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1040es

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1040es

1040es Other Methods of Depreciation Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: How To Figure the DeductionBasis Useful Life Salvage Value Methods To UseStraight Line Method Declining Balance Method Income Forecast Method How To Change Methods DispositionsSale or exchange. 1040es Property not disposed of or abandoned. 1040es Special rule for normal retirements from item accounts. 1040es Abandoned property. 1040es Single item accounts. 1040es Multiple property account. 1040es Topics - This chapter discusses: How to figure the deduction Methods to use How to change methods Dispositions Useful Items - You may want to see: Publication 544 Sales and Other Dispositions of Assets 551 Basis of Assets 583 Starting a Business and Keeping Records 946 How To Depreciate Property Form (and Instructions) 3115 Application for Change in Accounting Method 4562 Depreciation and Amortization Schedule C (Form 1040) Profit or Loss From Business If your property is being depreciated under ACRS, you must continue to use rules for depreciation that applied when you placed the property in service. 1040es If your property qualified for MACRS, you must depreciate it under MACRS. 1040es See Publication 946. 1040es However, you cannot use MACRS for certain property because of special rules that exclude it from MACRS. 1040es Also, you can elect to exclude certain property from being depreciated under MACRS. 1040es Property that you cannot depreciate using MACRS includes: Intangible property, Property you can elect to exclude from MACRS that you properly depreciate under a method that is not based on a term of years, Certain public utility property, Any motion picture film or video tape, Any sound recording, and Certain real and personal property placed in service before 1987. 1040es Intangible property. 1040es   You cannot depreciate intangible property under ACRS or MACRS. 1040es You depreciate intangible property using any other reasonable method, usually, the straight line method. 1040es Note. 1040es The cost of certain intangible property that you acquire after August 10, 1993, must be amortized over a 15-year period. 1040es For more information, see chapter 12 of Publication 535. 1040es Public utility property. 1040es   The law excludes from MACRS any public utility property for which the taxpayer does not use a normalization method of accounting. 1040es This type of property is subject to depreciation under a special rule. 1040es Videocassettes. 1040es   If you are in the videocassette rental business, you can depreciate those videocassettes purchased for rental. 1040es You can depreciate the cost less salvage value of those videocassettes that have a useful life over one year using either: The straight line method, or The income forecast method. 1040es The straight line method, salvage value, and useful life are discussed later under Methods To Use. 1040es You can deduct in the year of purchase as a business expense the cost of any cassette that has a useful life of one year or less. 1040es How To Figure the Deduction Two other reasonable methods can be used to figure your deduction for property not covered under ACRS or MACRS. 1040es These methods are straight line and declining balance. 1040es To figure depreciation using these methods, you must generally determine three things about the property you intend to depreciate. 1040es They are: The basis, The useful life, and The estimated salvage value at the end of its useful life. 1040es The amount of the deduction in any year also depends on which method of depreciation you choose. 1040es Basis To deduct the proper amount of depreciation each year, first determine your basis in the property you intend to depreciate. 1040es The basis used for figuring depreciation is the same as the basis that would be used for figuring the gain on a sale. 1040es Your original basis is usually the purchase price. 1040es However, if you acquire property in some other way, such as inheriting it, getting it as a gift, or building it yourself, you have to figure your original basis in a different way. 1040es Adjusted basis. 1040es   Events will often change the basis of property. 1040es When this occurs, the changed basis is called the adjusted basis. 1040es Some events, such as improvements you make, increase basis. 1040es Events such as deducting casualty losses and depreciation decrease basis. 1040es If basis is adjusted, the depreciation deduction may also have to be changed, depending on the reason for the adjustment and the method of depreciation you are using. 1040es   Publication 551 explains how to figure basis for property acquired in different ways. 1040es It also discusses what items increase and decrease basis, how to figure adjusted basis, and how to allocate cost if you buy several pieces of property at one time. 1040es Useful Life The useful life of a piece of property is an estimate of how long you can expect to use it in your trade or business, or to produce income. 1040es It is the length of time over which you will make yearly depreciation deductions of your basis in the property. 1040es It is how long it will continue to be useful to you, not how long the property will last. 1040es Many things affect the useful life of property, such as: Frequency of use, Age when acquired, Your repair policy, and Environmental conditions. 1040es The useful life can also be affected by technological improvements, progress in the arts, reasonably foreseeable economic changes, shifting of business centers, prohibitory laws, and other causes. 1040es Consider all these factors before you arrive at a useful life for your property. 1040es The useful life of the same type of property varies from user to user. 1040es When you determine the useful life of your property, keep in mind your own experience with similar property. 