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2010 Ez 1040 Form

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2010 Ez 1040 Form

2010 ez 1040 form 1. 2010 ez 1040 form   Bona Fide Residence Table of Contents Presence TestDays of Presence in the United States or Relevant Possession Significant Connection Tax HomeExceptions Closer ConnectionException for Year of Move Special Rules in the Year of a MoveYear of Moving to a Possession Year of Moving From a Possession Reporting a Change in Bona Fide ResidenceWho Must File Penalty for Not Filing Form 8898 In order to qualify for certain tax benefits (see chapter 3), you must be a bona fide resident of American Samoa, the CNMI, Guam, Puerto Rico, or the USVI for the entire tax year. 2010 ez 1040 form Generally, you are a bona fide resident of one of these possessions (the relevant possession) if, during the tax year, you: Meet the presence test, Do not have a tax home outside the relevant possession, and Do not have a closer connection to the United States or to a foreign country than to the relevant possession. 2010 ez 1040 form Special rule for members of the U. 2010 ez 1040 form S. 2010 ez 1040 form Armed Forces. 2010 ez 1040 form   If you are a member of the U. 2010 ez 1040 form S. 2010 ez 1040 form Armed Forces who qualified as a bona fide resident of the relevant possession in an earlier tax year, your absence from that possession during the current tax year in compliance with military orders will not affect your status as a bona fide resident. 2010 ez 1040 form Likewise, being in a possession solely in compliance with military orders will not qualify you for bona fide residency. 2010 ez 1040 form Also see the special income source rule for members of the U. 2010 ez 1040 form S. 2010 ez 1040 form Armed Forces in chapter 2, under Compensation for Labor or Personal Services . 2010 ez 1040 form Special rule for civilian spouse of active duty member of the U. 2010 ez 1040 form S. 2010 ez 1040 form Armed Forces. 2010 ez 1040 form   If you are the civilian spouse of an active duty servicemember, under Military Spouses Residency Relief Act (MSRRA) you can choose to keep your prior residence or domicile for tax purposes (tax residence) when accompanying the servicemember spouse, who is relocating under military orders, to a new military duty station in one of the 50 states, the District of Columbia, or a U. 2010 ez 1040 form S. 2010 ez 1040 form possession. 2010 ez 1040 form Before relocating, you and your spouse must have the same tax residence. 2010 ez 1040 form If you are a civilian spouse and choose to keep your prior tax residence after such relocation, the source of income for services performed (for example, wages, salaries, tips, or self-employment) by you is considered to be (the jurisdiction of) the prior tax residence. 2010 ez 1040 form As a result, the amount of income tax withholding (from Form(s) W-2, Wage and Tax Statement) that you are able to claim on your federal return, as well as the need to file a state or U. 2010 ez 1040 form S. 2010 ez 1040 form possession return, may be affected. 2010 ez 1040 form For more information, consult with state, local, or U. 2010 ez 1040 form S. 2010 ez 1040 form possession tax authorities regarding your tax obligations under MSRRA. 2010 ez 1040 form Presence Test If you are a U. 2010 ez 1040 form S. 2010 ez 1040 form citizen or resident alien, you will satisfy the presence test for the entire tax year if you meet one of the following conditions. 2010 ez 1040 form You were present in the relevant possession for at least 183 days during the tax year. 2010 ez 1040 form You were present in the relevant possession for at least 549 days during the 3-year period that includes the current tax year and the 2 immediately preceding tax years. 2010 ez 1040 form During each year of the 3-year period, you must be present in the relevant possession for at least 60 days. 2010 ez 1040 form You were present in the United States for no more than 90 days during the tax year. 2010 ez 1040 form You had earned income in the United States of no more than a total of $3,000 and were present for more days in the relevant possession than in the United States during the tax year. 2010 ez 1040 form Earned income is pay for personal services performed, such as wages, salaries, or professional fees. 2010 ez 1040 form You had no significant connection to the United States during the tax year. 2010 ez 1040 form Special rule for nonresident aliens. 2010 ez 1040 form   Conditions (1) through (5) above do not apply to nonresident aliens of the United States. 2010 ez 1040 form Instead, nonresident aliens must meet the substantial presence test discussed in chapter 1 of Publication 519. 2010 ez 1040 form In that discussion, substitute the name of the possession for “United States” and “U. 2010 ez 1040 form S. 2010 ez 1040 form ” wherever they appear. 2010 ez 1040 form Disregard the discussion in that chapter about a Closer Connection to a Foreign Country. 2010 ez 1040 form Days of Presence in the United States or Relevant Possession Generally, you are treated as being present in the United States or in the relevant possession on any day that you are physically present in that location at any time during the day. 2010 ez 1040 form Days of presence in a possession. 2010 ez 1040 form   You are considered to be present in the relevant possession on any of the following days. 2010 ez 1040 form Any day you are physically present in that possession at any time during the day. 2010 ez 1040 form Any day you are outside of the relevant possession in order to receive, or to accompany any of the following family members to receive, qualifying medical treatment (see Qualifying Medical Treatment , later). 2010 ez 1040 form Your parent. 2010 ez 1040 form Your spouse. 2010 ez 1040 form Your child, who is your son, daughter, stepson, or stepdaughter. 2010 ez 1040 form This includes an adopted child or child lawfully placed with you for legal adoption. 