2011 login tax return Pay you receive as an employee of the U. Taxact 2011 login tax return S. Taxact 2011 login tax return Government. Taxact 2011 login tax return (See U. Taxact 2011 login tax return S. Taxact 2011 login tax return Government Employees, later. Taxact 2011 login tax return ) Amounts you include in your income because of your employer's contributions to a nonexempt employee trust or to a nonqualified annuity contract. Taxact 2011 login tax return Any unallowable moving expense deduction that you choose to recapture as explained under Moving Expense Attributable to Foreign Earnings in 2 Years in chapter 5. Taxact 2011 login tax return Payments you receive after the end of the tax year following the tax year in which you performed the services that earned the income. Taxact 2011 login tax return Earned income. Taxact 2011 login tax return   This is pay for personal services performed, such as wages, salaries, or professional fees. Taxact 2011 login tax return The list that follows classifies many types of income into three categories. Taxact 2011 login tax return The column headed Variable Income lists income that may fall into either the earned income category, the unearned income category, or partly into both. Taxact 2011 login tax return For more information on earned and unearned income, see Earned and Unearned Income, later. Taxact 2011 login tax return Earned Income Unearned Income Variable Income Salaries and wages Dividends Business profits Commissions Interest Royalties Bonuses Capital gains Rents Professional fees Gambling winnings Scholarships and fellowships Tips Alimony     Social security benefits     Pensions     Annuities     In addition to the types of earned income listed, certain noncash income and allowances or reimbursements are considered earned income. Taxact 2011 login tax return Noncash income. Taxact 2011 login tax return   The fair market value of property or facilities provided to you by your employer in the form of lodging, meals, or use of a car is earned income. Taxact 2011 login tax return Allowances or reimbursements. Taxact 2011 login tax return   Earned income includes allowances or reimbursements you receive, such as the following amounts. Taxact 2011 login tax return    Cost-of-living allowances. Taxact 2011 login tax return Overseas differential. Taxact 2011 login tax return Family allowance. Taxact 2011 login tax return Reimbursement for education or education allowance. Taxact 2011 login tax return Home leave allowance. Taxact 2011 login tax return Quarters allowance. Taxact 2011 login tax return Reimbursement for moving or moving allowance (unless excluded from income as discussed later in Reimbursement of employee expenses under Earned and Unearned Income). Taxact 2011 login tax return Source of Earned Income The source of your earned income is the place where you perform the services for which you received the income. Taxact 2011 login tax return Foreign earned income is income you receive for working in a foreign country. Taxact 2011 login tax return Where or how you are paid has no effect on the source of the income. Taxact 2011 login tax return For example, income you receive for work done in Austria is income from a foreign source even if the income is paid directly to your bank account in the United States and your employer is located in New York City. Taxact 2011 login tax return Example. Taxact 2011 login tax return You are a U. Taxact 2011 login tax return S. Taxact 2011 login tax return citizen, a bona fide resident of Canada, and working as a mining engineer. Taxact 2011 login tax return Your salary is $76,800 per year. Taxact 2011 login tax return You also receive a $6,000 cost-of-living allowance, and a $6,000 education allowance. Taxact 2011 login tax return Your employment contract did not indicate that you were entitled to these allowances only while outside the United States. Taxact 2011 login tax return Your total income is $88,800. Taxact 2011 login tax return You work a 5-day week, Monday through Friday. Taxact 2011 login tax return After subtracting your vacation, you have a total of 240 workdays in the year. Taxact 2011 login tax return You worked in the United States during the year for 6 weeks (30 workdays). Taxact 2011 login tax return The following shows how to figure the part of your income that is for work done in Canada during the year. Taxact 2011 login tax return   Number of days worked in Canada during the year (210) × Total income ($88,800) = $77,700     Number of days of work during the year for which payment was made (240)   Your foreign source earned income is $77,700. Taxact 2011 login tax return Earned and Unearned Income Earned income was defined earlier as pay for personal services performed. Taxact 2011 login tax return Some types of income are not easily identified as earned or unearned income. Taxact 2011 login tax return Some of these types of income are further explained here. Taxact 2011 login tax return Income from a sole proprietorship or partnership. Taxact 2011 login tax return   Income from a business in which capital investment is an important part of producing the income may be unearned income. Taxact 2011 login tax return If you are a sole proprietor or partner and your personal services are also an important part of producing the income, the part of the income that represents the value of your personal services will be treated as earned income. Taxact 2011 login tax return Capital a factor. Taxact 2011 login tax return   If capital investment is an important part of producing income, no more than 30% of your share of the net profits of the business is earned income. Taxact 2011 login tax return   If you have no net profits, the part of your gross profit that represents a reasonable allowance for personal services actually performed