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1040nr Tax Return

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1040nr Tax Return

1040nr tax return Publication 503 - Main Content Table of Contents Tests To Claim the CreditQualifying Person Test Earned Income Test Work-Related Expense Test Joint Return Test Provider Identification Test How To Figure the CreditFiguring Total Work-Related Expenses Earned Income Limit Dollar Limit Amount of Credit How To Claim the CreditTax credit not refundable. 1040nr tax return Employment Taxes for Household Employers How To Get Tax HelpLow Income Taxpayer Clinics Tests To Claim the Credit To be able to claim the credit for child and dependent care expenses, you must file Form 1040, Form 1040A, or Form 1040NR, not Form 1040EZ or Form 1040NR-EZ, and meet all the following tests. 1040nr tax return The care must be for one or more qualifying persons who are identified on Form 2441. 1040nr tax return (See Qualifying Person Test. 1040nr tax return ) You (and your spouse if filing jointly) must have earned income during the year. 1040nr tax return (However, see Rule for student-spouse or spouse not able to care for self under Earned Income Test, later. 1040nr tax return ) You must pay child and dependent care expenses so you (and your spouse if filing jointly) can work or look for work. 1040nr tax return (See Work-Related Expense Test, later. 1040nr tax return ) You must make payments for child and dependent care to someone you (and your spouse) cannot claim as a dependent. 1040nr tax return If you make payments to your child, he or she cannot be your dependent and must be age 19 or older by the end of the year. 1040nr tax return You cannot make payments to: Your spouse, or The parent of your qualifying person if your qualifying person is your child and under age 13. 1040nr tax return See Payments to Relatives or Dependents under Work-Related Expense Test, later. 1040nr tax return Your filing status may be single, head of household, or qualifying widow(er) with dependent child. 1040nr tax return If you are married, you must file a joint return, unless an exception applies to you. 1040nr tax return See Joint Return Test, later. 1040nr tax return You must identify the care provider on your tax return. 1040nr tax return (See Provider Identification Test, later. 1040nr tax return ) If you exclude or deduct dependent care benefits provided by a dependent care benefit plan, the total amount you exclude or deduct must be less than the dollar limit for qualifying expenses (generally, $3,000 if one qualifying person was cared for or $6,000 if two or more qualifying persons were cared for). 1040nr tax return (If two or more qualifying persons were cared for, the amount you exclude or deduct will always be less than the dollar limit, since the total amount you can exclude or deduct is limited to $5,000. 1040nr tax return See Reduced Dollar Limit under How To Figure the Credit, later. 1040nr tax return ) These tests are presented in Figure A and are also explained in detail in this publication. 1040nr tax return Qualifying Person Test Your child and dependent care expenses must be for the care of one or more qualifying persons. 1040nr tax return A qualifying person is: Your qualifying child who is your dependent and who was under age 13 when the care was provided (but see Child of divorced or separated parents or parents living apart , later), Your spouse who was not physically or mentally able to care for himself or herself and lived with you for more than half the year, or A person who was not physically or mentally able to care for himself or herself, lived with you for more than half the year, and either: Was your dependent, or Would have been your dependent except that: He or she received gross income of $3,900 or more, He or she filed a joint return, or You, or your spouse if filing jointly, could be claimed as a dependent on someone else's 2013 return. 1040nr tax return Dependent defined. 1040nr tax return   A dependent is a person, other than you or your spouse, for whom you can claim an exemption. 1040nr tax return To be your dependent, a person must be your qualifying child (or your qualifying relative). 1040nr tax return Qualifying child. 1040nr tax return   To be your qualifying child, a child must live with you for more than half the year and meet other requirements. 1040nr tax return More information. 1040nr tax return   For more information about who is a dependent or a qualifying child, see Publication 501. 1040nr tax return Physically or mentally not able to care for oneself. 1040nr tax return   Persons who cannot dress, clean, or feed themselves because of physical or mental problems are considered not able to care for themselves. 1040nr tax return Also, persons who must have constant attention to prevent them from injuring themselves or others are considered not able to care for themselves. 1040nr tax return Person qualifying for part of year. 1040nr tax return   You determine a person's qualifying status each day. 1040nr tax return For example, if the person for whom you pay child and dependent care expenses no longer qualifies on September 16, count only those expenses through September 15. 1040nr tax return Also see Yearly limit under Dollar Limit, later. 1040nr tax return Birth or death of otherwise qualifying person. 1040nr tax return   In determining whether a person is a qualifying person, a person who was born or died in 2013 is treated as having lived with you for more than half of 2013 if your home was the person's home more than half the time he or she was alive in 2013. 1040nr tax return Taxpayer identification number. 1040nr tax return   You must include on your return the name and taxpayer identification number (generally the social security number) of the qualifying person(s). 1040nr tax return If the correct information is not shown, the credit may be reduced or disallowed. 1040nr tax return Individual taxpayer identification number (ITIN) for aliens. 1040nr tax return   If your qualifying person is a nonresident or resident alien who does not have and cannot get a social security number (SSN), use that person's ITIN. 1040nr tax return The ITIN is entered wherever an SSN is requested on a tax return. 1040nr tax return If the alien does not have an ITIN, he or she must apply for one. 1040nr tax return See Form W-7, Application for IRS Individual Taxpayer Identification Number, for details. 1040nr tax return   An ITIN is for tax use only. 1040nr tax return It does not entitle the holder to social security benefits or change the holder's employment or immigration status under U. 1040nr tax return S. 1040nr tax return law. 1040nr tax return Adoption taxpayer identification number (ATIN). 1040nr tax return   If your qualifying person is a child who was placed in your home for adoption and for whom you do not have an SSN, you must get an ATIN for the child. 1040nr tax return File Form W-7A, Application for Taxpayer Identification Number for Pending U. 1040nr tax return S. 1040nr tax return Adoptions. 1040nr tax return Child of divorced or separated parents or parents living apart. 1040nr tax return   Even if you cannot claim your child as a dependent, he or she is treated as your qualifying person if: The child was under age 13 or was not physically or mentally able to care for himself or herself, The child received over half of his or her support during the calendar year from one or both parents who are divorced or legally separated under a decree of divorce or separate maintenance, are separated under a written separation agreement, or lived apart at all times during the last 6 months of the calendar year, The child was in the custody of one or both parents for more than half the year, and You were the child's custodial parent. 1040nr tax return   The custodial parent is the parent with whom the child lived for the greater number of nights in 2013. 1040nr tax return If the child was with each parent for an equal number of nights, the custodial parent is the parent with the higher adjusted gross income. 1040nr tax return For details and an exception for a parent who works at night, see Publication 501. 1040nr tax return   The noncustodial parent cannot treat the child as a qualifying person even if that parent is entitled to claim the child as a dependent under the special rules for a child of divorced or separated parents. 1040nr tax return Please click here for the text description of the image. 1040nr tax return Figure a. 1040nr tax return Can you claim the credit Earned Income Test To claim the credit, you (and your spouse if filing jointly) must have earned income during the year. 1040nr tax return Earned income. 1040nr tax return   Earned income includes wages, salaries, tips, other taxable employee compensation, and net earnings from self-employment. 1040nr tax return A net loss from self-employment reduces earned income. 1040nr tax return Earned income also includes strike benefits and any disability pay you report as wages. 1040nr tax return   Generally, only taxable compensation is included. 1040nr tax return However, you can elect to include nontaxable combat pay in earned income. 1040nr tax return If you are filing a joint return and both you and your spouse received nontaxable combat pay, you can each make your own election. 1040nr tax return (In other words, if one of you makes the election, the other one can also make it but does not have to. 1040nr tax return ) Including this income will give you a larger credit only if your (or your spouse's) other earned income is less than the amount entered on line 3 of Form 2441. 1040nr tax return You should figure your credit both ways and make the election if it gives you a greater tax benefit. 1040nr tax return    You can choose to include your nontaxable combat pay in earned income when figuring your credit for child and dependent care expenses, even if you choose not to include it in earned income for the earned income credit or the exclusion or deduction for dependent care benefits. 1040nr tax return Members of certain religious faiths opposed to social security. 1040nr tax return   This section is for persons who are members of certain religious faiths that are opposed to participation in Social Security Act programs and have an IRS-approved form that exempts certain income from social security and Medicare taxes. 1040nr tax return These forms are: Form 4361, Application for Exemption From Self-Employment Tax for Use by Ministers, Members of Religious Orders and Christian Science Practitioners, and Form 4029, Application for Exemption From Social Security and Medicare Taxes and Waiver of Benefits, for use by members of recognized religious groups. 1040nr tax return   Each form is discussed here in terms of what is or is not earned income for purposes of the child and dependent care credit. 1040nr tax return For information on the use of these forms, see Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers. 1040nr tax return Form 4361. 1040nr tax return   Whether or not you have an approved Form 4361, amounts you received for performing ministerial duties as an employee are earned income. 1040nr tax return This includes wages, salaries, tips, and other taxable employee compensation. 1040nr tax return   However, amounts you received for ministerial duties, but not as an employee, do not count as earned income. 1040nr tax return Examples include fees for performing marriages and honoraria for delivering speeches. 1040nr tax return   Any amount you received for work that is not related to your ministerial duties is earned income. 1040nr tax return Form 4029. 1040nr tax return   Whether or not you have an approved Form 4029, all wages, salaries, tips, and other taxable employee compensation are earned income. 1040nr tax return   However, amounts you received as a self-employed individual do not count as earned income. 1040nr tax return What is not earned income?   Earned income does not include: Pensions and annuities, Social security and railroad retirement benefits, Workers' compensation, Interest and dividends, Unemployment compensation, Scholarships or fellowship grants, except for those reported on Form W-2 and paid to you for teaching or other services, Nontaxable workfare payments, Child support payments received, Income of a nonresident alien that is not effectively connected with a U. 1040nr tax return S. 1040nr tax return trade or business, or Any amount received for work while an inmate in a penal institution. 1040nr tax return Rule for student-spouse or spouse not able to care for self. 1040nr tax return   Your spouse is treated as having earned income for any month that he or she is: A full-time student, or Physically or mentally not able to care for himself or herself. 