2010 ez 1040 form This also includes a foster child who is placed with you by an authorized placement agency or by judgment, decree, or other order of any court of competent jurisdiction. 2010 ez 1040 form Any day you are outside the relevant possession because you leave or are unable to return to the relevant possession during any: 14-day period within which a major disaster occurs in the relevant possession for which a Federal Emergency Management Agency (FEMA) notice of a federal declaration of a major disaster is issued in the Federal Register, or Period for which a mandatory evacuation order is in effect for the geographic area in the relevant possession in which your main home is located. 2010 ez 1040 form   If, during a single day, you are physically present: In the United States and in the relevant possession, that day is considered a day of presence in the relevant possession; or In two possessions, that day is considered a day of presence in the possession where your tax home is located (see Tax Home , later). 2010 ez 1040 form Days of presence in the United States. 2010 ez 1040 form   You are considered to be present in the United States on any day that you are physically present in the United States at any time during the day. 2010 ez 1040 form However, do not count the following days as days of presence in the United States. 2010 ez 1040 form Any day you are temporarily present in the United States in order to receive, or to accompany a parent, spouse, or child who is receiving, qualifying medical treatment. 2010 ez 1040 form “Child” is defined under item 2c earlier. 2010 ez 1040 form “Qualifying medical treatment” is defined later. 2010 ez 1040 form Any day you are temporarily present in the United States because you leave or are unable to return to the relevant possession during any: 14-day period within which a major disaster occurs in the relevant possession for which a Federal Emergency Management Agency (FEMA) notice of a federal declaration of a major disaster is issued in the Federal Register, or Period for which a mandatory evacuation order is in effect for the geographic area in the relevant possession in which your main home is located. 2010 ez 1040 form Any day you are in the United States for less than 24 hours when you are traveling between two places outside the United States. 2010 ez 1040 form Any day you are temporarily present in the United States as a professional athlete to compete in a charitable sports event (defined later). 2010 ez 1040 form Any day you are temporarily in the United States as a student (defined later). 2010 ez 1040 form Any day you are in the United States serving as an elected representative of the relevant possession, or serving full time as an elected or appointed official or employee of the government of that possession (or any of its political subdivisions). 2010 ez 1040 form Qualifying Medical Treatment Such treatment is generally provided by (or under the supervision of) a physician for an illness, injury, impairment, or physical or mental condition. 2010 ez 1040 form The treatment generally involves: Any period of inpatient care that requires an overnight stay in a hospital or hospice, and any period immediately before or after that inpatient care to the extent it is medically necessary, or Any temporary period of inpatient care in a residential medical care facility for medically necessary rehabilitation services. 2010 ez 1040 form With respect to each qualifying medical treatment, you must prepare (or obtain) and maintain documentation supporting your claim that such treatment meets the criteria to be considered days of presence in the relevant possession. 2010 ez 1040 form You must be able to produce this documentation within 30 days if requested by the IRS or tax administrator for the relevant possession. 2010 ez 1040 form You must keep the following documentation. 2010 ez 1040 form Records that provide: The patient's name and relationship to you (if the medical treatment is provided to a person you accompany); The name and address of the hospital, hospice, or residential medical care facility where the medical treatment was provided; The name, address, and telephone number of the physician who provided the medical treatment; The date(s) on which the medical treatment was provided; and Receipt(s) of payment for the medical treatment. 2010 ez 1040 form Signed certification by the providing or supervising physician that the medical treatment met the requirements for being qualified medical treatment, and setting forth: The patient's name, A reasonably detailed description of the medical treatment provided by (or under the supervision of) the physician, The dates on which the medical treatment was provided, and The medical facts that support the physician's certification and determination that the treatment was medically necessary. 2010 ez 1040 form Charitable Sports Event A charitable sports event is one that meets all of the following conditions. 2010 ez 1040 form The main purpose is to benefit a qualified charitable organization. 2010 ez 1040 form The entire net proceeds go to charity. 2010 ez 1040 form Volunteers perform substantially all the work. 2010 ez 1040 form In figuring the days of presence in the United States, you can exclude only the days on which you actually competed in the charitable sports event. 2010 ez 1040 form You cannot exclude the days on which you were in the United States to practice for the event, to perform promotional or other activities related to the event, or to travel between events. 2010 ez 1040 form Student To qualify as a student, you must be, during some part of each of any 5 calendar months during the calendar year: A full-time student at a school that has a regular teaching staff, course of study, and regularly enrolled body of students in attendance, or A student taking a full-time, on-farm training course given by a school described in (1) above or by a state, county, or local government agency. 2010 ez 1040 form The 5 calendar months do not have to be consecutive. 