is considered earned income. Taxact 2011 login tax return Because you do not have a net profit, the 30% limit does not apply. Taxact 2011 login tax return Example 1. Taxact 2011 login tax return You are a U. Taxact 2011 login tax return S. Taxact 2011 login tax return citizen and meet the bona fide residence test. Taxact 2011 login tax return You invest in a partnership based in Cameroon that is engaged solely in selling merchandise outside the United States. Taxact 2011 login tax return You perform no services for the partnership. Taxact 2011 login tax return At the end of the tax year, your share of the net profits is $80,000. Taxact 2011 login tax return The entire $80,000 is unearned income. Taxact 2011 login tax return Example 2. Taxact 2011 login tax return Assume that in Example 1 you spend time operating the business. Taxact 2011 login tax return Your share of the net profits is $80,000; 30% of your share of the profits is $24,000. Taxact 2011 login tax return If the value of your services for the year is $15,000, your earned income is limited to the value of your services, $15,000. Taxact 2011 login tax return Capital not a factor. Taxact 2011 login tax return   If capital is not an income-producing factor and personal services produce the business income, the 30% rule does not apply. Taxact 2011 login tax return The entire amount of business income is earned income. Taxact 2011 login tax return Example. Taxact 2011 login tax return You and Lou Green are management consultants and operate as equal partners in performing services outside the United States. Taxact 2011 login tax return Because capital is not an income- producing factor, all the income from the partnership is considered earned income. Taxact 2011 login tax return Income from a corporation. Taxact 2011 login tax return   The salary you receive from a corporation is earned income only if it represents a reasonable allowance as compensation for work you do for the corporation. Taxact 2011 login tax return Any amount over what is considered a reasonable salary is unearned income. Taxact 2011 login tax return Example 1. Taxact 2011 login tax return You are a U. Taxact 2011 login tax return S. Taxact 2011 login tax return citizen and an officer and stockholder of a corporation in Honduras. Taxact 2011 login tax return You perform no work or service of any kind for the corporation. Taxact 2011 login tax return During the tax year you receive a $10,000 “salary” from the corporation. Taxact 2011 login tax return The $10,000 clearly is not for personal services and is unearned income. Taxact 2011 login tax return Example 2. Taxact 2011 login tax return You are a U. Taxact 2011 login tax return S. Taxact 2011 login tax return citizen and work full time as secretary-treasurer of your corporation. Taxact 2011 login tax return During the tax year you receive $100,000 as salary from the corporation. Taxact 2011 login tax return If $80,000 is a reasonable allowance as pay for the work you did, then $80,000 is earned income. Taxact 2011 login tax return Stock options. Taxact 2011 login tax return   You may have earned income if you disposed of stock that you got by exercising a stock option granted to you under an employee stock purchase plan. Taxact 2011 login tax return   If your gain on the disposition of stock you got by exercising an option is treated as capital gain, your gain is unearned income. Taxact 2011 login tax return   However, if you disposed of the stock less than 2 years after you were granted the option or less than 1 year after you got the stock, part of the gain on the disposition may be earned income. Taxact 2011 login tax return It is considered received in the year you disposed of the stock and earned in the year you performed the services for which you were granted the option. Taxact 2011 login tax return Any part of the earned income that is due to work you did outside the United States is foreign earned income. Taxact 2011 login tax return   See Publication 525, Taxable and Nontaxable Income, for a discussion of the treatment of stock options. Taxact 2011 login tax return Pensions and annuities. Taxact 2011 login tax return    For purposes of the foreign earned income exclusion, the foreign housing exclusion, and the foreign housing deduction, amounts received as pensions or annuities are unearned income. Taxact 2011 login tax return Royalties. Taxact 2011 login tax return   Royalties from the leasing of oil and mineral lands and patents generally are a form of rent or dividends and are unearned income. Taxact 2011 login tax return   Royalties received by a writer are earned income if they are received: For the transfer of property rights of the writer in the writer's product, or Under a contract to write a book or series of articles. Taxact 2011 login tax return Rental income. Taxact 2011 login tax return   Generally, rental income is unearned income. Taxact 2011 login tax return If you perform personal services in connection with the production of rent, up to 30% of your net rental income can be considered earned income. Taxact 2011 login tax return Example. Taxact 2011 login tax return Larry Smith, a U. Taxact 2011 login tax return S. Taxact 2011 login tax return citizen living in Australia, owns and operates a rooming house in Sydney. Taxact 2011 login tax return If he is operating the rooming house as a business that requires capital and personal services, he can consider up to 30% of net rental income as earned income. Taxact 2011 login tax return On the other hand, if he just owns the rooming house and performs no personal services connected with its operation, except perhaps making minor repairs and collecting rents, none of his net income from the house is considered earned income. Taxact 2011 login tax return It is all unearned income. Taxact 