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1040x 2010 Instructions

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1040x 2010 Instructions

1040x 2010 instructions 6. 1040x 2010 instructions   Insurance Table of Contents What's New Introduction Topics - This chapter discusses: Useful Items - You may want to see: Deductible PremiumsSelf-Employed Health Insurance Deduction Nondeductible Premiums Capitalized Premiums When To Deduct Premiums What's New Retiree drug subsidy. 1040x 2010 instructions  Beginning in 2013, sponsors of certain qualified retiree prescription drug plans must account for the subsidy received by reducing the amount of qualified retiree prescription drug plans expense by the subsidy received (taking into account the taxpayer's accounting method). 1040x 2010 instructions For more information, see the retiree drug subsidy frequently asked questions on IRS. 1040x 2010 instructions gov. 1040x 2010 instructions Introduction You generally can deduct the ordinary and necessary cost of insurance as a business expense if it is for your trade, business, or profession. 1040x 2010 instructions However, you may have to capitalize certain insurance costs under the uniform capitalization rules. 1040x 2010 instructions For more information, see Capitalized Premiums , later. 1040x 2010 instructions Topics - This chapter discusses: Deductible premiums Nondeductible premiums Capitalized premiums When to deduct premiums Useful Items - You may want to see: Publication 15-B Employer's Tax Guide to Fringe Benefits 525 Taxable and Nontaxable Income 538 Accounting Periods and Methods 547 Casualties, Disasters, and Thefts Form (and Instructions) 1040 U. 1040x 2010 instructions S. 1040x 2010 instructions Individual Income Tax Return See chapter 12 for information about getting publications and forms. 1040x 2010 instructions Deductible Premiums You generally can deduct premiums you pay for the following kinds of insurance related to your trade or business. 1040x 2010 instructions Insurance that covers fire, storm, theft, accident, or similar losses. 1040x 2010 instructions Credit insurance that covers losses from business bad debts. 1040x 2010 instructions Group hospitalization and medical insurance for employees, including long-term care insurance. 1040x 2010 instructions If a partnership pays accident and health insurance premiums for its partners, it generally can deduct them as guaranteed payments to partners. 1040x 2010 instructions If an S corporation pays accident and health insurance premiums for its more-than-2% shareholder-employees, it generally can deduct them, but must also include them in the shareholder's wages subject to federal income tax withholding. 1040x 2010 instructions See Publication 15-B. 1040x 2010 instructions Liability insurance. 1040x 2010 instructions Malpractice insurance that covers your personal liability for professional negligence resulting in injury or damage to patients or clients. 1040x 2010 instructions Workers' compensation insurance set by state law that covers any claims for bodily injuries or job-related diseases suffered by employees in your business, regardless of fault. 1040x 2010 instructions If a partnership pays workers' compensation premiums for its partners, it generally can deduct them as guaranteed payments to partners. 1040x 2010 instructions If an S corporation pays workers' compensation premiums for its more-than-2% shareholder-employees, it generally can deduct them, but must also include them in the shareholder's wages. 1040x 2010 instructions Contributions to a state unemployment insurance fund are deductible as taxes if they are considered taxes under state law. 1040x 2010 instructions Overhead insurance that pays for business overhead expenses you have during long periods of disability caused by your injury or sickness. 1040x 2010 instructions Car and other vehicle insurance that covers vehicles used in your business for liability, damages, and other losses. 1040x 2010 instructions If you operate a vehicle partly for personal use, deduct only the part of the insurance premium that applies to the business use of the vehicle. 1040x 2010 instructions If you use the standard mileage rate to figure your car expenses, you cannot deduct any car insurance premiums. 1040x 2010 instructions Life insurance covering your officers and employees if you are not directly or indirectly a beneficiary under the contract. 1040x 2010 instructions Business interruption insurance that pays for lost profits if your business is shut down due to a fire or other cause. 1040x 2010 instructions Self-Employed Health Insurance Deduction You may be able to deduct premiums paid for medical and dental insurance and qualified long-term care insurance for yourself, your spouse, and your dependents. 1040x 2010 instructions The insurance can also cover your child who was under age 27 at the end of 2013, even if the child was not your dependent. 1040x 2010 instructions A child includes your son, daughter, stepchild, adopted child, or foster child. 1040x 2010 instructions A foster child is any child placed with you by an authorized placement agency or by judgment, decree, or other order of any court of competent jurisdiction. 1040x 2010 instructions One of the following statements must be true. 1040x 2010 instructions You were self-employed and had a net profit for the year reported on Schedule C (Form 1040), Profit or Loss From Business; Schedule C-EZ (Form 1040), Net Profit From Business; or Schedule F (Form 1040), Profit or Loss From Farming. 1040x 2010 instructions You were a partner with net earnings from self-employment for the year reported on Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc. 1040x 2010 instructions , box 14, code A. 1040x 2010 instructions You used one of the optional methods to figure your net earnings from self-employment on Schedule SE. 1040x 2010 instructions You received wages in 2013 from an S corporation in which you were a more-than-2% shareholder. 