2010 ez 1040 form Full-time student. 2010 ez 1040 form   A full-time student is a person who is enrolled for the number of hours or courses the school considers to be full-time attendance. 2010 ez 1040 form However, school attendance exclusively at night is not considered full-time attendance. 2010 ez 1040 form School. 2010 ez 1040 form   The term “school” includes elementary schools, middle schools, junior and senior high schools, colleges, universities, and technical, trade, and mechanical schools. 2010 ez 1040 form It does not include on-the-job training courses, correspondence schools, and schools offering courses only through the Internet. 2010 ez 1040 form Significant Connection One way in which you can meet the presence test is to have no significant connection to the United States during the tax year. 2010 ez 1040 form This section looks at the factors that determine if a significant connection exists. 2010 ez 1040 form You are treated as having a significant connection to the United States if you: Have a permanent home in the United States, Are currently registered to vote in any political subdivision of the United States, or Have a spouse or child (see item 2c under Days of presence in a possession , earlier) who is under age 18 whose main home is in the United States, other than: A child who is in the United States because he or she is the child of divorced or legally separated parents and is living with a custodial parent under a custodial decree or multiple support agreement, or A child who is in the United States as a student. 2010 ez 1040 form For the purpose of determining if you have a significant connection to the United States, the term “spouse” does not include a spouse from whom you are legally separated under a decree of divorce or separate maintenance. 2010 ez 1040 form Permanent home. 2010 ez 1040 form   A permanent home generally includes an accommodation such as a house, an apartment, or a furnished room that is either owned or rented by you or your spouse. 2010 ez 1040 form The dwelling unit must be available at all times, continuously, not only for short stays. 2010 ez 1040 form Exception for rental property. 2010 ez 1040 form   If you or your spouse own the dwelling unit and at any time during the tax year it is rented to someone else at fair rental value, it will be considered your permanent home only if you or your spouse use that property for personal purposes for more than the greater of: 14 days, or 10% of the number of days during that tax year that the property is rented to others at a fair rental value. 2010 ez 1040 form   You are treated as using rental property for personal purposes on any day the property is not being rented to someone else at fair rental value for the entire day. 2010 ez 1040 form   A day of personal use of a dwelling unit is also any day that the unit is used by any of the following persons. 2010 ez 1040 form You or any other person who has an interest in it, unless you rent it to another owner as his or her main home under a shared equity financing agreement. 2010 ez 1040 form A member of your family or a member of the family of any other person who has an interest in it, unless the family member uses the dwelling unit as his or her main home and pays a fair rental price. 2010 ez 1040 form Family includes only brothers and sisters, half-brothers and half-sisters, spouses, ancestors (parents, grandparents, etc. 2010 ez 1040 form ), and lineal descendants (children, grandchildren, etc. 2010 ez 1040 form ). 2010 ez 1040 form Anyone under an arrangement that lets you use some other dwelling unit. 2010 ez 1040 form Anyone at less than a fair rental price. 2010 ez 1040 form   However, any day you spend working substantially full time repairing and maintaining (not improving) your property is not counted as a day of personal use. 2010 ez 1040 form Whether your property is used mainly for this purpose is determined in light of all the facts and circumstances, such as: The amount of time you devote to repair and maintenance work, How often during the tax year you perform repair and maintenance work on this property, and The presence and activities of companions. 2010 ez 1040 form   See Publication 527, Residential Rental Property, for more information about personal use of a dwelling unit. 2010 ez 1040 form Example—significant connection. 2010 ez 1040 form Ann Green, a U. 2010 ez 1040 form S. 2010 ez 1040 form citizen, is a sales representative for a company based in Guam. 2010 ez 1040 form Ann lives with her spouse and young children in their house in Guam, where she is also registered to vote. 2010 ez 1040 form Her business travel requires her to spend 120 days in the United States and another 120 days in foreign countries. 2010 ez 1040 form When traveling on business, Ann generally stays at hotels but sometimes stays with her brother, who lives in the United States. 2010 ez 1040 form Ann's stays are always of short duration and she asks her brother's permission to stay with him. 2010 ez 1040 form Her brother's house is not her permanent home, nor does she have any other accommodations in the United States that would be considered her permanent home. 2010 ez 1040 form Ann satisfies the presence test because she has no significant connection to the United States. 2010 ez 1040 form Example—presence test. 2010 ez 1040 form Eric and Wanda Brown live for part of the year in a condominium, which they own, in the CNMI. 2010 ez 1040 form They also own a house in Maine where they live for 120 days every year to be near their grown children and grandchildren. 2010 ez 1040 form The Browns are retired and their only income is from pension payments, dividends, interest, and social security benefits. 2010 ez 1040 form In 2013, they spent only 175 days in the CNMI because of a 70-day vacation to Europe and Asia. 2010 ez 1040 form Thus, in 2013, the Browns were not present in the CNMI for at least 183 days, were present in the United States for more than 90 days, and had a significant connection to the United States because of their permanent home. 2010 ez 1040 form However, the Browns still satisfied the presence test with respect to the CNMI because they had no earned income in the United States and were physically present for more days in the CNMI than in the United States. 