2011 login tax return Professional fees. Taxact 2011 login tax return   If you are engaged in a professional occupation (such as a doctor or lawyer), all fees received in the performance of these services are earned income. Taxact 2011 login tax return Income of an artist. Taxact 2011 login tax return   Income you receive from the sale of paintings you created is earned income. Taxact 2011 login tax return Scholarships and fellowships. Taxact 2011 login tax return   Any portion of a scholarship or fellowship grant that is paid to you for teaching, research or other services is considered earned income if you must include it in your gross income. Taxact 2011 login tax return If the payer of the grant is required to provide you with a Form W-2, Wage and Tax Statement, these amounts will be listed as wages. Taxact 2011 login tax return    Certain scholarship and fellowship income may be exempt under other provisions. Taxact 2011 login tax return See Publication 970, Tax Benefits for Education, chapter 1. Taxact 2011 login tax return Use of employer's property or facilities. Taxact 2011 login tax return   If you receive fringe benefits in the form of the right to use your employer's property or facilities, the fair market value of that right is earned income. Taxact 2011 login tax return Fair market value is the price at which the property would change hands between a willing buyer and a willing seller, neither being required to buy or sell, and both having reasonable knowledge of all the necessary facts. Taxact 2011 login tax return Example. Taxact 2011 login tax return You are privately employed and live in Japan all year. Taxact 2011 login tax return You are paid a salary of $6,000 a month. Taxact 2011 login tax return You live rent-free in a house provided by your employer that has a fair rental value of $3,000 a month. Taxact 2011 login tax return The house is not provided for your employer's convenience. Taxact 2011 login tax return You report on the calendar-year, cash basis. Taxact 2011 login tax return You received $72,000 salary from foreign sources plus $36,000 fair rental value of the house, or a total of $108,000 of earned income. Taxact 2011 login tax return Reimbursement of employee expenses. Taxact 2011 login tax return   If you are reimbursed under an accountable plan (defined below) for expenses you incur on your employer's behalf and you have adequately accounted to your employer for the expenses, do not include the reimbursement for those expenses in your earned income. Taxact 2011 login tax return   The expenses for which you are reimbursed are not considered allocable (related) to your earned income. Taxact 2011 login tax return If expenses and reimbursement are equal, there is nothing to allocate to excluded income. Taxact 2011 login tax return If expenses are more than the reimbursement, the unreimbursed expenses are considered to have been incurred in producing earned income and must be divided between your excluded and included income in determining the amount of unreimbursed expenses you can deduct. Taxact 2011 login tax return (See chapter 5. Taxact 2011 login tax return ) If the reimbursement is more than the expenses, no expenses remain to be divided between excluded and included income and the excess reimbursement must be included in earned income. Taxact 2011 login tax return   These rules do not apply to the following individuals. Taxact 2011 login tax return Straight-commission salespersons. Taxact 2011 login tax return Employees who have arrangements with their employers under which taxes are not withheld on a percentage of the commissions because the employers consider that percentage to be attributable to the employees' expenses. Taxact 2011 login tax return Accountable plan. Taxact 2011 login tax return   An accountable plan is a reimbursement or allowance arrangement that includes all three of the following rules. Taxact 2011 login tax return The expenses covered under the plan must have a business connection. Taxact 2011 login tax return The employee must adequately account to the employer for these expenses within a reasonable period of time. Taxact 2011 login tax return The employee must return any excess reimbursement or allowance within a reasonable period of time. Taxact 2011 login tax return Reimbursement of moving expenses. Taxact 2011 login tax return   Reimbursement of moving expenses may be earned income. Taxact 2011 login tax return You must include as earned income: Any reimbursements of, or payments for, nondeductible moving expenses, Reimbursements that are more than your deductible expenses and that you do not return to your employer, Any reimbursements made (or treated as made) under a nonaccountable plan (any plan that does not meet the rules listed above for an accountable plan), even if they are for deductible expenses, and Any reimbursement of moving expenses you deducted in an earlier year. Taxact 2011 login tax return This section discusses reimbursements that must be included in earned income. Taxact 2011 login tax return Publication 521, Moving Expenses, discusses additional rules that apply to moving expense deductions and reimbursements. Taxact 2011 login tax return   The rules for determining when the reimbursement is considered earned or where the reimbursement is considered earned may differ somewhat from the general rules previously discussed. Taxact 2011 login tax return   Although you receive the reimbursement in one tax year, it may be considered earned for services performed, or to be performed, in another tax year. Taxact 2011 login tax return You must report the reimbursement as income on your return in the year you receive it, even if it is considered earned during a different year. Taxact 2011 login tax return Move from U. Taxact 2011 login tax return S. Taxact 2011 