1040x 2010 instructions Health insurance premiums paid or reimbursed by the S corporation are shown as wages on Form W-2, Wage and Tax Statement. 1040x 2010 instructions The insurance plan must be established, or considered to be established as discussed in the following bullets, under your business. 1040x 2010 instructions For self-employed individuals filing a Schedule C, C-EZ, or F, a policy can be either in the name of the business or in the name of the individual. 1040x 2010 instructions For partners, a policy can be either in the name of the partnership or in the name of the partner. 1040x 2010 instructions You can either pay the premiums yourself or your partnership can pay them and report the premium amounts on Schedule K-1 (Form 1065) as guaranteed payments to be included in your gross income. 1040x 2010 instructions However, if the policy is in your name and you pay the premiums yourself, the partnership must reimburse you and report the premium amounts on Schedule K-1 (Form 1065) as guaranteed payments to be included in your gross income. 1040x 2010 instructions Otherwise, the insurance plan will not be considered to be established under your business. 1040x 2010 instructions For more-than-2% shareholders, a policy can be either in the name of the S corporation or in the name of the shareholder. 1040x 2010 instructions You can either pay the premiums yourself or your S corporation can pay them and report the premium amounts on Form W-2 as wages to be included in your gross income. 1040x 2010 instructions However, if the policy is in your name and you pay the premiums yourself, the S corporation must reimburse you and report the premium amounts on Form W-2 as wages to be included in your gross income. 1040x 2010 instructions Otherwise, the insurance plan will not be considered to be established under your business. 1040x 2010 instructions Medicare premiums you voluntarily pay to obtain insurance in your name that is similar to qualifying private health insurance can be used to figure the deduction. 1040x 2010 instructions If you previously filed returns without using Medicare premiums to figure the deduction, you can file timely amended returns to refigure the deduction. 1040x 2010 instructions For more information, see Form 1040X, Amended U. 1040x 2010 instructions S. 1040x 2010 instructions Individual Income Tax Return. 1040x 2010 instructions Amounts paid for health insurance coverage from retirement plan distributions that were nontaxable because you are a retired public safety officer cannot be used to figure the deduction. 1040x 2010 instructions Take the deduction on Form 1040, line 29. 1040x 2010 instructions Qualified long-term care insurance. 1040x 2010 instructions   You can include premiums paid on a qualified long-term care insurance contract when figuring your deduction. 1040x 2010 instructions But, for each person covered, you can include only the smaller of the following amounts. 1040x 2010 instructions The amount paid for that person. 1040x 2010 instructions The amount shown below. 1040x 2010 instructions Use the person's age at the end of the tax year. 1040x 2010 instructions Age 40 or younger–$360 Age 41 to 50–$680 Age 51 to 60–$1,360 Age 61 to 70–$3,640 Age 71 or older–$4,550 Qualified long-term care insurance contract. 1040x 2010 instructions   A qualified long-term care insurance contract is an insurance contract that only provides coverage of qualified long-term care services. 1040x 2010 instructions The contract must meet all the following requirements. 1040x 2010 instructions It must be guaranteed renewable. 1040x 2010 instructions It must provide that refunds, other than refunds on the death of the insured or complete surrender or cancellation of the contract, and dividends under the contract may be used only to reduce future premiums or increase future benefits. 1040x 2010 instructions It must not provide for a cash surrender value or other money that can be paid, assigned, pledged, or borrowed. 1040x 2010 instructions It generally must not pay or reimburse expenses incurred for services or items that would be reimbursed under Medicare, except where Medicare is a secondary payer or the contract makes per diem or other periodic payments without regard to expenses. 1040x 2010 instructions Qualified long-term care services. 1040x 2010 instructions   Qualified long-term care services are: Necessary diagnostic, preventive, therapeutic, curing, treating, mitigating, and rehabilitative services, and Maintenance or personal care services. 1040x 2010 instructions The services must be required by a chronically ill individual and prescribed by a licensed health care practitioner. 1040x 2010 instructions Worksheet 6-A. 1040x 2010 instructions Self-Employed Health Insurance Deduction Worksheet Note. 1040x 2010 instructions Use a separate worksheet for each trade or business under which an insurance plan is established. 1040x 2010 instructions 1. 1040x 2010 instructions Enter the total amount paid in 2013 for health insurance coverage established under your business for 2013 for you, your spouse, and your dependents. 1040x 2010 instructions Your insurance can also cover your child who was under age 27 at the end of 2013, even if the child was not your dependent. 1040x 2010 instructions But do not include the following. 1040x 2010 instructions   Amounts for any month you were eligible to participate in a health plan subsidized by your or your spouse's employer or the employer of either your dependent or your child who was under the age of 27 at the end of 2013. 1040x 2010 instructions Any amounts paid from retirement plan distributions that were nontaxable because you are a retired public safety officer. 