2010 ez 1040 form Tax Home You will have met the tax home test if you did not have a tax home outside the relevant possession during any part of the tax year. 2010 ez 1040 form Your tax home is your regular or main place of business, employment, or post of duty regardless of where you maintain your family home. 2010 ez 1040 form If you do not have a regular or main place of business because of the nature of your work, then your tax home is the place where you regularly live. 2010 ez 1040 form If you do not fit either of these categories, you are considered an itinerant and your tax home is wherever you work. 2010 ez 1040 form Exceptions There are some special rules regarding tax home that provide exceptions to the general rule stated above. 2010 ez 1040 form Students and Government Officials Disregard the following days when determining whether you have a tax home outside the relevant possession. 2010 ez 1040 form Days you were temporarily in the United States as a student (see Student under Days of Presence in the United States or Relevant Possession, earlier). 2010 ez 1040 form Days you were in the United States serving as an elected representative of the relevant possession, or serving full time as an elected or appointed official or employee of the government of that possession (or any of its political subdivisions). 2010 ez 1040 form Seafarers You will not be considered to have a tax home outside the relevant possession solely because you are employed on a ship or other seafaring vessel that is predominantly used in local and international waters. 2010 ez 1040 form For this purpose, a vessel is considered to be predominantly used in local and international waters if, during the tax year, the total amount of time it is used in international waters and in the waters within 3 miles of the relevant possession exceeds the total amount of time it is used in the territorial waters of the United States, another possession, or any foreign country. 2010 ez 1040 form Example. 2010 ez 1040 form In 2013, Sean Silverman, a U. 2010 ez 1040 form S. 2010 ez 1040 form citizen, was employed by a fishery and spent 250 days at sea on a fishing vessel. 2010 ez 1040 form When not at sea, Sean lived with his spouse at a house they own in American Samoa. 2010 ez 1040 form The fishing vessel on which Sean works departs and arrives at various ports in American Samoa, other possessions, and foreign countries, but was in international or American Samoa's local waters for 225 days. 2010 ez 1040 form For purposes of determining bona fide residency of American Samoa, Sean will not be considered to have a tax home outside that possession solely because of his employment on board the fishing vessel. 2010 ez 1040 form Year of Move If you are moving to or from a possession during the year, you may still be able to meet the tax home test for that year. 2010 ez 1040 form See Special Rules in the Year of a Move , later in this chapter. 2010 ez 1040 form Closer Connection You will have met the closer connection test if, during any part of the tax year, you do not have a closer connection to the United States or a foreign country than to the relevant U. 2010 ez 1040 form S. 2010 ez 1040 form possession. 2010 ez 1040 form You will be considered to have a closer connection to a possession than to the United States or to a foreign country if you have maintained more significant contacts with the possession(s) than with the United States or foreign country. 2010 ez 1040 form In determining if you have maintained more significant contacts with the relevant possession, the facts and circumstances to be considered include, but are not limited to, the following. 2010 ez 1040 form The location of your permanent home. 2010 ez 1040 form The location of your family. 2010 ez 1040 form The location of personal belongings, such as automobiles, furniture, clothing, and jewelry owned by you and your family. 2010 ez 1040 form The location of social, political, cultural, professional, or religious organizations with which you have a current relationship. 2010 ez 1040 form The location where you conduct your routine personal banking activities. 2010 ez 1040 form The location where you conduct business activities (other than those that go into determining your tax home). 2010 ez 1040 form The location of the jurisdiction in which you hold a driver's license. 2010 ez 1040 form The location of the jurisdiction in which you vote. 2010 ez 1040 form The location of charitable organizations to which you contribute. 2010 ez 1040 form The country of residence you designate on forms and documents. 2010 ez 1040 form The types of official forms and documents you file, such as Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting (Individuals), or Form W-9, Request for Taxpayer Identification Number and Certification. 2010 ez 1040 form Your connections to the relevant possession will be compared to the total of your connections with the United States and foreign countries. 2010 ez 1040 form Your answers to the questions on Form 8898, Part III, will help establish the jurisdiction to which you have a closer connection. 2010 ez 1040 form Example—closer connection to the United States. 2010 ez 1040 form Marcos Reyes, a U. 2010 ez 1040 form S. 2010 ez 1040 form citizen, moved to Puerto Rico in 2013 to start an investment consulting and venture capital business. 2010 ez 1040 form His spouse and two teenage children remained in California to allow the children to complete high school. 2010 ez 1040 form He traveled back to the United States regularly to see his spouse and children, to engage in business activities, and to take vacations. 2010 ez 1040 form Marcos had an apartment available for his full-time use in Puerto Rico, but remained a joint owner of the residence in California where his spouse and children lived. 