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Where can i file my federal and state taxes for free 4. Where can i file my federal and state taxes for free   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. Where can i file my federal and state taxes for free S. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free Useful Items - You may want to see: Publication 519 U. Where can i file my federal and state taxes for free S. Where can i file my federal and state taxes for free Tax Guide for Aliens 570 Tax Guide for Individuals With Income from U. Where can i file my federal and state taxes for free S. Where can i file my federal and state taxes for free Possessions 596 Earned Income Credit (EIC) Form (and Instructions) 1040X Amended U. Where can i file my federal and state taxes for free S. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free If you are a U. Where can i file my federal and state taxes for free S. Where can i file my federal and state taxes for free citizen or a resident alien of the United States and you live abroad, you are taxed on your worldwide income. Where can i file my federal and state taxes for free However, you may qualify to exclude from income up to $97,600 of your foreign earnings. Where can i file my federal and state taxes for free In addition, you can exclude or deduct certain foreign housing amounts. Where can i file my federal and state taxes for free See Foreign Earned Income Exclusion and Foreign Housing Exclusion and Deduction, later. Where can i file my federal and state taxes for free You also may be entitled to exclude from income the value of meals and lodging provided to you by your employer. Where can i file my federal and state taxes for free See Exclusion of Meals and Lodging, later. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free Your tax home must be in a foreign country. Where can i file my federal and state taxes for free You must have foreign earned income. Where can i file my federal and state taxes for free You must be one of the following. Where can i file my federal and state taxes for free A U. Where can i file my federal and state taxes for free S. Where can i file my federal and state taxes for free citizen who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year. Where can i file my federal and state taxes for free A U. Where can i file my federal and state taxes for free S. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free A U. Where can i file my federal and state taxes for free S. Where can i file my federal and state taxes for free citizen or a U. Where can i file my federal and state taxes for free S. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free See Publication 519 to find out if you are a U. Where can i file my federal and state taxes for free S. Where can i file my federal and state taxes for free resident alien for tax purposes and whether you keep that alien status when you temporarily work abroad. Where can i file my federal and state taxes for free If you are a nonresident alien married to a U. Where can i file my federal and state taxes for free S. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free For information on making the choice, see the discussion in chapter 1 under Nonresident Alien Spouse Treated as a Resident . Where can i file my federal and state taxes for free Waiver of minimum time requirements. Where can i file my federal and state taxes for free   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. Where can i file my federal and state taxes for free This is fully explained under Waiver of Time Requirements , later. Where can i file my federal and state taxes for free   See Figure 4-A and information in this chapter to determine if you are eligible to claim either exclusion or the deduction. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free Bona fide residence and physical presence are explained later. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free Your tax home is the place where you are permanently or indefinitely engaged to work as an employee or self-employed individual. Where can i file my federal and state taxes for free Having a “tax home” in a given location does not necessarily mean that the given location is your residence or domicile for tax purposes. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free However, your abode is not necessarily in the United States while you are temporarily in the United States. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free “Abode” has been variously defined as one's home, habitation, residence, domicile, or place of dwelling. Where can i file my federal and state taxes for free It does not mean your principal place of business. Where can i file my federal and state taxes for free “Abode” has a domestic rather than a vocational meaning and does not mean the same as “tax home. Where can i file my federal and state taxes for free ” The location of your abode often will depend on where you maintain your economic, family, and personal ties. Where can i file my federal and state taxes for free Example 1. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free You return to your family residence in the United States during your off periods. Where can i file my federal and state taxes for free You are considered to have an abode in the United States and do not satisfy the tax home test in the foreign country. Where can i file my federal and state taxes for free You cannot claim either of the exclusions or the housing deduction. Where can i file my federal and state taxes for free Example 2. Where can i file my federal and state taxes for free For several years, you were a marketing executive with a producer of machine tools in Toledo, Ohio. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free Before you left, you distributed business cards showing your business and home addresses in London. Where can i file my federal and state taxes for free You kept ownership of your home in Toledo but rented it to another family. Where can i file my federal and state taxes for free You placed your car in storage. Where can i file my federal and state taxes for free In November of last year, you moved your spouse, children, furniture, and family pets to a home your employer rented for you in London. Where can i file my federal and state taxes for free Shortly after moving, you leased a car and you and your spouse got British driving licenses. Where can i file my federal and state taxes for free Your entire family got library cards for the local public library. Where can i file my federal and state taxes for free You and your spouse opened bank accounts with a London bank and secured consumer credit. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free Your abode is in London for the time you live there. Where can i file my federal and state taxes for free You satisfy the tax home test in the foreign country. Where can i file my federal and state taxes for free Please click here for the text description of the image. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free If you expect it to last for more than 1 year, it is indefinite. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free Once your expectation changes, it is indefinite. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free A foreign country includes any territory under the sovereignty of a government other than that of the United States. Where can i file my federal and state taxes for free The term “foreign country” includes the country's airspace and territorial waters, but not international waters and the airspace above them. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free The term “foreign country” does not include Antarctica or U. Where can i file my federal and state taxes for free S. Where can i file my federal and state taxes for free possessions such as Puerto Rico, Guam, the Commonwealth of the Northern Mariana Islands, the U. Where can i file my federal and state taxes for free S. Where can i file my federal and state taxes for free Virgin Islands, and Johnston Island. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free American Samoa, Guam, and the Commonwealth of the Northern Mariana Islands Residence or presence in a U. Where can i file my federal and state taxes for free S. Where can i file my federal and state taxes for free possession does not qualify you for the foreign earned income exclusion. Where can i file my federal and state taxes for free You may, however, qualify for an exclusion of your possession income on your U. Where can i file my federal and state taxes for free S. Where can i file my federal and state taxes for free return. Where can i file my federal and state taxes for free American Samoa. Where can i file my federal and state taxes for free   There is a possession exclusion available to individuals who are bona fide residents of American Samoa for the entire tax year. Where can i file my federal and state taxes for free Gross income from sources within American Samoa may be eligible for this exclusion. Where can i file my federal and state taxes for free Income that is effectively connected with the conduct of a trade or business within American Samoa also may be eligible for this exclusion. Where can i file my federal and state taxes for free Use Form 4563, Exclusion of Income for Bona Fide Residents of American Samoa, to figure the exclusion. Where can i file my federal and state taxes for free Guam and the Commonwealth of the Northern Mariana Islands. Where can i file my federal and state taxes for free   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. Where can i file my federal and state taxes for free   For more information, see Publication 570. Where can i file my federal and state taxes for free Puerto Rico and U. Where can i file my federal and state taxes for free S. Where can i file my federal and state taxes for free Virgin Islands Residents of Puerto Rico and the U. Where can i file my federal and state taxes for free S. Where can i file my federal and state taxes for free Virgin Islands cannot claim the foreign earned income exclusion or the foreign housing exclusion. Where can i file my federal and state taxes for free Puerto Rico. Where can i file my federal and state taxes for free   Generally, if you are a U. Where can i file my federal and state taxes for free S. Where can i file my federal and state taxes for free citizen who is a bona fide resident of Puerto Rico for the entire tax year, you are not subject to U. Where can i file my federal and state taxes for free S. Where can i file my federal and state taxes for free tax on income from Puerto Rican sources. Where can i file my federal and state taxes for free This does not include amounts paid for services performed as an employee of the United States. Where can i file my federal and state taxes for free However, you are subject to U. Where can i file my federal and state taxes for free S. Where can i file my federal and state taxes for free tax on your income from sources outside Puerto Rico. Where can i file my federal and state taxes for free In figuring your U. Where can i file my federal and state taxes for free S. Where can i file my federal and state taxes for free tax, you cannot deduct expenses allocable to income not subject to tax. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free You can use the bona fide residence test to qualify for the exclusions and the deduction only if you are either: A U. Where can i file my federal and state taxes for free S. Where can i file my federal and state taxes for free citizen, or A U. Where can i file my federal and state taxes for free S. Where can i file my federal and state taxes for free resident alien who is a citizen or national of a country with which the United States has an income tax treaty in effect. Where can i file my federal and state taxes for free You do not automatically acquire bona fide resident status merely by living in a foreign country or countries for 1 year. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free Bona fide residence. Where can i file my federal and state taxes for free   To meet the bona fide residence test, you must have established a bona fide residence in a foreign country. Where can i file my federal and state taxes for free   Your bona fide residence is not necessarily the same as your domicile. Where can i file my federal and state taxes for free Your domicile is your permanent home, the place to which you always return or intend to return. Where can i file my federal and state taxes for free Example. Where can i file my federal and state taxes for free You could have your domicile in Cleveland, Ohio, and a bona fide residence in Edinburgh, Scotland, if you intend to return eventually to Cleveland. Where can i file my federal and state taxes for free The fact that you go to Scotland does not automatically make Scotland your bona fide residence. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free You are clearly not a resident of Scotland in the first instance. Where can i file my federal and state taxes for free However, in the second, you are a resident because your stay in Scotland appears to be permanent. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free Determination. Where can i file my federal and state taxes for free   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. Where can i file my federal and state taxes for free   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. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free IRS cannot make this determination until you file Form 2555. Where can i file my federal and state taxes for free Statement to foreign authorities. Where can i file my federal and state taxes for free   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. Where can i file my federal and state taxes for free Special agreements and treaties. Where can i file my federal and state taxes for free   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. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free Example 1. Where can i file my federal and state taxes for free You are a U. Where can i file my federal and state taxes for free S. Where can i file my federal and state taxes for free citizen employed in the United Kingdom by a U. Where can i file my federal and state taxes for free S. Where can i file my federal and state taxes for free employer under contract with the U. Where can i file my federal and state taxes for free S. Where can i file my federal and state taxes for free Armed Forces. Where can i file my federal and state taxes for free You are not subject to the North Atlantic Treaty Status of Forces Agreement. Where can i file my federal and state taxes for free You may be a bona fide resident of the United Kingdom. Where can i file my federal and state taxes for free Example 2. Where can i file my federal and state taxes for free You are a U. Where can i file my federal and state taxes for free S. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free You are not a bona fide resident of the United Kingdom. Where can i file my federal and state taxes for free Example 3. Where can i file my federal and state taxes for free You are a U. Where can i file my federal and state taxes for free S. Where can i file my federal and state taxes for free citizen employed in Japan by a U. Where can i file my federal and state taxes for free S. Where can i file my federal and state taxes for free employer under contract with the U. Where can i file my federal and state taxes for free S. Where can i file my federal and state taxes for free Armed Forces. Where can i file my federal and state taxes for free You are subject to the agreement of the Treaty of Mutual Cooperation and Security between the United States and Japan. Where can i file my federal and state taxes for free Being subject to the agreement does not make you a bona fide resident of Japan. Where can i file my federal and state taxes for free Example 4. Where can i file my federal and state taxes for free You are a U. Where can i file my federal and state taxes for free S. Where can i file my federal and state taxes for free citizen employed as an “official” by the United Nations in Switzerland. Where can i file my federal and state taxes for free You are exempt from Swiss taxation on the salary or wages paid to you by the United Nations. Where can i file my federal and state taxes for free This does not prevent you from being a bona fide resident of Switzerland. Where can i file my federal and state taxes for free Effect of voting by absentee ballot. Where can i file my federal and state taxes for free   If you are a U. Where can i file my federal and state taxes for free S. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free   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. Where can i file my federal and state taxes for free Uninterrupted period including entire tax year. Where can i file my federal and state taxes for free   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. Where can i file my federal and state taxes for free An entire tax year is from January 1 through December 31 for taxpayers who file their income tax returns on a calendar year basis. Where can i file my federal and state taxes for free   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. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free Example 1. Where can i file my federal and state taxes for free You arrived with your family in Lisbon, Portugal, on November 1, 2011. Where can i file my federal and state taxes for free Your assignment is indefinite, and you intend to live there with your family until your company sends you to a new post. Where can i file my federal and state taxes for free You immediately established residence there. Where can i file my federal and state taxes for free You spent April of 2012 at a business conference in the United States. Where can i file my federal and state taxes for free Your family stayed in Lisbon. Where can i file my federal and state taxes for free Immediately following the conference, you returned to Lisbon and continued living there. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free Example 2. Where can i file my federal and state taxes for free Assume the same facts as in Example 1, except that you transferred back to the United States on December 13, 2012. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free You may, however, qualify for the foreign earned income exclusion or the housing exclusion or deduction under the physical presence test (discussed later). Where can i file my federal and state taxes for free Bona fide resident for part of a year. Where can i file my federal and state taxes for free   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. Where can i file my federal and state taxes for free Your period of bona fide residence can include an entire tax year plus parts of 2 other tax years. Where can i file my federal and state taxes for free Example. Where can i file my federal and state taxes for free You were a bona fide resident of Singapore from March 1, 2011, through September 14, 2013. Where can i file my federal and state taxes for free On September 15, 2013, you returned to the United States. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free Reassignment. Where can i file my federal and state taxes for free   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. Where can i file my federal and state taxes for free Example 1. Where can i file my federal and state taxes for free You were a resident of Pakistan from October 1, 2012, through November 30, 2013. Where can i file my federal and state taxes for free On December 1, 2013, you and your family returned to the United States to wait for an assignment to another foreign country. Where can i file my federal and state taxes for free Your household goods also were returned to the United States. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free You may, however, qualify for the foreign earned income exclusion or the housing exclusion or deduction under the physical presence test, discussed later. Where can i file my federal and state taxes for free Example 2. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free On December 1, 2013, you and your family returned to the United States for a month's vacation. Where can i file my federal and state taxes for free On January 2, 2014, you arrived in Turkey for your new assignment. Where can i file my federal and state taxes for free Because you did not interrupt your bona fide residence abroad, you meet the bona fide residence test. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free The 330 days do not have to be consecutive. Where can i file my federal and state taxes for free Any U. Where can i file my federal and state taxes for free S. Where can i file my federal and state taxes for free citizen or resident alien can use the physical presence test to qualify for the exclusions and the deduction. Where can i file my federal and state taxes for free The physical presence test is based only on how long you stay in a foreign country or countries. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free 330 full days. Where can i file my federal and state taxes for free   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. Where can i file my federal and state taxes for free You can count days you spent abroad for any reason. Where can i file my federal and state taxes for free You do not have to be in a foreign country only for employment purposes. Where can i file my federal and state taxes for free You can be on vacation. Where can i file my federal and state taxes for free   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. Where can i file my federal and state taxes for free Exception. Where can i file my federal and state taxes for free   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. Where can i file my federal and state taxes for free See Waiver of Time Requirements, later. Where can i file my federal and state taxes for free Full day. Where can i file my federal and state taxes for free   A full day is a period of 24 consecutive hours, beginning at midnight. Where can i file my federal and state taxes for free Travel. Where can i file my federal and state taxes for free    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. Where can i file my federal and state taxes for free Example. Where can i file my federal and state taxes for free You leave the United States for France by air on June 10. Where can i file my federal and state taxes for free You arrive in France at 9:00 a. Where can i file my federal and state taxes for free m. Where can i file my federal and state taxes for free on June 11. Where can i file my federal and state taxes for free Your first full day of physical presence in France is June 12. Where can i file my federal and state taxes for free Passing over foreign country. Where can i file my federal and state taxes for free   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. Where can i file my federal and state taxes for free Example. Where can i file my federal and state taxes for free You leave the United States by air at 9:30 a. Where can i file my federal and state taxes for free m. Where can i file my federal and state taxes for free on June 10 to travel to Kenya. Where can i file my federal and state taxes for free You pass over western Africa at 11:00 p. Where can i file my federal and state taxes for free m. Where can i file my federal and state taxes for free on June 10 and arrive in Kenya at 12:30 a. Where can i file my federal and state taxes for free m. Where can i file my federal and state taxes for free on June 11. Where can i file my federal and state taxes for free Your first full day in a foreign country is June 11. Where can i file my federal and state taxes for free Change of location. Where can i file my federal and state taxes for free   You can move about from one place to another in a foreign country or to another foreign country without losing full days. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free Example 1. Where can i file my federal and state taxes for free You leave Ireland by air at 11:00 p. Where can i file my federal and state taxes for free m. Where can i file my federal and state taxes for free on July 6 and arrive in Sweden at 5:00 a. Where can i file my federal and state taxes for free m. Where can i file my federal and state taxes for free on July 7. Where can i file my federal and state taxes for free Your trip takes less than 24 hours and you lose no full days. Where can i file my federal and state taxes for free Example 2. Where can i file my federal and state taxes for free You leave Norway by ship at 10:00 p. Where can i file my federal and state taxes for free m. Where can i file my federal and state taxes for free on July 6 and arrive in Portugal at 6:00 a. Where can i file my federal and state taxes for free m. Where can i file my federal and state taxes for free on July 8. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free If you remain in Portugal, your next full day in a foreign country is July 9. Where can i file my federal and state taxes for free In United States while in transit. Where can i file my federal and state taxes for free   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. Where can i file my federal and state taxes for free You are treated as traveling over areas not within any foreign country. Where can i file my federal and state taxes for free    Please click here for the text description of the image. Where can i file my federal and state taxes for free Figure 4-B How to figure the 12-month period. Where can i file my federal and state taxes for free   There are four rules you should know when figuring the 12-month period. Where can i file my federal and state taxes for free Your 12-month period can begin with any day of the month. Where can i file my federal and state taxes for free It ends the day before the same calendar day, 12 months later. Where can i file my federal and state taxes for free Your 12-month period must be made up of consecutive months. Where can i file my federal and state taxes for free Any 12-month period can be used if the 330 days in a foreign country fall within that period. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free You can choose the 12-month period that gives you the greatest exclusion. Where can i file my federal and state taxes for free In determining whether the 12-month period falls within a longer stay in the foreign country, 12-month periods can overlap one another. Where can i file my federal and state taxes for free Example 1. Where can i file my federal and state taxes for free You are a construction worker who works on and off in a foreign country over a 20-month period. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free Example 2. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free By overlapping the 12-month periods in this way, you meet the physical presence test for the whole 20-month period. Where can i file my federal and state taxes for free See Figure 4-B, on the previous page. Where can i file my federal and state taxes for free Waiver of Time Requirements Both the bona fide residence test and the physical presence test contain minimum time requirements. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free You must be able to show that you reasonably could have expected to meet the minimum time requirements if not for the adverse conditions. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free U. Where can i file my federal and state taxes for free S. Where can i file my federal and state taxes for free Travel Restrictions If you are present in a foreign country in violation of U. Where can i file my federal and state taxes for free S. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free For 2013, the only country to which travel restrictions applied was Cuba. Where can i file my federal and state taxes for free The restrictions applied for the entire year. Where can i file my federal and state taxes for free However, individuals working at the U. Where can i file my federal and state taxes for free S. Where can i file my federal and state taxes for free Naval Base at Guantanamo Bay in Cuba are not in violation of U. Where can i file my federal and state taxes for free S. Where can i file my federal and state taxes for free law. Where can i file my federal and state taxes for free Personal service income earned by individuals at the base is eligible for the foreign earned income exclusion provided the other requirements are met. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free Foreign earned income generally is income you receive for services you perform during a period in which you meet both of the following requirements. Where can i file my federal and state taxes for free Your tax home is in a foreign country. Where can i file my federal and state taxes for free You meet either the bona fide residence test or the physical presence test. Where can i file my federal and state taxes for free To determine whether your tax home is in a foreign country, see Tax Home in Foreign Country, earlier. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free Foreign earned income does not include the following amounts. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free Pension or annuity payments you receive, including social security benefits (see Pensions and annuities, later). Where can i file my federal and state taxes for free Pay you receive as an employee of the U. Where can i file my federal and state taxes for free S. Where can i file my federal and state taxes for free Government. Where can i file my federal and state taxes for free (See U. Where can i file my federal and state taxes for free S. Where can i file my federal and state taxes for free Government Employees, later. Where can i file my federal and state taxes for free ) Amounts you include in your income because of your employer's contributions to a nonexempt employee trust or to a nonqualified annuity contract. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free Payments you receive after the end of the tax year following the tax year in which you performed the services that earned the income. Where can i file my federal and state taxes for free Earned income. Where can i file my federal and state taxes for free   This is pay for personal services performed, such as wages, salaries, or professional fees. Where can i file my federal and state taxes for free The list that follows classifies many types of income into three categories. Where can i file my federal and state taxes for free The column headed Variable Income lists income that may fall into either the earned income category, the unearned income category, or partly into both. Where can i file my federal and state taxes for free For more information on earned and unearned income, see Earned and Unearned Income, later. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free Noncash income. Where can i file my federal and state taxes for free   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. Where can i file my federal and state taxes for free Allowances or reimbursements. Where can i file my federal and state taxes for free   Earned income includes allowances or reimbursements you receive, such as the following amounts. Where can i file my federal and state taxes for free    Cost-of-living allowances. Where can i file my federal and state taxes for free Overseas differential. Where can i file my federal and state taxes for free Family allowance. Where can i file my federal and state taxes for free Reimbursement for education or education allowance. Where can i file my federal and state taxes for free Home leave allowance. Where can i file my federal and state taxes for free Quarters allowance. Where can i file my federal and state taxes for free Reimbursement for moving or moving allowance (unless excluded from income as discussed later in Reimbursement of employee expenses under Earned and Unearned Income). Where can i file my federal and state taxes for free Source of Earned Income The source of your earned income is the place where you perform the services for which you received the income. Where can i file my federal and state taxes for free Foreign earned income is income you receive for working in a foreign country. Where can i file my federal and state taxes for free Where or how you are paid has no effect on the source of the income. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free Example. Where can i file my federal and state taxes for free You are a U. Where can i file my federal and state taxes for free S. Where can i file my federal and state taxes for free citizen, a bona fide resident of Canada, and working as a mining engineer. Where can i file my federal and state taxes for free Your salary is $76,800 per year. Where can i file my federal and state taxes for free You also receive a $6,000 cost-of-living allowance, and a $6,000 education allowance. Where can i file my federal and state taxes for free Your employment contract did not indicate that you were entitled to these allowances only while outside the United States. Where can i file my federal and state taxes for free Your total income is $88,800. Where can i file my federal and state taxes for free You work a 5-day week, Monday through Friday. Where can i file my federal and state taxes for free After subtracting your vacation, you have a total of 240 workdays in the year. Where can i file my federal and state taxes for free You worked in the United States during the year for 6 weeks (30 workdays). Where can i file my federal and state taxes for free The following shows how to figure the part of your income that is for work done in Canada during the year. Where can i file my federal and state taxes for free   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. Where can i file my federal and state taxes for free Earned and Unearned Income Earned income was defined earlier as pay for personal services performed. Where can i file my federal and state taxes for free Some types of income are not easily identified as earned or unearned income. Where can i file my federal and state taxes for free Some of these types of income are further explained here. Where can i file my federal and state taxes for free Income from a sole proprietorship or partnership. Where can i file my federal and state taxes for free   Income from a business in which capital investment is an important part of producing the income may be unearned income. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free Capital a factor. Where can i file my federal and state taxes for free   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. Where can i file my federal and state taxes for free   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. Where can i file my federal and state taxes for free Because you do not have a net profit, the 30% limit does not apply. Where can i file my federal and state taxes for free Example 1. Where can i file my federal and state taxes for free You are a U. Where can i file my federal and state taxes for free S. Where can i file my federal and state taxes for free citizen and meet the bona fide residence test. Where can i file my federal and state taxes for free You invest in a partnership based in Cameroon that is engaged solely in selling merchandise outside the United States. Where can i file my federal and state taxes for free You perform no services for the partnership. Where can i file my federal and state taxes for free At the end of the tax year, your share of the net profits is $80,000. Where can i file my federal and state taxes for free The entire $80,000 is unearned income. Where can i file my federal and state taxes for free Example 2. Where can i file my federal and state taxes for free Assume that in Example 1 you spend time operating the business. Where can i file my federal and state taxes for free Your share of the net profits is $80,000; 30% of your share of the profits is $24,000. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free Capital not a factor. Where can i file my federal and state taxes for free   If capital is not an income-producing factor and personal services produce the business income, the 30% rule does not apply. Where can i file my federal and state taxes for free The entire amount of business income is earned income. Where can i file my federal and state taxes for free Example. Where can i file my federal and state taxes for free You and Lou Green are management consultants and operate as equal partners in performing services outside the United States. Where can i file my federal and state taxes for free Because capital is not an income- producing factor, all the income from the partnership is considered earned income. Where can i file my federal and state taxes for free Income from a corporation. Where can i file my federal and state taxes for free   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. Where can i file my federal and state taxes for free Any amount over what is considered a reasonable salary is unearned income. Where can i file my federal and state taxes for free Example 1. Where can i file my federal and state taxes for free You are a U. Where can i file my federal and state taxes for free S. Where can i file my federal and state taxes for free citizen and an officer and stockholder of a corporation in Honduras. Where can i file my federal and state taxes for free You perform no work or service of any kind for the corporation. Where can i file my federal and state taxes for free During the tax year you receive a $10,000 “salary” from the corporation. Where can i file my federal and state taxes for free The $10,000 clearly is not for personal services and is unearned income. Where can i file my federal and state taxes for free Example 2. Where can i file my federal and state taxes for free You are a U. Where can i file my federal and state taxes for free S. Where can i file my federal and state taxes for free citizen and work full time as secretary-treasurer of your corporation. Where can i file my federal and state taxes for free During the tax year you receive $100,000 as salary from the corporation. Where can i file my federal and state taxes for free If $80,000 is a reasonable allowance as pay for the work you did, then $80,000 is earned income. Where can i file my federal and state taxes for free Stock options. Where can i file my federal and state taxes for free   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. Where can i file my federal and state taxes for free   If your gain on the disposition of stock you got by exercising an option is treated as capital gain, your gain is unearned income. Where can i file my federal and state taxes for free   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. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free Any part of the earned income that is due to work you did outside the United States is foreign earned income. Where can i file my federal and state taxes for free   See Publication 525, Taxable and Nontaxable Income, for a discussion of the treatment of stock options. Where can i file my federal and state taxes for free Pensions and annuities. Where can i file my federal and state taxes for free    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. Where can i file my federal and state taxes for free Royalties. Where can i file my federal and state taxes for free   Royalties from the leasing of oil and mineral lands and patents generally are a form of rent or dividends and are unearned income. Where can i file my federal and state taxes for free   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. Where can i file my federal and state taxes for free Rental income. Where can i file my federal and state taxes for free   Generally, rental income is unearned income. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free Example. Where can i file my federal and state taxes for free Larry Smith, a U. Where can i file my federal and state taxes for free S. Where can i file my federal and state taxes for free citizen living in Australia, owns and operates a rooming house in Sydney. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free It is all unearned income. Where can i file my federal and state taxes for free Professional fees. Where can i file my federal and state taxes for free   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. Where can i file my federal and state taxes for free Income of an artist. Where can i file my federal and state taxes for free   Income you receive from the sale of paintings you created is earned income. Where can i file my federal and state taxes for free Scholarships and fellowships. Where can i file my federal and state taxes for free   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. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free    Certain scholarship and fellowship income may be exempt under other provisions. Where can i file my federal and state taxes for free See Publication 970, Tax Benefits for Education, chapter 1. Where can i file my federal and state taxes for free Use of employer's property or facilities. Where can i file my federal and state taxes for free   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. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free Example. Where can i file my federal and state taxes for free You are privately employed and live in Japan all year. Where can i file my federal and state taxes for free You are paid a salary of $6,000 a month. Where can i file my federal and state taxes for free You live rent-free in a house provided by your employer that has a fair rental value of $3,000 a month. Where can i file my federal and state taxes for free The house is not provided for your employer's convenience. Where can i file my federal and state taxes for free You report on the calendar-year, cash basis. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free Reimbursement of employee expenses. Where can i file my federal and state taxes for free   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. Where can i file my federal and state taxes for free   The expenses for which you are reimbursed are not considered allocable (related) to your earned income. Where can i file my federal and state taxes for free If expenses and reimbursement are equal, there is nothing to allocate to excluded income. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free (See chapter 5. Where can i file my federal and state taxes for free ) 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. Where can i file my federal and state taxes for free   These rules do not apply to the following individuals. Where can i file my federal and state taxes for free Straight-commission salespersons. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free Accountable plan. Where can i file my federal and state taxes for free   An accountable plan is a reimbursement or allowance arrangement that includes all three of the following rules. Where can i file my federal and state taxes for free The expenses covered under the plan must have a business connection. Where can i file my federal and state taxes for free The employee must adequately account to the employer for these expenses within a reasonable period of time. Where can i file my federal and state taxes for free The employee must return any excess reimbursement or allowance within a reasonable period of time. Where can i file my federal and state taxes for free Reimbursement of moving expenses. Where can i file my federal and state taxes for free   Reimbursement of moving expenses may be earned income. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free This section discusses reimbursements that must be included in earned income. Where can i file my federal and state taxes for free Publication 521, Moving Expenses, discusses additional rules that apply to moving expense deductions and reimbursements. Where can i file my federal and state taxes for free   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. Where can i file my federal and state taxes for free   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. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free Move from U. Where can i file my federal and state taxes for free S. Where can i file my federal and state taxes for free to foreign country. Where can i file my federal and state taxes for free   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. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free   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. Where can i file my federal and state taxes for free To figure the amount earned in the year of the move, multiply the reimbursement by a fraction. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free   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. Where can i file my federal and state taxes for free The part earned in each year is figured as shown in the following example. Where can i file my federal and state taxes for free Example. Where can i file my federal and state taxes for free You are a U. Where can i file my federal and state taxes for free S. Where can i file my federal and state taxes for free citizen working in the United States. Where can i file my federal and state taxes for free You were told in October 2012 that you were being transferred to a foreign country. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free Your employer reimbursed you $2,000 in January 2013 for the part of the moving expense that you were not allowed to deduct. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free You figure the part of the reimbursement for services performed in the foreign country in 2012 by multiplying the total reimbursement by a fraction. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free The remaining part of the reimbursement is for services performed in the foreign country in 2013. Where can i file my federal and state taxes for free This computation is used only to determine when the reimbursement is considered earned. Where can i file my federal and state taxes for free You would include the amount of the reimbursement in income in 2013, the year you received it. Where can i file my federal and state taxes for free Move between foreign countries. Where can i file my federal and state taxes for free   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. Where can i file my federal and state taxes for free Move to U. Where can i file my federal and state taxes for free S. Where can i file my federal and state taxes for free   If you move to the United States, the moving expense reimbursement that you must include in income is generally considered to be U. Where can i file my federal and state taxes for free S. Where can i file my federal and state taxes for free source income. Where can i file my federal and state taxes for free   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. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free   See the discussion under Move from U. Where can i file my federal and state taxes for free S. Where can i file my federal and state taxes for free to foreign country , earlier, to figure the amount of the includible reimbursement considered earned in the year of the move. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free Example. Where can i file my federal and state taxes for free You are a U. Where can i file my federal and state taxes for free S. Where can i file my federal and state taxes for free citizen employed in a foreign country. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free The fraction is the number of days of foreign residence during the year (90) divided by the number of days in the year (365). Where can i file my federal and state taxes for free The remaining part of the includible reimbursement is for services performed in the foreign country in 2012. Where can i file my federal and state taxes for free You report the amount of the includible reimbursement in 2013, the year you received it. Where can i file my federal and state taxes for free    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. Where can i file my federal and state taxes for free Storage expense reimbursements. Where can i file my federal and state taxes for free   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. Where can i file my federal and state taxes for free U. Where can i file my federal and state taxes for free S. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free This includes amounts paid from both appropriated and nonappropriated funds. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free United States Armed Forces exchanges. Where can i file my federal and state taxes for free Commissioned and noncommissioned officers' messes. Where can i file my federal and state taxes for free Armed Forces motion picture services. Where can i file my federal and state taxes for free Kindergartens on foreign Armed Forces installations. Where can i file my federal and state taxes for free Amounts paid by the United States or its agencies to persons who are not their employees may qualify for exclusion or deduction. Where can i file my federal and state taxes for free If you are a U. Where can i file my federal and state taxes for free S. Where can i file my federal and state taxes for free Government employee paid by a U. Where can i file my federal and state taxes for free S. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free S. Where can i file my federal and state taxes for free Government and does not qualify for exclusion or deduction. Where can i file my federal and state taxes for free If you have questions about whether you are an employee or an independent contractor, get Publication 15-A, Employer's Supplemental Tax Guide. Where can i file my federal and state taxes for free American Institute in Taiwan. Where can i file my federal and state taxes for free   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. Where can i file my federal and state taxes for free If you are an employee of the American Institute in Taiwan, allowances you receive are exempt from U. Where can i file my federal and state taxes for free S. Where can i file my federal and state taxes for free tax up to the amount that equals tax-exempt allowances received by civilian employees of the U. Where can i file my federal and state taxes for free S. Where can i file my federal and state taxes for free Government. Where can i file my federal and state taxes for free Allowances. Where can i file my federal and state taxes for free   Cost-of-living and foreign-area allowances paid under certain acts of Congress to U. Where can i file my federal and state taxes for free S. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free Post differentials are wages that must be included in gross income, regardless of the act of Congress under which they are paid. Where can i file my federal and state taxes for free More information. Where can i file my federal and state taxes for free   Publication 516, U. Where can i file my federal and state taxes for free S. Where can i file my federal and state taxes for free Government Civilian Employees Stationed Abroad, has more information for U. Where can i file my federal and state taxes for free S. Where can i file my federal and state taxes for free Government employees abroad. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free The meals are furnished: On the business premises of your employer, and For the convenience of your employer. Where can i file my federal and state taxes for free The lodging is furnished: On the business premises of your employer, For the convenience of your employer, and As a condition of your employment. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free Amounts you do not include in income because of these rules are not foreign earned income. Where can i file my federal and state taxes for free If you receive a Form W-2, excludable amounts should not be included in the total reported in box 1 as wages. Where can i file my federal and state taxes for free Family. Where can i file my federal and state taxes for free   Your family, for this purpose, includes only your spouse and your dependents. Where can i file my federal and state taxes for free Lodging. Where can i file my federal and state taxes for free   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. Where can i file my federal and state taxes for free Business premises of employer. Where can i file my federal and state taxes for free   Generally, the business premises of your employer is wherever you work. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free Convenience of employer. Where can i file my federal and state taxes for free   Whether meals or lodging are provided for your employer's convenience must be determined from all the facts and circumstances. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free   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. Where can i file my federal and state taxes for free Condition of employment. Where can i file my federal and state taxes for free   Lodging is provided as a condition of employment if you must accept the lodging to properly carry out the duties of your job. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free Foreign camps. Where can i file my federal and state taxes for free   If the lodging is in a camp located in a foreign country, the camp is considered part of your employer's business premises. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free Foreign earned income was defined earlier in this chapter. Where can i file my federal and state taxes for free You also can choose to exclude from your income a foreign housing amount. Where can i file my federal and state taxes for free This is explained later under Foreign Housing Exclusion. Where can i file my federal and state taxes for free If you choose to exclude a foreign housing amount, you must figure the foreign housing exclusion before you figure the foreign earned income exclusion. Where can i file my federal and state taxes for free Your foreign earned income exclusion is limited to your foreign earned income minus your foreign housing exclusion. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free This includes any expenses, losses, and other normally deductible items allocable to the excluded income. Where can i file my federal and state taxes for free For more information about deductions and credits, see chapter 5 . Where can i file my federal and state taxes for free Limit on Excludable Amount You may be able to exclude up to $97,600 of your foreign earned income in 2013. Where can i file my federal and state taxes for free 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). Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free You do not both need to meet the same test. Where can i file my federal and state taxes for free Together, you and your spouse can exclude as much as $195,200. Where can i file my federal and state taxes for free Paid in year following work. Where can i file my federal and state taxes for free   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. Where can i file my federal and state taxes for free If you report your income on a cash basis, you report the income on your return for the year you receive it. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free For an exception to this general rule, see Year-end payroll period, later. Where can i file my federal and state taxes for free Example. Where can i file my federal and state taxes for free You were a bona fide resident of Brazil for all of 2012 and 2013. Where can i file my federal and state taxes for free You report your income on the cash basis. Where can i file my federal and state taxes for free In 2012, you were paid $84,200 for work you did in Brazil during that year. Where can i file my federal and state taxes for free You excluded all of the $84,200 from your income in 2012. Where can i file my federal and state taxes for free In 2013, you were paid $117,300 for your work in Brazil. Where can i file my federal and state taxes for free $18,800 was for work you did in 2012 and $98,500 was for work you did in 2013. Where can i file my federal and state taxes for free You can exclude $10,900 of the $18,800 from your income in 2013. Where can i file my federal and state taxes for free This is the $95,100 maximum exclusion in 2012 minus the $84,200 actually excluded that year. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free You can exclude $97,600 of the $98,500 you were paid for work you did in 2013 from your 2013 income. Where can i file my federal and state taxes for free 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). Where can i file my federal and state taxes for free 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). Where can i file my federal and state taxes for free Year-end payroll period. Where can i file my federal and state taxes for free   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. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free The period for which the payment is made is a normal payroll period of your employer that regularly applies to you. Where can i file my federal and state taxes for free The payroll period includes the last day of your tax year (December 31 if you figure your taxes on a calendar-year basis). Where can i file my federal and state taxes for free The payroll period is not longer than 16 days. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free Example. Where can i file my federal and state taxes for free You are paid twice a month. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free Because all of the above conditions are met, the pay you received on January 1, 2013, is considered earned in 2013. Where can i file my federal and state taxes for free Income earned over more than 1 year. Where can i file my federal and state taxes for free   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. Where can i file my federal and state taxes for free For example, a bonus may be based on work you did over several years. Where can i file my federal and state taxes for free You determine the amount of the bonus that is considered earned in a particular year in two steps. Where can i file my federal and state taxes for free Divide the bonus by the number of calendar months in the period when you did the work that resulted in the bonus. Where can i file my federal and state taxes for free Multiply the result of (1) by the number of months you did the work during the year. Where can i file my federal and state taxes for free This is the amount that is subject to the exclusion limit for that tax year. Where can i file my federal and state taxes for free Income received more than 1 year after it was earned. Where can i file my federal and state taxes for free   You cannot exclude income you receive after the end of the year following the year you do the work to earn it. Where can i file my federal and state taxes for free Example. Where can i file my federal and state taxes for free   You were a bona fide resident of Sweden for 2011, 2012, and 2013. Where can i file my federal and state taxes for free You report your income on the cash basis. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free You excluded all the income on your 2011 and 2012 returns. Where can i file my federal and state taxes for free   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. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free You must include the $10,000 in income. Where can i file my federal and state taxes for free You can exclude all of the $82,000 received for work you did in 2013. Where can i file my federal and state taxes for free Community income. Where can i file my federal and state taxes for free   The maximum exclusion applies separately to the earnings of spouses. Where can i file my federal and state taxes for free Ignore any community property laws when you figure your limit on the foreign earned income exclusion. Where can i file my federal and state taxes for free Part-year exclusion. Where can i file my federal and state taxes for free   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. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free   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. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free Example. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free You can exclude a maximum of 75/365 of $97,600, or $20,055, of your foreign earned income for 2013. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free Physical presence test. Where can i file my federal and state taxes for free   Under the physical presence test, a 12-month period can be any period of 12 consecutive months that includes 330 full days. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free Example. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free You figure the maximum exclusion for 2012 as follows. Where can i file my federal and state taxes for free Beginning with June 1, 2012, count forward 330 full days. Where can i file my federal and state taxes for free Do not count the 16 days you spent in the United States. Where can i file my federal and state taxes for free The 330th day, May 12, 2013, is the last day of a 12-month period. Where can i file my federal and state taxes for free Count backward 12 months from May 11, 2013, to find the first day of this 12-month period, May 12, 2012. Where can i file my federal and state taxes for free This 12-month period runs from May 12, 2012, through May 11, 2013. Where can i file my federal and state taxes for free Count the total days during 2012 that fall within this 12-month period. Where can i file my federal and state taxes for free This is 234 days (May 12, 2012 – December 31, 2012). Where can i file my federal and state taxes for free Multiply $95,100 (the maximum exclusion for 2012) by the fraction 234/366 to find your maximum exclusion for 2012 ($60,802). Where can i file my federal and state taxes for free You figure the maximum exclusion for 2013 in the opposite manner. Where can i file my federal and state taxes for free Beginning with your last full day, September 30, 2013, count backward 330 full days. Where can i file my federal and state taxes for free Do not count the 16 days you spent in the United States. Where can i file my federal and state taxes for free That day, October 20, 2012, is the first day of a 12-month period. Where can i file my federal and state taxes for free Count forward 12 months from October 20, 2012, to find the last day of this 12-month period, October 19, 2013. Where can i file my federal and state taxes for free This 12-month period runs from October 20, 2012, through October 19, 2013. Where can i file my federal and state taxes for free Count the total days during 2013 that fall within this 12-month period. Where can i file my federal and state taxes for free This is 292 days (January 1, 2013 – October 19, 2013). Where can i file my federal and state taxes for free Multiply $97,600, the maximum limit, by the fraction 292/365 to find your maximum exclusion for 2013 ($78,080). Where can i file my federal and state taxes for free Choosing the Exclusion The foreign earned income exclusion is voluntary. Where can i file my federal and state taxes for free You can choose the exclusion by completing the appropriate parts of Form 2555. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free A return filed by the due date (including any extensions). Where can i file my federal and state taxes for free A return amending a timely-filed return. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free A return filed within 1 year from the original due date of the return (determined without regard to any extensions). Where can i file my federal and state taxes for free Filing after the above periods. Where can i file my federal and state taxes for free   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. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free 911-7(a)(2)(i)(D). Where can i file my federal and state taxes for free ” 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. Where can i file my federal and state taxes for free You must request a private letter ruling under Income Tax Regulation 301. Where can i file my federal and state taxes for free 9100-3 and Revenue Procedure 2013-1, 2013-1 I. Where can i file my federal and state taxes for free R. Where can i file my federal and state taxes for free B. Where can i file my federal and state taxes for free 1, available at www. Where can i file my federal and state taxes for free irs. Where can i file my federal and state taxes for free gov/irb/2013-01_IRB/ar06. Where can i file my federal and state taxes for free html. Where can i file my federal and state taxes for free 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. Where can i file my federal and state taxes for free Foreign tax credit or deduction. Where can i file my federal and state taxes for free  
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Where can i file my federal and state taxes for free 12. Where can i file my federal and state taxes for free   Other Income Table of Contents Introduction Useful Items - You may want to see: Bartering Canceled DebtsInterest included in canceled debt. Where can i file my federal and state taxes for free Exceptions Host or Hostess Life Insurance ProceedsSurviving spouse. Where can i file my federal and state taxes for free Endowment Contract Proceeds Accelerated Death Benefits Public Safety Officer Killed in the Line of Duty Partnership Income S Corporation Income RecoveriesItemized Deduction Recoveries Rents from Personal Property RepaymentsMethod 1. Where can i file my federal and state taxes for free Method 2. Where can i file my federal and state taxes for free RoyaltiesDepletion. Where can i file my federal and state taxes for free Coal and iron ore. Where can i file my federal and state taxes for free Sale of property interest. Where can i file my federal and state taxes for free Part of future production sold. Where can i file my federal and state taxes for free Unemployment BenefitsTypes of unemployment compensation. Where can i file my federal and state taxes for free Governmental program. Where can i file my federal and state taxes for free Repayment of unemployment compensation. Where can i file my federal and state taxes for free Tax withholding. Where can i file my federal and state taxes for free Repayment of benefits. Where can i file my federal and state taxes for free Welfare and Other Public Assistance Benefits Other IncomeEmotional distress. Where can i file my federal and state taxes for free Deduction for costs involved in unlawful discrimination suits. Where can i file my federal and state taxes for free Energy conservation measure. Where can i file my federal and state taxes for free Dwelling unit. Where can i file my federal and state taxes for free Current income required to be distributed. Where can i file my federal and state taxes for free Current income not required to be distributed. Where can i file my federal and state taxes for free How to report. Where can i file my federal and state taxes for free Losses. Where can i file my federal and state taxes for free Grantor trust. Where can i file my federal and state taxes for free Nonemployee compensation. Where can i file my federal and state taxes for free Corporate director. Where can i file my federal and state taxes for free Personal representatives. Where can i file my federal and state taxes for free Manager of trade or business for bankruptcy estate. Where can i file my federal and state taxes for free Notary public. Where can i file my federal and state taxes for free Election precinct official. Where can i file my federal and state taxes for free Difficulty-of-care payments. Where can i file my federal and state taxes for free Maintaining space in home. Where can i file my federal and state taxes for free Reporting taxable payments. Where can i file my federal and state taxes for free Lotteries and raffles. Where can i file my federal and state taxes for free Form W-2G. Where can i file my federal and state taxes for free Reporting winnings and recordkeeping. Where can i file my federal and state taxes for free Inherited pension or IRA. Where can i file my federal and state taxes for free Employee awards or bonuses. Where can i file my federal and state taxes for free Pulitzer, Nobel, and similar prizes. Where can i file my federal and state taxes for free Payment for services. Where can i file my federal and state taxes for free VA payments. Where can i file my federal and state taxes for free Prizes. Where can i file my federal and state taxes for free Strike and lockout benefits. Where can i file my federal and state taxes for free Introduction You must include on your return all items of income you receive in the form of money, property, and services unless the tax law states that you do not include them. Where can i file my federal and state taxes for free Some items, however, are only partly excluded from income. Where can i file my federal and state taxes for free This chapter discusses many kinds of income and explains whether they are taxable or nontaxable. Where can i file my federal and state taxes for free Income that is taxable must be reported on your tax return and is subject to tax. Where can i file my federal and state taxes for free Income that is nontaxable may have to be shown on your tax return but is not taxable. Where can i file my federal and state taxes for free This chapter begins with discussions of the following income items. Where can i file my federal and state taxes for free Bartering. Where can i file my federal and state taxes for free Canceled debts. Where can i file my federal and state taxes for free Sales parties at which you are the host or hostess. Where can i file my federal and state taxes for free Life insurance proceeds. Where can i file my federal and state taxes for free Partnership income. Where can i file my federal and state taxes for free S Corporation income. Where can i file my federal and state taxes for free Recoveries (including state income tax refunds). Where can i file my federal and state taxes for free Rents from personal property. Where can i file my federal and state taxes for free Repayments. Where can i file my federal and state taxes for free Royalties. Where can i file my federal and state taxes for free Unemployment benefits. Where can i file my federal and state taxes for free Welfare and other public assistance benefits. Where can i file my federal and state taxes for free These discussions are followed by brief discussions of other income items. Where can i file my federal and state taxes for free Useful Items - You may want to see: Publication 525 Taxable and Nontaxable Income 544 Sales and Other Dispositions of Assets 4681 Canceled Debts, Foreclosures, Repossessions, and Abandonments Bartering Bartering is an exchange of property or services. Where can i file my federal and state taxes for free You must include in your income, at the time received, the fair market value of property or services you receive in bartering. Where can i file my federal and state taxes for free If you exchange services with another person and you both have agreed ahead of time on the value of the services, that value will be accepted as fair market value unless the value can be shown to be otherwise. Where can i file my federal and state taxes for free Generally, you report this income on Schedule C (Form 1040), Profit or Loss From Business, or Schedule C-EZ (Form 1040), Net Profit From Business. Where can i file my federal and state taxes for free However, if the barter involves an exchange of something other than services, such as in Example 3 below, you may have to use another form or schedule instead. Where can i file my federal and state taxes for free Example 1. Where can i file my federal and state taxes for free You are a self-employed attorney who performs legal services for a client, a small corporation. Where can i file my federal and state taxes for free The corporation gives you shares of its stock as payment for your services. Where can i file my federal and state taxes for free You must include the fair market value of the shares in your income on Schedule C (Form 1040) or Schedule C-EZ (Form 1040) in the year you receive them. Where can i file my federal and state taxes for free Example 2. Where can i file my federal and state taxes for free You are self-employed and a member of a barter club. Where can i file my federal and state taxes for free The club uses “credit units” as a means of exchange. Where can i file my federal and state taxes for free It adds credit units to your account for goods or services you provide to members, which you can use to purchase goods or services offered by other members of the barter club. Where can i file my federal and state taxes for free The club subtracts credit units from your account when you receive goods or services from other members. Where can i file my federal and state taxes for free You must include in your income the value of the credit units that are added to your account, even though you may not actually receive goods or services from other members until a later tax year. Where can i file my federal and state taxes for free Example 3. Where can i file my federal and state taxes for free You own a small apartment building. Where can i file my federal and state taxes for free In return for 6 months rent-free use of an apartment, an artist gives you a work of art she created. Where can i file my federal and state taxes for free You must report as rental income on Schedule E (Form 1040), Supplemental Income and Loss, the fair market value of the artwork, and the artist must report as income on Schedule C (Form 1040) or Schedule C-EZ (Form 1040) the fair rental value of the apartment. Where can i file my federal and state taxes for free Form 1099-B from barter exchange. Where can i file my federal and state taxes for free   If you exchanged property or services through a barter exchange, Form 1099-B, Proceeds From Broker and Barter Exchange Transactions, or a similar statement from the barter exchange should be sent to you by February 18, 2014. Where can i file my federal and state taxes for free It should show the value of cash, property, services, credits, or scrip you received from exchanges during 2013. Where can i file my federal and state taxes for free The IRS also will receive a copy of Form 1099-B. Where can i file my federal and state taxes for free Canceled Debts In most cases, if a debt you owe is canceled or forgiven, other than as a gift or bequest, you must include the canceled amount in your income. Where can i file my federal and state taxes for free You have no income from the canceled debt if it is intended as a gift to you. Where can i file my federal and state taxes for free A debt includes any indebtedness for which you are liable or which attaches to property you hold. Where can i file my federal and state taxes for free If the debt is a nonbusiness debt, report the canceled amount on Form 1040, line 21. Where can i file my federal and state taxes for free If it is a business debt, report the amount on Schedule C (Form 1040) or Schedule C-EZ (Form 1040) (or on Schedule F (Form 1040), Profit or Loss From Farming, if the debt is farm debt and you are a farmer). Where can i file my federal and state taxes for free Form 1099-C. Where can i file my federal and state taxes for free   If a Federal Government agency, financial institution, or credit union cancels or forgives a debt you owe of $600 or more, you will receive a Form 1099-C, Cancellation of Debt. Where can i file my federal and state taxes for free The amount of the canceled debt is shown in box 2. Where can i file my federal and state taxes for free Interest included in canceled debt. Where can i file my federal and state taxes for free   If any interest is forgiven and included in the amount of canceled debt in box 2, the amount of interest also will be shown in box 3. Where can i file my federal and state taxes for free Whether or not you must include the interest portion of the canceled debt in your income depends on whether the interest would be deductible when you paid it. Where can i file my federal and state taxes for free See Deductible debt under Exceptions, later. Where can i file my federal and state taxes for free   If the interest would not be deductible (such as interest on a personal loan), include in your income the amount from Form 1099-C, box 2. Where can i file my federal and state taxes for free If the interest would be deductible (such as on a business loan), include in your income the net amount of the canceled debt (the amount shown in box 2 less the interest amount shown in box 3). Where can i file my federal and state taxes for free Discounted mortgage loan. Where can i file my federal and state taxes for free   If your financial institution offers a discount for the early payment of your mortgage loan, the amount of the discount is canceled debt. Where can i file my federal and state taxes for free You must include the canceled amount in your income. Where can i file my federal and state taxes for free Mortgage relief upon sale or other disposition. Where can i file my federal and state taxes for free   If you are personally liable for a mortgage (recourse debt), and you are relieved of the mortgage when you dispose of the property, you may realize gain or loss up to the fair market value of the property. Where can i file my federal and state taxes for free To the extent the mortgage discharge exceeds the fair market value of the property, it is income from discharge of indebtedness unless it qualifies for exclusion under Excluded debt , later. Where can i file my federal and state taxes for free Report any income from discharge of indebtedness on nonbusiness debt that does not qualify for exclusion as other income on Form 1040, line 21. Where can i file my federal and state taxes for free    You may be able to exclude part of the mortgage relief on your principal residence. Where can i file my federal and state taxes for free See Excluded debt, later. Where can i file my federal and state taxes for free   If you are not personally liable for a mortgage (nonrecourse debt), and you are relieved of the mortgage when you dispose of the property (such as through foreclosure), that relief is included in the amount you realize. Where can i file my federal and state taxes for free You may have a taxable gain if the amount you realize exceeds your adjusted basis in the property. Where can i file my federal and state taxes for free Report any gain on nonbusiness property as a capital gain. Where can i file my federal and state taxes for free   See Publication 4681 for more information. Where can i file my federal and state taxes for free Stockholder debt. Where can i file my federal and state taxes for free   If you are a stockholder in a corporation and the corporation cancels or forgives your debt to it, the canceled debt is a constructive distribution that is generally dividend income to you. Where can i file my federal and state taxes for free For more information, see Publication 542, Corporations. Where can i file my federal and state taxes for free   If you are a stockholder in a corporation and you cancel a debt owed to you by the corporation, you generally do not realize income. Where can i file my federal and state taxes for free This is because the canceled debt is considered as a contribution to the capital of the corporation equal to the amount of debt principal that you canceled. Where can i file my federal and state taxes for free Repayment of canceled debt. Where can i file my federal and state taxes for free   If you included a canceled amount in your income and later pay the debt, you may be able to file a claim for refund for the year the amount was included in income. Where can i file my federal and state taxes for free You can file a claim on Form 1040X if the statute of limitations for filing a claim is still open. Where can i file my federal and state taxes for free The statute of limitations generally does not end until 3 years after the due date of your original return. Where can i file my federal and state taxes for free Exceptions There are several exceptions to the inclusion of canceled debt in income. Where can i file my federal and state taxes for free These are explained next. Where can i file my federal and state taxes for free Student loans. Where can i file my federal and state taxes for free   Certain student loans contain a provision that all or part of the debt incurred to attend the qualified educational institution will be canceled if you work for a certain period of time in certain professions for any of a broad class of employers. Where can i file my federal and state taxes for free   You do not have income if your student loan is canceled after you agreed to this provision and then performed the services required. Where can i file my federal and state taxes for free To qualify, the loan must have been made by: The Federal Government, a state or local government, or an instrumentality, agency, or subdivision thereof, A tax-exempt public benefit corporation that has assumed control of a state, county, or municipal hospital, and whose employees are considered public employees under state law, or An educational institution: Under an agreement with an entity described in (1) or (2) that provided the funds to the institution to make the loan, or As part of a program of the institution designed to encourage its students to serve in occupations with unmet needs or in areas with unmet needs and under which the services provided by the students (or former students) are for or under the direction of a governmental unit or a tax-exempt organization described in section 501(c)(3). Where can i