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Taxcut com 6. Taxcut com   Dual-Status Tax Year Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Tax Year Income Subject to Tax Restrictions for Dual-Status Taxpayers Exemptions How To Figure TaxIncome Tax Credits and Payments Forms To File When and Where To File Introduction You have a dual-status tax year when you have been both a resident alien and a nonresident alien in the same year. Taxcut com Dual status does not refer to your citizenship; it refers only to your resident status in the United States. Taxcut com In determining your U. Taxcut com S. Taxcut com income tax liability for a dual-status tax year, different rules apply for the part of the year you are a resident of the United States and the part of the year you are a nonresident. Taxcut com The most common dual-status tax years are the years of arrival and departure. Taxcut com See Dual-Status Aliens in chapter 1. Taxcut com If you are married and choose to be treated as a U. Taxcut com S. Taxcut com resident for the entire year, as explained in chapter 1, the rules of this chapter do not apply to you for that year. Taxcut com Topics - This chapter discusses: Income subject to tax, Restrictions for dual-status taxpayers, Exemptions, How to figure the tax, Forms to file, When and where to file, and How to fill out a dual-status return. Taxcut com Useful Items - You may want to see: Publication 503 Child and Dependent Care Expenses 514 Foreign Tax Credit for Individuals 575 Pension and Annuity Income Form (and Instructions) 1040 U. Taxcut com S. Taxcut com Individual Income Tax Return 1040-C U. Taxcut com S. Taxcut com Departing Alien Income Tax Return 1040-ES Estimated Tax for Individuals 1040-ES (NR) U. Taxcut com S. Taxcut com Estimated Tax for Nonresident Alien Individuals 1040NR U. Taxcut com S. Taxcut com Nonresident Alien Income Tax Return 1116 Foreign Tax Credit See chapter 12 for information about getting these publications and forms. Taxcut com Tax Year You must file your tax return on the basis of an annual accounting period called a tax year. Taxcut com If you have not previously established a fiscal tax year, your tax year is the calendar year. Taxcut com A calendar year is 12 consecutive months ending on December 31. Taxcut com If you have previously established a regular fiscal year (12 consecutive months ending on the last day of a month other than December, or a 52–53 week year) and are considered to be a U. Taxcut com S. Taxcut com resident for any calendar year, you will be treated as a U. Taxcut com S. Taxcut com resident for any part of your fiscal year that falls within that calendar year. Taxcut com Income Subject to Tax For the part of the year you are a resident alien, you are taxed on income from all sources. Taxcut com Income from sources outside the United States is taxable if you receive it while you are a resident alien. Taxcut com The income is taxable even if you earned it while you were a nonresident alien or if you became a nonresident alien after receiving it and before the end of the year. Taxcut com For the part of the year you are a nonresident alien, you are taxed on income from U. Taxcut com S. Taxcut com sources and on certain foreign source income treated as effectively connected with a U. Taxcut com S. Taxcut com trade or business. Taxcut com (The rules for treating foreign source income as effectively connected are discussed in chapter 4 under Foreign Income. Taxcut com ) Income from sources outside the United States that is not effectively connected with a trade or business in the United States is not taxable if you receive it while you are a nonresident alien. Taxcut com The income is not taxable even if you earned it while you were a resident alien or if you became a resident alien or a U. Taxcut com S. Taxcut com citizen after receiving it and before the end of the year. Taxcut com Income from U. Taxcut com S. Taxcut com sources is taxable whether you receive it while a nonresident alien or a resident alien unless specifically exempt under the Internal Revenue Code or a tax treaty provision. Taxcut com Generally, tax treaty provisions apply only to the part of the year you were a nonresident. Taxcut com In certain cases, however, treaty provisions may apply while you were a resident alien. Taxcut com See chapter 9 for more information. Taxcut com When determining what income is taxed in the United States, you must consider exemptions under U. Taxcut com S. Taxcut com tax law as well as the reduced tax rates and exemptions provided by tax treaties between the United States and certain foreign countries. Taxcut com For a further discussion of tax treaties, see chapter 9. Taxcut com Restrictions for Dual-Status Taxpayers The following restrictions apply if you are filing a tax return for a dual-status tax year. Taxcut com 1) Standard deduction. Taxcut com   You cannot use the standard deduction allowed on Form 1040. Taxcut com However, you can itemize any allowable deductions. Taxcut com 2) Exemptions. Taxcut com   Your total deduction for the exemptions for your spouse and allowable dependents cannot be more than your taxable income (figured without deducting personal exemptions) for the period you are a resident alien. Taxcut com 3) Head of household. Taxcut com   You cannot use the head of household Tax Table column or Tax Computation Worksheet. Taxcut com 4) Joint return. Taxcut com   You cannot file a joint return. Taxcut com However, see Choosing Resident Alien Status under Dual-Status Aliens in chapter 1. Taxcut com 5) Tax rates. Taxcut com   If you are married and a nonresident of the United States for all or part of the tax year and you do not choose to file jointly as discussed in chapter 1, you must use the Tax Table column or Tax Computation Worksheet for married filing separately to figure your tax on income effectively connected with a U. Taxcut com S. Taxcut com trade or business. Taxcut com You cannot use the Tax Table column or Tax Computation Worksheet for married filing jointly or single. Taxcut com However, you may be able to file as single if you lived apart from your spouse during the last 6 months of the year and you are a: Married resident of Canada, Mexico, or South Korea, or Married U. Taxcut com S. Taxcut com national. Taxcut com  See the