1040x 2010 instructions Any amounts you included on Form 8885, line 4. 1040x 2010 instructions Any qualified health insurance premiums you paid to “U. 1040x 2010 instructions S. 1040x 2010 instructions Treasury-HCTC. 1040x 2010 instructions ” Any health coverage tax credit advance payments shown in box 1 of Form 1099-H. 1040x 2010 instructions Any payments for qualified long-term care insurance (see line 2) 1. 1040x 2010 instructions   2. 1040x 2010 instructions For coverage under a qualified long-term care insurance contract, enter for each person covered the smaller of the following amounts. 1040x 2010 instructions       a) Total payments made for that person during the year. 1040x 2010 instructions       b) The amount shown below. 1040x 2010 instructions Use the person's age at the end of the tax year. 1040x 2010 instructions         $360— if that person is age 40 or younger          $680— if age 41 to 50         $1,360— if age 51 to 60         $3,640— if age 61 to 70         $4,550— if age 71 or older         Do not include payments for any month you were eligible to participate in a long-term care insurance plan subsidized by your or your spouse’s employer or the employer of either your dependent or your child who was under the age of 27 at the end of 2013. 1040x 2010 instructions If more than one person is covered, figure separately the amount to enter for each person. 1040x 2010 instructions Then enter the total of those amounts 2. 1040x 2010 instructions   3. 1040x 2010 instructions Add lines 1 and 2 3. 1040x 2010 instructions   4. 1040x 2010 instructions Enter your net profit* and any other earned income** from the trade or business under which the insurance plan is established. 1040x 2010 instructions Do not include Conservation Reserve Program payments exempt from self-employment tax. 1040x 2010 instructions If the business is an S corporation, skip to line 11 4. 1040x 2010 instructions   5. 1040x 2010 instructions Enter the total of all net profits* from: Schedule C (Form 1040), line 31; Schedule C-EZ (Form 1040), line 3; Schedule F (Form 1040), line 34; or Schedule K-1 (Form 1065), box 14, code A; plus any other income allocable to the profitable businesses. 1040x 2010 instructions Do not include Conservation Reserve Program payments exempt from self-employment tax. 1040x 2010 instructions See the Instructions for Schedule SE (Form 1040). 1040x 2010 instructions Do not include any net losses shown on these schedules. 1040x 2010 instructions 5. 1040x 2010 instructions   6. 1040x 2010 instructions Divide line 4 by line 5 6. 1040x 2010 instructions   7. 1040x 2010 instructions Multiply Form 1040, line 27, by the percentage on line 6 7. 1040x 2010 instructions   8. 1040x 2010 instructions Subtract line 7 from line 4 8. 1040x 2010 instructions   9. 1040x 2010 instructions Enter the amount, if any, from Form 1040, line 28, attributable to the same trade or business in which the insurance plan is established 9. 1040x 2010 instructions   10. 1040x 2010 instructions Subtract line 9 from line 8 10. 1040x 2010 instructions   11. 1040x 2010 instructions Enter your Medicare wages (Form W-2, box 5) from an S corporation in which you are a more-than-2% shareholder and in which the insurance plan is established 11. 1040x 2010 instructions   12. 1040x 2010 instructions Enter any amount from Form 2555, line 45, attributable to the amount entered on line 4 or 11 above, or any amount from Form 2555-EZ, line 18, attributable to the amount entered on line 11 above 12. 1040x 2010 instructions   13. 1040x 2010 instructions Subtract line 12 from line 10 or 11, whichever applies 13. 1040x 2010 instructions   14. 1040x 2010 instructions Enter the smaller of line 3 or line 13 here and on Form 1040, line 29. 1040x 2010 instructions Do not include this amount when figuring any medical expense deduction on Schedule A (Form 1040). 1040x 2010 instructions 14. 1040x 2010 instructions   * If you used either optional method to figure your net earnings from self-employment from any business, do not enter your net profit from the business. 1040x 2010 instructions Instead, enter the amount attributable to that business from Schedule SE (Form 1040), Section B, line 4b. 1040x 2010 instructions * *Earned income includes net earnings and gains from the sale, transfer, or licensing of property you created. 1040x 2010 instructions However, it does not include capital gain income. 1040x 2010 instructions Chronically ill individual. 1040x 2010 instructions   A chronically ill individual is a person who has been certified as one of the following. 1040x 2010 instructions An individual who has been unable, due to loss of functional capacity for at least 90 days, to perform at least two activities of daily living without substantial assistance from another individual. 1040x 2010 instructions Activities of daily living are eating, toileting, transferring (general mobility), bathing, dressing, and continence. 1040x 2010 instructions An individual who requires substantial supervision to be protected from threats to health and safety due to severe cognitive impairment. 1040x 2010 instructions The certification must have been made by a licensed health care practitioner within the previous 12 months. 1040x 2010 instructions Benefits received. 1040x 2010 instructions   For information on excluding benefits you receive from a long-term care contract from gross income, see Publication 525. 1040x 2010 instructions Other coverage. 1040x 2010 instructions   You cannot take the deduction for any month you were eligible to participate in any employer (including your spouse's) subsidized health plan at any time during that month, even if you did not actually participate. 