login tax return to foreign country. Taxact 2011 login tax return   If you move from the United States to a foreign country, your moving expense reimbursement is generally considered pay for future services to be performed at the new location. Taxact 2011 login tax return The reimbursement is considered earned solely in the year of the move if you qualify for the exclusion for a period that includes at least 120 days during that tax year. Taxact 2011 login tax return   If you are neither a bona fide resident of nor physically present in a foreign country or countries for a period that includes 120 days during the year of the move, a portion of the reimbursement is considered earned in the year of the move and a portion is considered earned in the year following the year of the move. Taxact 2011 login tax return To figure the amount earned in the year of the move, multiply the reimbursement by a fraction. Taxact 2011 login tax return The numerator (top number) is the number of days in your qualifying period that fall within the year of the move, and the denominator (bottom number) is the total number of days in the year of the move. Taxact 2011 login tax return   The difference between the total reimbursement and the amount considered earned in the year of the move is the amount considered earned in the year following the year of the move. Taxact 2011 login tax return The part earned in each year is figured as shown in the following example. Taxact 2011 login tax return Example. Taxact 2011 login tax return You are a U. Taxact 2011 login tax return S. Taxact 2011 login tax return citizen working in the United States. Taxact 2011 login tax return You were told in October 2012 that you were being transferred to a foreign country. Taxact 2011 login tax return You arrived in the foreign country on December 15, 2012, and you are a bona fide resident for the remainder of 2012 and all of 2013. Taxact 2011 login tax return Your employer reimbursed you $2,000 in January 2013 for the part of the moving expense that you were not allowed to deduct. Taxact 2011 login tax return Because you did not qualify for the exclusion under the bona fide residence test for at least 120 days in 2012 (the year of the move), the reimbursement is considered pay for services performed in the foreign country for both 2012 and 2013. Taxact 2011 login tax return You figure the part of the reimbursement for services performed in the foreign country in 2012 by multiplying the total reimbursement by a fraction. Taxact 2011 login tax return The fraction is the number of days during which you were a bona fide resident in 2012 (the year of the move) divided by 366. Taxact 2011 login tax return The remaining part of the reimbursement is for services performed in the foreign country in 2013. Taxact 2011 login tax return This computation is used only to determine when the reimbursement is considered earned. Taxact 2011 login tax return You would include the amount of the reimbursement in income in 2013, the year you received it. Taxact 2011 login tax return Move between foreign countries. Taxact 2011 login tax return   If you move between foreign countries, any moving expense reimbursement that you must include in income will be considered earned in the year of the move if you qualify for the foreign earned income exclusion for a period that includes at least 120 days in the year of the move. Taxact 2011 login tax return Move to U. Taxact 2011 login tax return S. Taxact 2011 login tax return   If you move to the United States, the moving expense reimbursement that you must include in income is generally considered to be U. Taxact 2011 login tax return S. Taxact 2011 login tax return source income. Taxact 2011 login tax return   However, if under either an agreement between you and your employer or a statement of company policy that is reduced to writing before your move to the foreign country, your employer will reimburse you for your move back to the United States regardless of whether you continue to work for the employer, the includible reimbursement is considered compensation for past services performed in the foreign country. Taxact 2011 login tax return The includible reimbursement is considered earned in the year of the move if you qualify for the foreign earned income exclusion for a period that includes at least 120 days during that year. Taxact 2011 login tax return Otherwise, you treat the includible reimbursement as received for services performed in the foreign country in the year of the move and the year immediately before the year of the move. Taxact 2011 login tax return   See the discussion under Move from U. Taxact 2011 login tax return S. Taxact 2011 login tax return to foreign country , earlier, to figure the amount of the includible reimbursement considered earned in the year of the move. Taxact 2011 login tax return The amount earned in the year before the year of the move is the difference between the total includible reimbursement and the amount earned in the year of the move. Taxact 2011 login tax return Example. Taxact 2011 login tax return You are a U. Taxact 2011 login tax return S. Taxact 2011 login tax return citizen employed in a foreign country. Taxact 2011 login tax return You retired from employment with your employer on March 31, 2013, and returned to the United States after having been a bona fide resident of the foreign country for several years. Taxact 2011 login tax return A written agreement with your employer entered into before you went abroad provided that you would be reimbursed for your move back to the United States. Taxact 2011 login tax return In April 2013, your former employer reimbursed you $4,000 for the part of the cost of your move back to the United States that you were not allowed to deduct. Taxact 2011 login tax return Because