file my federal and state taxes for free   A loan to refinance a qualified student loan also will qualify if it was made by an educational institution or a qualified tax-exempt organization under its program designed as described in (3)(b) above. Where can i file my federal and state taxes for free Education loan repayment assistance. Where can i file my federal and state taxes for free   Education loan repayments made to you by the National Health Service Corps Loan Repayment Program (NHSC Loan Repayment Program), a state education loan repayment program eligible for funds under the Public Health Service Act, or any other state loan repayment or loan forgiveness program that is intended to provide for the increased availability of health services in underserved or health professional shortage areas are not taxable. Where can i file my federal and state taxes for free    The provision relating to the “other state loan repayment or loan forgiveness program” was added to this exclusion for amounts received in tax years beginning after December 31, 2008. Where can i file my federal and state taxes for free If you included these amounts in income in 2010, 2011, or 2012, you should file an amended tax return to exclude this income. Where can i file my federal and state taxes for free See Form 1040X and its instructions for details on filing. Where can i file my federal and state taxes for free Deductible debt. Where can i file my federal and state taxes for free   You do not have income from the cancellation of a debt if your payment of the debt would be deductible. Where can i file my federal and state taxes for free This exception applies only if you use the cash method of accounting. Where can i file my federal and state taxes for free For more information, see chapter 5 of Publication 334, Tax Guide for Small Business. Where can i file my federal and state taxes for free Price reduced after purchase. Where can i file my federal and state taxes for free   In most cases, if the seller reduces the amount of debt you owe for property you purchased, you do not have income from the reduction. Where can i file my federal and state taxes for free The reduction of the debt is treated as a purchase price adjustment and reduces your basis in the property. Where can i file my federal and state taxes for free Excluded debt. Where can i file my federal and state taxes for free   Do not include a canceled debt in your gross income in the following situations. Where can i file my federal and state taxes for free The debt is canceled in a bankruptcy case under title 11 of the U. Where can i file my federal and state taxes for free S. Where can i file my federal and state taxes for free Code. Where can i file my federal and state taxes for free See Publication 908, Bankruptcy Tax Guide. Where can i file my federal and state taxes for free The debt is canceled when you are insolvent. Where can i file my federal and state taxes for free However, you cannot exclude any amount of canceled debt that is more than the amount by which you are insolvent. Where can i file my federal and state taxes for free See Publication 908. Where can i file my federal and state taxes for free The debt is qualified farm debt and is canceled by a qualified person. Where can i file my federal and state taxes for free See chapter 3 of Publication 225, Farmer's Tax Guide. Where can i file my federal and state taxes for free The debt is qualified real property business debt. Where can i file my federal and state taxes for free See chapter 5 of Publication 334. Where can i file my federal and state taxes for free The cancellation is intended as a gift. Where can i file my federal and state taxes for free The debt is qualified principal residence indebtedness. Where can i file my federal and state taxes for free See Publication 525 for additional information. Where can i file my federal and state taxes for free Host or Hostess If you host a party or event at which sales are made, any gift or gratuity you receive for giving the event is a payment for helping a direct seller make sales. Where can i file my federal and state taxes for free You must report this item as income at its fair market value. Where can i file my federal and state taxes for free Your out-of-pocket party expenses are subject to the 50% limit for meal and entertainment expenses. Where can i file my federal and state taxes for free These expenses are deductible as miscellaneous itemized deductions subject to the 2%-of-AGI limit on Schedule A (Form 1040), but only up to the amount of income you receive for giving the party. Where can i file my federal and state taxes for free For more information about the 50% limit for meal and entertainment expenses, see chapter 26. Where can i file my federal and state taxes for free Life Insurance Proceeds Life insurance proceeds paid to you because of the death of the insured person are not taxable unless the policy was turned over to you for a price. Where can i file my federal and state taxes for free This is true even if the proceeds were paid under an accident or health insurance policy or an endowment contract. Where can i file my federal and state taxes for free However, interest income received as a result of life insurance proceeds may be taxable. Where can i file my federal and state taxes for free Proceeds not received in installments. Where can i file my federal and state taxes for free   If death benefits are paid to you in a lump sum or other than at regular intervals, include in your income only the benefits that are more than the amount payable to you at the time of the insured person's death. Where can i file my federal and state taxes for free If the benefit payable at death is not specified, you include in your income the benefit payments that are more than the present value of the payments at the time of death. Where can i file my federal and state taxes for free Proceeds received in installments. Where can i file my federal and state taxes for free   If you receive life insurance proceeds in installments, you can exclude part of each installment from your income. Where can i file my federal and state taxes for free   To determine the excluded part, divide the amount held by the insurance company (generally the total lump sum payable at the death of the insured person) by the number of installments to be paid. Where can i file my federal and state taxes for free Include anything over this excluded part in your income as interest. Where can i file my federal and state taxes for free Surviving spouse. Where can i file my federal and state taxes for free   If your spouse died before October 23, 1986, and insurance proceeds paid to you because of the death of your spouse are received in installments, you can exclude up to $1,000 a year of the interest included in the installments. Where can i file my federal and state taxes for free If you remarry, you can continue to take the exclusion. Where can i file my federal and state taxes for free Surrender of policy for cash. Where can i file my federal and state taxes for free   If you surrender a life insurance policy for cash, you must include in income any proceeds that are more than the cost of the life insurance policy. Where can i file my federal and state taxes for free In most cases, your cost (or investment in the contract) is the total of premiums that you paid for the life insurance policy, less any refunded premiums, rebates, dividends, or unrepaid loans that were not included in your income. Where can i file my federal and state taxes for free    You should receive a Form 1099-R showing the total proceeds and the taxable part. Where can i file my federal and state taxes for free Report these amounts on lines 16a and 16b of Form 1040 or lines 12a and 12b of Form 1040A. Where can i file my federal and state taxes for free More information. Where can i file my federal and state taxes for free   For more information, see Life Insurance Proceeds in Publication 525. Where can i file my federal and state taxes for free Endowment Contract Proceeds An endowment contract is a policy under which you are paid a specified amount of money on a certain date unless you die before that date, in which case, the money is paid to your designated beneficiary. Where can i file my federal and state taxes for free Endowment proceeds paid in a lump sum to you at maturity are taxable only if the proceeds are more than the cost of the policy. Where can i file my federal and state taxes for free To determine your cost, subtract any amount that you previously received under the contract and excluded from your income from the total premiums (or other consideration) paid for the contract. Where can i file my federal and state taxes for free Include the part of the lump sum payment that is more than your cost in your income. Where can i file my federal and state taxes for free Accelerated Death Benefits Certain amounts paid as accelerated death benefits under a life insurance contract or viatical settlement before the insured's death are excluded from income if the insured is terminally or chronically ill. Where can i file my federal and state taxes for free Viatical settlement. Where can i file my federal and state taxes for free   This is the sale or assignment of any part of the death benefit under a life insurance contract to a viatical settlement provider. Where can i file my federal and state taxes for free A viatical settlement provider is a person who regularly engages in the business of buying or taking assignment of life insurance contracts on the lives of insured individuals who are terminally or chronically ill and who meets the requirements of section 101(g)(2)(B) of the Internal Revenue Code. Where can i file my federal and state taxes for free Exclusion for terminal illness. Where can i file my federal and state taxes for free    Accelerated death benefits are fully excludable if the insured is a terminally ill individual. Where can i file my federal and state taxes for free This is a person who has been certified by a physician as having an illness or physical condition that can reasonably be expected to result in death within 24 months from the date of the certification. Where can i file my federal and state taxes for free Exclusion for chronic illness. Where can i file my federal and state taxes for free    If the insured is a chronically ill individual who is not terminally ill, accelerated death benefits paid on the basis of costs incurred for qualified long-term care services are fully excludable. Where can i file my federal and state taxes for free Accelerated death benefits paid on a per diem or other periodic basis are excludable up to a limit. Where can i file my federal and state taxes for free This limit applies to the total of the accelerated death benefits and any periodic payments received from long-term care insurance contracts. Where can i file my federal and state taxes for free For information on the limit and the definitions of chronically ill individual, qualified long-term care services, and long-term care insurance contracts, see Long-Term Care Insurance Contracts under Sickness and Injury Benefits in Publication 525. Where can i file my federal and state taxes for free Exception. Where can i file my federal and state taxes for free   The exclusion does not apply to any amount paid to a person (other than the insured) who has an insurable interest in the life of the insured because the insured: Is a director, officer, or employee of the person, or Has a financial interest in the person's business. Where can i file my federal and state taxes for free Form 8853. Where can i file my federal and state taxes for free   To claim an exclusion for accelerated death benefits made on a per diem or other periodic basis, you must file Form 8853, Archer MSAs and Long-Term Care Insurance Contracts, with your return. Where can i file my federal and state taxes for free You do not have to file Form 8853 to exclude accelerated death benefits paid on the basis of actual expenses incurred. Where can i file my federal and state taxes for free Public Safety Officer Killed in the Line of Duty If you are a survivor of a public safety officer who was killed in the line of duty, you may be able to exclude from income certain amounts you receive. Where can i file my federal and state taxes for free For this purpose, the term public safety officer includes law enforcement officers, firefighters, chaplains, and rescue squad and ambulance crew members. Where can i file my federal and state taxes for free For more information, see Publication 559, Survivors, Executors, and Administrators. Where can i file my federal and state taxes for free Partnership Income A partnership generally is not a taxable entity. Where can i file my federal and state taxes for free The income, gains, losses, deductions, and credits of a partnership are passed through to the partners based on each partner's distributive share of these items. Where can i file my federal and state taxes for free Schedule K-1 (Form 1065). Where can i file my federal and state taxes for free    Although a partnership generally pays no tax, it must file an information return on Form 1065, U. Where can i file my federal and state taxes for free S. Where can i file my federal and state taxes for free Return of Partnership Income, and send Schedule K-1 (Form 1065) to each partner. Where can i file my federal and state taxes for free In addition, the partnership will send each partner a copy of the Partner's Instructions for Schedule K-1 (Form 1065) to help each partner report his or her share of the partnership's income, deductions, credits, and tax preference items. Where can i file my federal and state taxes for free Keep Schedule K-1 (Form 1065) for your records. Where can i file my federal and state taxes for free Do not attach it to your Form 1040, unless you are specifically required to do so. Where can i file my federal and state taxes for free For more information on partnerships, see Publication 541, Partnerships. Where can i file my federal and state taxes for free Qualified joint venture. Where can i file my federal and state taxes for free   If you and your spouse each materially participate as the only members of a jointly owned and operated business, and you file a joint return for the tax year, you can make a joint election to be treated as a qualified joint venture instead of a partnership. Where can i file my federal and state taxes for free To make this election, you must divide all items of income, gain, loss, deduction, and credit attributable to the business between you and your spouse in accordance with your respective interests in the venture. Where can i file my federal and state taxes for free For further information on how to make the election and which schedule(s) to file, see the instructions for your individual tax return. Where can i file my federal and state taxes for free S Corporation Income In most cases, an S corporation does not pay tax on its income. Where can i file my federal and state taxes for free Instead, the income, losses, deductions, and credits of the corporation are passed through to the shareholders based on each shareholder's pro rata share. Where can i file my federal and state taxes for free Schedule K-1 (Form 1120S). Where can i file my federal and state taxes for free   An S corporation must file a return on Form 1120S, U. Where can i file my federal and state taxes for free S. Where can i file my federal and state taxes for free Income Tax Return for an S Corporation, and send Schedule K-1 (Form 1120S) to each shareholder. Where can i file my federal and state taxes for free In addition, the S corporation will send each shareholder a copy of the Shareholder's Instructions for Schedule K-1 (Form 1120S) to help each shareholder report his or her share of the S corporation's income, losses, credits, and deductions. Where can i file my federal and state taxes for free Keep Schedule K-1 (Form 1120S) for your records. Where can i file my federal and state taxes for free Do not attach it to your Form 1040, unless you are specifically required to do so. Where can i file my federal and state taxes for free For more information on S corporations and their shareholders, see the Instructions for Form 1120S. Where can i file my federal and state taxes for free Recoveries A recovery is a return of an amount you deducted or took a credit for in an earlier year. Where can i file my federal and state taxes for free The most common recoveries are refunds, reimbursements, and rebates of deductions itemized on Schedule A (Form 1040). Where can i file my federal and state taxes for free You also may have recoveries of non-itemized deductions (such as payments on previously deducted bad debts) and recoveries of items for which you previously claimed a tax credit. Where can i file my federal and state taxes for free Tax benefit rule. Where can i file my federal and state taxes for free   You must include a recovery in your income in the year you receive it up to the amount by which the deduction or credit you took for the recovered amount reduced your tax in the earlier year. Where can i file my federal and state taxes for free For this purpose, any increase to an amount carried over to the current year that resulted from the deduction or credit is considered to have reduced your tax in the earlier year. Where can i file my federal and state taxes for free For more information, see Publication 525. Where can i file my federal and state taxes for free Federal income tax refund. Where can i file my federal and state taxes for free   Refunds of federal income taxes are not included in your income because they are never allowed as a deduction from income. Where can i file my federal and state taxes for free State tax refund. Where can i file my federal and state taxes for free   If you received a state or local income tax refund (or credit or offset) in 2013, you generally must include it in income if you deducted the tax in an earlier year. Where can i file my federal and state taxes for free The payer should send Form 1099-G, Certain Government Payments, to you by January 31, 2014. Where can i file my federal and state taxes for free The IRS also will receive a copy of the Form 1099-G. Where can i file my federal and state taxes for free If you file Form 1040, use the State and Local Income Tax Refund Worksheet in the 2013 Form 1040 instructions for line 10 to figure the amount (if any) to include in your income. Where can i file my federal and state taxes for free See Publication 525 for when you must use another worksheet. Where can i file my federal and state taxes for free   If you could choose to deduct for a tax year either: State and local income taxes, or State and local general sales taxes, then the maximum refund that you may have to include in income is limited to the excess of the tax you chose to deduct for that year over the tax you did not choose to deduct for that year. Where can i file my federal and state taxes for free For examples, see Publication 525. Where can i file my federal and state taxes for free Mortgage interest refund. Where can i file my federal and state taxes for free    If you received a refund or credit in 2013 of mortgage interest paid in an earlier year, the amount should be shown in box 3 of your Form 1098, Mortgage Interest Statement. Where can i file my federal and state taxes for free Do not subtract the refund amount from the interest you paid in 2013. Where can i file my federal and state taxes for free You may have to include it in your income under the rules explained in the following discussions. Where can i file my federal and state taxes for free Interest on recovery. Where can i file my federal and state taxes for free   Interest on any of the amounts you recover must be reported as interest income in the year received. Where can i file my federal and state taxes for free For example, report any interest you received on state or local income tax refunds on Form 1040, line 8a. Where can i file my federal and state taxes for free Recovery and expense in same year. Where can i file my federal and state taxes for free   If the refund or other recovery and the expense occur in the same year, the recovery reduces the deduction or credit and is not reported as income. Where can i file my federal and state taxes for free Recovery for 2 or more years. Where can i file my federal and state taxes for free   If you receive a refund or other recovery that is for