2010 ez 1040 form Marcos and his family had automobiles and personal belongings such as furniture, clothing, and jewelry located at both residences. 2010 ez 1040 form Although Marcos was a member of the Puerto Rico Chamber of Commerce, he also belonged to and had current relationships with social, political, cultural, and religious organizations in California. 2010 ez 1040 form Marcos received mail in California, including bank and brokerage statements and credit card bills. 2010 ez 1040 form He conducted his personal banking activities in California. 2010 ez 1040 form He held a California driver's license and was also registered to vote there. 2010 ez 1040 form Based on all of the particular facts and circumstances pertaining to Marcos, he was not a bona fide resident of Puerto Rico in 2013 because he had a closer connection to the United States than to Puerto Rico. 2010 ez 1040 form Closer connection to another possession. 2010 ez 1040 form   Generally, possessions are not treated as foreign countries. 2010 ez 1040 form Therefore, a closer connection to a possession other than the relevant possession will not be treated as a closer connection to a foreign country. 2010 ez 1040 form Example—tax home and closer connection to possession. 2010 ez 1040 form Pearl Blackmon, a U. 2010 ez 1040 form S. 2010 ez 1040 form citizen, is a permanent employee of a hotel in Guam, but works only during the tourist season. 2010 ez 1040 form For the remainder of each year, Pearl lives with her spouse and children in the CNMI, where she has no outside employment. 2010 ez 1040 form Most of Pearl's personal belongings, including her automobile, are located in the CNMI. 2010 ez 1040 form She is registered to vote in, and has a driver's license issued by, the CNMI. 2010 ez 1040 form She does her personal banking in the CNMI and routinely lists her CNMI address as her permanent address on forms and documents. 2010 ez 1040 form Pearl satisfies the presence test with respect to both Guam and the CNMI. 2010 ez 1040 form She satisfies the tax home test with respect to Guam, because her regular place of business is in Guam. 2010 ez 1040 form Pearl satisfies the closer connection test with respect to both Guam and the CNMI, because she does not have a closer connection to the United States or to any foreign country. 2010 ez 1040 form Pearl is considered a bona fide resident of Guam, the location of her tax home. 2010 ez 1040 form Exception for Year of Move If you are moving to or from a possession during the year, you may still be able to meet the closer connection test for that year. 2010 ez 1040 form See Special Rules in the Year of a Move , next. 2010 ez 1040 form Special Rules in the Year of a Move If you are moving to or from a possession during the year, you may still be able to meet the tax home and closer connection tests for that year. 2010 ez 1040 form Year of Moving to a Possession You will satisfy the tax home and closer connection tests in the tax year of changing your residence to the relevant possession if you meet all of the following. 2010 ez 1040 form You have not been a bona fide resident of the relevant possession in any of the 3 tax years immediately preceding your move. 2010 ez 1040 form In the year of the move, you do not have a tax home outside the relevant possession or a closer connection to the United States or a foreign country than to the relevant possession during any of the last 183 days of the tax year. 2010 ez 1040 form You are a bona fide resident of the relevant possession for each of the 3 tax years immediately following your move. 2010 ez 1040 form Example. 2010 ez 1040 form Dwight Wood, a U. 2010 ez 1040 form S. 2010 ez 1040 form citizen, files returns on a calendar year basis. 2010 ez 1040 form He lived in the United States from January 2007 through May 2013. 2010 ez 1040 form In June 2013 he moved to the USVI, purchased a house, and accepted a permanent job with a local employer. 2010 ez 1040 form From July 1 through December 31, 2013 (more than 183 days), Dwight's principal place of business was in the USVI and, during that time, he did not have a closer connection to the United States or a foreign country than to the USVI. 2010 ez 1040 form If he is a bona fide resident of the USVI during all of 2014 through 2016, he will satisfy the tax home and closer connection tests for 2013. 2010 ez 1040 form If Dwight also satisfies the presence test in 2013, he will be considered a bona fide resident of the USVI for the entire 2013 tax year. 2010 ez 1040 form Year of Moving From a Possession In the year you cease to be a bona fide resident of American Samoa, the CNMI, Guam, or the USVI, you will satisfy the tax home and closer connection tests with respect to the relevant possession if you meet all of the following. 2010 ez 1040 form You have been a bona fide resident of the relevant possession for each of the 3 tax years immediately preceding your change of residence. 2010 ez 1040 form In the year of the move, you do not have a tax home outside the relevant possession or a closer connection to the United States or a foreign country than to the relevant possession during any of the first 183 days of the tax year. 2010 ez 1040 form You are not a bona fide resident of the relevant possession for any of the 3 tax years immediately following your move. 2010 ez 1040 form Example. 2010 ez 1040 form Jean Aspen, a U. 2010 ez 1040 form S. 2010 ez 1040 form citizen, files returns on a calendar year basis. 2010 ez 1040 form From January 2010 through December 2012, Jean was a bona fide resident of American Samoa. 2010 ez 1040 form Jean continued to live there until September 6, 2013, when she accepted new employment and moved to Hawaii. 2010 ez 1040 form Jean's principal place of business from January 1 through September 5, 2013 (more than 183 days), was in American Samoa, and during that period Jean did not have a closer connection to the United States or a foreign country than to American Samoa. 