you were not a bona fide resident of a foreign country or countries for a period that included at least 120 days in 2013 (the year of the move), the includible reimbursement is considered pay for services performed in the foreign country for both 2013 and 2012. Taxact 2011 login tax return You figure the part of the moving expense reimbursement for services performed in the foreign country for 2013 by multiplying the total includible reimbursement by a fraction. Taxact 2011 login tax return The fraction is the number of days of foreign residence during the year (90) divided by the number of days in the year (365). Taxact 2011 login tax return The remaining part of the includible reimbursement is for services performed in the foreign country in 2012. Taxact 2011 login tax return You report the amount of the includible reimbursement in 2013, the year you received it. Taxact 2011 login tax return    In this example, if you met the physical presence test for a period that included at least 120 days in 2013, the moving expense reimbursement would be considered earned entirely in the year of the move. Taxact 2011 login tax return Storage expense reimbursements. Taxact 2011 login tax return   If you are reimbursed for storage expenses, the reimbursement is for services you perform during the period of time for which the storage expenses are incurred. Taxact 2011 login tax return U. Taxact 2011 login tax return S. Taxact 2011 login tax return Government Employees For purposes of the foreign earned income exclusion, the foreign housing exclusion, and the foreign housing deduction, foreign earned income does not include any amounts paid by the United States or any of its agencies to its employees. Taxact 2011 login tax return This includes amounts paid from both appropriated and nonappropriated funds. Taxact 2011 login tax return The following organizations (and other organizations similarly organized and operated under United States Army, Navy, or Air Force regulations) are integral parts of the Armed Forces, agencies, or instrumentalities of the United States. Taxact 2011 login tax return United States Armed Forces exchanges. Taxact 2011 login tax return Commissioned and noncommissioned officers' messes. Taxact 2011 login tax return Armed Forces motion picture services. Taxact 2011 login tax return Kindergartens on foreign Armed Forces installations. Taxact 2011 login tax return Amounts paid by the United States or its agencies to persons who are not their employees may qualify for exclusion or deduction. Taxact 2011 login tax return If you are a U. Taxact 2011 login tax return S. Taxact 2011 login tax return Government employee paid by a U. Taxact 2011 login tax return S. Taxact 2011 login tax return agency that assigned you to a foreign government to perform specific services for which the agency is reimbursed by the foreign government, your pay is from the U. Taxact 2011 login tax return S. Taxact 2011 login tax return Government and does not qualify for exclusion or deduction. Taxact 2011 login tax return If you have questions about whether you are an employee or an independent contractor, get Publication 15-A, Employer's Supplemental Tax Guide. Taxact 2011 login tax return American Institute in Taiwan. Taxact 2011 login tax return   Amounts paid by the American Institute in Taiwan are not foreign earned income for purposes of the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction. Taxact 2011 login tax return If you are an employee of the American Institute in Taiwan, allowances you receive are exempt from U. Taxact 2011 login tax return S. Taxact 2011 login tax return tax up to the amount that equals tax-exempt allowances received by civilian employees of the U. Taxact 2011 login tax return S. Taxact 2011 login tax return Government. Taxact 2011 login tax return Allowances. Taxact 2011 login tax return   Cost-of-living and foreign-area allowances paid under certain acts of Congress to U. Taxact 2011 login tax return S. Taxact 2011 login tax return civilian officers and employees stationed in Alaska and Hawaii or elsewhere outside the 48 contiguous states and the District of Columbia can be excluded from gross income. Taxact 2011 login tax return Post differentials are wages that must be included in gross income, regardless of the act of Congress under which they are paid. Taxact 2011 login tax return More information. Taxact 2011 login tax return   Publication 516, U. Taxact 2011 login tax return S. Taxact 2011 login tax return Government Civilian Employees Stationed Abroad, has more information for U. Taxact 2011 login tax return S. Taxact 2011 login tax return Government employees abroad. Taxact 2011 login tax return Exclusion of Meals and Lodging You do not include in your income the value of meals and lodging provided to you and your family by your employer at no charge if the following conditions are met. Taxact 2011 login tax return The meals are furnished: On the business premises of your employer, and For the convenience of your employer. Taxact 2011 login tax return The lodging is furnished: On the business premises of your employer, For the convenience of your employer, and As a condition of your employment. Taxact 2011 login tax return If these conditions are met, do not include the value of the meals or lodging in your income, even if a law or your employment contract says that they are provided as compensation. Taxact 2011 login tax return Amounts you do not include in income because of these rules are not foreign earned income. Taxact 2011 login tax return If you receive a Form W-2, excludable amounts should not be included in the total reported in box 1 as wages. Taxact 2011 login tax return Family. Taxact 2011 login tax return   Your family, for this purpose, includes only your spouse and your dependents. Taxact 2011 