amounts you paid in 2 or more separate years, you must allocate, on a pro rata basis, the recovered amount between the years in which you paid it. Where can i file my federal and state taxes for free This allocation is necessary to determine the amount of recovery from any earlier years and to determine the amount, if any, of your allowable deduction for this item for the current year. Where can i file my federal and state taxes for free For information on how to compute the allocation, see Recoveries in Publication 525. Where can i file my federal and state taxes for free Itemized Deduction Recoveries If you recover any amount that you deducted in an earlier year on Schedule A (Form 1040), you generally must include the full amount of the recovery in your income in the year you receive it. Where can i file my federal and state taxes for free Where to report. Where can i file my federal and state taxes for free   Enter your state or local income tax refund on Form 1040, line 10, and the total of all other recoveries as other income on Form 1040, line 21. Where can i file my federal and state taxes for free You cannot use Form 1040A or Form 1040EZ. Where can i file my federal and state taxes for free Standard deduction limit. Where can i file my federal and state taxes for free   You generally are allowed to claim the standard deduction if you do not itemize your deductions. Where can i file my federal and state taxes for free Only your itemized deductions that are more than your standard deduction are subject to the recovery rule (unless you are required to itemize your deductions). Where can i file my federal and state taxes for free If your total deductions on the earlier year return were not more than your income for that year, include in your income this year the lesser of: Your recoveries, or The amount by which your itemized deductions exceeded the standard deduction. Where can i file my federal and state taxes for free Example. Where can i file my federal and state taxes for free For 2012, you filed a joint return. Where can i file my federal and state taxes for free Your taxable income was $60,000 and you were not entitled to any tax credits. Where can i file my federal and state taxes for free Your standard deduction was $11,900, and you had itemized deductions of $14,000. Where can i file my federal and state taxes for free In 2013, you received the following recoveries for amounts deducted on your 2012 return: Medical expenses $200 State and local income tax refund 400 Refund of mortgage interest 325 Total recoveries $925 None of the recoveries were more than the deductions taken for 2012. Where can i file my federal and state taxes for free The difference between the state and local income tax you deducted and your local general sales tax was more than $400. Where can i file my federal and state taxes for free Your total recoveries are less than the amount by which your itemized deductions exceeded the standard deduction ($14,000 − 11,900 = $2,100), so you must include your total recoveries in your income for 2013. Where can i file my federal and state taxes for free Report the state and local income tax refund of $400 on Form 1040, line 10, and the balance of your recoveries, $525, on Form 1040, line 21. Where can i file my federal and state taxes for free Standard deduction for earlier years. Where can i file my federal and state taxes for free   To determine if amounts recovered in 2013 must be included in your income, you must know the standard deduction for your filing status for the year the deduction was claimed. Where can i file my federal and state taxes for free Look in the instructions for your tax return from prior years to locate the standard deduction for the filing status for that prior year. Where can i file my federal and state taxes for free Example. Where can i file my federal and state taxes for free You filed a joint return on Form 1040 for 2012 with taxable income of $45,000. Where can i file my federal and state taxes for free Your itemized deductions were $12,350. Where can i file my federal and state taxes for free The standard deduction that you could have claimed was $11,900. Where can i file my federal and state taxes for free In 2013, you recovered $2,100 of your 2012 itemized deductions. Where can i file my federal and state taxes for free None of the recoveries were more than the actual deductions for 2012. Where can i file my federal and state taxes for free Include $450 of the recoveries in your 2013 income. Where can i file my federal and state taxes for free This is the smaller of your recoveries ($2,100) or the amount by which your itemized deductions were more than the standard deduction ($12,350 − $11,900 = $450). Where can i file my federal and state taxes for free Recovery limited to deduction. Where can i file my federal and state taxes for free   You do not include in your income any amount of your recovery that is more than the amount you deducted in the earlier year. Where can i file my federal and state taxes for free The amount you include in your income is limited to the smaller of: The amount deducted on Schedule A (Form 1040), or The amount recovered. Where can i file my federal and state taxes for free Example. Where can i file my federal and state taxes for free During 2012 you paid $1,700 for medical expenses. Where can i file my federal and state taxes for free From this amount you subtracted $1,500, which was 7. Where can i file my federal and state taxes for free 5% of your adjusted gross income. Where can i file my federal and state taxes for free Your actual medical expense deduction was $200. Where can i file my federal and state taxes for free In 2013, you received a $500 reimbursement from your medical insurance for your 2012 expenses. Where can i file my federal and state taxes for free The only amount of the $500 reimbursement that must be included in your income for 2013 is $200—the amount actually deducted. Where can i file my federal and state taxes for free Other recoveries. Where can i file my federal and state taxes for free   See Recoveries in Publication 525 if: You have recoveries of items other than itemized deductions, or You received a recovery for an item for which you claimed a tax credit (other than investment credit or foreign tax credit) in a prior year. Where can i file my federal and state taxes for free Rents from Personal Property If you rent out personal property, such as equipment or vehicles, how you report your income and expenses is in most cases determined by: Whether or not the rental activity is a business, and Whether or not the rental activity is conducted for profit. Where can i file my federal and state taxes for free In most cases, if your primary purpose is income or profit and you are involved in the rental activity with continuity and regularity, your rental activity is a business. Where can i file my federal and state taxes for free See Publication 535, Business Expenses, for details on deducting expenses for both business and not-for-profit activities. Where can i file my federal and state taxes for free Reporting business income and expenses. Where can i file my federal and state taxes for free    If you are in the business of renting personal property, report your income and expenses on Schedule C or Schedule C-EZ (Form 1040). Where can i file my federal and state taxes for free The form instructions have information on how to complete them. Where can i file my federal and state taxes for free Reporting nonbusiness income. Where can i file my federal and state taxes for free   If you are not in the business of renting personal property, report your rental income on Form 1040, line 21. Where can i file my federal and state taxes for free List the type and amount of the income on the dotted line next to line 21. Where can i file my federal and state taxes for free Reporting nonbusiness expenses. Where can i file my federal and state taxes for free   If you rent personal property for profit, include your rental expenses in the total amount you enter on Form 1040, line 36. Where can i file my federal and state taxes for free Also enter the amount and “PPR” on the dotted line next to line 36. Where can i file my federal and state taxes for free   If you do not rent personal property for profit, your deductions are limited and you cannot report a loss to offset other income. Where can i file my federal and state taxes for free See Activity not for profit , under Other Income, later. Where can i file my federal and state taxes for free Repayments If you had to repay an amount that you included in your income in an earlier year, you may be able to deduct the amount repaid from your income for the year in which you repaid it. Where can i file my federal and state taxes for free Or, if the amount you repaid is more than $3,000, you may be able to take a credit against your tax for the year in which you repaid it. Where can i file my federal and state taxes for free Generally, you can claim a deduction or credit only if the repayment qualifies as an expense or loss incurred in your trade or business or in a for-profit transaction. Where can i file my federal and state taxes for free Type of deduction. Where can i file my federal and state taxes for free   The type of deduction you are allowed in the year of repayment depends on the type of income you included in the earlier year. Where can i file my federal and state taxes for free You generally deduct the repayment on the same form or schedule on which you previously reported it as income. Where can i file my federal and state taxes for free For example, if you reported it as self-employment income, deduct it as a business expense on Schedule C or Schedule C-EZ (Form 1040) or Schedule F (Form 1040). Where can i file my federal and state taxes for free If you reported it as a capital gain, deduct it as a capital loss as explained in the Instructions for Schedule D (Form 1040). Where can i file my federal and state taxes for free If you reported it as wages, unemployment compensation, or other nonbusiness income, deduct it as a miscellaneous itemized deduction on Schedule A (Form 1040). Where can i file my federal and state taxes for free Repaid social security benefits. Where can i file my federal and state taxes for free   If you repaid social security benefits or equivalent railroad retirement benefits, see Repayment of benefits in chapter 11. Where can i file my federal and state taxes for free Repayment of $3,000 or less. Where can i file my federal and state taxes for free   If the amount you repaid was $3,000 or less, deduct it from your income in the year you repaid it. Where can i file my federal and state taxes for free If you must deduct it as a miscellaneous itemized deduction, enter it on Schedule A (Form 1040), line 23. Where can i file my federal and state taxes for free Repayment over $3,000. Where can i file my federal and state taxes for free   If the amount you repaid was more than $3,000, you can deduct the repayment (as explained under Type of deduction , earlier). Where can i file my federal and state taxes for free However, you can choose instead to take a tax credit for the year of repayment if you included the income under a claim of right. Where can i file my federal and state taxes for free This means that at the time you included the income, it appeared that you had an unrestricted right to it. Where can i file my federal and state taxes for free If you qualify for this choice, figure your tax under both methods and compare the results. Where can i file my federal and state taxes for free Use the method (deduction or credit) that results in less tax. Where can i file my federal and state taxes for free When determining whether the amount you repaid was more or less than $3,000, consider the total amount being repaid on the return. Where can i file my federal and state taxes for free Each instance of repayment is not considered separately. Where can i file my federal and state taxes for free Method 1. Where can i file my federal and state taxes for free   Figure your tax for 2013 claiming a deduction for the repaid amount. Where can i file my federal and state taxes for free If you must deduct it as a miscellaneous itemized deduction, enter it on Schedule A (Form 1040), line 28. Where can i file my federal and state taxes for free Method 2. Where can i file my federal and state taxes for free   Figure your tax for 2013 claiming a credit for the repaid amount. Where can i file my federal and state taxes for free Follow these steps. Where can i file my federal and state taxes for free Figure your tax for 2013 without deducting the repaid amount. Where can i file my federal and state taxes for free Refigure your tax from the earlier year without including in income the amount you repaid in 2013. Where can i file my federal and state taxes for free Subtract the tax in (2) from the tax shown on your return for the earlier year. Where can i file my federal and state taxes for free This is the credit. Where can i file my federal and state taxes for free Subtract the answer in (3) from the tax for 2013 figured without the deduction (Step 1). Where can i file my federal and state taxes for free   If method 1 results in less tax, deduct the amount repaid. Where can i file my federal and state taxes for free If method 2 results in less tax, claim the credit figured in (3) above on Form 1040, line 71, by adding the amount of the credit to any other credits on this line, and entering “I. Where can i file my federal and state taxes for free R. Where can i file my federal and state taxes for free C. Where can i file my federal and state taxes for free 1341” in the column to the right of line 71. Where can i file my federal and state taxes for free   An example of this computation can be found in Publication 525. Where can i file my federal and state taxes for free Repaid wages subject to social security and Medicare taxes. Where can i file my federal and state taxes for free   If you had to repay an amount that you included in your wages or compensation in an earlier year on which social security, Medicare, or tier 1 RRTA taxes were paid, ask your employer to refund the excess amount to you. Where can i file my federal and state taxes for free If the employer refuses to refund the taxes, ask for a statement indicating the amount of the overcollection to support your claim. Where can i file my federal and state taxes for free File a claim for refund using Form 843, Claim for Refund and Request for Abatement. Where can i file my federal and state taxes for free Repaid wages subject to Additional Medicare Tax. Where can i file my federal and state taxes for free   Employers cannot make an adjustment or file a claim for refund for Additional Medicare Tax withholding when there is a repayment of wages received by an employee in a prior year because the employee determines liability for Additional Medicare Tax on the employee's income tax return for the prior year. Where can i file my federal and state taxes for free If you had to repay an amount that you included in your wages or compensation in an earlier year, and on which Additional Medicare Tax was paid, you may be able to recover the Additional Medicare Tax paid on the amount. Where can i file my federal and state taxes for free To recover Additional Medicare Tax on the repaid wages or compensation, you must file Form 1040X, Amended U. Where can i file my federal and state taxes for free S. Where can i file my federal and state taxes for free Individual Income Tax Return, for the prior year in which the wages or compensation were originally received. Where can i file my federal and state taxes for free See the Instructions for Form 1040X. Where can i file my federal and state taxes for free Royalties Royalties from copyrights, patents, and oil, gas, and mineral properties are taxable as ordinary income. Where can i file my federal and state taxes for free In most cases you report royalties in Part I of Schedule E (Form 1040). Where can i file my federal and state taxes for free However, if you hold an operating oil, gas, or mineral interest or are in business as a self-employed writer, inventor, artist, etc. Where can i file my federal and state taxes for free , report your income and expenses on Schedule C or Schedule C-EZ (Form 1040). Where can i file my federal and state taxes for free Copyrights and patents. Where can i file my federal and state taxes for free   Royalties from copyrights on literary, musical, or artistic works, and similar property, or from patents on inventions, are amounts paid to you for the right to use your work over a specified period of time. Where can i file my federal and state taxes for free Royalties generally are based on the number of units sold, such as the number of books, tickets to a performance, or machines sold. Where can i file my federal and state taxes for free Oil, gas, and minerals. Where can i file my federal and state taxes for free   Royalty income from oil, gas, and mineral properties is the amount you receive when natural resources are extracted from your property. Where can i file my federal and state taxes for free The royalties are based on units, such as barrels, tons, etc. Where can i file my federal and state taxes for free , and are paid to you by a person or company who leases the property from you. Where can i file my federal and state taxes for free Depletion. Where can i file my federal and state taxes for free   If you are the owner of an economic interest in mineral deposits or oil and gas wells, you can recover your investment through the depletion allowance. Where can i file my federal and state taxes for free For information on this subject, see chapter 9 of Publication 535. Where can i file my federal and state taxes for free Coal and iron ore. Where can i file my federal and state taxes for free   Under certain circumstances, you can treat amounts you receive from the disposal of coal and iron ore as payments from the sale of a capital asset, rather than as royalty income. Where can i file my federal and state taxes for free For information about gain or loss from the sale of coal and iron ore, see Publication 544. Where can i file my federal and state taxes for free Sale of property interest. Where can i file my federal and state taxes for free   If you sell your complete interest in oil, gas, or mineral rights, the amount you receive is considered payment for the sale of property used in a trade or business under section 1231, not royalty income. Where can i file my federal and state taxes for free Under certain circumstances, the sale is subject to capital gain or loss treatment as explained in the Instructions for Schedule D (Form 1040). Where can i file my federal and state taxes for free For more information on selling section 1231 property, see chapter 3 of Publication 544. Where can i file my federal and state taxes for free   If you retain a royalty, an overriding royalty, or a net profit interest in a mineral property for the life of the property, you have made a lease or a sublease, and any cash you receive for the assignment of other interests in the property is ordinary income subject to a depletion allowance. Where can i file my federal and state taxes for free Part of future production sold. Where can i file my federal and state taxes for free   If you own mineral property but sell part of the future production, in most cases you treat the money you receive from the buyer at the time of the sale as a loan from the buyer. Where can i file my federal and state taxes for free Do not include it in your income or take depletion based on it. Where can i file my federal and state taxes for free   When production begins, you include all the proceeds in your income, deduct all the production expenses, and deduct depletion from that amount to arrive at your taxable income from the property. Where can i file my federal and state taxes for free Unemployment Benefits The tax treatment of unemployment benefits you receive depends on the type of program paying the benefits. Where can i file my federal and state taxes for free Unemployment compensation. Where can i file my federal and state taxes for free   You must include in income all unemployment compensation you receive. Where can i file my federal and state taxes for free You should receive a Form 1099-G showing in box 1 the total unemployment compensation paid to you. Where can i file my federal and state taxes for free In most cases, you enter