1040nr tax return (Your spouse also must live with you for more than half the year. 1040nr tax return )   If you are filing a joint return, this rule also applies to you. 1040nr tax return You can be treated as having earned income for any month you are a full-time student or not able to care for yourself. 1040nr tax return   Figure the earned income of the nonworking spouse, described under (1) or (2) above, as shown under Earned Income Limit under How To Figure the Credit, later. 1040nr tax return   This rule applies to only one spouse for any one month. 1040nr tax return If, in the same month, both you and your spouse do not work and are either full-time students or not physically or mentally able to care for yourselves, only one of you can be treated as having earned income in that month. 1040nr tax return Full-time student. 1040nr tax return    You are a full-time student if you are enrolled at a school for the number of hours or classes that the school considers full time. 1040nr tax return You must have been a full-time student for some part of each of 5 calendar months during the year. 1040nr tax return (The months need not be consecutive. 1040nr tax return ) School. 1040nr tax return   The term “school” includes high schools, colleges, universities, and technical, trade, and mechanical schools. 1040nr tax return A school does not include an on-the-job training course, correspondence school, or school offering courses only through the Internet. 1040nr tax return Work-Related Expense Test Child and dependent care expenses must be work-related to qualify for the credit. 1040nr tax return Expenses are considered work-related only if both of the following are true. 1040nr tax return They allow you (and your spouse if filing jointly) to work or look for work. 1040nr tax return They are for a qualifying person's care. 1040nr tax return Working or Looking for Work To be work-related, your expenses must allow you to work or look for work. 1040nr tax return If you are married, generally both you and your spouse must work or look for work. 1040nr tax return One spouse is treated as working during any month he or she is a full-time student or is not physically or mentally able to care for himself or herself. 1040nr tax return Your work can be for others or in your own business or partnership. 1040nr tax return It can be either full time or part time. 1040nr tax return Work also includes actively looking for work. 1040nr tax return However, if you do not find a job and have no earned income for the year, you cannot take this credit. 1040nr tax return See Earned Income Test, earlier. 1040nr tax return An expense is not considered work-related merely because you had it while you were working. 1040nr tax return The purpose of the expense must be to allow you to work. 1040nr tax return Whether your expenses allow you to work or look for work depends on the facts. 1040nr tax return Example 1. 1040nr tax return The cost of a babysitter while you and your spouse go out to eat is not normally a work-related expense. 1040nr tax return Example 2. 1040nr tax return You work during the day. 1040nr tax return Your spouse works at night and sleeps during the day. 1040nr tax return You pay for care of your 5-year-old child during the hours when you are working and your spouse is sleeping. 1040nr tax return Your expenses are considered work-related. 1040nr tax return Volunteer work. 1040nr tax return   For this purpose, you are not considered to be working if you do unpaid volunteer work or volunteer work for a nominal salary. 1040nr tax return Work for part of year. 1040nr tax return   If you work or actively look for work during only part of the period covered by the expenses, then you must figure your expenses for each day. 1040nr tax return For example, if you work all year and pay care expenses of $250 a month ($3,000 for the year), all the expenses are work related. 1040nr tax return However, if you work or look for work for only 2 months and 15 days during the year and pay expenses of $250 a month, your work-related expenses are limited to $625 (2½ months × $250). 1040nr tax return Temporary absence from work. 1040nr tax return   You do not have to figure your expenses for each day during a short, temporary absence from work, such as for vacation or a minor illness, if you have to pay for care anyway. 1040nr tax return Instead, you can figure your credit including the expenses you paid for the period of absence. 1040nr tax return   An absence of 2 weeks or less is a short, temporary absence. 1040nr tax return An absence of more than 2 weeks may be considered a short, temporary absence, depending on the circumstances. 1040nr tax return Example. 1040nr tax return You pay a nanny to care for your 2-year-old son and 4-year-old daughter so you can work. 1040nr tax return You become ill and miss 4 months of work but receive sick pay. 1040nr tax return You continue to pay the nanny to care for the children while you are ill. 1040nr tax return Your absence is not a short, temporary absence, and your expenses are not considered work-related. 1040nr tax return Part-time work. 1040nr tax return   If you work part-time, you generally must figure your expenses for each day. 1040nr tax return However, if you have to pay for care weekly, monthly, or in another way that includes both days worked and days not worked, you can figure your credit including the expenses you paid for days you did not work. 1040nr tax return Any day when you work at least 1 hour is a day of work. 1040nr tax return Example 1. 1040nr tax return You work 3 days a week. 1040nr tax return While you work, your 6-year-old child attends a dependent care center, which complies with all state and local regulations. 1040nr tax return You can pay the center $150 for any 3 days a week or $250 for 5 days a week. 1040nr tax return Your child attends the center 5 days a week. 1040nr tax return Your work-related expenses are limited to $150 a week. 1040nr tax return Example 2. 1040nr tax return The facts are the same as in Example 1 except the center does not offer a 3-day option. 1040nr tax return The entire $250 weekly fee may be a work-related expense. 1040nr tax return Care of a Qualifying Person To be work-related, your expenses must be to provide care for a qualifying person. 1040nr tax return You do not have to choose the least expensive way of providing the care. 1040nr tax return The cost of a paid care provider may be an expense for the care of a qualifying person even if another care provider is available at no cost. 1040nr tax return Expenses are for the care of a qualifying person only if their main purpose is the person's well-being and protection. 1040nr tax return Expenses for household services qualify if part of the services is for the care of qualifying persons. 1040nr tax return See Household Services, later. 1040nr tax return Expenses not for care. 1040nr tax return   Expenses for care do not include amounts you pay for food, lodging, clothing, education, and entertainment. 1040nr tax return However, you can include small amounts paid for these items if they are incidental to and cannot be separated from the cost of caring for the qualifying person. 1040nr tax return Otherwise, see the discussion of Expenses partly work-related, later. 1040nr tax return   Child support payments are not for care and do not qualify for the credit. 1040nr tax return Education. 1040nr tax return   Expenses for a child in nursery school, preschool, or similar programs for children below the level of kindergarten are expenses for care. 1040nr tax return   Expenses to attend kindergarten or a higher grade are not expenses for care. 1040nr tax return Do not use these expenses to figure your credit. 1040nr tax return   However, expenses for before- or after-school care of a child in kindergarten or a higher grade may be expenses for care. 1040nr tax return   Summer school and tutoring programs are not for care. 1040nr tax return Example 1. 1040nr tax return You take your 3-year-old child to a nursery school that provides lunch and a few educational activities as part of its preschool childcare service. 1040nr tax return The lunch and educational activities are incidental to the childcare, and their cost cannot be separated from the cost of care. 1040nr tax return You can count the total cost when you figure the credit. 1040nr tax return Example 2. 1040nr tax return You place your 10-year-old child in a boarding school so you can work full time. 1040nr tax return Only the part of the boarding school expense that is for the care of your child is a work-related expense. 1040nr tax return You can count that part of the expense in figuring your credit if it can be separated from the cost of education. 1040nr tax return You cannot count any part of the amount you pay the school for your child's education. 1040nr tax return Care outside your home. 1040nr tax return   You can count the cost of care provided outside your home if the care is for your dependent under age 13 or any other qualifying person who regularly spends at least 8 hours each day in your home. 1040nr tax return Dependent care center. 1040nr tax return   You can count care provided outside your home by a dependent care center only if the center complies with all state and local regulations that apply to these centers. 1040nr tax return   A dependent care center is a place that provides care for more than six persons (other than persons who live there) and receives a fee, payment, or grant for providing services for any of those persons, even if the center is not run for profit. 1040nr tax return Camp. 1040nr tax return   The cost of sending your child to an overnight camp is not considered a work-related expense. 1040nr tax return    The cost of sending your child to a day camp may be a work-related expense, even if the camp specializes in a particular activity, such as computers or soccer. 1040nr tax return Transportation. 1040nr tax return   If a care provider takes a qualifying person to or from a place where care is provided, that transportation is for the care of the qualifying person. 1040nr tax return This includes transportation by bus, subway, taxi, or private car. 1040nr tax return However, transportation not provided by a care provider is not for the care of a qualifying person. 1040nr tax return Also, if you pay the transportation cost for the care provider to come to your home, that expense is not for care of a qualifying person. 1040nr tax return Fees and deposits. 1040nr tax return   Fees you paid to an agency to get the services of a care provider, deposits you paid to an agency or preschool, application fees, and other indirect expenses are work-related expenses if you have to pay them to get care, even though they are not directly for care. 1040nr tax return However, a forfeited deposit is not for the care of a qualifying person if care is not provided. 1040nr tax return Example 1. 1040nr tax return You paid a fee to an agency to get the services of the nanny who cares for your 2-year-old daughter while you work. 1040nr tax return The fee you paid is a work-related expense. 1040nr tax return Example 2. 1040nr tax return You placed a deposit with a preschool to reserve a place for your 3-year-old child. 1040nr tax return You later sent your child to a different preschool and forfeited the deposit. 1040nr tax return The forfeited deposit is not for care and so is not a work-related expense. 1040nr tax return Household Services Expenses you pay for household services meet the work-related expense test if they are at least partly for the well-being and protection of a qualifying person. 1040nr tax return Definition. 1040nr tax return   Household services are ordinary and usual services done in and around your home that are necessary to run your home. 1040nr tax return They include the services of a housekeeper, maid, or cook. 1040nr tax return However, they do not include the services of a chauffeur, bartender, or gardener. 1040nr tax return Housekeeper. 1040nr tax return   In this publication, the term housekeeper refers to any household employee whose services include the care of a qualifying person. 1040nr tax return Expenses partly work-related. 1040nr tax return   If part of an expense is work-related (for either household services or the care of a qualifying person) and part is for other purposes, you have to divide the expense. 1040nr tax return To figure your credit, count only the part that is work-related. 1040nr tax return However, you do not have to divide the expense if only a small part is for other purposes. 1040nr tax return Example. 