1040x 2010 instructions In addition, if you were eligible for any month or part of a month to participate in any subsidized health plan maintained by the employer of either your dependent or your child who was under age 27 at the end of 2013, do not use amounts paid for coverage for that month to figure the deduction. 1040x 2010 instructions   These rules are applied separately to plans that provide long-term care insurance and plans that do not provide long-term care insurance. 1040x 2010 instructions However, any medical insurance payments not deductible on Form 1040, line 29, can be included as medical expenses on Schedule A (Form 1040), Itemized Deductions, if you itemize deductions. 1040x 2010 instructions Effect on itemized deductions. 1040x 2010 instructions   Subtract the health insurance deduction from your medical insurance when figuring medical expenses on Schedule A (Form 1040) if you itemize deductions. 1040x 2010 instructions Effect on self-employment tax. 1040x 2010 instructions   For tax years beginning before or after 2010, you cannot subtract the self-employed health insurance deduction when figuring net earnings for your self-employment tax from the business under which the insurance plan is established, or considered to be established as discussed earlier. 1040x 2010 instructions For more information, see Schedule SE (Form 1040). 1040x 2010 instructions How to figure the deduction. 1040x 2010 instructions   Generally, you can use the worksheet in the Form 1040 instructions to figure your deduction. 1040x 2010 instructions However, if any of the following apply, you must use Worksheet 6-A in this chapter. 1040x 2010 instructions You had more than one source of income subject to self-employment tax. 1040x 2010 instructions You file Form 2555, Foreign Earned Income, or Form 2555-EZ, Foreign Earned Income Exclusion. 1040x 2010 instructions You are using amounts paid for qualified long-term care insurance to figure the deduction. 1040x 2010 instructions If you are claiming the health coverage tax credit, complete Form 8885, Health Coverage Tax Credit, before you figure this deduction. 1040x 2010 instructions Health coverage tax credit. 1040x 2010 instructions   You may be able to take this credit only if you were an eligible trade adjustment assistance (TAA) recipient, alternative TAA (ATAA) recipient, reemployment trade adjustment assistance (RTAA) recipient, or Pension Benefit Guaranty Corporation (PBGC) pension recipient. 1040x 2010 instructions Use Form 8885 to figure the amount, if any, of this credit. 1040x 2010 instructions   When figuring the amount to enter on line 1 of Worksheet 6-A, do not include the following. 1040x 2010 instructions Any amounts you included on Form 8885, line 4. 1040x 2010 instructions Any qualified health insurance premiums you paid to “U. 1040x 2010 instructions S. 1040x 2010 instructions Treasury-HCTC. 1040x 2010 instructions ” Any health coverage tax credit advance payments shown in box 1 of Form 1099-H, Health Coverage Tax Credit (HCTC) Advance Payments. 1040x 2010 instructions More than one health plan and business. 1040x 2010 instructions   If you have more than one health plan during the year and each plan is established under a different business, you must use separate worksheets (Worksheet 6-A) to figure each plan's net earnings limit. 1040x 2010 instructions Include the premium you paid under each plan on line 1 or line 2 of that separate worksheet and your net profit (or wages) from that business on line 4 (or line 11). 1040x 2010 instructions For a plan that provides long-term care insurance, the total of the amounts entered for each person on line 2 of all worksheets cannot be more than the appropriate limit shown on line 2 for that person. 1040x 2010 instructions Nondeductible Premiums You cannot deduct premiums on the following kinds of insurance. 1040x 2010 instructions Self-insurance reserve funds. 1040x 2010 instructions You cannot deduct amounts credited to a reserve set up for self-insurance. 1040x 2010 instructions This applies even if you cannot get business insurance coverage for certain business risks. 1040x 2010 instructions However, your actual losses may be deductible. 1040x 2010 instructions See Publication 547. 1040x 2010 instructions Loss of earnings. 1040x 2010 instructions You cannot deduct premiums for a policy that pays for lost earnings due to sickness or disability. 1040x 2010 instructions However, see the discussion on overhead insurance, item (8), under Deductible Premiums , earlier. 1040x 2010 instructions Certain life insurance and annuities. 1040x 2010 instructions For contracts issued before June 9, 1997, you cannot deduct the premiums on a life insurance policy covering you, an employee, or any person with a financial interest in your business if you are directly or indirectly a beneficiary of the policy. 1040x 2010 instructions You are included among possible beneficiaries of the policy if the policy owner is obligated to repay a loan from you using the proceeds of the policy. 1040x 2010 instructions A person has a financial interest in your business if the person is an owner or part owner of the business or has lent money to the business. 1040x 2010 instructions For contracts issued after June 8, 1997, you generally cannot deduct the premiums on any life insurance policy, endowment contract, or annuity contract if you are directly or indirectly a beneficiary. 1040x 2010 instructions The disallowance applies without regard to whom the policy covers. 1040x 2010 instructions Partners. 1040x 2010 instructions If, as a partner in a partnership, you take out an insurance policy on your own life and name your partners as beneficiaries to induce them to retain their investments in the partnership, you are considered a beneficiary. 1040x 2010 instructions You cannot deduct the insurance premiums. 