login tax return Lodging. Taxact 2011 login tax return   The value of lodging includes the cost of heat, electricity, gas, water, sewer service, and similar items needed to make the lodging fit to live in. Taxact 2011 login tax return Business premises of employer. Taxact 2011 login tax return   Generally, the business premises of your employer is wherever you work. Taxact 2011 login tax return For example, if you work as a housekeeper, meals and lodging provided in your employer's home are provided on the business premises of your employer. Taxact 2011 login tax return Similarly, meals provided to cowhands while herding cattle on land leased or owned by their employer are considered provided on the premises of their employer. Taxact 2011 login tax return Convenience of employer. Taxact 2011 login tax return   Whether meals or lodging are provided for your employer's convenience must be determined from all the facts and circumstances. Taxact 2011 login tax return Meals furnished at no charge are considered provided for your employer's convenience if there is a good business reason for providing them, other than to give you more pay. Taxact 2011 login tax return   On the other hand, if your employer provides meals to you or your family as a means of giving you more pay, and there is no other business reason for providing them, their value is extra income to you because they are not furnished for the convenience of your employer. Taxact 2011 login tax return Condition of employment. Taxact 2011 login tax return   Lodging is provided as a condition of employment if you must accept the lodging to properly carry out the duties of your job. Taxact 2011 login tax return You must accept lodging to properly carry out your duties if, for example, you must be available for duty at all times or you could not perform your duties if the lodging was not furnished. Taxact 2011 login tax return Foreign camps. Taxact 2011 login tax return   If the lodging is in a camp located in a foreign country, the camp is considered part of your employer's business premises. Taxact 2011 login tax return The camp must be: Provided for your employer's convenience because the place where you work is in a remote area where satisfactory housing is not available to you on the open market within a reasonable commuting distance, Located as close as reasonably possible in the area where you work, and Provided in a common area or enclave that is not available to the general public for lodging or accommodations and that normally houses at least ten employees. Taxact 2011 login tax return Foreign Earned Income Exclusion If your tax home is in a foreign country and you meet the bona fide residence test or the physical presence test, you can choose to exclude from your income a limited amount of your foreign earned income. Taxact 2011 login tax return Foreign earned income was defined earlier in this chapter. Taxact 2011 login tax return You also can choose to exclude from your income a foreign housing amount. Taxact 2011 login tax return This is explained later under Foreign Housing Exclusion. Taxact 2011 login tax return If you choose to exclude a foreign housing amount, you must figure the foreign housing exclusion before you figure the foreign earned income exclusion. Taxact 2011 login tax return Your foreign earned income exclusion is limited to your foreign earned income minus your foreign housing exclusion. Taxact 2011 login tax return If you choose to exclude foreign earned income, you cannot deduct, exclude, or claim a credit for any item that can be allocated to or charged against the excluded amounts. Taxact 2011 login tax return This includes any expenses, losses, and other normally deductible items allocable to the excluded income. Taxact 2011 login tax return For more information about deductions and credits, see chapter 5 . Taxact 2011 login tax return Limit on Excludable Amount You may be able to exclude up to $97,600 of your foreign earned income in 2013. Taxact 2011 login tax return You cannot exclude more than the smaller of: $97,600, or Your foreign earned income (discussed earlier) for the tax year minus your foreign housing exclusion (discussed later). Taxact 2011 login tax return If both you and your spouse work abroad and each of you meets either the bona fide residence test or the physical presence test, you can each choose the foreign earned income exclusion. Taxact 2011 login tax return You do not both need to meet the same test. Taxact 2011 login tax return Together, you and your spouse can exclude as much as $195,200. Taxact 2011 login tax return Paid in year following work. Taxact 2011 login tax return   Generally, you are considered to have earned income in the year in which you do the work for which you receive the income, even if you work in one year but are not paid until the following year. Taxact 2011 login tax return If you report your income on a cash basis, you report the income on your return for the year you receive it. Taxact 2011 login tax return If you work one year, but are not paid for that work until the next year, the amount you can exclude in the year you are paid is the amount you could have excluded in the year you did the work if you had been paid in that year. Taxact 2011 login tax return For an exception to this general rule, see Year-end payroll period, later. Taxact 2011 login tax return Example. Taxact 2011 login tax return You were a bona fide resident of Brazil for all of 2012 and 2013. Taxact 2011 login tax return You report your income on the cash basis. Taxact 2011 login tax return In 2012, you were paid $84,200 for work you did in Brazil during that year. Taxact 2011 login tax return You excluded all of the $84,200 from your income in 2012. Taxact 2011 login tax return In 2013, you were paid $117,300 for your work in