1040nr tax return You pay a housekeeper to care for your 9-year-old and 15-year-old children so you can work. 1040nr tax return The housekeeper spends most of the time doing normal household work and spends 30 minutes a day driving you to and from work. 1040nr tax return You do not have to divide the expenses. 1040nr tax return You can treat the entire expense of the housekeeper as work-related because the time spent driving is minimal. 1040nr tax return Nor do you have to divide the expenses between the two children, even though the expenses are partly for the 15-year-old child who is not a qualifying person, because the expense is also partly for the care of your 9-year-old child, who is a qualifying person. 1040nr tax return However, the dollar limit (discussed later) is based on one qualifying person, not two. 1040nr tax return Meals and lodging provided for housekeeper. 1040nr tax return   If you have expenses for meals that your housekeeper eats in your home because of his or her employment, count these as work-related expenses. 1040nr tax return If you have extra expenses for providing lodging in your home to the housekeeper, count these as work-related expenses also. 1040nr tax return Example. 1040nr tax return To provide lodging to the housekeeper, you move to an apartment with an extra bedroom. 1040nr tax return You can count the extra rent and utility expenses for the housekeeper's bedroom as work-related. 1040nr tax return However, if your housekeeper moves into an existing bedroom in your home, you can count only the extra utility expenses as work-related. 1040nr tax return Taxes paid on wages. 1040nr tax return   The taxes you pay on wages for qualifying child and dependent care services are work-related expenses. 1040nr tax return For more information on a household employer's tax responsibilities, see Employment Taxes for Household Employers, later. 1040nr tax return Payments to Relatives or Dependents You can count work-related payments you make to relatives who are not your dependents, even if they live in your home. 1040nr tax return However, do not count any amounts you pay to: A dependent for whom you (or your spouse if filing jointly) can claim an exemption, Your child who was under age 19 at the end of the year, even if he or she is not your dependent, A person who was your spouse any time during the year, or The parent of your qualifying person if your qualifying person is your child and under age 13. 1040nr tax return Joint Return Test Generally, married couples must file a joint return to take the credit. 1040nr tax return However, if you are legally separated or living apart from your spouse, you may be able to file a separate return and still take the credit. 1040nr tax return Legally separated. 1040nr tax return   You are not considered married if you are legally separated from your spouse under a decree of divorce or separate maintenance. 1040nr tax return You may be eligible to take the credit on your return using head of household filing status. 1040nr tax return Married and living apart. 1040nr tax return   You are not considered married and are eligible to take the credit if all the following apply. 1040nr tax return You file a return apart from your spouse. 1040nr tax return Your home is the home of a qualifying person for more than half the year. 1040nr tax return You pay more than half the cost of keeping up your home for the year. 1040nr tax return Your spouse does not live in your home for the last 6 months of the year. 1040nr tax return Costs of keeping up a home. 1040nr tax return   The costs of keeping up a home normally include property taxes, mortgage interest, rent, utility charges, home repairs, insurance on the home, and food eaten at home. 1040nr tax return   The costs of keeping up a home do not include payments for clothing, education, medical treatment, vacations, life insurance, transportation, or mortgage principal. 1040nr tax return   They also do not include the purchase, permanent improvement, or replacement of property. 1040nr tax return For example, you cannot include the cost of replacing a water heater. 1040nr tax return However, you can include the cost of repairing a water heater. 1040nr tax return Death of spouse. 1040nr tax return   If your spouse died during the year and you do not remarry before the end of the year, you generally must file a joint return to take the credit. 1040nr tax return If you do remarry before the end of the year, the credit can be claimed on your deceased spouse's own return. 1040nr tax return Provider Identification Test You must identify all persons or organizations that provide care for your child or dependent. 1040nr tax return Use Form 2441, Part I, to show the information. 1040nr tax return If you do not have any care providers and you are filing Form 2441 only to report taxable income in Part III, enter “none” in line 1, column (a). 1040nr tax return Information needed. 1040nr tax return   To identify the care provider, you must give the provider's: Name, Address, and Taxpayer identification number. 1040nr tax return    If the care provider is an individual, the taxpayer identification number is his or her social security number or individual taxpayer identification number. 1040nr tax return If the care provider is an organization, then it is the employer identification number (EIN). 1040nr tax return   You do not have to show the taxpayer identification number if the care provider is a tax-exempt organization (such as a church or school). 1040nr tax return In this case, enter “Tax-Exempt” in the space where Form 2441 asks for the number. 1040nr tax return   If you cannot provide all of the information or the information is incorrect, you must be able to show that you used due diligence (discussed later) in trying to furnish the necessary information. 1040nr tax return Getting the information. 1040nr tax return    You can use Form W-10, Dependent Care Provider's Identification and Certification, to request the required information from the care provider. 1040nr tax return If you do not use Form W-10, you can get the information from one of the other sources listed in the instructions for Form W-10, including: A copy of the provider's social security card, A copy of the provider's completed Form W-4, Employee's Withholding Allowance Certificate, if he or she is your household employee, A copy of the statement furnished by your employer if the provider is your employer's dependent care plan, or A letter or invoice from the provider if it shows the necessary information. 1040nr tax return    You should keep this information with your tax records. 1040nr tax return Do not send Form W-10 (or other document containing this information) to the Internal Revenue Service. 1040nr tax return Due diligence. 1040nr tax return   If the care provider information you give is incorrect or incomplete, your credit may not be allowed. 1040nr tax return However, if you can show that you used due diligence in trying to supply the information, you can still claim the credit. 1040nr tax return   You can show due diligence by getting and keeping the provider's completed Form W-10 or one of the other sources of information just listed. 1040nr tax return Care providers can be penalized if they do not provide this information to you or if they provide incorrect information. 1040nr tax return Provider refusal. 1040nr tax return    If the provider refuses to give you the identifying information, you should report on Form 2441 whatever information you have (such as the name and address). 1040nr tax return Enter “See Attached Statement” in the columns calling for the information you do not have. 1040nr tax return Then attach a statement explaining that you requested the information from the care provider, but the provider did not give you the information. 1040nr tax return Be sure to write your name and social security number on this statement. 1040nr tax return The statement will show that you used due diligence in trying to furnish the necessary information. 1040nr tax return U. 1040nr tax return S. 1040nr tax return citizens and resident aliens living abroad. 1040nr tax return   If you are living abroad, your care provider may not have, and may not be required to get, a U. 1040nr tax return S. 1040nr tax return taxpayer identification number (for example, an SSN or an EIN). 1040nr tax return If so, enter “LAFCP” (Living Abroad Foreign Care Provider) in the space for the care provider's taxpayer identification number. 1040nr tax return How To Figure the Credit Your credit is a percentage of your work-related expenses. 1040nr tax return Your expenses are subject to the earned income limit and the dollar limit. 1040nr tax return The percentage is based on your adjusted gross income. 1040nr tax return Figuring Total Work-Related Expenses To figure the credit for 2013 work-related expenses, count only those you paid by December 31, 2013. 1040nr tax return Expenses prepaid in an earlier year. 1040nr tax return   If you pay for services before they are provided, you can count the prepaid expenses only in the year the care is received. 1040nr tax return Claim the expenses for the later year as if they were actually paid in that later year. 1040nr tax return Expenses not paid until the following year. 1040nr tax return   Do not count 2012 expenses that you paid in 2013 as work-related expenses for 2013. 1040nr tax return You may be able to claim an additional credit for them on your 2013 return, but you must figure it separately. 1040nr tax return See Payments for prior year's expenses under Amount of Credit, later. 1040nr tax return If you had expenses in 2013 that you did not pay until 2014, you cannot count them when figuring your 2013 credit. 1040nr tax return You may be able to claim a credit for them on your 2014 return. 1040nr tax return Expenses reimbursed. 1040nr tax return   If a state social services agency pays you a nontaxable amount to reimburse you for some of your child and dependent care expenses, you cannot count the expenses that are reimbursed as work-related expenses. 1040nr tax return Example. 1040nr tax return You paid work-related expenses of $3,000. 1040nr tax return You are reimbursed $2,000 by a state social services agency. 1040nr tax return You can use only $1,000 to figure your credit. 1040nr tax return Medical expenses. 1040nr tax return   Some expenses for the care of qualifying persons who are not able to care for themselves may qualify as work-related expenses and also as medical expenses. 1040nr tax return You can use them either way, but you cannot use the same expenses to claim both a credit and a medical expense deduction. 1040nr tax return   If you use these expenses to figure the credit and they are more than the earned income limit or the dollar limit, discussed later, you can add the excess to your medical expenses. 1040nr tax return However, if you use your total expenses to figure your medical expense deduction, you cannot use any part of them to figure your credit. 1040nr tax return For information on medical expenses, see Publication 502, Medical and Dental Expenses. 1040nr tax return    Amounts excluded from your income under your employer's dependent care benefits plan cannot be used to claim a medical expense deduction. 1040nr tax return Dependent Care Benefits If you receive dependent care benefits, your dollar limit for purposes of the credit may be reduced. 1040nr tax return See Reduced Dollar Limit, later. 1040nr tax return But, even if you cannot take the credit, you may be able to take an exclusion or deduction for the dependent care benefits. 1040nr tax return Dependent care benefits. 1040nr tax return    Dependent care benefits include: Amounts your employer paid directly to either you or your care provider for the care of your qualifying person while you work, The fair market value of care in a daycare facility provided or sponsored by your employer, and Pre-tax contributions you made under a dependent care flexible spending arrangement. 1040nr tax return Your salary may have been reduced to pay for these benefits. 1040nr tax return If you received benefits as an employee, they should be shown in box 10 of your Form W-2, Wage and Tax Statement. 1040nr tax return See Statement for employee, later. 1040nr tax return Benefits you received as a partner should be shown in box 13 of your Schedule K-1 (Form 1065) with code O. 1040nr tax return   Enter the amount of these benefits on Form 2441, Part III, line 12. 1040nr tax return Exclusion or deduction. 1040nr tax return   If your employer provides dependent care benefits under a qualified plan, you may be able to exclude these benefits from your income. 1040nr tax return Your employer can tell you whether your benefit plan qualifies. 1040nr tax return To claim the exclusion, you must complete Part III of Form 2441. 