1040x 2010 instructions Insurance to secure a loan. 1040x 2010 instructions If you take out a policy on your life or on the life of another person with a financial interest in your business to get or protect a business loan, you cannot deduct the premiums as a business expense. 1040x 2010 instructions Nor can you deduct the premiums as interest on business loans or as an expense of financing loans. 1040x 2010 instructions In the event of death, the proceeds of the policy are generally not taxed as income even if they are used to liquidate the debt. 1040x 2010 instructions Capitalized Premiums Under the uniform capitalization rules, you must capitalize the direct costs and part of the indirect costs for certain production or resale activities. 1040x 2010 instructions Include these costs in the basis of property you produce or acquire for resale, rather than claiming them as a current deduction. 1040x 2010 instructions You recover the costs through depreciation, amortization, or cost of goods sold when you use, sell, or otherwise dispose of the property. 1040x 2010 instructions Indirect costs include premiums for insurance on your plant or facility, machinery, equipment, materials, property produced, or property acquired for resale. 1040x 2010 instructions Uniform capitalization rules. 1040x 2010 instructions   You may be subject to the uniform capitalization rules if you do any of the following, unless the property is produced for your use other than in a business or an activity carried on for profit. 1040x 2010 instructions Produce real property or tangible personal property. 1040x 2010 instructions For this purpose, tangible personal property includes a film, sound recording, video tape, book, or similar property. 1040x 2010 instructions Acquire property for resale. 1040x 2010 instructions However, these rules do not apply to the following property. 1040x 2010 instructions Personal property you acquire for resale if your average annual gross receipts are $10 million or less for the 3 prior tax years. 1040x 2010 instructions Property you produce if you meet either of the following conditions. 1040x 2010 instructions Your indirect costs of producing the property are $200,000 or less. 1040x 2010 instructions You use the cash method of accounting and do not account for inventories. 1040x 2010 instructions More information. 1040x 2010 instructions   For more information on these rules, see Uniform Capitalization Rules in Publication 538 and the regulations under Internal Revenue Code section 263A. 1040x 2010 instructions When To Deduct Premiums You can usually deduct insurance premiums in the tax year to which they apply. 1040x 2010 instructions Cash method. 1040x 2010 instructions   If you use the cash method of accounting, you generally deduct insurance premiums in the tax year you actually paid them, even if you incurred them in an earlier year. 1040x 2010 instructions However, see Prepayment , later. 1040x 2010 instructions Accrual method. 1040x 2010 instructions   If you use an accrual method of accounting, you cannot deduct insurance premiums before the tax year in which you incur a liability for them. 1040x 2010 instructions In addition, you cannot deduct insurance premiums before the tax year in which you actually pay them (unless the exception for recurring items applies). 1040x 2010 instructions For more information about the accrual method of accounting, see chapter 1. 1040x 2010 instructions For information about the exception for recurring items, see Publication 538. 1040x 2010 instructions Prepayment. 1040x 2010 instructions   You cannot deduct expenses in advance, even if you pay them in advance. 1040x 2010 instructions This rule applies to any expense paid far enough in advance to, in effect, create an asset with a useful life extending substantially beyond the end of the current tax year. 1040x 2010 instructions   Expenses such as insurance are generally allocable to a period of time. 1040x 2010 instructions You can deduct insurance expenses for the year to which they are allocable. 1040x 2010 instructions Example. 1040x 2010 instructions In 2013, you signed a 3-year insurance contract. 1040x 2010 instructions Even though you paid the premiums for 2013, 2014, and 2015 when you signed the contract, you can only deduct the premium for 2013 on your 2013 tax return. 1040x 2010 instructions You can deduct in 2014 and 2015 the premium allocable to those years. 1040x 2010 instructions Dividends received. 1040x 2010 instructions   If you receive dividends from business insurance and you deducted the premiums in prior years, at least part of the dividends generally are income. 1040x 2010 instructions For more information, see Recovery of amount deducted (tax benefit rule) in chapter 1 under How Much Can I Deduct. 1040x 2010 instructions Prev  Up  Next   Home   More Online Publications
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The 1040x 2010 Instructions

1040x 2010 instructions 11. 1040x 2010 instructions   Departing Aliens and the Sailing or Departure Permit Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Aliens Not Required To Obtain Sailing or Departure Permits Aliens Required To Obtain Sailing or Departure PermitsGetting a Sailing or Departure Permit Forms To File Paying Taxes and Obtaining Refunds Bond To Ensure Payment Filing Annual U. 1040x 2010 instructions S. 1040x 2010 instructions Income Tax Returns Introduction Before leaving the United States, all aliens (except those listed under Aliens Not Required To Obtain Sailing or Departure Permits must obtain a certificate of compliance. 1040x 2010 instructions This document, also popularly known as the sailing permit or departure permit, is part of the income tax form you must file before leaving. 1040x 2010 instructions You will receive a sailing or departure permit after filing a Form 1040-C or Form 2063. 