1040es You can use the general experience of the industry you are in until you are able to determine a useful life of your property from your own experience. 1040es Change in useful life. 1040es   You base your estimate of useful life on certain facts. 1040es If these facts change significantly, you can adjust your estimate of the remaining useful life. 1040es However, you redetermine the estimated useful life only when the change is substantial and there is a clear reason for making the change. 1040es Salvage Value It is important for you to accurately determine the correct salvage value of the property you want to depreciate. 1040es You generally cannot depreciate property below a reasonable salvage value. 1040es Determining salvage value. 1040es   Salvage value is the estimated value of property at the end of its useful life. 1040es It is what you expect to get for the property if you sell it after you can no longer use it productively. 1040es You must estimate the salvage value of a piece of property when you first acquire it. 1040es   Salvage value is affected both by how you use the property and how long you use it. 1040es If it is your policy to dispose of property that is still in good operating condition, the salvage value can be relatively large. 1040es However, if your policy is to use property until it is no longer usable, its salvage value can be its junk value. 1040es Changing salvage value. 1040es   Once you determine the salvage value for property, you should not change it merely because prices have changed. 1040es However, if you redetermine the useful life of property, as discussed earlier under Change in useful life, you can also redetermine the salvage value. 1040es When you redetermine the salvage value, take into account the facts that exist at the time. 1040es Net salvage. 1040es   Net salvage is the salvage value of property minus what it costs to remove it when you dispose of it. 1040es You can choose either salvage value or net salvage when you figure depreciation. 1040es You must consistently use the one you choose and the treatment of the costs of removal must be consistent with the practice adopted. 1040es However, if the cost to remove the property is more than the estimated salvage value, then net salvage is zero. 1040es Your salvage value can never be less than zero. 1040es Ten percent rule. 1040es   If you acquire personal property that has a useful life of 3 years or more, you can use an amount for salvage value that is less than your actual estimate. 1040es You can subtract from your estimate of salvage value an amount equal to 10% of your basis in the property. 1040es If salvage value is less than 10% of basis, you can ignore salvage value when you figure depreciation. 1040es Methods To Use Two methods of depreciation are the straight line and declining balance methods. 1040es If ACRS or MACRS does not apply, you can use one of these methods. 1040es The straight line and declining balance methods discussed in this section are not figured in the same way as straight line or declining balance methods under MACRS. 1040es Straight Line Method Before 1981, you could use any reasonable method for every kind of depreciable property. 1040es One of these methods was the straight line method. 1040es This method was also used for intangible property. 1040es It lets you deduct the same amount of depreciation each year. 1040es To figure your deduction, determine the adjusted basis of your property, its salvage value, and its estimated useful life. 1040es Subtract the salvage value, if any, from the adjusted basis. 1040es The balance is the total amount of depreciation you can take over the useful life of the property. 1040es Divide the balance by the number of years remaining in the useful life. 1040es This gives you the amount of your yearly depreciation deduction. 1040es Unless there is a big change in adjusted basis, or useful life, this amount will stay the same throughout the time you depreciate the property. 1040es If, in the first year, you use the property for less than a full year, you must prorate your depreciation deduction for the number of months in use. 1040es Example. 1040es In April 1994, Frank bought a franchise for $5,600. 1040es It expires in 10 years. 1040es This property is intangible property that cannot be depreciated under MACRS. 1040es Frank depreciates the franchise under the straight line method, using a 10-year useful life and no salvage value. 1040es He takes the $5,600 basis and divides that amount by 10 years ($5,600 ÷ 10 = $560, a full year's use). 1040es He must prorate the $560 for his 9 months of use in 1994. 1040es This gives him a deduction of $420 ($560 ÷ 9/12). 1040es In 1995, Frank can deduct $560 for the full year. 1040es Declining Balance Method The declining balance method allows you to recover a larger amount of the cost of the property in the early years of your use of the property. 1040es The rate cannot be more than twice the straight line rate. 1040es Rate of depreciation. 1040es   Under this method, you must determine your declining balance rate of depreciation. 1040es The initial step is to: Divide the number 1 by the useful life of your property to get a straight line rate. 1040es (For example, if property has a useful life of 5 years, its normal straight line rate of depreciation is ⅕, or 20%. 1040es ) Multiply this straight line rate by a number that is more than 1 but not more than 2 to determine the declining balance rate. 1040es Unless there is a change in the useful life during the time you depreciate the property, the rate of depreciation generally will not change. 1040es Depreciation deductions. 1040es   After you determine the rate of depreciation, multiply the adjusted basis of the property by it. 1040es This gives you the amount of your deduction. 