1040nr tax return You cannot use Form 1040EZ. 1040nr tax return   If you are self-employed and receive benefits from a qualified dependent care benefit plan, you are treated as both employer and employee. 1040nr tax return Therefore, you would not get an exclusion from wages. 1040nr tax return Instead, you would get a deduction on Form 1040, Schedule C, line 14; Schedule E, line 19 or 28; or Schedule F, line 15. 1040nr tax return To claim the deduction, you must use Form 2441. 1040nr tax return   The amount you can exclude or deduct is limited to the smallest of: The total amount of dependent care benefits you received during the year, The total amount of qualified expenses you incurred during the year, Your earned income, Your spouse's earned income, or $5,000 ($2,500 if married filing separately). 1040nr tax return   The definition of earned income for the exclusion or deduction is the same as the definition used when figuring the credit except that earned income for the exclusion or deduction does not include any dependent care benefits you receive. 1040nr tax return    You can choose to include your nontaxable combat pay in earned income when figuring your exclusion or deduction, even if you choose not to include it in earned income for the earned income credit or the credit for child and dependent care expenses. 1040nr tax return Statement for employee. 1040nr tax return   Your employer must give you a Form W-2 (or similar statement), showing in box 10 the total amount of dependent care benefits provided to you during the year under a qualified plan. 1040nr tax return Your employer will also include any dependent care benefits over $5,000 in your wages shown on your Form W-2 in box 1. 1040nr tax return Effect of exclusion on credit. 1040nr tax return   If you exclude dependent care benefits from your income, the amount of the excluded benefits: Is not included in your work-related expenses, and Reduces the dollar limit, discussed later. 1040nr tax return Earned Income Limit The amount of work-related expenses you use to figure your credit cannot be more than: Your earned income for the year, if you are single at the end of the year, or The smaller of your or your spouse's earned income for the year if you are married at the end of the year. 1040nr tax return Earned income for the purpose of figuring the credit is defined under Earned Income Test, earlier. 1040nr tax return For purposes of item (2), use your spouse's earned income for the entire year, even if you were married for only part of the year. 1040nr tax return Example. 1040nr tax return You remarried on December 3. 1040nr tax return Your earned income for the year was $18,000. 1040nr tax return Your new spouse's earned income for the year was $2,000. 1040nr tax return You paid work-related expenses of $3,000 for the care of your 5-year-old child and qualified to claim the credit. 1040nr tax return The amount of expenses you use to figure your credit cannot be more than $2,000 (the smaller of your earned income or that of your spouse). 1040nr tax return Separated spouse. 1040nr tax return   If you are legally separated or married and living apart from your spouse (as described under Joint Return Test, earlier), you are not considered married for purposes of the earned income limit. 1040nr tax return Use only your income in figuring the earned income limit. 1040nr tax return Surviving spouse. 1040nr tax return   If your spouse died during the year and you file a joint return as a surviving spouse, you may, but are not required to, take into account the earned income of your spouse who died during the year. 1040nr tax return Community property laws. 1040nr tax return   Disregard community property laws when you figure earned income for this credit. 1040nr tax return Self-employment earnings. 1040nr tax return   If you are self-employed, include your net earnings in earned income. 1040nr tax return For purposes of the child and dependent care credit, net earnings from self-employment generally means the amount from Schedule SE (either Section A or Section B), line 3, minus any deduction for self-employment tax on Form 1040 or Form 1040NR, line 27. 1040nr tax return Include your self-employment earnings in earned income, even if they are less than $400 and you did not file Schedule SE. 1040nr tax return Clergy or church employee. 1040nr tax return   If you are a member of the clergy or a church employee, see the Instructions for Form 2441 for details. 1040nr tax return Statutory employee. 1040nr tax return   If you filed Schedule C (Form 1040) or C-EZ (Form 1040) to report income as a statutory employee, also include as earned income the amount from line 1 of that Schedule C (Form 1040) or C-EZ (Form 1040). 1040nr tax return Net loss. 1040nr tax return   You must reduce your earned income by any net loss from self-employment. 1040nr tax return Optional method if earnings are low or a net loss. 1040nr tax return   If your net earnings from self-employment are low or you have a net loss, you may be able to figure your net earnings by using an optional method instead of the regular method. 1040nr tax return Get Publication 334, Tax Guide for Small Business, for details. 1040nr tax return If you use an optional method to figure net earnings for self-employment tax purposes, include those net earnings in your earned income for this credit. 1040nr tax return In this case, subtract any deduction you claimed on Form 1040 or Form 1040NR, line 27, from the total of the amounts on Schedule SE, Section B, lines 3 and 4b, to figure your net earnings. 1040nr tax return You or your spouse is a student or not able to care for self. 1040nr tax return   Your spouse who is either a full-time student or not able to care for himself or herself is treated as having earned income. 1040nr tax return His or her earned income for each month is considered to be at least $250 if there is one qualifying person in your home, or at least $500 if there are two or more. 1040nr tax return Spouse works. 1040nr tax return   If your spouse works during that month, use the higher of $250 (or $500) or his or her actual earned income for that month. 1040nr tax return Spouse qualifies for part of month. 1040nr tax return   If your spouse is a full-time student or not able to care for himself or herself for only part of a month, the full $250 (or $500) still applies for that month. 1040nr tax return You are a student or not able to care for self. 1040nr tax return   These rules also apply if you are a student or not able to care for yourself and are filing a joint return. 1040nr tax return For each month or part of a month you are a student or not able to care for yourself, your earned income is considered to be at least $250 (or $500). 1040nr tax return If you also work during that month, use the higher of $250 (or $500) or your actual earned income for that month. 1040nr tax return Both spouses qualify. 1040nr tax return   If, in the same month, both you and your spouse are either full-time students or not able to care for yourselves, only one spouse can be considered to have this earned income of $250 (or $500) for that month. 1040nr tax return Example. 1040nr tax return Jim works and keeps up a home for himself and his wife Sharon. 1040nr tax return Because of an accident, Sharon is not able to care for herself for 11 months during the tax year. 1040nr tax return During the 11 months, Jim pays $3,300 of work-related expenses for Sharon's care. 1040nr tax return These expenses also qualify as medical expenses. 1040nr tax return Their adjusted gross income is $29,000 and the entire amount is Jim's earned income. 1040nr tax return Jim and Sharon's earned income limit is the smallest of the following amounts. 1040nr tax return   Jim and Sharon's Earned Income Limit   1) Work-related expenses Jim paid $   3,300   2) Jim's earned income $   29,000   3) Income considered earned by Sharon (11 × $250) $    2,750   Jim and Sharon can use $2,750 to figure the credit and treat the balance of $550 ($3,300 − $2,750) as a medical expense. 1040nr tax return However, if they use the $3,300 first as a medical expense, they cannot use any part of that amount to figure the credit. 1040nr tax return Dollar Limit There is a dollar limit on the amount of your work-related expenses you can use to figure the credit. 1040nr tax return This limit is $3,000 for one qualifying person, or $6,000 for two or more qualifying persons. 1040nr tax return If you paid work-related expenses for the care of two or more qualifying persons, the applicable dollar limit is $6,000. 1040nr tax return This limit does not need to be divided equally among them. 1040nr tax return For example, if your work-related expenses for the care of one qualifying person are $3,200 and your work-related expenses for another qualifying person are $2,800, you can use the total, $6,000, when figuring the credit. 1040nr tax return Yearly limit. 1040nr tax return   The dollar limit is a yearly limit. 1040nr tax return The amount of the dollar limit remains the same no matter how long, during the year, you have a qualifying person in your household. 1040nr tax return Use the $3,000 limit if you paid work-related expenses for the care of one qualifying person at any time during the year. 1040nr tax return Use $6,000 if you paid work-related expenses for the care of more than one qualifying person at any time during the year. 1040nr tax return Example 1. 1040nr tax return You pay $500 a month for after-school care for your son. 1040nr tax return He turned 13 on May 1 and is no longer a qualifying person. 1040nr tax return You can use the $2,000 of expenses for his care January through April to figure your credit because it is not more than the $3,000 yearly limit. 1040nr tax return Example 2. 1040nr tax return In July of this year, to permit your spouse to begin a new job, you enrolled your 3-year-old daughter in a nursery school that provides preschool childcare. 1040nr tax return You paid $300 per month for the childcare. 1040nr tax return You can use the full $1,800 you paid ($300 × 6 months) as qualified expenses because it is not more than the $3,000 yearly limit. 1040nr tax return Reduced Dollar Limit If you received dependent care benefits that you exclude or deduct from your income, you must subtract that amount from the dollar limit that applies to you. 1040nr tax return Your reduced dollar limit is figured on Form 2441, Part III. 1040nr tax return See Dependent Care Benefits, earlier, for information on excluding or deducting these benefits. 1040nr tax return Example 1. 1040nr tax return George is a widower with one child and earns $24,000 a year. 1040nr tax return He pays work-related expenses of $2,900 for the care of his 4-year-old child and qualifies to claim the credit for child and dependent care expenses. 1040nr tax return His employer pays an additional $1,000 under a qualified dependent care benefit plan. 1040nr tax return This $1,000 is excluded from George's income. 1040nr tax return Although the dollar limit for his work-related expenses is $3,000 (one qualifying person), George figures his credit on only $2,000 of the $2,900 work-related expenses he paid. 1040nr tax return This is because his dollar limit is reduced as shown next. 1040nr tax return   George's Reduced Dollar Limit 1) Maximum allowable expenses for one qualifying person $3,000 2) Minus: Dependent care benefits George excludes from income −1,000 3) Reduced dollar limit on expenses George can use for the credit $2,000 Example 2. 1040nr tax return Randall is married and both he and his wife are employed. 1040nr tax return Each has earned income in excess of $6,000. 1040nr tax return They have two children, Anne and Andy, ages 2 and 4, who attend a daycare facility licensed and regulated by the state. 1040nr tax return Randall's work-related expenses are $6,000 for the year. 1040nr tax return Randall's employer has a dependent care assistance program as part of its cafeteria plan, which allows employees to make pre-tax contributions to a dependent care flexible spending arrangement. 1040nr tax return Randall has elected to take the maximum $5,000 exclusion from his salary to cover dependent care expenses through this program. 1040nr tax return Although the dollar limit for his work-related expenses is $6,000 (two or more qualifying persons), Randall figures his credit on only $1,000 of the $6,000 work-related expense paid. 1040nr tax return This is because his dollar limit is reduced as shown next. 1040nr tax return   Randall's Reduced Dollar Limit 1) Maximum allowable expenses for two qualifying persons $6,000 2) Minus: Dependent care benefits selected from employer's cafeteria plan and  excluded from Randall's income −5,000 3) Reduced dollar limit on work-related expenses Randall can use for the credit $1,000 Amount of Credit To determine the amount of your credit, multiply your work-related expenses (after applying the earned income and dollar limits) by a percentage. 