1040x 2010 instructions These forms are discussed in this chapter. 1040x 2010 instructions To find out if you need a sailing or departure permit, first read Aliens Not Required To Obtain Sailing or Departure Permits . 1040x 2010 instructions If you do not fall into one of the categories in that discussion, you must obtain a sailing or departure permit. 1040x 2010 instructions Read Aliens Required To Obtain Sailing or Departure Permits . 1040x 2010 instructions Topics - This chapter discusses: Who needs a sailing permit, How to get a sailing permit, and Forms you file to get a sailing permit. 1040x 2010 instructions Useful Items - You may want to see: Form (and Instructions) 1040-C U. 1040x 2010 instructions S. 1040x 2010 instructions Departing Alien Income Tax Return 2063 U. 1040x 2010 instructions S. 1040x 2010 instructions Departing Alien Income Tax Statement See chapter 12 for information about getting these forms. 1040x 2010 instructions Aliens Not Required To Obtain Sailing or Departure Permits If you are included in one of the following categories, you do not have to get a sailing or departure permit before leaving the United States. 1040x 2010 instructions If you are in one of these categories and do not have to get a sailing or departure permit, you must be able to support your claim for exemption with proper identification or give the authority for the exemption. 1040x 2010 instructions Category 1. 1040x 2010 instructions   Representatives of foreign governments with diplomatic passports, whether accredited to the United States or other countries, members of their households, and servants accompanying them. 1040x 2010 instructions Servants who are leaving, but not with a person with a diplomatic passport, must get a sailing or departure permit. 1040x 2010 instructions However, they can get a sailing or departure permit on Form 2063 without examination of their income tax liability by presenting a letter from the chief of their diplomatic mission certifying that: Their name appears on the “White List” (a list of employees of diplomatic missions), and They do not owe to the United States any income tax, and will not owe any tax up to and including the intended date of departure. 1040x 2010 instructions   The statement must be presented to an IRS office. 1040x 2010 instructions Category 2. 1040x 2010 instructions    Employees of international organizations and foreign governments (other than diplomatic representatives exempt under category 1) and members of their households: Whose compensation for official services is exempt from U. 1040x 2010 instructions S. 1040x 2010 instructions tax under U. 1040x 2010 instructions S. 1040x 2010 instructions tax laws (described in chapter 10), and Who receive no other income from U. 1040x 2010 instructions S. 1040x 2010 instructions sources. 1040x 2010 instructions If you are an alien in category (1) or (2), above, who filed the waiver under section 247(b) of the Immigration and Nationality Act, you must get a sailing or departure permit. 1040x 2010 instructions This is true even if your income is exempt from U. 1040x 2010 instructions S. 1040x 2010 instructions tax because of an income tax treaty, consular agreement, or international agreement. 1040x 2010 instructions Category 3. 1040x 2010 instructions   Alien students, industrial trainees, and exchange visitors, including their spouses and children, who enter on an “F-1,” “F-2,” “H-3,” “H-4,” “J-1,” “J-2,” or “Q” visa only and who receive no income from U. 1040x 2010 instructions S. 1040x 2010 instructions sources while in the United States under those visas other than: Allowances to cover expenses incident to study or training in the United States, such as expenses for travel, maintenance, and tuition, The value of any services or food and lodging connected with this study or training, Income from employment authorized by the U. 1040x 2010 instructions S. 1040x 2010 instructions Citizenship and Immigration Services (USCIS), or Interest income on deposits that is not effectively connected with a U. 1040x 2010 instructions S. 1040x 2010 instructions trade or business. 1040x 2010 instructions (See Interest Income in chapter 3. 1040x 2010 instructions ) Category 4. 1040x 2010 instructions   Alien students, including their spouses and children, who enter on an “M-1” or “M-2” visa only and who receive no income from U. 1040x 2010 instructions S. 1040x 2010 instructions sources while in the United States under those visas, other than: Income from employment authorized by the U. 1040x 2010 instructions S. 1040x 2010 instructions Citizenship and Immigration Services (USCIS) or Interest income on deposits that is not effectively connected with a U. 1040x 2010 instructions S. 1040x 2010 instructions trade or business. 1040x 2010 instructions (See Interest Income in chapter 3. 1040x 2010 instructions ) Category 5. 1040x 2010 instructions   Certain other aliens temporarily in the United States who have received no taxable income during the tax year up to and including the date of departure or during the preceding tax year. 1040x 2010 instructions If the IRS has reason to believe that an alien has received income subject to tax and that the collection of income tax is jeopardized by departure, it may then require the alien to obtain a sailing or departure permit. 