Brazil. Taxact 2011 login tax return $18,800 was for work you did in 2012 and $98,500 was for work you did in 2013. Taxact 2011 login tax return You can exclude $10,900 of the $18,800 from your income in 2013. Taxact 2011 login tax return This is the $95,100 maximum exclusion in 2012 minus the $84,200 actually excluded that year. Taxact 2011 login tax return You must include the remaining $7,900 in income in 2013 because you could not have excluded that income in 2012 if you had received it that year. Taxact 2011 login tax return You can exclude $97,600 of the $98,500 you were paid for work you did in 2013 from your 2013 income. Taxact 2011 login tax return Your total foreign earned income exclusion for 2013 is $108,500 ($10,900 for work you did in 2012 and $97,600 for work you did in 2013). Taxact 2011 login tax return You would include in your 2013 income $8,800 ($7,900 for the work you did in 2012 and $900 for the work you did in 2013). Taxact 2011 login tax return Year-end payroll period. Taxact 2011 login tax return   There is an exception to the general rule that income is considered earned in the year you do the work for which you receive the income. Taxact 2011 login tax return If you are a cash-basis taxpayer, any salary or wage payment you receive after the end of the year in which you do the work for which you receive the pay is considered earned entirely in the year you receive it if all four of the following apply. Taxact 2011 login tax return The period for which the payment is made is a normal payroll period of your employer that regularly applies to you. Taxact 2011 login tax return The payroll period includes the last day of your tax year (December 31 if you figure your taxes on a calendar-year basis). Taxact 2011 login tax return The payroll period is not longer than 16 days. Taxact 2011 login tax return The payday comes at the same time in relation to the payroll period that it would normally come and it comes before the end of the next payroll period. Taxact 2011 login tax return Example. Taxact 2011 login tax return You are paid twice a month. Taxact 2011 login tax return For the normal payroll period that begins on the first of the month and ends on the fifteenth of the month, you are paid on the sixteenth day of the month. Taxact 2011 login tax return For the normal payroll period that begins on the sixteenth of the month and ends on the last day of the month, you are paid on the first day of the following month. Taxact 2011 login tax return Because all of the above conditions are met, the pay you received on January 1, 2013, is considered earned in 2013. Taxact 2011 login tax return Income earned over more than 1 year. Taxact 2011 login tax return   Regardless of when you actually receive income, you must apply it to the year in which you earned it in figuring your excludable amount for that year. Taxact 2011 login tax return For example, a bonus may be based on work you did over several years. Taxact 2011 login tax return You determine the amount of the bonus that is considered earned in a particular year in two steps. Taxact 2011 login tax return Divide the bonus by the number of calendar months in the period when you did the work that resulted in the bonus. Taxact 2011 login tax return Multiply the result of (1) by the number of months you did the work during the year. Taxact 2011 login tax return This is the amount that is subject to the exclusion limit for that tax year. Taxact 2011 login tax return Income received more than 1 year after it was earned. Taxact 2011 login tax return   You cannot exclude income you receive after the end of the year following the year you do the work to earn it. Taxact 2011 login tax return Example. Taxact 2011 login tax return   You were a bona fide resident of Sweden for 2011, 2012, and 2013. Taxact 2011 login tax return You report your income on the cash basis. Taxact 2011 login tax return In 2011, you were paid $69,000 for work you did in Sweden that year and in 2012 you were paid $74,000 for that year's work in Sweden. Taxact 2011 login tax return You excluded all the income on your 2011 and 2012 returns. Taxact 2011 login tax return   In 2013, you were paid $92,000; $82,000 for your work in Sweden during 2013, and $10,000 for work you did in Sweden in 2011. Taxact 2011 login tax return You cannot exclude any of the $10,000 for work done in 2011 because you received it after the end of the year following the year in which you earned it. Taxact 2011 login tax return You must include the $10,000 in income. Taxact 2011 login tax return You can exclude all of the $82,000 received for work you did in 2013. Taxact 2011 login tax return Community income. Taxact 2011 login tax return   The maximum exclusion applies separately to the earnings of spouses. Taxact 2011 login tax return Ignore any community property laws when you figure your limit on the foreign earned income exclusion. Taxact 2011 login tax return Part-year exclusion. Taxact 2011 login tax return   If the period for which you qualify for the foreign earned income exclusion includes only part of the year, you must adjust the maximum limit based on the number of qualifying days in the year. Taxact 2011 login tax return The number of qualifying days is the number of days in the year within the period on which you both: Have your tax home in a foreign country, and Meet either the bona fide residence test or the physical presence test. Taxact 2011 login tax return   For this purpose, you can count as qualifying days all days within a period of 12 consecutive months once you are physically present and have your tax home in a foreign country for 330 full days. Taxact 2011 login tax return To figure your maximum exclusion, multiply the maximum excludable amount for the year by the number of your qualifying days in the year, and then