1040nr tax return This percentage depends on your adjusted gross income shown on Form 1040, line 38; Form 1040A, line 22; or Form 1040NR, line 37. 1040nr tax return The following table shows the percentage to use based on adjusted gross income. 1040nr tax return   IF your adjusted gross income is: THEN the       Over:       But not over:   percentage is:       $0   —   $15,000   35%       15,000   —   17,000   34%       17,000   —   19,000   33%       19,000   —   21,000   32%       21,000   —   23,000   31%       23,000   —   25,000   30%       25,000   —   27,000   29%       27,000   —   29,000   28%       29,000   —   31,000   27%       31,000   —   33,000   26%       33,000   —   35,000   25%       35,000   —   37,000   24%       37,000   —   39,000   23%       39,000   —   41,000   22%       41,000   —   43,000   21%       43,000   —   No limit   20%   To qualify for the credit, you must have one or more qualifying persons. 1040nr tax return You should show the expenses for each person on Form 2441, line 2, column (c). 1040nr tax return However, it is possible a qualifying person could have no expenses and a second qualifying person could have expenses exceeding $3,000. 1040nr tax return You should list -0- for the one person and the actual amount for the second person. 1040nr tax return The $6,000 limit that applies to two or more qualifying persons would still be used to compute your credit unless you already excluded or deducted, in Part III of Form 2441, certain dependent care benefits paid to you (or on your behalf) by your employer. 1040nr tax return Example. 1040nr tax return Roger and Megan Paris have two qualifying children. 1040nr tax return They received $1,000 of dependent care benefits from Megan's employer during 2013, but they incurred a total of $19,500 of child and dependent care expenses. 1040nr tax return They complete Part III of Form 2441 to exclude the $1,000 from their taxable income (offsetting $1,000 of their expenses). 1040nr tax return Roger and Megan continue to line 27 to figure their credit using the remaining $18,500 of expenses. 1040nr tax return Line 30 tells them to complete line 2 without including any dependent care benefits. 1040nr tax return They complete line 2 of Form 2441, listing both Susan and James, as shown in the Line 2 example above. 1040nr tax return Line 2 Example (a) Qualifying person's name (b) Qualifying person's social security number (c) Qualified expenses you incurred and paid in 2013 for the person listed in column (a) First Last Susan Paris 123-00-6789 -0- James Paris 987-00-4321 18,500. 1040nr tax return 00 All of Susan's expenses were covered by the $1,000 of employer-provided dependent care benefits. 1040nr tax return However, their son James has special needs and they paid $18,500 for his care. 1040nr tax return Line 3 imposes a $5,000 limit for two or more children ($6,000 limit, minus $1,000 already excluded from income = $5,000) and Roger and Megan continue to complete the form. 1040nr tax return Even though line 2 indicates one of the Paris children did not have any dependent care expenses, it does not change the fact that they had two qualifying children for the purposes of Form 2441. 1040nr tax return Payments for prior year's expenses. 1040nr tax return   If you had work-related expenses in 2012 that you paid in 2013, you may be able to increase the credit on your 2013 return. 1040nr tax return Attach a statement to your form showing how you figured the additional amount from 2012. 1040nr tax return Then enter “CPYE” (Credit for Prior Year Expenses) and the amount of the credit on the dotted line next to line 9 on Form 2441. 1040nr tax return Also enter the name and taxpayer identification number of the person for whom you paid the prior year's expenses. 1040nr tax return Then add this credit to the amount on line 9, and replace the amount on line 9 with the total. 1040nr tax return See Worksheet A. 1040nr tax return Example. 1040nr tax return In 2012, Sam and Kate had childcare expenses of $2,600 for their 12-year-old child. 1040nr tax return Of the $2,600, they paid $2,000 in 2012 and $600 in 2013. 1040nr tax return Their adjusted gross income for 2012 was $30,000. 1040nr tax return Sam's earned income of $14,000 was less than Kate's earned income. 1040nr tax return A credit for their 2012 expenses paid in 2013 is not allowed in 2012. 1040nr tax return It is allowed for the 2013 tax year, but they must use their adjusted gross income for 2012 to compute the amount. 1040nr tax return The filled-in Worksheet A they used to figure this credit is shown later. 1040nr tax return Sam and Kate add the $162 from line 13 of this worksheet to their 2013 credit and enter the total on their Form 2441, line 9. 1040nr tax return They enter “CPYE $162” and their child's name and SSN in the space to the left of line 9. 1040nr tax return Worksheet A. 1040nr tax return Worksheet for 2012 Expenses Paid in 2013 Use this worksheet to figure the credit you may claim for 2012 expenses paid in 2013. 1040nr tax return 1. 1040nr tax return   Enter your 2012 qualified expenses paid in 2012 1. 1040nr tax return     2. 1040nr tax return   Enter your 2012 qualified expenses paid in 2013 2. 1040nr tax return     3. 1040nr tax return   Add the amounts on lines 1 and 2 3. 1040nr tax return     4. 1040nr tax return   Enter $3,000 if care was for one qualifying person ($6,000 if for two or more) 4. 1040nr tax return     5. 1040nr tax return   Enter any dependent care benefits received for 2012 and excluded from your income (from your 2012 Form 2441, line 25) 5. 1040nr tax return     6. 1040nr tax return   Subtract the amount on line 5 from the amount on line 4 and enter the result 6. 1040nr tax return     7. 1040nr tax return   Compare your earned income for 2012 and your spouse's earned income for 2012 and enter the smaller amount 7. 1040nr tax return     8. 1040nr tax return   Compare the amounts on lines 3, 6, and 7 and enter the smallest amount 8. 1040nr tax return     9. 1040nr tax return   Enter the amount on which you figured the credit for 2012 (from your 2012 Form 2441, line 6) 9. 1040nr tax return     10. 1040nr tax return   Subtract the amount on line 9 from the amount on line 8 and enter the result. 1040nr tax return If zero or less, stop here. 1040nr tax return You cannot increase your 2013 credit by any previous year's expenses 10. 1040nr tax return     11. 1040nr tax return   Enter your 2012 adjusted gross income (from your 2012 Form 1040, line 38; Form 1040A, line 22; or Form 1040NR, line 37) 11. 1040nr tax return     12. 1040nr tax return   Find your 2012 adjusted gross income in the table below and enter the corresponding decimal amount here 12. 1040nr tax return             IF your 2012 adjusted gross income is:   THEN the decimal                 Over:   But not over:     amount is:                 $0 — $15,000     . 1040nr tax return 35                 15,000 — 17,000     . 1040nr tax return 34                 17,000 — 19,000     . 1040nr tax return 33                 19,000 — 21,000     . 1040nr tax return 32                 21,000 — 23,000     . 1040nr tax return 31                 23,000 — 25,000     . 1040nr tax return 30                 25,000 — 27,000     . 1040nr tax return 29                 27,000 — 29,000     . 1040nr tax return 28                 29,000 — 31,000     . 1040nr tax return 27                 31,000 — 33,000     . 1040nr tax return 26                 33,000 — 35,000     . 1040nr tax return 25                 35,000 — 37,000     . 1040nr tax return 24                 37,000 — 39,000     . 1040nr tax return 23                 39,000 — 41,000     . 1040nr tax return 22                 41,000 — 43,000     . 1040nr tax return 21                 43,000 — No limit     . 1040nr tax return 20           13. 1040nr tax return   Multiply line 10 by line 12. 1040nr tax return Add this amount to your 2013 credit and enter the total on your 2013 Form 2441, line 9. 1040nr tax return Enter the following on the dotted line next to line 9 of Form 2441: “CPYE” The amount of this credit for a prior year's expenses           Also, attach a statement to your tax return showing the name and taxpayer identification number of the person for whom you paid the prior year's expenses and how you figured the credit 13. 1040nr tax return       Worksheet A. 1040nr tax return Filled-in Worksheet for 2012 Expenses Paid in 2013 Use this worksheet to figure the credit you may claim for 2012 expenses paid in 2013. 1040nr tax return 1. 1040nr tax return   Enter your 2012 qualified expenses paid in 2012 1. 1040nr tax return   $2,000 2. 1040nr tax return   Enter your 2012 qualified expenses paid in 2013 2. 1040nr tax return   600 3. 1040nr tax return   Add the amounts on lines 1 and 2 3. 1040nr tax return   2,600 4. 1040nr tax return   Enter $3,000 if care was for one qualifying person ($6,000 if for two or more) 4. 1040nr tax return   3,000 5. 1040nr tax return   Enter any dependent care benefits received for 2012 and excluded from your income (from your 2012 Form 2441, line 25) 5. 1040nr tax return   0 6. 1040nr tax return   Subtract the amount on line 5 from the amount on line 4 and enter the result 6. 1040nr tax return   3,000 7. 1040nr tax return   Compare your earned income for 2012 and your spouse's earned income for 2012 and enter the smaller amount 7. 1040nr tax return   14,000 8. 1040nr tax return   Compare the amounts on lines 3, 6, and 7 and enter the smallest amount 8. 1040nr tax return   2,600 9. 1040nr tax return   Enter the amount on which you figured the credit for 2012 (from your 2012 Form 2441, line 6) 9. 1040nr tax return   2,000 10. 1040nr tax return   Subtract the amount on line 9 from the amount on line 8 and enter the result. 1040nr tax return If zero or less, stop here. 1040nr tax return You cannot increase your 2013 credit by any previous year's expenses 10. 1040nr tax return   600 11. 1040nr tax return   Enter your 2012 adjusted gross income (from your 2012 Form 1040, line 38; Form 1040A, line 22; or Form 1040NR, line 37) 11. 1040nr tax return   30,000 12. 1040nr tax return   Find your 2012 adjusted gross income in the table below and enter the corresponding decimal amount here 12. 1040nr tax return   . 1040nr tax return 27         IF your 2012 adjusted gross income is:   THEN the decimal                 Over   But not over     amount is:                 $0 — $15,000     . 1040nr tax return 35                 15,000 — 17,000     . 1040nr tax return 34                 17,000 — 19,000     . 1040nr tax return 33                 19,000 — 21,000     . 1040nr tax return 32                 21,000 — 23,000     . 1040nr tax return 31                 23,000 — 25,000     . 1040nr tax return 30                 25,000 — 27,000     . 1040nr tax return 29                 27,000 — 29,000     . 1040nr tax return 28                 29,000 — 31,000     . 1040nr tax return 27                 31,000 — 33,000     . 1040nr tax return 26                 33,000 — 35,000     . 1040nr tax return 25                 35,000 — 37,000     . 1040nr tax return 24                 37,000 — 39,000     . 1040nr tax return 23                 39,000 — 41,000     . 1040nr tax return 22                 41,000 — 43,000     . 1040nr tax return 21                 43,000 — No limit     . 1040nr tax return 20           13. 1040nr tax return   Multiply line 10 by line 12. 1040nr tax return Add this amount to your 2013 credit and enter the total on your 2013 Form 2441, line 9. 1040nr tax return Enter the following on the dotted line next to line 9 of Form 2441: “CPYE” The amount of this credit for a prior year's expenses             Also, attach a statement to your tax return showing the name and taxpayer identification number of the person for whom you paid the prior year's expenses and how you figured the credit 13. 1040nr tax return   $162   How To Claim the Credit To claim the credit, you can file Form 1040, Form 1040A, or Form 1040NR. 1040nr tax return You cannot claim the credit on Form 1040EZ or Form 1040NR-EZ. 1040nr tax return Form 1040, Form 1040A, or Form 1040NR. 1040nr tax return    You must complete Form 2441 and attach it to your Form 1040, Form 1040A, or Form 1040NR. 1040nr tax return Enter the credit on your Form 1040, line 48; Form 1040A, line 29; or Form 1040NR, line 46. 1040nr tax return Limit on credit. 1040nr tax return    The amount of credit you can claim is limited to your tax. 1040nr tax return For more information, see the Instructions for Form 2441. 1040nr tax return Tax credit not refundable. 