1040x 2010 instructions Aliens in this category are: Alien military trainees who enter the United States for training under the sponsorship of the Department of Defense and who leave the United States on official military travel orders, Alien visitors for business on a “B-1” visa, or on both a “B-1” visa and a “B-2” visa, who do not remain in the United States or a U. 1040x 2010 instructions S. 1040x 2010 instructions possession for more than 90 days during the tax year, Alien visitors for pleasure on a “B-2” visa, Aliens in transit through the United States or any of its possessions on a “C-1” visa, or under a contract, such as a bond agreement, between a transportation line and the Attorney General, and Aliens who enter the United States on a border-crossing identification card or for whom passports, visas, and border-crossing identification cards are not required, if they are: Visitors for pleasure, Visitors for business who do not remain in the United States or a U. 1040x 2010 instructions S. 1040x 2010 instructions possession for more than 90 days during the tax year, or In transit through the United States or any of its possessions. 1040x 2010 instructions Category 6. 1040x 2010 instructions   Alien residents of Canada or Mexico who frequently commute between that country and the United States for employment, and whose wages are subject to the withholding of U. 1040x 2010 instructions S. 1040x 2010 instructions tax. 1040x 2010 instructions Aliens Required To Obtain Sailing or Departure Permits If you do not fall into one of the categories listed under Aliens Not Required To Obtain Sailing or Departure Permits, you must obtain a sailing or departure permit. 1040x 2010 instructions To obtain a permit, file Form 1040-C or Form 2063 (whichever applies) with your local IRS office before you leave the United States. 1040x 2010 instructions See Forms To File , later. 1040x 2010 instructions You must also pay all the tax shown as due on Form 1040-C and any taxes due for past years. 1040x 2010 instructions See Paying Taxes and Obtaining Refunds , later. 1040x 2010 instructions Getting a Sailing or Departure Permit The following discussion covers when and where to get your sailing permit. 1040x 2010 instructions Where to get a sailing or departure permit. 1040x 2010 instructions   If you have been working in the United States, you should get the permit from an IRS office in the area of your employment, or you may obtain one from an IRS office in the area of your departure. 1040x 2010 instructions When to get a sailing or departure permit. 1040x 2010 instructions   You should get your sailing or departure permit at least 2 weeks before you plan to leave. 1040x 2010 instructions You cannot apply earlier than 30 days before your planned departure date. 1040x 2010 instructions Do not wait until the last minute in case there are unexpected problems. 1040x 2010 instructions Papers to submit. 1040x 2010 instructions   Getting your sailing or departure permit will go faster if you bring to the IRS office papers and documents related to your income and your stay in the United States. 1040x 2010 instructions Bring the following records with you if they apply. 1040x 2010 instructions Your passport and alien registration card or visa. 1040x 2010 instructions Copies of your U. 1040x 2010 instructions S. 1040x 2010 instructions income tax returns filed for the past 2 years. 1040x 2010 instructions If you were in the United States for less than 2 years, bring the income tax returns you filed for that period. 1040x 2010 instructions Receipts for income taxes paid on these returns. 1040x 2010 instructions Receipts, bank records, canceled checks, and other documents that prove your deductions, business expenses, and dependents claimed on your returns. 1040x 2010 instructions A statement from each employer showing wages paid and tax withheld from January 1 of the current year to the date of departure if you were an employee. 1040x 2010 instructions If you were self-employed, you must bring a statement of income and expenses up to the date you plan to leave. 1040x 2010 instructions Proof of estimated tax payments for the past year and this year. 1040x 2010 instructions Documents showing any gain or loss from the sale of personal property and/or real property, including capital assets and merchandise. 1040x 2010 instructions Documents relating to scholarship or fellowship grants including: Verification of the grantor, source, and purpose of the grant. 1040x 2010 instructions Copies of the application for, and approval of, the grant. 1040x 2010 instructions A statement of the amount paid, and your duties and obligations under the grant. 1040x 2010 instructions A list of any previous grants. 1040x 2010 instructions Documents indicating you qualify for any special tax treaty benefits claimed. 1040x 2010 instructions Document verifying your date of departure from the United States, such as an airline ticket. 1040x 2010 instructions Document verifying your U. 1040x 2010 instructions S. 1040x 2010 instructions taxpayer identification number, such as a social security card or an IRS issued Notice CP 565 showing your individual taxpayer identification number (ITIN). 1040x 2010 instructions Note. 1040x 2010 instructions   If you are married and reside in a community property state, also bring the above-listed documents for your spouse. 1040x 2010 instructions This applies whether or not your spouse requires a permit. 1040x 2010 instructions Forms To File If you must get a sailing or departure permit, you must file Form 2063 or Form 1040-C. 1040x 2010 instructions Employees in the IRS office can assist in filing these forms. 1040x 2010 instructions Both forms have a “certificate of compliance” section. 1040x 2010 instructions When the certificate of compliance is signed by an agent of the Field Assistance Area Director, it certifies that your U. 1040x 2010 instructions S. 1040x 2010 instructions tax obligations have been satisfied according to available information. 1040x 2010 instructions Your Form 1040-C copy of the signed certificate, or the one detached from Form 2063, is your sailing or departure permit. 1040x 2010 instructions Form 2063 This is a short form that asks for certain information but does not include a tax computation. 