unemployment compensation on line 19 of Form 1040, line 13 of Form 1040A, or line 3 of Form 1040EZ. Where can i file my federal and state taxes for free Types of unemployment compensation. Where can i file my federal and state taxes for free   Unemployment compensation generally includes any amount received under an unemployment compensation law of the United States or of a state. Where can i file my federal and state taxes for free It includes the following benefits. Where can i file my federal and state taxes for free Benefits paid by a state or the District of Columbia from the Federal Unemployment Trust Fund. Where can i file my federal and state taxes for free State unemployment insurance benefits. Where can i file my federal and state taxes for free Railroad unemployment compensation benefits. Where can i file my federal and state taxes for free Disability payments from a government program paid as a substitute for unemployment compensation. Where can i file my federal and state taxes for free (Amounts received as workers' compensation for injuries or illness are not unemployment compensation. Where can i file my federal and state taxes for free See chapter 5 for more information. Where can i file my federal and state taxes for free ) Trade readjustment allowances under the Trade Act of 1974. Where can i file my federal and state taxes for free Unemployment assistance under the Disaster Relief and Emergency Assistance Act. Where can i file my federal and state taxes for free Unemployment assistance under the Airline Deregulation Act of 1974 Program. Where can i file my federal and state taxes for free Governmental program. Where can i file my federal and state taxes for free   If you contribute to a governmental unemployment compensation program and your contributions are not deductible, amounts you receive under the program are not included as unemployment compensation until you recover your contributions. Where can i file my federal and state taxes for free If you deducted all of your contributions to the program, the entire amount you receive under the program is included in your income. Where can i file my federal and state taxes for free Repayment of unemployment compensation. Where can i file my federal and state taxes for free   If you repaid in 2013 unemployment compensation you received in 2013, subtract the amount you repaid from the total amount you received and enter the difference on line 19 of Form 1040, line 13 of Form 1040A, or line 3 of Form 1040EZ. Where can i file my federal and state taxes for free On the dotted line next to your entry enter “Repaid” and the amount you repaid. Where can i file my federal and state taxes for free If you repaid unemployment compensation in 2013 that you included in income in an earlier year, you can deduct the amount repaid on Schedule A (Form 1040), line 23, if you itemize deductions. Where can i file my federal and state taxes for free If the amount is more than $3,000, see Repayments , earlier. Where can i file my federal and state taxes for free Tax withholding. Where can i file my federal and state taxes for free   You can choose to have federal income tax withheld from your unemployment compensation. Where can i file my federal and state taxes for free To make this choice, complete Form W-4V, Voluntary Withholding Request, and give it to the paying office. Where can i file my federal and state taxes for free Tax will be withheld at 10% of your payment. Where can i file my federal and state taxes for free    If you do not choose to have tax withheld from your unemployment compensation, you may be liable for estimated tax. Where can i file my federal and state taxes for free If you do not pay enough tax, either through withholding or estimated tax, or a combination of both, you may have to pay a penalty. Where can i file my federal and state taxes for free For more information on estimated tax, see chapter 4. Where can i file my federal and state taxes for free Supplemental unemployment benefits. Where can i file my federal and state taxes for free   Benefits received from an employer-financed fund (to which the employees did not contribute) are not unemployment compensation. Where can i file my federal and state taxes for free They are taxable as wages and are subject to withholding for income tax. Where can i file my federal and state taxes for free They may be subject to social security and Medicare taxes. Where can i file my federal and state taxes for free For more information, see Supplemental Unemployment Benefits in section 5 of Publication 15-A, Employer's Supplemental Tax Guide. Where can i file my federal and state taxes for free Report these payments on line 7 of Form 1040 or Form 1040A or on line 1 of Form 1040EZ. Where can i file my federal and state taxes for free Repayment of benefits. Where can i file my federal and state taxes for free   You may have to repay some of your supplemental unemployment benefits to qualify for trade readjustment allowances under the Trade Act of 1974. Where can i file my federal and state taxes for free If you repay supplemental unemployment benefits in the same year you receive them, reduce the total benefits by the amount you repay. Where can i file my federal and state taxes for free If you repay the benefits in a later year, you must include the full amount of the benefits received in your income for the year you received them. Where can i file my federal and state taxes for free   Deduct the repayment in the later year as an adjustment to gross income on Form 1040. Where can i file my federal and state taxes for free (You cannot use Form 1040A or Form 1040EZ. Where can i file my federal and state taxes for free ) Include the repayment on Form 1040, line 36, and enter “Sub-Pay TRA” and the amount on the dotted line next to line 36. Where can i file my federal and state taxes for free If the amount you repay in a later year is more than $3,000, you may be able to take a credit against your tax for the later year instead of deducting the amount repaid. Where can i file my federal and state taxes for free For more information on this, see Repayments , earlier. Where can i file my federal and state taxes for free Private unemployment fund. Where can i file my federal and state taxes for free   Unemployment benefit payments from a private (nonunion) fund to which you voluntarily contribute are taxable only if the amounts you receive are more than your total payments into the fund. Where can i file my federal and state taxes for free Report the taxable amount on Form 1040, line 21. Where can i file my federal and state taxes for free Payments by a union. Where can i file my federal and state taxes for free   Benefits paid to you as an unemployed member of a union from regular union dues are included in your income on Form 1040, line 21. Where can i file my federal and state taxes for free However, if you contribute to a special union fund and your payments to the fund are not deductible, the unemployment benefits you receive from the fund are includible in your income only to the extent they are more than your contributions. Where can i file my federal and state taxes for free Guaranteed annual wage. Where can i file my federal and state taxes for free   Payments you receive from your employer during periods of unemployment, under a union agreement that guarantees you full pay during the year, are taxable as wages. Where can i file my federal and state taxes for free Include them on line 7 of Form 1040 or Form 1040A or on line 1 of Form 1040EZ. Where can i file my federal and state taxes for free State employees. Where can i file my federal and state taxes for free   Payments similar to a state's unemployment compensation may be made by the state to its employees who are not covered by the state's unemployment compensation law. Where can i file my federal and state taxes for free Although the payments are fully taxable, do not report them as unemployment compensation. Where can i file my federal and state taxes for free Report these payments on Form 1040, line 21. Where can i file my federal and state taxes for free Welfare and Other Public Assistance Benefits Do not include in your income governmental benefit payments from a public welfare fund based upon need, such as payments to blind individuals under a state public assistance law. Where can i file my federal and state taxes for free Payments from a state fund for the victims of crime should not be included in the victims' incomes if they are in the nature of welfare payments. Where can i file my federal and state taxes for free Do not deduct medical expenses that are reimbursed by such a fund. Where can i file my federal and state taxes for free You must include in your income any welfare payments that are compensation for services or that are obtained fraudulently. Where can i file my federal and state taxes for free Reemployment Trade Adjustment Assistance (RTAA) payments. Where can i file my federal and state taxes for free   RTAA payments received from a state must be included in your income. Where can i file my federal and state taxes for free The state must send you Form 1099-G to advise you of the amount you should include in income. Where can i file my federal and state taxes for free The amount should be reported on Form 1040, line 21. Where can i file my federal and state taxes for free Persons with disabilities. Where can i file my federal and state taxes for free   If you have a disability, you must include in income compensation you receive for services you perform unless the compensation is otherwise excluded. Where can i file my federal and state taxes for free However, you do not include in income the value of goods, services, and cash that you receive, not in return for your services, but for your training and rehabilitation because you have a disability. Where can i file my federal and state taxes for free Excludable amounts include payments for transportation and attendant care, such as interpreter services for the deaf, reader services for the blind, and services to help individuals with an intellectual disability do their work. Where can i file my federal and state taxes for free Disaster relief grants. Where can i file my federal and state taxes for free    Do not include post-disaster grants received under the Robert T. Where can i file my federal and state taxes for free Stafford Disaster Relief and Emergency Assistance Act in your income if the grant payments are made to help you meet necessary expenses or serious needs for medical, dental, housing, personal property, transportation, child care, or funeral expenses. Where can i file my federal and state taxes for free Do not deduct casualty losses or medical expenses that are specifically reimbursed by these disaster relief grants. Where can i file my federal and state taxes for free If you have deducted a casualty loss for the loss of your personal residence and you later receive a disaster relief grant for the loss of the same residence, you may have to include part or all of the grant in your taxable income. Where can i file my federal and state taxes for free See Recoveries , earlier. Where can i file my federal and state taxes for free Unemployment assistance payments under the Act are taxable unemployment compensation. Where can i file my federal and state taxes for free See Unemployment compensation under Unemployment Benefits, earlier. Where can i file my federal and state taxes for free Disaster relief payments. Where can i file my federal and state taxes for free   You can exclude from income any amount you receive that is a qualified disaster relief payment. Where can i file my federal and state taxes for free A qualified disaster relief payment is an amount paid to you: To reimburse or pay reasonable and necessary personal, family, living, or funeral expenses that result from a qualified disaster; To reimburse or pay reasonable and necessary expenses incurred for the repair or rehabilitation of your home or repair or replacement of its contents to the extent it is due to a qualified disaster; By a person engaged in the furnishing or sale of transportation as a common carrier because of the death or personal physical injuries incurred as a result of a qualified disaster; or By a federal, state, or local government, or agency, or instrumentality in connection with a qualified disaster in order to promote the general welfare. Where can i file my federal and state taxes for free You can exclude this amount only to the extent any expense it pays for is not paid for by insurance or otherwise. Where can i file my federal and state taxes for free The exclusion does not apply if you were a participant or conspirator in a terrorist action or a representative of one. Where can i file my federal and state taxes for free   A qualified disaster is: A disaster which results from a terrorist or military action; A federally declared disaster; or A disaster which results from an accident involving a common carrier, or from any other event, which is determined to be catastrophic by the Secretary of the Treasury or his or her delegate. Where can i file my federal and state taxes for free   For amounts paid under item (4), a disaster is qualified if it is determined by an applicable federal, state, or local authority to warrant assistance from the federal, state, or local government, agency, or instrumentality. Where can i file my federal and state taxes for free Disaster mitigation payments. Where can i file my federal and state taxes for free   You also can exclude from income any amount you receive that is a qualified disaster mitigation payment. Where can i file my federal and state taxes for free Qualified disaster mitigation payments are also most commonly paid to you in the period immediately following damage to property as a result of a natural disaster. Where can i file my federal and state taxes for free However, disaster mitigation payments are used to mitigate (reduce the severity of) potential damage from future natural disasters. Where can i file my federal and state taxes for free They are paid to you through state and local governments based on the provisions of the Robert T. Where can i file my federal and state taxes for free Stafford Disaster Relief and Emergency Assistance Act or the National Flood Insurance Act. Where can i file my federal and state taxes for free   You cannot increase the basis or adjusted basis of your property for improvements made with nontaxable disaster mitigation payments. Where can i file my federal and state taxes for free Home Affordable Modification Program (HAMP). Where can i file my federal and state taxes for free   If you benefit from Pay-for-Performance Success Payments under HAMP, the payments are not taxable. Where can i file my federal and state taxes for free Mortgage assistance payments under section 235 of the National Housing Act. Where can i file my federal and state taxes for free   Payments made under section 235 of the National Housing Act for mortgage assistance are not included in the homeowner's income. Where can i file my federal and state taxes for free Interest paid for the homeowner under the mortgage assistance program cannot be deducted. Where can i file my federal and state taxes for free Medicare. Where can i file my federal and state taxes for free   Medicare benefits received under title XVIII of the Social Security Act are not includible in the gross income of the individuals for whom they are paid. Where can i file my federal and state taxes for free This includes basic (part A (Hospital Insurance Benefits for the Aged)) and supplementary (part B (Supplementary Medical Insurance Benefits for the Aged)). Where can i file my federal and state taxes for free Old-age, survivors, and disability insurance benefits (OASDI). Where can i file my federal and state taxes for free   Generally, OASDI payments under section 202 of title II of the Social Security Act are not includible in the gross income of the individuals to whom they are paid. Where can i file my federal and state taxes for free This applies to old-age insurance benefits, and insurance benefits for wives, husbands, children, widows, widowers, mothers and fathers, and parents, as well as the lump-sum death payment. Where can i file my federal and state taxes for free Nutrition Program for the Elderly. Where can i file my federal and state taxes for free    Food benefits you receive under the Nutrition Program for the Elderly are not taxable. Where can i file my federal and state taxes for free If you prepare and serve free meals for the program, include in your income as wages the cash pay you receive, even if you are also eligible for food benefits. Where can i file my federal and state taxes for free Payments to reduce cost of winter energy. Where can i file my federal and state taxes for free   Payments made by a state to qualified people to reduce their cost of winter energy use are not taxable. Where can i file my federal and state taxes for free Other Income The following brief discussions are arranged in alphabetical order. Where can i file my federal and state taxes for free Other income items briefly discussed below are referenced to publications which provide more topical information. Where can i file my federal and state taxes for free Activity not for profit. Where can i file my federal and state taxes for free   You must include on your return income from an activity from which you do not expect to make a profit. Where can i file my federal and state taxes for free An example of this type of activity is a hobby or a farm you operate mostly for recreation and pleasure. Where can i file my federal and state taxes for free Enter this income on Form 1040, line 21. Where can i file my federal and state taxes for free Deductions for expenses related to the activity are limited. Where can i file my federal and state taxes for free They cannot total more than the income you report and can be taken only if you itemize deductions on Schedule A (Form 1040). Where can i file my federal and state taxes for free See Not-for-Profit Activities in chapter 1 of Publication 535 for information on whether an activity is considered carried on for a profit. Where can i file my federal and state taxes for free Alaska Permanent Fund dividend. Where can i file my federal and state taxes for free   If you received a payment from Alaska's mineral income fund (Alaska Permanent Fund dividend), report it as income on line 21 of Form 1040, line 13 of Form 1040A, or line 3 of Form 1040EZ. Where can i file my federal and state taxes for free The state of Alaska sends each recipient a document that shows the amount of the payment with the check. Where can i file my federal and state taxes for free The amount also is reported to IRS. Where can i file my federal and state taxes for free Alimony. Where can i file my federal and state taxes for free   Include in your income on Form 1040, line 11, any alimony payments you receive. Where can i file my federal and state taxes for free Amounts you receive for child support are not income to you. Where can i file my federal and state taxes for free Alimony and child support payments are discussed in chapter 18. Where can i file my federal and state taxes for free Bribes. Where can i file my federal and state taxes for free   If you receive a bribe, include it in your income. Where can i file my federal and state taxes for free Campaign contributions. Where can i file my federal and state taxes for free   These contributions are not income to a candidate unless they are diverted to his or her personal use. Where can i file my federal and state taxes for free To be exempt from tax, the contributions must be spent for campaign purposes or kept in a fund for use in future campaigns. Where can i file my federal and state taxes for free However, interest earned on bank deposits, dividends received on contributed securities, and net gains realized on sales of contributed securities are taxable and must be reported on Form 1120-POL, U. Where can i file my federal and state taxes for free S. Where can i file my federal and state taxes for free Income Tax Return for Certain Political Organizations. Where can i file my federal and state taxes for free Excess campaign funds transferred to an office account must be included in the officeholder's income on Form 1040, line 21, in the year transferred. Where can i file my federal and state taxes for free Car pools. Where can i file my federal and state taxes for free   Do