1040nr tax return   You cannot get a refund for any part of the credit that is more than this limit. 1040nr tax return Recordkeeping. 1040nr tax return You should keep records of your work-related expenses. 1040nr tax return Also, if your dependent or spouse is not able to care for himself or herself, your records should show both the nature and length of the disability. 1040nr tax return Other records you should keep to support your claim for the credit are described under Provider Identification Test, earlier. 1040nr tax return Employment Taxes for Household Employers If you pay someone to come to your home and care for your dependent or spouse, you may be a household employer. 1040nr tax return If you are a household employer, you will need an employer identification number (EIN) and you may have to pay employment taxes. 1040nr tax return If the individuals who work in your home are self-employed, you are not liable for any of the taxes discussed in this section. 1040nr tax return Self-employed persons who are in business for themselves are not household employees. 1040nr tax return Usually, you are not a household employer if the person who cares for your dependent or spouse does so at his or her home or place of business. 1040nr tax return If you use a placement agency that exercises control over what work is done and how it will be done by a babysitter or companion who works in your home, the worker is not your employee. 1040nr tax return This control could include providing rules of conduct and appearance and requiring regular reports. 1040nr tax return In this case, you do not have to pay employment taxes. 1040nr tax return But, if an agency merely gives you a list of sitters and you hire one from that list, and pay the sitter directly, the sitter may be your employee. 1040nr tax return If you have a household employee, you may be subject to: Social security and Medicare taxes, Federal unemployment tax, and Federal income tax withholding. 1040nr tax return Social security and Medicare taxes are generally withheld from the employee's pay and matched by the employer. 1040nr tax return Federal unemployment (FUTA) tax is paid by the employer only and provides for payments of unemployment compensation to workers who have lost their jobs. 1040nr tax return Federal income tax is withheld from the employee's total pay if the employee asks you to do so and you agree. 1040nr tax return For more information on a household employer's tax responsibilities, see Publication 926 and Schedule H (Form 1040) and its instructions. 1040nr tax return State employment tax. 1040nr tax return   You may also have to pay state unemployment tax. 1040nr tax return Contact your state unemployment tax office for information. 1040nr tax return You should also find out whether you need to pay or collect other state employment taxes or carry worker's compensation insurance. 1040nr tax return For a list of state unemployment tax agencies, visit the U. 1040nr tax return S. 1040nr tax return Department of Labor's website. 1040nr tax return To find that website, use the link in Publication 926 or search online. 1040nr tax return How To Get Tax Help Whether it's help with a tax issue, preparing your tax return or a need for a free publication or form, get the help you need the way you want it: online, use a smart phone, call or walk in to an IRS office or volunteer site near you. 1040nr tax return Free help with your tax return. 1040nr tax return   You can get free help preparing your return nationwide from IRS-certified volunteers. 1040nr tax return The Volunteer Income Tax Assistance (VITA) program helps low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers. 1040nr tax return The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. 1040nr tax return Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. 1040nr tax return In addition, some VITA and TCE sites provide taxpayers the opportunity to prepare their own return with help from an IRS-certified volunteer. 1040nr tax return To find the nearest VITA or TCE site, you can use the VITA Locator Tool on IRS. 1040nr tax return gov, download the IRS2Go app, or call 1-800-906-9887. 1040nr tax return   As part of the TCE program, AARP offers the Tax-Aide counseling program. 1040nr tax return To find the nearest AARP Tax-Aide site, visit AARP's website at www. 1040nr tax return aarp. 1040nr tax return org/money/taxaide or call 1-888-227-7669. 1040nr tax return For more information on these programs, go to IRS. 1040nr tax return gov and enter “VITA” in the search box. 1040nr tax return Internet. 1040nr tax return    IRS. 1040nr tax return gov and IRS2Go are ready when you are —24 hours a day, 7 days a week. 1040nr tax return Download the free IRS2Go app from the iTunes app store or from Google Play. 1040nr tax return Use it to check your refund status, order transcripts of your tax returns or tax account, watch the IRS YouTube channel, get IRS news as soon as it's released to the public, subscribe to filing season updates or daily tax tips, and follow the IRS Twitter news feed, @IRSnews, to get the latest federal tax news, including information about tax law changes and important IRS programs. 1040nr tax return Check the status of your 2013 refund with the Where's My Refund? application on IRS. 1040nr tax return gov or download the IRS2Go app and select the Refund Status option. 1040nr tax return The IRS issues more than 9 out of 10 refunds in less than 21 days. 1040nr tax return Using these applications, you can start checking on the status of your return within 24 hours after we receive your e-filed return or 4 weeks after you mail a paper return. 1040nr tax return You will also be given a personalized refund date as soon as the IRS processes your tax return and approves your refund. 1040nr tax return The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. 1040nr tax return Use the Interactive Tax Assistant (ITA) to research your tax questions. 1040nr tax return No need to wait on the phone or stand in line. 1040nr tax return The ITA is available 24 hours a day, 7 days a week, and provides you with a variety of tax information related to general filing topics, deductions, credits, and income. 1040nr tax return When you reach the response screen, you can print the entire interview and the final response for your records. 1040nr tax return New subject areas are added on a regular basis. 1040nr tax return  Answers not provided through ITA may be found in Tax Trails, one of the Tax Topics on IRS. 1040nr tax return gov which contain general individual and business tax information or by searching the IRS Tax Map, which includes an international subject index. 1040nr tax return You can use the IRS Tax Map, to search publications and instructions by topic or keyword. 1040nr tax return The IRS Tax Map integrates forms and publications into one research tool and provides single-point access to tax law information by subject. 1040nr tax return When the user searches the IRS Tax Map, they will be provided with links to related content in existing IRS publications, forms and instructions, questions and answers, and Tax Topics. 1040nr tax return Coming this filing season, you can immediately view and print for free all 5 types of individual federal tax transcripts (tax returns, tax account, record of account, wage and income statement, and certification of non-filing) using Get Transcript. 1040nr tax return You can also ask the IRS to mail a return or an account transcript to you. 1040nr tax return Only the mail option is available by choosing the Tax Records option on the IRS2Go app by selecting Mail Transcript on IRS. 1040nr tax return gov or by calling 1-800-908-9946. 1040nr tax return Tax return and tax account transcripts are generally available for the current year and the past three years. 1040nr tax return Determine if you are eligible for the EITC and estimate the amount of the credit with the Earned Income Tax Credit (EITC) Assistant. 1040nr tax return Visit Understanding Your IRS Notice or Letter to get answers to questions about a notice or letter you received from the IRS. 1040nr tax return If you received the First Time Homebuyer Credit, you can use the First Time Homebuyer Credit Account Look-up tool for information on your repayments and account balance. 1040nr tax return Check the status of your amended return using Where's My Amended Return? Go to IRS. 1040nr tax return gov and enter Where's My Amended Return? in the search box. 1040nr tax return You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. 1040nr tax return It can take up to 3 weeks from the date you mailed it to show up in our system. 1040nr tax return Make a payment using one of several safe and convenient electronic payment options available on IRS. 1040nr tax return gov. 1040nr tax return Select the Payment tab on the front page of IRS. 1040nr tax return gov for more information. 1040nr tax return Determine if you are eligible and apply for an online payment agreement, if you owe more tax than you can pay today. 1040nr tax return Figure your income tax withholding with the IRS Withholding Calculator on IRS. 1040nr tax return gov. 1040nr tax return Use it if you've had too much or too little withheld, your personal situation has changed, you're starting a new job or you just want to see if you're having the right amount withheld. 1040nr tax return Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. 1040nr tax return gov. 1040nr tax return Request an Electronic Filing PIN by going to IRS. 1040nr tax return gov and entering Electronic Filing PIN in the search box. 1040nr tax return Download forms, instructions and publications, including accessible versions for people with disabilities. 1040nr tax return Locate the nearest Taxpayer Assistance Center (TAC) using the Office Locator tool on IRS. 1040nr tax return gov, or choose the Contact Us option on the IRS2Go app and search Local Offices. 1040nr tax return An employee can answer questions about your tax account or help you set up a payment plan. 1040nr tax return Before you visit, check the Office Locator on IRS. 1040nr tax return gov, or Local Offices under Contact Us on IRS2Go to confirm the address, phone number, days and hours of operation, and the services provided. 1040nr tax return If you have a special need, such as a disability, you can request an appointment. 1040nr tax return Call the local number listed in the Office Locator, or look in the phone book under Unit
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The 1040nr Tax Return

1040nr tax return 9. 1040nr tax return   Dispositions of Property Used in Farming Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Section 1231 Gains and LossesNonrecaptured section 1231 losses. 1040nr tax return Depreciation RecaptureSection 1245 Property Section 1250 Property Installment Sale Other Dispositions Other GainsExceptions. 1040nr tax return Amount to report as ordinary income. 1040nr tax return Applicable percentage. 1040nr tax return Amount to report as ordinary income. 1040nr tax return Applicable percentage. 1040nr tax return Introduction When you dispose of property used in your farm business, your taxable gain or loss is usually treated as ordinary income (which is taxed at the same rates as wages and interest income) or capital gain (which is generally taxed at lower rates) under the rules for section 1231 transactions. 1040nr tax return When you dispose of depreciable property (section 1245 property or section 1250 property) at a gain, you may have to recognize all or part of the gain as ordinary income under the depreciation recapture rules. 1040nr tax return Any gain remaining after applying the depreciation recapture rules is a section 1231 gain, which may be taxed as a capital gain. 1040nr tax return Gains and losses from property used in farming are reported on Form 4797, Sales of Business Property. 1040nr tax return Table 9-1 contains examples of items reported on Form 4797 and refers to the part of that form on which they first should be reported. 1040nr tax return Topics - This chapter discusses: Section 1231 gains and losses Depreciation recapture Other gains Useful Items - You may want to see: Publication 544 Sales and Other Dispositions of Assets Form (and Instructions) 4797 Sales of Business Property See chapter 16 for information about getting publications and forms. 1040nr tax return Section 1231 Gains and Losses Section 1231 gains and losses are the taxable gains and losses from section 1231 transactions (explained below). 1040nr tax return Their treatment as ordinary or capital gains depends on whether you have a net gain or a net loss from all of your section 1231 transactions in the tax year. 1040nr tax return Table 9-1. 