2010 ez 1040 form If Jean continues to live and work in Hawaii for the rest of 2013 and throughout years 2014 through 2016, she will satisfy the tax home and closer connection tests for 2013 with respect to American Samoa. 2010 ez 1040 form If Jean also satisfies the presence test in 2013, she will be considered a bona fide resident for the entire 2013 tax year. 2010 ez 1040 form Puerto Rico You will be considered a bona fide resident of Puerto Rico for the part of the tax year preceding the date on which you move if you: Are a U. 2010 ez 1040 form S. 2010 ez 1040 form citizen, Are a bona fide resident of Puerto Rico for at least 2 tax years immediately preceding the tax year of the move, Cease to be a bona fide resident of Puerto Rico during the tax year, Cease to have a tax home in Puerto Rico during the tax year, and Have a closer connection to Puerto Rico than to the United States or a foreign country throughout the part of the tax year preceding the date on which you cease to have a tax home in Puerto Rico. 2010 ez 1040 form Example. 2010 ez 1040 form Randy White, a U. 2010 ez 1040 form S. 2010 ez 1040 form citizen, files returns on a calendar year basis. 2010 ez 1040 form For all of 2011 and 2012, Randy was a bona fide resident of Puerto Rico. 2010 ez 1040 form From January through April 2013, Randy continued to reside and maintain his principal place of business in and closer connection to Puerto Rico. 2010 ez 1040 form On May 5, 2013, Randy moved and changed his tax home to Nevada. 2010 ez 1040 form Later that year he established a closer connection to the United States than to Puerto Rico. 2010 ez 1040 form Randy did not satisfy the presence test for 2013 with respect to Puerto Rico, nor the tax home or closer connection tests. 2010 ez 1040 form However, because Randy was a bona fide resident of Puerto Rico for at least 2 tax years before he moved to Nevada in 2013, he was a bona fide resident of Puerto Rico from January 1 through May 4, 2013. 2010 ez 1040 form Reporting a Change in Bona Fide Residence If you became or ceased to be a bona fide resident of a U. 2010 ez 1040 form S. 2010 ez 1040 form possession, you may need to file Form 8898. 2010 ez 1040 form This applies to the U. 2010 ez 1040 form S. 2010 ez 1040 form possessions of American Samoa, the CNMI, Guam, Puerto Rico, and the USVI. 2010 ez 1040 form Who Must File You must file Form 8898 for the tax year in which you meet both of the following conditions. 2010 ez 1040 form Your worldwide gross income (defined below) in that tax year is more than $75,000. 2010 ez 1040 form You meet one of the following. 2010 ez 1040 form You take a position for U. 2010 ez 1040 form S. 2010 ez 1040 form tax purposes that you became a bona fide resident of a U. 2010 ez 1040 form S. 2010 ez 1040 form possession after a tax year for which you filed a U. 2010 ez 1040 form S. 2010 ez 1040 form income tax return as a citizen or resident alien of the United States but not as a bona fide resident of the possession. 2010 ez 1040 form You are a citizen or resident alien of the United States who takes the position for U. 2010 ez 1040 form S. 2010 ez 1040 form tax purposes that you ceased to be a bona fide resident of a U. 2010 ez 1040 form S. 2010 ez 1040 form possession after a tax year for which you filed an income tax return (with the IRS, the possession tax authority, or both) as a bona fide resident of the possession. 2010 ez 1040 form You take the position for U. 2010 ez 1040 form S. 2010 ez 1040 form tax purposes that you became a bona fide resident of Puerto Rico or American Samoa after a tax year for which you were required to file an income tax return as a bona fide resident of the CNMI, Guam, or the USVI. 2010 ez 1040 form Worldwide gross income. 2010 ez 1040 form   Worldwide gross income means all income you received in the form of money, goods, property, and services, including any income from sources outside the United States (even if you can exclude part or all of it) and before any deductions, credits, or rebates. 2010 ez 1040 form Example. 2010 ez 1040 form You are a U. 2010 ez 1040 form S. 2010 ez 1040 form citizen who moved to the CNMI in December 2012, but did not become a bona fide resident of that possession until the 2013 tax year. 2010 ez 1040 form You must file Form 8898 for the 2013 tax year if your worldwide gross income for that year was more than $75,000. 2010 ez 1040 form Penalty for Not Filing Form 8898 If you are required to file Form 8898 for any tax year and you fail to file it, you may owe a penalty of $1,000. 2010 ez 1040 form You may also owe this penalty if you do not include all the information required by the form or the form includes incorrect information. 2010 ez 1040 form In either case, you will not owe this penalty if you can show that such failure is due to reasonable cause and not willful neglect. 2010 ez 1040 form This is in addition to any criminal penalty that may be imposed. 2010 ez 1040 form Prev  Up  Next   Home   More Online Publications
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The 2010 Ez 1040 Form

2010 ez 1040 form 31. 2010 ez 1040 form   Tax on Unearned Income of Certain Children Table of Contents What's New Introduction Useful Items - You may want to see: Which Parent's Return To UseParents Who Do Not File a Joint Return Parent's Election To Report Child's Interest and DividendsEffect of Making the Election Figuring Child's Income Figuring Additional Tax Tax for Certain Children Who Have Unearned IncomeProviding Parental Information (Form 8615, lines A–C) Step 1. 2010 ez 1040 form Figuring the Child's Net Unearned Income (Form 8615, Part I) Step 2. 2010 ez 1040 form Figuring Tentative Tax at the Parent's Tax Rate (Form 8615, Part II) Step 3. 2010 ez 1040 form Figuring the Child's Tax (Form 8615, Part III) What's New Net Investment Income Tax. 2010 ez 1040 form . 2010 ez 1040 form  For tax years beginning after December 31, 2012, a child whose tax is figured on Form 8615 may be subject to the Net Investment Income Tax (NIIT). 