1040es For example, if your adjusted basis at the beginning of the first year is $10,000, and your declining balance rate is 20%, your depreciation deduction for the first year is $2,000 ($10,000 ÷ 20%). 1040es To figure your depreciation deduction in the second year, you must first adjust the basis for the amount of depreciation you deducted in the first year. 1040es Subtract the previous year's depreciation from your basis ($10,000 - $2,000 = $8,000). 1040es Multiply this amount by the rate of depreciation ($8,000 ÷ 20% = $1,600). 1040es Your depreciation deduction for the second year is $1,600. 1040es   As you can see from this example, your adjusted basis in the property gets smaller each year. 1040es Also, under this method, deductions are larger in the earlier years and smaller in the later years. 1040es You can make a change to the straight line method without consent. 1040es Salvage value. 1040es   Do not subtract salvage value when you figure your yearly depreciation deductions under the declining balance method. 1040es However, you cannot depreciate the property below its reasonable salvage value. 1040es Determine salvage value using the rules discussed earlier, including the special 10% rule. 1040es Example. 1040es If your adjusted basis has been decreased to $1,000 and the rate of depreciation is 20%, your depreciation deduction should be $200. 1040es But if your estimate of salvage value was $900, you can only deduct $100. 1040es This is because $100 is the amount that would lower your adjusted basis to equal salvage value. 1040es Income Forecast Method The income forecast method requires income projections for each videocassette or group of videocassettes. 1040es You can group the videocassettes by title for making this projection. 1040es You determine the depreciation by applying a fraction to the cost less salvage value of the cassette. 1040es The numerator is the income from the videocassette for the tax year and the denominator is the total projected income for the cassette. 1040es For more information on the income forecast method, see Revenue Ruling 60-358 in Cumulative Bulletin 1960, Volume 2, on page 68. 1040es How To Change Methods In some cases, you may change your method of depreciation for property depreciated under a reasonable method. 1040es If you change your method of depreciation, it is generally a change in your method of accounting. 1040es You must get IRS consent before making the change. 1040es However, you do not need permission for certain changes in your method of depreciation. 1040es The rules discussed in this section do not apply to property depreciated under ACRS or MACRS. 1040es For information on ACRS elections,see Revocation of election, in chapter 1 under Alternate ACRS Method. 1040es Change to the straight line method. 1040es   You can change from the declining balance method to the straight line method at any time during the useful life of your property without IRS consent. 1040es However, if you have a written agreement with the IRS that prohibits a change, you must first get IRS permission. 1040es When the change is made, figure depreciation based on your adjusted basis in the property at that time. 1040es Your adjusted basis takes into account all previous depreciation deductions. 1040es Use the estimated remaining useful life of your property at the time of change and its estimated salvage value. 1040es   You can change from the declining balance method to straight line only on the original tax return for the year you first use the straight line method. 1040es You cannot make the change on an amended return filed after the due date of the original return (including extensions). 1040es   When you make the change, attach a statement to your tax return showing: When you acquired the property, Its original cost or other original basis, The total amount claimed for depreciation and other allowances since you acquired it, Its salvage value and remaining useful life, and A description of the property and its use. 1040es   After you change to straight line, you cannot change back to the declining balance method or to any other method for a period of 10 years without written permission from the IRS. 1040es Changes that require permission. 1040es   For most other changes in method of depreciation, you must get permission from the IRS. 1040es To request a change in method of depreciation, file Form 3115. 1040es File the application within the first 180 days of the tax year the change is to become effective. 1040es In most cases, there is a user fee that must accompany Form 3115. 1040es See the instructions for Form 3115 to determine if a fee is required. 1040es Changes granted automatically. 1040es   The IRS automatically approves certain changes of a method of depreciation. 1040es But, you must file Form 3115 for these automatic changes. 1040es   However, IRS can deny permission if Form 3115 is not filed on time. 1040es For more information on automatic changes, see Revenue Procedure 74-11, 1974-1 C. 1040es B. 1040es 420. 1040es Changes for which approval is not automatic. 1040es   The automatic change procedures do not apply to: Property or an account where you made a change in depreciation within the last 10 tax years (unless the change was made under the Class Life System), Class Life Asset Depreciation Range System, and Public utility property. 1040es   You must request and receive permission for these changes. 1040es To make the request, file Form 3115 during the first 180 days of the tax year for which you want the change to be effective. 1040es Change from an improper method. 1040es   If the IRS disallows the method you are using, you do not need permission to change to a proper method. 1040es You can adopt the straight line method, or any other method that would have been permitted if you had used it from the beginning. 1040es If you file your tax return using an improper method, but later file an amended return, you can use a proper method on the amended return without getting IRS permission. 