1040nr tax return Where to First Report Certain Items on Form 4797 Type of property Held 1 year  or less Held more than  1 year 1 Depreciable trade or business property:       a Sold or exchanged at a gain Part II Part III (1245, 1250)   b Sold or exchanged at a loss Part II Part I 2 Farmland held less than 10 years for which soil, water, or land clearing expenses were deducted:       a Sold at a gain Part II Part III (1252)   b Sold at a loss Part II Part I 3 All other farmland Part II Part I 4 Disposition of cost-sharing payment property described in section 126 Part II Part III (1255) 5 Cattle and horses used in a trade or business for draft, breeding, dairy, or sporting purposes: Held less  than 24 mos. 1040nr tax return Held 24 mos. 1040nr tax return  or more   a Sold at a gain Part II Part III (1245)   b Sold at a loss Part II Part I   c Raised cattle and horses sold at a gain Part II Part I 6 Livestock other than cattle and horses used in a trade or business for draft, breeding, dairy, or sporting purposes: Held less  than 12 mos. 1040nr tax return Held 12 mos. 1040nr tax return   or more   a Sold at a gain Part II Part III (1245)   b Sold at a loss Part II Part I   c Raised livestock sold at a gain Part II Part I If you have a gain from a section 1231 transaction, first determine whether any of the gain is ordinary income under the depreciation recapture rules (explained later). 1040nr tax return Do not take that gain into account as section 1231 gain. 1040nr tax return Section 1231 transactions. 1040nr tax return   Gain or loss on the following transactions is subject to section 1231 treatment. 1040nr tax return Sale or exchange of cattle and horses. 1040nr tax return The cattle and horses must be held for draft, breeding, dairy, or sporting purposes and held for 24 months or longer. 1040nr tax return Sale or exchange of other livestock. 1040nr tax return This livestock must be held for draft, breeding, dairy, or sporting purposes and held for 12 months or longer. 1040nr tax return Other livestock includes hogs, mules, sheep, goats, donkeys, and other fur-bearing animals. 1040nr tax return Other livestock does not include poultry. 1040nr tax return Sale or exchange of depreciable personal property. 1040nr tax return This property must be used in your business and held longer than 1 year. 1040nr tax return Generally, property held for the production of rents or royalties is considered to be used in a trade or business. 1040nr tax return Examples of depreciable personal property include farm machinery and trucks. 1040nr tax return It also includes amortizable section 197 intangibles. 1040nr tax return Sale or exchange of real estate. 1040nr tax return This property must be used in your business and held longer than 1 year. 1040nr tax return Examples are your farm or ranch (including barns and sheds). 1040nr tax return Sale or exchange of unharvested crops. 1040nr tax return The crop and land must be sold, exchanged, or involuntarily converted at the same time and to the same person, and the land must have been held longer than 1 year. 1040nr tax return You cannot keep any right or option to reacquire the land directly or indirectly (other than a right customarily incident to a mortgage or other security transaction). 1040nr tax return Growing crops sold with a leasehold on the land, even if sold to the same person in a single transaction, are not included. 1040nr tax return Distributive share of partnership gains and losses. 1040nr tax return Your distributive share must be from the sale or exchange of property listed above and held longer than 1 year (or for the required period for certain livestock). 1040nr tax return Cutting or disposal of timber. 1040nr tax return Special rules apply if you owned the timber longer than 1 year and elect to treat timber cutting as a sale or exchange, or you enter into a cutting contract, as described in chapter 8 under Timber . 1040nr tax return Condemnation. 1040nr tax return The condemned property (defined in chapter 11) must have been held longer than 1 year. 1040nr tax return It must be business property or a capital asset held in connection with a trade or business or a transaction entered into for profit, such as investment property. 1040nr tax return It cannot be property held for personal use. 1040nr tax return Casualty or theft. 1040nr tax return The casualty or theft must have affected business property, property held for the production of rents or royalties, or investment property (such as notes and bonds). 1040nr tax return You must have held the property longer than 1 year. 1040nr tax return However, if your casualty or theft losses are more than your casualty or theft gains, neither the gains nor the losses are taken into account in the section 1231 computation. 1040nr tax return Section 1231 does not apply to personal casualty gains and losses. 1040nr tax return See chapter 11 for information on how to treat those gains and losses. 1040nr tax return If the property is not held for the required holding period, the transaction is not subject to section 1231 treatment, and any gain or loss is ordinary income reported in Part II of Form 4797. 1040nr tax return See Table 9-1. 1040nr tax return Property for sale to customers. 1040nr tax return   A sale, exchange, or involuntary conversion of property held mainly for sale to customers is not a section 1231 transaction. 1040nr tax return If you will get back all, or nearly all, of your investment in the property by selling it rather than by using it up in your business, it is property held mainly for sale to customers. 1040nr tax return Treatment as ordinary or capital. 1040nr tax return   To determine the treatment of section 1231 gains and losses, combine all of your section 1231 gains and losses for the year. 1040nr tax return If you have a net section 1231 loss, it is an ordinary loss. 1040nr tax return If you have a net section 1231 gain, it is ordinary income up to your nonrecaptured section 1231 losses from previous years, explained next. 1040nr tax return The rest, if any, is long-term capital gain. 1040nr tax return Nonrecaptured section 1231 losses. 1040nr tax return   Your nonrecaptured section 1231 losses are your net section 1231 losses for the previous 5 years that have not been applied against a net section 1231 gain by treating the gain as ordinary income. 1040nr tax return These losses are applied against your net section 1231 gain beginning with the earliest loss in the 5-year period. 1040nr tax return Example. 1040nr tax return In 2013, Ben has a $2,000 net section 1231 gain. 1040nr tax return To figure how much he has to report as ordinary income and long-term capital gain, he must first determine his section 1231 gains and losses from the previous 5-year period. 1040nr tax return From 2008 through 2012 he had the following section 1231 gains and losses. 1040nr tax return Year Amount 2008 -0- 2009 -0- 2010 ($2,500) 2011 -0- 2012 $1,800   Ben uses this information to figure how to report his net section 1231 gain for 2013 as shown below. 1040nr tax return 1) Net section 1231 gain (2013) $2,000 2) Net section 1231 loss (2010) ($2,500)   3) Net section 1231 gain (2012) 1,800   4) Remaining net section 1231 loss from prior 5 years ($700)   5) Gain treated as  ordinary income $700 6) Gain treated as long-term  capital gain $1,300 His remaining net section 1231 loss from 2010 is completely recaptured in 2013. 1040nr tax return Depreciation Recapture If you dispose of depreciable or amortizable property at a gain, you may have to treat all or part of the gain (even if it is otherwise nontaxable) as ordinary income. 1040nr tax return To figure any gain that must be reported as ordinary income, you must keep permanent records of the facts necessary to figure the depreciation or amortization allowed or allowable on your property. 1040nr tax return For more information, see chapter 3 of Publication 544. 1040nr tax return Section 1245 Property A gain on the disposition of section 1245 property is treated as ordinary income to the extent of depreciation allowed or allowable. 1040nr tax return Any recognized gain that is more than the part that is ordinary income is a section 1231 gain. 1040nr tax return See Treatment as ordinary or capital under Section 1231 Gains and Losses , earlier. 1040nr tax return Section 1245 property includes any property that is or has been subject to an allowance for depreciation or amortization and that is any of the following types of property. 1040nr tax return Personal property (either tangible or intangible). 1040nr tax return Other tangible property (except buildings and their structural components) used as any of the following. 1040nr tax return See Buildings and structural components below. 1040nr tax return An integral part of manufacturing, production, or extraction, or of furnishing certain services. 1040nr tax return A research facility in any of the activities in (a). 1040nr tax return A facility in any of the activities in (a) above, for the bulk storage of fungible commodities (discussed later). 1040nr tax return That part of real property (not included in (2)) with an adjusted basis reduced by (but not limited to) the following. 1040nr tax return Amortization of certified pollution control facilities. 1040nr tax return The section 179 expense deduction. 1040nr tax return Deduction for clean-fuel vehicles and certain refueling property. 1040nr tax return Expenditures to remove architectural and transportation barriers to the handicapped and elderly. 1040nr tax return Certain reforestation expenditures (as described under Reforestation Costs in chapter 7. 1040nr tax return Single purpose agricultural (livestock) or horticultural structures. 1040nr tax return Storage facilities (except buildings and their structural components) used in distributing petroleum or any primary product of petroleum. 1040nr tax return Buildings and structural components. 1040nr tax return   Section 1245 property does not include buildings and structural components. 1040nr tax return The term building includes a house, barn, warehouse, or garage. 1040nr tax return The term structural component includes walls, floors, windows, doors, central air conditioning systems, light fixtures, etc. 1040nr tax return   Do not treat a structure that is essentially machinery or equipment as a building or structural component. 1040nr tax return Also, do not treat a structure that houses property used as an integral part of an activity as a building or structural component if the structure's use is so closely related to the property's use that the structure can be expected to be replaced when the property it initially houses is replaced. 1040nr tax return   The fact that the structure is specially designed to withstand the stress and other demands of the property and cannot be used economically for other purposes indicates it is closely related to the use of the property it houses. 1040nr tax return Structures such as oil and gas storage tanks, grain storage bins, and silos are not treated as buildings, but as section 1245 property. 1040nr tax return Facility for bulk storage of fungible commodities. 1040nr tax return   This is a facility used mainly for the bulk storage of fungible commodities. 1040nr tax return Bulk storage means storage of a commodity in a large mass before it is used. 1040nr tax return For example, if a facility is used to store oranges that have been sorted and boxed, it is not used for bulk storage. 1040nr tax return To be fungible, a commodity must be such that one part may be used in place of another. 1040nr tax return Gain Treated as Ordinary Income The gain treated as ordinary income on the sale, exchange, or involuntary conversion of section 1245 property, including a sale and leaseback transaction, is the lesser of the following amounts. 1040nr tax return The depreciation (which includes any section 179 deduction claimed) and amortization allowed or allowable on the property. 1040nr tax return The gain realized on the disposition (the amount realized from the disposition minus the adjusted basis of the property). 1040nr tax return For any other disposition of section 1245 property, ordinary income is the lesser of (1) above or the amount by which its fair market value (FMV) is more than its adjusted basis. 1040nr tax return For details, see chapter 3 of Publication 544. 1040nr tax return Use Part III of Form 4797 to figure the ordinary income part of the gain. 1040nr tax return Depreciation claimed on other property or claimed by other taxpayers. 1040nr tax return   Depreciation and amortization include the amounts you claimed on the section 1245 property as well as the following depreciation and amortization amounts. 1040nr tax return Amounts you claimed on property you exchanged for, or converted to, your section 1245 property in a like-kind exchange or involuntary conversion. 