2010 ez 1040 form NIIT is a 3. 2010 ez 1040 form 8% tax on the lesser of the net investment income or the excess of the child's modified adjusted gross income (MAGI) over the threshold amount. 2010 ez 1040 form Use Form 8960, Net Investment Income Tax, to figure this tax. 2010 ez 1040 form For more information on NIIT, go to www. 2010 ez 1040 form irs. 2010 ez 1040 form gov and enter “Net Investment Income Tax” in the search box. 2010 ez 1040 form Introduction This chapter discusses the following two rules that may affect the tax on unearned income of certain children. 2010 ez 1040 form If the child's interest and dividend income (including capital gain distributions) total less than $10,000, the child's parent may be able to choose to include that income on the parent's return rather than file a return for the child. 2010 ez 1040 form (See Parent's Election To Report Child's Interest and Dividends , later. 2010 ez 1040 form ) If the child's interest, dividends, and other unearned income total more than $2,000, part of that income may be taxed at the parent's tax rate instead of the child's tax rate. 2010 ez 1040 form (See Tax for Certain Children Who Have Unearned Income , later. 2010 ez 1040 form ) For these rules, the term “child” includes a legally adopted child and a stepchild. 2010 ez 1040 form These rules apply whether or not the child is a dependent. 2010 ez 1040 form Useful Items - You may want to see: Publication 929 Tax Rules for Children and Dependents Form (and Instructions) 8615 Tax for Certain Children Who Have Unearned Income 8814 Parents' Election To Report Child's Interest and Dividends Which Parent's Return To Use If a child's parents are married to each other and file a joint return, use the joint return to figure the tax on the child's unearned income. 2010 ez 1040 form The tax rate and other return information from that return are used to figure the child's tax as explained later under Tax for Certain Children Who Have Unearned Income . 2010 ez 1040 form Parents Who Do Not File a Joint Return For parents who do not file a joint return, the following discussions explain which parent's tax return must be used to figure the tax. 2010 ez 1040 form Only the parent whose tax return is used can make the election described under Parent's Election To Report Child's Interest and Dividends . 2010 ez 1040 form Parents are married. 2010 ez 1040 form   If the child's parents file separate returns, use the return of the parent with the greater taxable income. 2010 ez 1040 form Parents not living together. 2010 ez 1040 form   If the child's parents are married to each other but not living together, and the parent with whom the child lives (the custodial parent) is considered unmarried, use the return of the custodial parent. 2010 ez 1040 form If the custodial parent is not considered unmarried, use the return of the parent with the greater taxable income. 2010 ez 1040 form   For an explanation of when a married person living apart from his or her spouse is considered unmarried, see Head of Household in chapter 2. 2010 ez 1040 form Parents are divorced. 2010 ez 1040 form   If the child's parents are divorced or legally separated, and the parent who had custody of the child for the greater part of the year (the custodial parent) has not remarried, use the return of the custodial parent. 2010 ez 1040 form Custodial parent remarried. 2010 ez 1040 form   If the custodial parent has remarried, the stepparent (rather than the noncustodial parent) is treated as the child's other parent. 2010 ez 1040 form Therefore, if the custodial parent and the stepparent file a joint return, use that joint return. 2010 ez 1040 form Do not use the return of the noncustodial parent. 2010 ez 1040 form   If the custodial parent and the stepparent are married, but file separate returns, use the return of the one with the greater taxable income. 2010 ez 1040 form If the custodial parent and the stepparent are married but not living together, the earlier discussion under Parents not living together applies. 2010 ez 1040 form Parents never married. 2010 ez 1040 form   If a child's parents have never been married to each other, but lived together all year, use the return of the parent with the greater taxable income. 2010 ez 1040 form If the parents did not live together all year, the rules explained earlier under Parents are divorced apply. 2010 ez 1040 form Widowed parent remarried. 2010 ez 1040 form   If a widow or widower remarries, the new spouse is treated as the child's other parent. 2010 ez 1040 form The rules explained earlier under Custodial parent remarried apply. 2010 ez 1040 form Parent's Election To Report Child's Interest and Dividends You may be able to elect to include your child's interest and dividend income (including capital gain distributions) on your tax return. 2010 ez 1040 form If you do, your child will not have to file a return. 2010 ez 1040 form You can make this election only if all the following conditions are met. 2010 ez 1040 form Your child was under age 19 (or under age 24 if a full-time student) at the end of the year. 2010 ez 1040 form Your child had income only from interest and dividends (including capital gain distributions and Alaska Permanent Fund dividends). 2010 ez 1040 form The child's gross income was less than $10,000. 2010 ez 1040 form The child is required to file a return unless you make this election. 2010 ez 1040 form The child does not file a joint return for the year. 2010 ez 1040 form No estimated tax payment was made for the year, and no overpayment from the previous year (or from any amended return) was applied to this year under your child's name and social security number. 2010 ez 1040 form No federal income tax was taken out of your child's income under the backup withholding rules. 2010 ez 1040 form You are the parent whose return must be used when applying the special tax rules for children. 2010 ez 1040 form (See Which Parent's Return To Use , earlier. 