not include in your income amounts you receive from the passengers for driving a car in a car pool to and from work. Where can i file my federal and state taxes for free These amounts are considered reimbursement for your expenses. Where can i file my federal and state taxes for free However, this rule does not apply if you have developed car pool arrangements into a profit-making business of transporting workers for hire. Where can i file my federal and state taxes for free Cash rebates. Where can i file my federal and state taxes for free   A cash rebate you receive from a dealer or manufacturer of an item you buy is not income, but you must reduce your basis by the amount of the rebate. Where can i file my federal and state taxes for free Example. Where can i file my federal and state taxes for free You buy a new car for $24,000 cash and receive a $2,000 rebate check from the manufacturer. Where can i file my federal and state taxes for free The $2,000 is not income to you. Where can i file my federal and state taxes for free Your basis in the car is $22,000. Where can i file my federal and state taxes for free This is the basis on which you figure gain or loss if you sell the car and depreciation if you use it for business. Where can i file my federal and state taxes for free Casualty insurance and other reimbursements. Where can i file my federal and state taxes for free   You generally should not report these reimbursements on your return unless you are figuring gain or loss from the casualty or theft. Where can i file my federal and state taxes for free See chapter 25 for more information. Where can i file my federal and state taxes for free Child support payments. Where can i file my federal and state taxes for free   You should not report these payments on your return. Where can i file my federal and state taxes for free See chapter 18 for more information. Where can i file my federal and state taxes for free Court awards and damages. Where can i file my federal and state taxes for free   To determine if settlement amounts you receive by compromise or judgment must be included in your income, you must consider the item that the settlement replaces. Where can i file my federal and state taxes for free The character of the income as ordinary income or capital gain depends on the nature of the underlying claim. Where can i file my federal and state taxes for free Include the following as ordinary income. Where can i file my federal and state taxes for free Interest on any award. Where can i file my federal and state taxes for free Compensation for lost wages or lost profits in most cases. Where can i file my federal and state taxes for free Punitive damages, in most cases. Where can i file my federal and state taxes for free It does not matter if they relate to a physical injury or physical sickness. Where can i file my federal and state taxes for free Amounts received in settlement of pension rights (if you did not contribute to the plan). Where can i file my federal and state taxes for free Damages for: Patent or copyright infringement, Breach of contract, or Interference with business operations. Where can i file my federal and state taxes for free Back pay and damages for emotional distress received to satisfy a claim under title VII of the Civil Rights Act of 1964. Where can i file my federal and state taxes for free Attorney fees and costs (including contingent fees) where the underlying recovery is included in gross income. Where can i file my federal and state taxes for free   Do not include in your income compensatory damages for personal physical injury or physical sickness (whether received in a lump sum or installments). Where can i file my federal and state taxes for free Emotional distress. Where can i file my federal and state taxes for free   Emotional distress itself is not a physical injury or physical sickness, but damages you receive for emotional distress due to a physical injury or sickness are treated as received for the physical injury or sickness. Where can i file my federal and state taxes for free Do not include them in your income. Where can i file my federal and state taxes for free   If the emotional distress is due to a personal injury that is not due to a physical injury or sickness (for example, employment discrimination or injury to reputation), you must include the damages in your income, except for any damages you receive for medical care due to that emotional distress. Where can i file my federal and state taxes for free Emotional distress includes physical symptoms that result from emotional distress, such as headaches, insomnia, and stomach disorders. Where can i file my federal and state taxes for free Deduction for costs involved in unlawful discrimination suits. Where can i file my federal and state taxes for free   You may be able to deduct attorney fees and court costs paid to recover a judgment or settlement for a claim of unlawful discrimination under various provisions of federal, state, and local law listed in Internal Revenue Code section 62(e), a claim against the United States government, or a claim under section 1862(b)(3)(A) of the Social Security Act. Where can i file my federal and state taxes for free For more information, see Publication 525. Where can i file my federal and state taxes for free Credit card insurance. Where can i file my federal and state taxes for free   In most cases, if you receive benefits under a credit card disability or unemployment insurance plan, the benefits are taxable to you. Where can i file my federal and state taxes for free These plans make the minimum monthly payment on your credit card account if you cannot make the payment due to injury, illness, disability, or unemployment. Where can i file my federal and state taxes for free Report on Form 1040, line 21, the amount of benefits you received during the year that is more than the amount of the premiums you paid during the year. Where can i file my federal and state taxes for free Down payment assistance. Where can i file my federal and state taxes for free   If you purchase a home and receive assistance from a nonprofit corporation to make the down payment, that assistance is not included in your income. Where can i file my federal and state taxes for free If the corporation qualifies as a tax-exempt charitable organization, the assistance is treated as a gift and is included in your basis of the house. Where can i file my federal and state taxes for free If the corporation does not qualify, the assistance is treated as a rebate or reduction of the purchase price and is not included in your basis. Where can i file my federal and state taxes for free Employment agency fees. Where can i file my federal and state taxes for free   If you get a job through an employment agency, and the fee is paid by your employer, the fee is not includible in your income if you are not liable for it. Where can i file my federal and state taxes for free However, if you pay it and your employer reimburses you for it, it is includible in your income. Where can i file my federal and state taxes for free Energy conservation subsidies. Where can i file my federal and state taxes for free   You can exclude from gross income any subsidy provided, either directly or indirectly, by public utilities for the purchase or installation of an energy conservation measure for a dwelling unit. Where can i file my federal and state taxes for free Energy conservation measure. Where can i file my federal and state taxes for free   This includes installations or modifications that are primarily designed to reduce consumption of electricity or natural gas, or improve the management of energy demand. Where can i file my federal and state taxes for free Dwelling unit. Where can i file my federal and state taxes for free   This includes a house, apartment, condominium, mobile home, boat, or similar property. Where can i file my federal and state taxes for free If a building or structure contains both dwelling and other units, any subsidy must be properly allocated. Where can i file my federal and state taxes for free Estate and trust income. Where can i file my federal and state taxes for free    An estate or trust, unlike a partnership, may have to pay federal income tax. Where can i file my federal and state taxes for free If you are a beneficiary of an estate or trust, you may be taxed on your share of its income distributed or required to be distributed to you. Where can i file my federal and state taxes for free However, there is never a double tax. Where can i file my federal and state taxes for free Estates and trusts file their returns on Form 1041, U. Where can i file my federal and state taxes for free S. Where can i file my federal and state taxes for free Income Tax Return for Estates and Trusts, and your share of the income is reported to you on Schedule K-1 (Form 1041). Where can i file my federal and state taxes for free Current income required to be distributed. Where can i file my federal and state taxes for free   If you are the beneficiary of an estate or trust that must distribute all of its current income, you must report your share of the distributable net income, whether or not you actually received it. Where can i file my federal and state taxes for free Current income not required to be distributed. Where can i file my federal and state taxes for free    If you are the beneficiary of an estate or trust and the fiduciary has the choice of whether to distribute all or part of the current income, you must report: All income that is required to be distributed to you, whether or not it is actually distributed, plus All other amounts actually paid or credited to you, up to the amount of your share of distributable net income. Where can i file my federal and state taxes for free How to report. Where can i file my federal and state taxes for free   Treat each item of income the same way that the estate or trust would treat it. Where can i file my federal and state taxes for free For example, if a trust's dividend income is distributed to you, you report the distribution as dividend income on your return. Where can i file my federal and state taxes for free The same rule applies to distributions of tax-exempt interest and capital gains. Where can i file my federal and state taxes for free   The fiduciary of the estate or trust must tell you the type of items making up your share of the estate or trust income and any credits you are allowed on your individual income tax return. Where can i file my federal and state taxes for free Losses. Where can i file my federal and state taxes for free   Losses of estates and trusts generally are not deductible by the beneficiaries. Where can i file my federal and state taxes for free Grantor trust. Where can i file my federal and state taxes for free   Income earned by a grantor trust is taxable to the grantor, not the beneficiary, if the grantor keeps certain control over the trust. Where can i file my federal and state taxes for free (The grantor is the one who transferred property to the trust. Where can i file my federal and state taxes for free ) This rule applies if the property (or income from the property) put into the trust will or may revert (be returned) to the grantor or the grantor's spouse. Where can i file my federal and state taxes for free   Generally, a trust is a grantor trust if the grantor has a reversionary interest valued (at the date of transfer) at more than 5% of the value of the transferred property. Where can i file my federal and state taxes for free Expenses paid by another. Where can i file my federal and state taxes for free   If your personal expenses are paid for by another person, such as a corporation, the payment may be taxable to you depending upon your relationship with that person and the nature of the payment. Where can i file my federal and state taxes for free But if the payment makes up for a loss caused by that person, and only restores you to the position you were in before the loss, the payment is not includible in your income. Where can i file my federal and state taxes for free Fees for services. Where can i file my federal and state taxes for free   Include all fees for your services in your income. Where can i file my federal and state taxes for free Examples of these fees are amounts you receive for services you perform as: A corporate director, An executor, administrator, or personal representative of an estate, A manager of a trade or business you operated before declaring Chapter 11 bankruptcy, A notary public, or An election precinct official. Where can i file my federal and state taxes for free Nonemployee compensation. Where can i file my federal and state taxes for free   If you are not an employee and the fees for your services from the same payer total $600 or more for the year, you may receive a Form 1099-MISC. Where can i file my federal and state taxes for free You may need to report your fees as self-employment income. Where can i file my federal and state taxes for free See Self-Employed Persons , in chapter 1, for a discussion of when you are considered self-employed. Where can i file my federal and state taxes for free Corporate director. Where can i file my federal and state taxes for free   Corporate director fees are self-employment income. Where can i file my federal and state taxes for free Report these payments on Schedule C or Schedule C-EZ (Form 1040). Where can i file my federal and state taxes for free Personal representatives. Where can i file my federal and state taxes for free   All personal representatives must include in their gross income fees paid to them from an estate. Where can i file my federal and state taxes for free If you are not in the trade or business of being an executor (for instance, you are the executor of a friend's or relative's estate), report these fees on Form 1040, line 21. Where can i file my federal and state taxes for free If you are in the trade or business of being an executor, report these fees as self-employment income on Schedule C or Schedule C-EZ (Form 1040). Where can i file my federal and state taxes for free The fee is not includible in income if it is waived. Where can i file my federal and state taxes for free Manager of trade or business for bankruptcy estate. Where can i file my federal and state taxes for free   Include in your income all payments received from your bankruptcy estate for managing or operating a trade or business that you operated before you filed for bankruptcy. Where can i file my federal and state taxes for free Report this income on Form 1040, line 21. Where can i file my federal and state taxes for free Notary public. Where can i file my federal and state taxes for free    Report payments for these services on Schedule C or Schedule C-EZ (Form 1040). Where can i file my federal and state taxes for free These payments are not subject to self-employment tax. Where can i file my federal and state taxes for free See the separate instructions for Schedule SE (Form 1040) for details. Where can i file my federal and state taxes for free Election precinct official. Where can i file my federal and state taxes for free    You should receive a Form W-2 showing payments for services performed as an election official or election worker. Where can i file my federal and state taxes for free Report these payments on line 7 of Form 1040 or Form 1040A or on line 1 of Form 1040EZ. Where can i file my federal and state taxes for free Foster care providers. Where can i file my federal and state taxes for free   Payments you receive from a state, political subdivision, or a qualified foster care placement agency for providing care to qualified foster individuals in your home generally are not included in your income. Where can i file my federal and state taxes for free However, you must include in your income payments received for the care of more than 5 individuals age 19 or older and certain difficulty-of-care payments. Where can i file my federal and state taxes for free   A qualified foster individual is a person who: Is living in a foster family home, and Was placed there by: An agency of a state or one of its political subdivisions, or A qualified foster care placement agency. Where can i file my federal and state taxes for free Difficulty-of-care payments. Where can i file my federal and state taxes for free   These are additional payments that are designated by the payer as compensation for providing the additional care that is required for physically, mentally, or emotionally handicapped qualified foster individuals. Where can i file my federal and state taxes for free A state must determine that the additional compensation is needed, and the care for which the payments are made must be provided in your home. Where can i file my federal and state taxes for free   You must include in your income difficulty-of-care payments received for more than: 10 qualified foster individuals under age 19, or 5 qualified foster individuals age 19 or older. Where can i file my federal and state taxes for free Maintaining space in home. Where can i file my federal and state taxes for free   If you are paid to maintain space in your home for emergency foster care, you must include the payment in your income. Where can i file my federal and state taxes for free Reporting taxable payments. Where can i file my federal and state taxes for free    If you receive payments that you must include in your income, you are in business as a foster care provider and you are self-employed. Where can i file my federal and state taxes for free Report the payments on Schedule C or Schedule C-EZ (Form 1040). Where can i file my federal and state taxes for free See Publication 587, Business Use of Your Home, to help you determine the amount you can deduct for the use of your home. Where can i file my federal and state taxes for free Found property. Where can i file my federal and state taxes for free   If you find and keep property that does not belong to you that has been lost or abandoned (treasure-trove), it is taxable to you at its fair market value in the first year it is your undisputed possession. Where can i file my federal and state taxes for free Free tour. Where can i file my federal and state taxes for free   If you received a free tour from a travel agency for organizing a group of tourists, you must include its value in your income. Where can i file my federal and state taxes for free Report the fair market value of the tour on Form 1040, line 21, if you are not in the trade or business of organizing tours. Where can i file my federal and state taxes for free You cannot deduct your expenses in serving as the voluntary leader of the group at the group's request. Where can i file my federal and state taxes for free If you organize tours as a trade or business, report the tour's value on Schedule C or Schedule C-EZ (Form 1040). Where can i file my federal and state taxes for free Gambling winnings. Where can i file my federal and state taxes for free   You must include your gambling winnings in income on Form 1040, line 21. Where can i file my federal and state taxes for free If you itemize your deductions on Schedule A (Form 1040), you can deduct gambling losses you had during the year, but only up to the amount of your winnings. Where can i file my federal and state taxes for free Lotteries and raffles. Where can i file my federal and state taxes for free   Winnings from lotteries and raffles are gambling winnings. Where can i file my federal and state taxes for free In addition to cash winnings, you must include in your income the fair market value of bonds, cars, houses, and other noncash prizes. Where can i file my federal and state taxes for free    If you win a state lottery prize payable in installments, see Publication 525 for more information. Where can i file my federal and state taxes for free Form W-2G. Where can i file my federal and state taxes for free   You may have received a Form W-2G, Certain Gambling Winnings, showing the amount of your gambling winnings and any tax taken out of them. Where can i file my federal and state taxes for free Include the amount from box 1 on Form 1040, line 21. Where can i file my federal and state taxes for free Include the amount shown in box 4 on Form 1040, line 62, as federal income tax withheld. Where can i file my federal and state taxes for free Reporting winnings and recordkeeping. Where can i file my federal and state taxes for free   For more information on reporting gam