instructions for Form 1040NR to see if you qualify. Taxcut com    A U. Taxcut com S. Taxcut com national is an individual who, although not a U. Taxcut com S. Taxcut com citizen, owes his or her allegiance to the United States. Taxcut com U. Taxcut com S. Taxcut com nationals include American Samoans and Northern Mariana Islanders who chose to become U. Taxcut com S. Taxcut com nationals instead of U. Taxcut com S. Taxcut com citizens. Taxcut com 6) Tax credits. Taxcut com   You cannot claim the education credits, the earned income credit, or the credit for the elderly or the disabled unless: You are married, and You choose to be treated as a resident for all of 2013 by filing a joint return with your spouse who is a U. Taxcut com S. Taxcut com citizen or resident, as discussed in chapter 1. Taxcut com Exemptions As a dual-status taxpayer, you usually will be able to claim your own personal exemption. Taxcut com Subject to the general rules for qualification, you can claim exemptions for your spouse and dependents when you figure taxable income for the part of the year you are a resident alien. Taxcut com The amount you can claim for these exemptions is limited to your taxable income (figured before subtracting exemptions) for the part of the year you are a resident alien. Taxcut com You cannot use exemptions (other than your own) to reduce taxable income to less than zero for that period. Taxcut com Special rules apply to exemptions for the part of the tax year you are a nonresident alien if you are a: Resident of Canada, Mexico, or South Korea, U. Taxcut com S. Taxcut com national, or Student or business apprentice from India. Taxcut com For more information, see Exemptions in chapter 5. Taxcut com How To Figure Tax When you figure your U. Taxcut com S. Taxcut com tax for a dual-status year, you are subject to different rules for the part of the year you are a resident and the part of the year you are a nonresident. Taxcut com Income All income for your period of residence and all income that is effectively connected with a trade or business in the United States for your period of nonresidence, after allowable deductions, is added and taxed at the rates that apply to U. Taxcut com S. Taxcut com citizens and residents. Taxcut com Income that is not connected with a trade or business in the United States for your period of nonresidence is subject to the flat 30% rate or lower treaty rate. Taxcut com You cannot take any deductions against this income. Taxcut com Social security and railroad retirement benefits. Taxcut com   During the part of the year you are a nonresident alien, 85% of any U. Taxcut com S. Taxcut com social security benefits (and the equivalent portion of tier 1 railroad retirement benefits) you receive is subject to the flat 30% tax, unless exempt, or subject to a lower treaty rate. Taxcut com (See The 30% Tax in chapter 4. Taxcut com )   During the part of the year you are a resident alien, part of the social security and the equivalent portion of tier 1 railroad retirement benefits will be taxed at graduated rates if your modified adjusted gross income plus half of these benefits is more than a certain base amount. Taxcut com Use the Social Security Benefits Worksheet in the Form 1040 instructions to help you figure the taxable part of your social security and equivalent tier 1 railroad retirement benefits for the part of the year you were a resident alien. Taxcut com If you received U. Taxcut com S. Taxcut com social security benefits while you were a nonresident alien, the Social Security Administration will send you Form SSA-1042S showing your combined benefits for the entire year and the amount of tax withheld. Taxcut com You will not receive separate statements for the benefits received during your periods of U. Taxcut com S. Taxcut com residence and nonresidence. Taxcut com Therefore, it is important for you to keep careful records of these amounts. Taxcut com You will need this information to properly complete your return and determine your tax liability. Taxcut com If you received railroad retirement benefits while you were a nonresident alien, the U. Taxcut com S. Taxcut com Railroad Retirement Board (RRB) will send you Form RRB-1042S, Statement for Nonresident Alien Recipients of Payments by the Railroad Retirement Board, and/or Form RRB-1099-R, Annuities or Pensions by the Railroad Retirement Board. Taxcut com If your country of legal residence changed or your rate of tax changed during the tax year, you may receive more than one form. Taxcut com Tax Credits and Payments This discussion covers tax credits and payments for dual-status aliens. Taxcut com Credits As a dual-status alien, you generally can claim tax credits using the same rules that apply to resident aliens. Taxcut com There are certain restrictions that may apply. Taxcut com These restrictions are discussed here, along with a brief explanation of credits often claimed by individuals. Taxcut com Foreign tax credit. Taxcut com   If you have paid or are liable for the payment of income tax to a foreign country on income from foreign sources, you may be able to claim a credit for the foreign taxes. Taxcut com   If you claim the foreign tax credit, you generally must file Form 1116 with your income tax return. Taxcut com For more information, see the Instructions for Form 1116 and Publication 514. Taxcut com Child and dependent care credit. Taxcut com   You may qualify for this credit if you pay someone to care for your qualifying child who is under age 13, or your disabled dependent or disabled spouse so that you can work or look for work. Taxcut com Generally, you must be able to claim an exemption for your dependent. Taxcut com   Married dual-status aliens can claim the credit only if they choose to file a joint return as discussed in chapter 1, or if they qualify as certain married individuals living apart. Taxcut com   The amount of your child and dependent care expense that qualifies for the credit in any tax year cannot be more than your earned income for that tax year. Taxcut com   For more information, get Publication 503 and Form 2441. Taxcut com Retirement savings contributions credit. Taxcut com   You may qualify for this credit (also known as the saver's credit) if you made eligible contributions to an employer-sponsored retirement