1040x 2010 instructions The following departing aliens can get their sailing or departure permits by filing Form 2063. 1040x 2010 instructions Aliens, whether resident or nonresident, who have had no taxable income for the tax year up to and including the date of departure and for the preceding year, if the period for filing the income tax return for that year has not expired. 1040x 2010 instructions Resident aliens who have received taxable income during the tax year or preceding year and whose departure will not hinder the collection of any tax. 1040x 2010 instructions However, if the IRS has information indicating that the aliens are leaving to avoid paying their income tax, they must file a Form 1040-C. 1040x 2010 instructions Aliens in either of these categories who have not filed an income tax return or paid income tax for any tax year must file the return and pay the income tax before they can be issued a sailing or departure permit on Form 2063. 1040x 2010 instructions The sailing or departure permit detached from Form 2063 can be used for all departures during the current year. 1040x 2010 instructions However, the IRS may cancel the sailing or departure permit for any later departure if it believes the collection of income tax is jeopardized by that later departure. 1040x 2010 instructions Form 1040-C If you must get a sailing or departure permit and you do not qualify to file Form 2063, you must file Form 1040-C. 1040x 2010 instructions Ordinarily, all income received or reasonably expected to be received during the tax year up to and including the date of departure must be reported on Form 1040-C and the tax on it must be paid. 1040x 2010 instructions When you pay any tax shown as due on the Form 1040-C, and you file all returns and pay all tax due for previous years, you will receive a sailing or departure permit. 1040x 2010 instructions However, the IRS may permit you to furnish a bond guaranteeing payment instead of paying the taxes for certain years. 1040x 2010 instructions See Bond To Ensure Payment , discussed later. 1040x 2010 instructions The sailing or departure permit issued under the conditions in this paragraph is only for the specific departure for which it is issued. 1040x 2010 instructions Returning to the United States. 1040x 2010 instructions   If you furnish the IRS with information showing, to the satisfaction of the IRS, that you intend to return to the United States and that your departure does not jeopardize the collection of income tax, you can get a sailing or departure permit by filing Form 1040-C without having to pay the tax shown on it. 1040x 2010 instructions You must, however, file all income tax returns that have not yet been filed as required, and pay all income tax that is due on these returns. 1040x 2010 instructions   Your Form 1040-C must include all income received and reasonably expected to be received during the entire year of departure. 1040x 2010 instructions The sailing or departure permit issued with this Form 1040-C can be used for all departures during the current year. 1040x 2010 instructions However, the Service may cancel the sailing or departure permit for any later departure if the payment of income tax appears to be in jeopardy. 1040x 2010 instructions Joint return on Form 1040-C. 1040x 2010 instructions   Departing husbands and wives who are nonresident aliens cannot file joint returns. 1040x 2010 instructions However, if both spouses are resident aliens, they can file a joint return on Form 1040-C if: Both spouses can reasonably be expected to qualify to file a joint return at the normal close of their tax year, and The tax years of the spouses end at the same time. 1040x 2010 instructions Paying Taxes and Obtaining Refunds You must pay all tax shown as due on the Form 1040-C at the time of filing it, except when a bond is furnished, or the IRS is satisfied that your departure does not jeopardize the collection of income tax. 1040x 2010 instructions You must also pay any taxes due for past years. 1040x 2010 instructions If the tax computation on Form 1040-C results in an overpayment, there is no tax to pay at the time you file that return. 1040x 2010 instructions However, the IRS cannot provide a refund at the time of departure. 1040x 2010 instructions If you are due a refund, you must file either Form 1040NR or Form 1040NR-EZ at the end of the tax year. 1040x 2010 instructions Bond To Ensure Payment Usually, you must pay the tax shown as due on Form 1040-C when you file it. 1040x 2010 instructions However, if you pay all taxes due that you owe for prior years, you can furnish a bond guaranteeing payment instead of paying the income taxes shown as due on the Form 1040-C or the tax return for the preceding year if the period for filing that return has not expired. 1040x 2010 instructions The bond must equal the tax due plus interest to the date of payment as figured by the IRS. 1040x 2010 instructions Information about the form of bond and security on it can be obtained from your IRS office. 1040x 2010 instructions Filing Annual U. 1040x 2010 instructions S. 1040x 2010 instructions Income Tax Returns Form 1040-C is not an annual U. 1040x 2010 instructions S. 1040x 2010 instructions income tax return. 1040x 2010 instructions If an income tax return is required by law, that return must be filed even though a Form 1040-C has already been filed. 1040x 2010 instructions Chapters 5 and 7 discuss filing an annual U. 1040x 2010 instructions S. 1040x 2010 instructions income tax return. 1040x 2010 instructions The tax paid with Form 1040-C should be taken as a credit against the tax liability for the entire tax year on your annual U. 1040x 2010 instructions S. 1040x 2010 instructions income tax return. 1040x 2010 instructions Prev  Up  Next   Home   More Online Publications