1040nr tax return For details on exchanges of property that are not taxable, see Like-Kind Exchanges in chapter 8. 1040nr tax return Amounts a previous owner of the section 1245 property claimed if your basis is determined with reference to that person's adjusted basis (for example, the donor's depreciation deductions on property you received as a gift and part of the transfer is a sale or exchange). 1040nr tax return Example. 1040nr tax return Jeff Free paid $120,000 for a tractor in 2012. 1040nr tax return On February 23, 2013, he traded it for a chopper and paid an additional $30,000. 1040nr tax return To figure his depreciation deduction on the chopper for the current year, Jeff continues to use the basis of the tractor as he would have before the trade. 1040nr tax return Jeff can also depreciate the additional $30,000 for the chopper. 1040nr tax return Depreciation and amortization. 1040nr tax return   Depreciation and amortization deductions that must be recaptured as ordinary income include (but are not limited to) the following items. 1040nr tax return See Depreciation Recapture in chapter 3 of Publication 544 for more details. 1040nr tax return Ordinary depreciation deductions. 1040nr tax return Section 179 deduction (see chapter 7). 1040nr tax return Any special depreciation allowance. 1040nr tax return Amortization deductions for all the following costs. 1040nr tax return Acquiring a lease. 1040nr tax return Lessee improvements. 1040nr tax return Pollution control facilities. 1040nr tax return Reforestation expenses. 1040nr tax return Section 197 intangibles. 1040nr tax return Qualified disaster expenses. 1040nr tax return Franchises, trademarks, and trade names acquired before August 11, 1993. 1040nr tax return Example. 1040nr tax return You file your returns on a calendar year basis. 1040nr tax return In February 2011, you bought and placed in service for 100% use in your farming business a light-duty truck (5-year property) that cost $10,000. 1040nr tax return You used the half-year convention and your MACRS deductions for the truck were $1,500 in 2011 and $2,550 in 2012. 1040nr tax return You did not claim the section 179 expense deduction for the truck. 1040nr tax return You sold it in May 2013 for $7,000. 1040nr tax return The MACRS deduction in 2013, the year of sale, is $893 (½ of $1,785). 1040nr tax return Figure the gain treated as ordinary income as follows. 1040nr tax return 1) Amount realized $7,000 2) Cost (February 2011) $10,000   3) Depreciation allowed or allowable (MACRS deductions: $1,500 + $2,550 + $893) 4,943   4) Adjusted basis (subtract line 3 from line 2) $5,057 5) Gain realized (subtract line 4 from line 1) 1,943 6) Gain treated as ordinary income (lesser of line 3 or line 5) $1,943 Depreciation allowed or allowable. 1040nr tax return   You generally use the greater of the depreciation allowed or allowable when figuring the part of gain to report as ordinary income. 1040nr tax return If, in prior years, you have consistently taken proper deductions under one method, the amount allowed for your prior years will not be increased even though a greater amount would have been allowed under another proper method. 1040nr tax return If you did not take any deduction at all for depreciation, your adjustments to basis for depreciation allowable are figured by using the straight line method. 1040nr tax return This treatment applies only when figuring what part of the gain is treated as ordinary income under the rules for section 1245 depreciation recapture. 1040nr tax return Disposition of plants and animals. 1040nr tax return   If you elect not to use the uniform capitalization rules (see chapter 6), you must treat any plant you produce as section 1245 property. 1040nr tax return If you have a gain on the property's disposition, you must recapture the pre-productive expenses you would have capitalized if you had not made the election by treating the gain, up to the amount of these expenses, as ordinary income. 1040nr tax return For section 1231 transactions, show these expenses as depreciation on Form 4797, Part III, line 22. 1040nr tax return For plant sales that are reported on Schedule F (1040), Profit or Loss From Farming, this recapture rule does not change the reporting of income because the gain is already ordinary income. 1040nr tax return You can use the farm-price method or the unit-livestock-price method discussed in  chapter 2 to figure these expenses. 1040nr tax return Example. 1040nr tax return Janet Maple sold her apple orchard in 2013 for $80,000. 1040nr tax return Her adjusted basis at the time of sale was $60,000. 1040nr tax return She bought the orchard in 2006, but the trees did not produce a crop until 2009. 1040nr tax return Her pre-productive expenses were $6,000. 1040nr tax return She elected not to use the uniform capitalization rules. 1040nr tax return Janet must treat $6,000 of the gain as ordinary income. 1040nr tax return Section 1250 Property Section 1250 property includes all real property subject to an allowance for depreciation that is not and never has been section 1245 property. 1040nr tax return It includes buildings and structural components that are not section 1245 property (discussed earlier). 1040nr tax return It includes a leasehold of land or section 1250 property subject to an allowance for depreciation. 1040nr tax return A fee simple interest in land is not section 1250 property because, like land, it is not depreciable. 1040nr tax return Gain on the disposition of section 1250 property is treated as ordinary income to the extent of additional depreciation allowed or allowable. 1040nr tax return To determine the additional depreciation on section 1250 property, see Depreciation Recapture in chapter 3 of Publication 544. 1040nr tax return You will not have additional depreciation if any of the following apply to the property disposed of. 1040nr tax return You figured depreciation for the property using the straight line method or any other method that does not result in depreciation that is more than the amount figured by the straight line method and you have held the property longer than 1 year. 1040nr tax return You chose the alternate ACRS (straight line) method for the property, which was a type of 15-, 18-, or 19-year real property covered by the section 1250 rules. 1040nr tax return The property was nonresidential real property placed in service after 1986 (or after July 31, 1986, if the choice to use MACRS was made) and you held it longer than 1 year. 1040nr tax return These properties are depreciated using the straight line method. 1040nr tax return Installment Sale If you report the sale of property under the installment method, any depreciation recapture under section 1245 or 1250 is taxable as ordinary income in the year of sale. 1040nr tax return This applies even if no payments are received in that year. 1040nr tax return If the gain is more than the depreciation recapture income, report the rest of the gain using the rules of the installment method. 1040nr tax return For this purpose, include the recapture income in your installment sale basis to determine your gross profit on the installment sale. 1040nr tax return If you dispose of more than one asset in a single transaction, you must separately figure the gain on each asset so that it may be properly reported. 1040nr tax return To do this, allocate the selling price and the payments you receive in the year of sale to each asset. 1040nr tax return Report any depreciation recapture income in the year of sale before using the installment method for any remaining gain. 1040nr tax return For more information on installment sales, see chapter 10. 1040nr tax return Other Dispositions Chapter 3 of Publication 544 discusses the tax treatment of the following transfers of depreciable property. 1040nr tax return By gift. 1040nr tax return At death. 1040nr tax return In like-kind exchanges. 1040nr tax return In involuntary conversions. 1040nr tax return Publication 544 also explains how to handle a single transaction involving multiple properties. 1040nr tax return Other Gains This section discusses gain on the disposition of farmland for which you were allowed either of the following. 1040nr tax return Deductions for soil and water conservation expenditures (section 1252 property). 1040nr tax return Exclusions from income for certain cost sharing payments (section 1255 property). 1040nr tax return Section 1252 property. 1040nr tax return   If you disposed of farmland you held more than 1 year and less than 10 years at a gain and you were allowed deductions for soil and water conservation expenses for the land, as discussed in chapter 5, you must treat part of the gain as ordinary income and treat the balance as section 1231 gain. 1040nr tax return Exceptions. 1040nr tax return   Do not treat gain on the following transactions as gain on section 1252 property. 1040nr tax return Disposition of farmland by gift. 1040nr tax return Transfer of farm property at death (except for income in respect of a decedent). 1040nr tax return For more information, see Regulations section 1. 1040nr tax return 1252-2. 1040nr tax return Amount to report as ordinary income. 1040nr tax return   You report as ordinary income the lesser of the following amounts. 1040nr tax return Your gain (determined by subtracting the adjusted basis from the amount realized from a sale, exchange, or involuntary conversion, or the FMV for all other dispositions). 1040nr tax return The total deductions allowed for soil and water conservation expenses multiplied by the applicable percentage, discussed next. 1040nr tax return Applicable percentage. 1040nr tax return   The applicable percentage is based on the length of time you held the land. 1040nr tax return If you dispose of your farmland within 5 years after the date you acquired it, the percentage is 100%. 1040nr tax return If you dispose of the land within the 6th through 9th year after you acquired it, the applicable percentage is reduced by 20% a year for each year or part of a year you hold the land after the 5th year. 1040nr tax return If you dispose of the land 10 or more years after you acquired it, the percentage is 0%, and the entire gain is a section 1231 gain. 1040nr tax return Example. 1040nr tax return You acquired farmland on January 19, 2005. 1040nr tax return On October 3, 2013, you sold the land at a $30,000 gain. 1040nr tax return Between January 1 and October 3, 2013, you incur soil and water conservation expenditures of $15,000 for the land that are fully deductible in 2013. 1040nr tax return The applicable percentage is 40% since you sold the land within the 8th year after you acquired it. 1040nr tax return You treat $6,000 (40% of $15,000) of the $30,000 gain as ordinary income and the $24,000 balance as a section 1231 gain. 1040nr tax return Section 1255 property. 1040nr tax return   If you receive certain cost-sharing payments on property and you exclude those payments from income (as discussed in chapter 3), you may have to treat part of any gain as ordinary income and treat the balance as a section 1231 gain. 1040nr tax return If you chose not to exclude these payments, you will not have to recognize ordinary income under this provision. 1040nr tax return Amount to report as ordinary income. 1040nr tax return   You report as ordinary income the lesser of the following amounts. 1040nr tax return The applicable percentage of the total excluded cost-sharing payments. 1040nr tax return The gain on the disposition of the property. 1040nr tax return You do not report ordinary income under this rule to the extent the gain is recognized as ordinary income under sections 1231 through 1254, 1256, and 1257. 1040nr tax return However, if applicable, gain reported under this rule must be reported regardless of any contrary provisions (including nonrecognition provisions) under any other section. 1040nr tax return Applicable percentage. 1040nr tax return   The applicable percentage of the excluded cost-sharing payments to be reported as ordinary income is based on the length of time you hold the property after receiving the payments. 1040nr tax return If the property is held less than 10 years after you receive the payments, the percentage is 100%. 1040nr tax return After 10 years, the percentage is reduced by 10% a year, or part of a year, until the rate is 0%. 1040nr tax return Form 4797, Part III. 1040nr tax return   Use Form 4797, Part III, to figure the ordinary income part of a gain from the sale, exchange, or involuntary conversion of section 1252 property and section 1255 property. 1040nr tax return Prev  Up  Next   Home   More 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