divide the result by the number of days in the year. Taxact 2011 login tax return Example. Taxact 2011 login tax return You report your income on the calendar-year basis and you qualified for the foreign earned income exclusion under the bona fide residence test for 75 days in 2013. Taxact 2011 login tax return You can exclude a maximum of 75/365 of $97,600, or $20,055, of your foreign earned income for 2013. Taxact 2011 login tax return If you qualify under the bona fide residence test for all of 2014, you can exclude your foreign earned income up to the 2014 limit. Taxact 2011 login tax return Physical presence test. Taxact 2011 login tax return   Under the physical presence test, a 12-month period can be any period of 12 consecutive months that includes 330 full days. Taxact 2011 login tax return If you qualify for the foreign earned income exclusion under the physical presence test for part of a year, it is important to carefully choose the 12-month period that will allow the maximum exclusion for that year. Taxact 2011 login tax return Example. Taxact 2011 login tax return You are physically present and have your tax home in a foreign country for a 16-month period from June 1, 2012, through September 30, 2013, except for 16 days in December 2012 when you were on vacation in the United States. Taxact 2011 login tax return You figure the maximum exclusion for 2012 as follows. Taxact 2011 login tax return Beginning with June 1, 2012, count forward 330 full days. Taxact 2011 login tax return Do not count the 16 days you spent in the United States. Taxact 2011 login tax return The 330th day, May 12, 2013, is the last day of a 12-month period. Taxact 2011 login tax return Count backward 12 months from May 11, 2013, to find the first day of this 12-month period, May 12, 2012. Taxact 2011 login tax return This 12-month period runs from May 12, 2012, through May 11, 2013. Taxact 2011 login tax return Count the total days during 2012 that fall within this 12-month period. Taxact 2011 login tax return This is 234 days (May 12, 2012 – December 31, 2012). Taxact 2011 login tax return Multiply $95,100 (the maximum exclusion for 2012) by the fraction 234/366 to find your maximum exclusion for 2012 ($60,802). Taxact 2011 login tax return You figure the maximum exclusion for 2013 in the opposite manner. Taxact 2011 login tax return Beginning with your last full day, September 30, 2013, count backward 330 full days. Taxact 2011 login tax return Do not count the 16 days you spent in the United States. Taxact 2011 login tax return That day, October 20, 2012, is the first day of a 12-month period. Taxact 2011 login tax return Count forward 12 months from October 20, 2012, to find the last day of this 12-month period, October 19, 2013. Taxact 2011 login tax return This 12-month period runs from October 20, 2012, through October 19, 2013. Taxact 2011 login tax return Count the total days during 2013 that fall within this 12-month period. Taxact 2011 login tax return This is 292 days (January 1, 2013 – October 19, 2013). Taxact 2011 login tax return Multiply $97,600, the maximum limit, by the fraction 292/365 to find your maximum exclusion for 2013 ($78,080). Taxact 2011 login tax return Choosing the Exclusion The foreign earned income exclusion is voluntary. Taxact 2011 login tax return You can choose the exclusion by completing the appropriate parts of Form 2555. Taxact 2011 login tax return When You Can Choose the Exclusion Your initial choice of the exclusion on Form 2555 or Form 2555-EZ generally must be made with one of the following returns. Taxact 2011 login tax return A return filed by the due date (including any extensions). Taxact 2011 login tax return A return amending a timely-filed return. Taxact 2011 login tax return Amended returns generally must be filed by the later of 3 years after the filing date of the original return or 2 years after the tax is paid. Taxact 2011 login tax return A return filed within 1 year from the original due date of the return (determined without regard to any extensions). Taxact 2011 login tax return Filing after the above periods. Taxact 2011 login tax return   You can choose the exclusion on a return filed after the periods described above if you owe no federal income tax after taking into account the exclusion. Taxact 2011 login tax return If you owe federal income tax after taking into account the exclusion, you can choose the exclusion on a return filed after the periods described earlier if you file before the IRS discovers that you failed to choose the exclusion. Taxact 2011 login tax return Whether or not you owe federal income tax after taking the exclusion into account, if you file your return after the periods described earlier, you must type or legibly print at the top of the first page of the Form 1040 “Filed pursuant to section 1. Taxact 2011 login tax return 911-7(a)(2)(i)(D). Taxact 2011 login tax return ” If you owe federal income tax after taking into account the foreign earned income exclusion and the IRS discovered that you failed to choose the exclusion, you may still be able to choose the exclusion. Taxact 2011 login tax return You must request a private letter ruling under Income Tax Regulation 301. Taxact 2011 login tax return 9100-3 and Revenue Procedure 2013-1, 2013-1 I. Taxact 2011 login tax return R. Taxact 2011 login tax return B. Taxact 2011 login tax return 1, available at www. Taxact 2011 login tax return irs. Taxact 2011 login tax return gov/irb/2013-01_IRB/ar06. Taxact 2011 login tax return html. Taxact 2011 login tax return Effect of Choosing the Exclusion Once you choose to exclude your foreign earned income, that choice remains in effect for that year and all later years unless you revoke it. Taxact 2011 login tax return Foreign tax credit or deduction. Taxact 2011 login tax return