1040es However, you must file the amended return before the filing date for the next tax year. 1040es Dispositions Retirement is the permanent withdrawal of depreciable property from use in your trade or business or for the production of income. 1040es You can do this by selling, exchanging, or abandoning the item of property. 1040es You can also withdraw it from use without disposing of it. 1040es For example, you could place it in a supplies or scrap account. 1040es Retirements can be either normal or abnormal depending on all facts and circumstances. 1040es The rules discussed next do not apply to MACRS and ACRS property. 1040es Normal retirement. 1040es   A normal retirement is a permanent withdrawal of depreciable property from use if the following apply: The retirement is made within the useful life you estimated originally, and The property has reached a condition at which you customarily retire or would retire similar property from use. 1040es A retirement is generally considered normal unless you can show that you retired the property because of a reason you did not consider when you originally estimated the useful life of the property. 1040es Abnormal retirement. 1040es   A retirement can be abnormal if you withdraw the property early or under other circumstances. 1040es For example, if the property is damaged by a fire or suddenly becomes obsolete and is now useless. 1040es Gain or loss on retirement. 1040es   There are special rules for figuring the gain or loss on retirement of property. 1040es The gain or loss will depend on several factors. 1040es These include the type of withdrawal, if the withdrawal was from a single property or multiple property account, and if the retirement was normal or abnormal. 1040es A single property account contains only one item of property. 1040es A multiple property account is one in which several items have been combined with a single rate of depreciation assigned to the entire account. 1040es Sale or exchange. 1040es   If property is retired by sale or exchange, you figure gain or loss by the usual rules that apply to sales or other dispositions of property. 1040es See Publication 544. 1040es Property not disposed of or abandoned. 1040es   If property is retired permanently, but not disposed of or physically abandoned, you do not recognize gain. 1040es You are allowed a loss in such a case, but only if the retirement is: An abnormal retirement, A normal retirement from a single property account in which you determined the life of each item of property separately, or A normal retirement from a multiple property account in which the depreciation rate is based on the maximum expected life of the longest lived item of property and the loss occurs before the expiration of the full useful life. 1040es However, you are not allowed a loss if the depreciation rate is based on the average useful life of the items of property in the account. 1040es   To figure your loss, subtract the estimated salvage or fair market value of the property at the date of retirement, whichever is more, from its adjusted basis. 1040es Special rule for normal retirements from item accounts. 1040es   You can generally deduct losses upon retirement of a few depreciable items of property with similar useful lives, if: You account for each one in a separate account, and You use the average useful life to figure depreciation. 1040es However, you cannot deduct losses if you use the average useful life to figure depreciation and they have a wide range of useful lives. 1040es   If you have a large number of depreciable property items and use average useful lives to figure depreciation, you cannot deduct the losses upon normal retirements from these accounts. 1040es Abandoned property. 1040es   If you physically abandon property, you can deduct as a loss the adjusted basis of the property at the time of its abandonment. 1040es However, your intent must be to discard the property so that you will not use it again or retrieve it for sale, exchange, or other disposition. 1040es Basis of property retired. 1040es   The basis for figuring gain or loss on the retirement of property is its adjusted basis at the time of retirement, as determined in the following discussions. 1040es Single item accounts. 1040es   If an item of property is accounted for in a single item account, the adjusted basis is the basis you would use to figure gain or loss for a sale or exchange of the property. 1040es This is generally the cost or other basis of the item of property less depreciation. 1040es See Publication 551. 1040es Multiple property account. 1040es   For a normal retirement from a multiple property account, if you figured depreciation using the average expected useful life, the adjusted basis is the salvage value estimated for the item of property when it was originally acquired. 1040es If you figured depreciation using the maximum expected useful life of the longest lived item of property in the account, you must use the depreciation method used for the multiple property account and a rate based on the maximum expected useful life of the item of property retired. 1040es   You make the adjustment for depreciation for an abnormal retirement from a multiple property account at the rate that would be proper if the item of property was depreciated in a single property account. 1040es The method of depreciation used for the multiple property account is used. 1040es You base the rate on either the average expected useful life or the maximum expected useful life of the retired item of property, depending on the method used to determine the depreciation rate for the multiple property account. 1040es Prev  Up  Next   Home   More Online Publications
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The 1040es

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