plan or to an individual retirement arrangement (IRA) in 2013. Taxcut com You cannot claim this credit if: You were born after January 1, 1996, You were a full-time student, Your exemption is claimed by someone else on his or her 2013 tax return, or Your adjusted gross income is more than $29,500. Taxcut com Use Form 8880 to figure the credit. Taxcut com For more information, see Publication 590. Taxcut com Child tax credit. Taxcut com   You may be able to take this credit if you have a qualifying child. Taxcut com   A qualifying child for purposes of the child tax credit is a child who: Was under age 17 at the end of 2013. Taxcut com 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). Taxcut com Is a U. Taxcut com S. Taxcut com citizen, a U. Taxcut com S. Taxcut com national, or a resident alien. Taxcut com Did not provide over half of his or her own support for 2013. Taxcut com Lived with you more than half of 2013. Taxcut com Temporary absences, such as for school, vacation, or medical care, count as time lived in the home. Taxcut com Is claimed as a dependent on your return. Taxcut com An adopted child is always treated as your own child. Taxcut com An adopted child includes a child lawfully placed with you for legal adoption. Taxcut com   See your form instructions for additional details. Taxcut com Adoption credit. Taxcut com   You may qualify to take a tax credit of up to $12,970 for qualifying expenses paid to adopt an eligible child. Taxcut com This amount may be allowed for the adoption of a child with special needs regardless of whether you have qualifying expenses. Taxcut com To claim the adoption credit, file Form 8839 with the U. Taxcut com S. Taxcut com income tax return that you file. Taxcut com   Married dual-status aliens can claim the credit only if they choose to file a joint return with a U. Taxcut com S. Taxcut com citizen or resident spouse as discussed in chapter 1, or if they qualify as certain married individuals living apart (see Married Persons Not Filing Jointly in the Form 8839 instructions). Taxcut com Payments You can report as payments against your U. Taxcut com S. Taxcut com income tax liability certain taxes you paid, are considered to have paid, or that were withheld from your income. Taxcut com These include: Tax withheld from wages earned in the United States, Taxes withheld at the source from various items of income from U. Taxcut com S. Taxcut com sources other than wages, Estimated tax paid with Form 1040-ES or Form 1040-ES (NR), and Tax paid with Form 1040-C, at the time of departure from the United States. Taxcut com Forms To File The U. Taxcut com S. Taxcut com income tax return you must file as a dual-status alien depends on whether you are a resident alien or a nonresident alien at the end of the tax year. Taxcut com Resident at end of year. Taxcut com   You must file Form 1040 if you are a dual-status taxpayer who becomes a resident during the year and who is a U. Taxcut com S. Taxcut com resident on the last day of the tax year. Taxcut com Write “Dual-Status Return” across the top of the return. Taxcut com Attach a statement to your return to show the income for the part of the year you are a nonresident. Taxcut com You can use Form 1040NR or Form 1040NR-EZ as the statement, but be sure to mark “Dual-Status Statement” across the top. Taxcut com Nonresident at end of year. Taxcut com   You must file Form 1040NR or Form 1040NR-EZ if you are a dual-status taxpayer who gives up residence in the United States during the year and who is not a U. Taxcut com S. Taxcut com resident on the last day of the tax year. Taxcut com Write “Dual-Status Return” across the top of the return. Taxcut com Attach a statement to your return to show the income for the part of the year you are a resident. Taxcut com You can use Form 1040 as the statement, but be sure to mark “Dual-Status Statement” across the top. Taxcut com   If you expatriated or terminated your residency in 2013, you may be required to file an expatriation statement (Form 8854) with your tax return. Taxcut com For more information, see Expatriation Tax in chapter 4. Taxcut com Statement. Taxcut com   Any statement must have your name, address, and taxpayer identification number on it. Taxcut com You do not need to sign a separate statement or schedule accompanying your return, because your signature on the return also applies to the supporting statements and schedules. Taxcut com When and Where To File If you are a resident alien on the last day of your tax year and report your income on a calendar year basis, you must file no later than April 15 of the year following the close of your tax year. Taxcut com If you report your income on other than a calendar year basis, file your return no later than the 15th day of the 4th month following the close of your tax year. Taxcut com In either case, file your return with the address for dual-status aliens shown on the back page of the Form 1040 instructions. Taxcut com If you are a nonresident alien on the last day of your tax year and you report your income on a calendar year basis, you must file no later than April 15 of the year following the close of your tax year if you receive wages subject to withholding. Taxcut com If you report your income on other than a calendar year basis, file your return no later than the 15th day of the 4th month following the close of your tax year. Taxcut com If you did not receive wages subject to withholding and you report your income on a calendar year basis, you must file no later than June 15 of the year following the close of your tax year. Taxcut com If you report your income on other than a calendar year basis, file your return no later than the 15th day of the 6th month following the close of your tax year. Taxcut com In any case, mail your return to:  Department of the Treasury Internal Revenue Service  Austin, TX 73301-0215 If enclosing a payment, mail your return to:  Internal Revenue Service  P. Taxcut com O. Taxcut com Box 1303 Charlotte, NC 28201-1303 If the regular due date for filing falls on a Saturday, Sunday, or legal holiday, the due date is the next day that is not a Saturday, Sunday, or legal holiday. Taxcut com Prev  Up  Next   Home   More Online Publications
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Operating a Business

Employer ID Number (EIN)
An Employer Identification Number (EIN) is also known as a federal tax identification number, and is used to identify a business entity. Find out if you need an EIN and how to apply for one.

Recordkeeping
Unless you are a professional bookkeeper, you probably don't like to spend valuable business time keeping records. But keeping good records can actually help you save money.

Business Name Change
Explanation for businesses on how to make a name change.

Businesses with Employees
If you operate a business and have employees, then this section has the information you will need. You will find resources on hiring, recordkeeping and other topics such as employment taxes, and wage reporting requirements.

Paying Independent Contractors
If you pay independent contractors, you may have to file Form 1099-MISC, Miscellaneous Income, to report payments for services performed for your trade or business.

What is Taxable and Nontaxable Income?
You can receive income in the form of money, property, or services. This section lists many kinds of income that are taxable or nontaxable.

Filing and Paying Your Business Taxes
This section discusses business taxes you may have to pay and the forms you may have to file. It also discusses taxpayer identification numbers.

e-File Form 940, 941 or 944 for Small Businesses
Learn your options for e-filing form 940, 941 or 944.

Estimated Taxes
Federal income tax is a pay-as-you-go tax. You must pay the tax as you earn or receive income during the year. There are two ways to pay as you go: withholding, and estimated taxes.

Business Expenses
You can deduct the cost of operating your business. These costs are known as business expenses. These are costs you do not have to capitalize or include in the cost of goods sold.

Business Tax Credits
A list of forms for claiming business tax credits, and a brief explanation about when carryovers, and credits cease.

Intangibles
Intangible Property is property that has value but cannot be seen or touched. Generally, you can either amortize or depreciate intangible property.

Avoiding Problems
This section provides links to resources to help the small business owner create a recordkeeping system, get the latest on the cash vs. accrual accounting methods, and tips on understanding their IRS notice, what to do if you haven’t filed a tax return, and how to recognize and avoid tax scams.

Closing a Business
There is more involved in closing your business than just locking the doors. This section provides procedures for getting out of business, including what forms to file and how to handle additional revenue received or expenses you may incur.

IRS Tax Calendar for Small Businesses and Self-Employed
The tax calendar is available for downloading and printing, or you can view it online.

Retirement Plans
The advantages of a retirement plan are numerous. There are economic, business and tax advantages for your business, for your employees and for you. A retirement plan may give you an important competitive edge in attracting and keeping the best employees - and help you plan for your own retirement years. Visit the IRS Video Portal and search keyword "retire" for a more information about choosing, operating and maintaining your retirement plan.

References/Related Topics

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