2010 ez 1040 form ) These conditions are also shown in Figure 31-A. 2010 ez 1040 form Certain January 1 birthdays. 2010 ez 1040 form   A child born on January 1, 1995, is considered to be age 19 at the end of 2013. 2010 ez 1040 form You cannot make this election for such a child unless the child was a full-time student. 2010 ez 1040 form   A child born on January 1, 1990, is considered to be age 24 at the end of 2013. 2010 ez 1040 form You cannot make this election for such a child. 2010 ez 1040 form Full-time student. 2010 ez 1040 form   A full-time student is a child who during some part of each of any 5 calendar months of the year was enrolled as a full-time student at a school, or took a full-time on-farm training course given by a school or a state, county, or local government agency. 2010 ez 1040 form A school includes a technical, trade, or mechanical school. 2010 ez 1040 form It does not include an on-the-job training course, correspondence school, or school offering courses only through the Internet. 2010 ez 1040 form How to make the election. 2010 ez 1040 form   Make the election by attaching Form 8814 to your Form 1040. 2010 ez 1040 form (If you make this election, you cannot file Form 1040A or Form 1040EZ. 2010 ez 1040 form ) Attach a separate Form 8814 for each child for whom you make the election. 2010 ez 1040 form You can make the election for one or more children and not for others. 2010 ez 1040 form Effect of Making the Election The federal income tax on your child's income may be more if you make the Form 8814 election. 2010 ez 1040 form Rate may be higher. 2010 ez 1040 form   If your child received qualified dividends or capital gain distributions, you may pay up to $100 more tax if you make this election instead of filing a separate tax return for the child. 2010 ez 1040 form This is because the tax rate on the child's income between $1,000 and $2,000 is 10% if you make this election. 2010 ez 1040 form However, if you file a separate return for the child, the tax rate may be as low as 0% (zero percent) because of the preferential tax rates for qualified dividends and capital gain distributions. 2010 ez 1040 form Deductions you cannot take. 2010 ez 1040 form   By making the Form 8814 election, you cannot take any of the following deductions that the child would be entitled to on his or her return. 2010 ez 1040 form The additional standard deduction if the child is blind. 2010 ez 1040 form The deduction for a penalty on an early withdrawal of your child's savings. 2010 ez 1040 form Itemized deductions (such as your child's investment expenses or charitable contributions). 2010 ez 1040 form Reduced deductions or credits. 2010 ez 1040 form   If you use Form 8814, your increased adjusted gross income may reduce certain deductions or credits on your return including the following. 2010 ez 1040 form Deduction for contributions to a traditional individual retirement arrangement (IRA). 2010 ez 1040 form Deduction for student loan interest. 2010 ez 1040 form Itemized deductions for medical expenses, casualty and theft losses, and certain miscellaneous expenses. 2010 ez 1040 form Credit for child and dependent care expenses. 2010 ez 1040 form Child tax credit. 2010 ez 1040 form Education tax credits. 2010 ez 1040 form Earned income credit. 2010 ez 1040 form Penalty for underpayment of estimated tax. 2010 ez 1040 form   If you make this election for 2013 and did not have enough tax withheld or pay enough estimated tax to cover the tax you owe, you may be subject to a penalty. 2010 ez 1040 form If you plan to make this election for 2014, you may need to increase your federal income tax withholding or your estimated tax payments to avoid the penalty. 2010 ez 1040 form See chapter 4 for more information. 2010 ez 1040 form Figuring Child's Income Use Form 8814, Part I, to figure your child's interest and dividend income to report on your return. 2010 ez 1040 form Only the amount over $2,000 is added to your income. 2010 ez 1040 form The amount over $2,000 is shown on Form 8814, line 6. 2010 ez 1040 form Unless the child's income includes qualified dividends or capital gain distributions (discussed next), the same amount is shown on Form 8814, line 12. 2010 ez 1040 form Include the amount from Form 8814, line 12, on Form 1040, line 21. 2010 ez 1040 form Enter “Form 8814” on the dotted line next to line 21. 2010 ez 1040 form If you file more than one Form 8814, include the total amounts from line 12 of all your Forms 8814 on Form 1040, line 21. 2010 ez 1040 form Capital gain distributions and qualified dividends. 2010 ez 1040 form   If your child's dividend income included any capital gain distributions, see Capital gain distributions under Figuring Child's Income in Publication 929, Part 2. 2010 ez 1040 form If your child's dividend income included any qualified dividends, see Qualified dividends under Figuring Child's Income in Publication 929, Part 2. 2010 ez 1040 form Figuring Additional Tax Use Form 8814, Part II, to figure the tax on the $2,000 of your child's interest and dividends that you do not include in your income. 2010 ez 1040 form This tax is added to the tax figured on your income. 2010 ez 1040 form This additional tax is the smaller of: 10% × (your child's gross income − $1,000), or $100. 2010 ez 1040 form Include the amount from line 15 of all your Forms 8814 in the total on Form 1040, line 44. 2010 ez 1040 form Check box a on Form 1040, line 44. 2010 ez 1040 form Figure 31-A. 2010 ez 1040 form Can You Include Your Child's Income On Your Tax Return? Please click here for the text description of the image. 2010 ez 1040 form Figure 31–A. 2010 ez 1040 form Can You Include Your Child's Income On Your Tax Return? Tax for Certain Children Who Have Unearned Income If a child's interest, dividends, and other unearned income total more than $2,000, part of that income may be taxed at the parent's tax rate instead of the child's tax rate. 2010 ez 1040 form If the parent does not or cannot choose to include the child's income on the parent's return, use Form 8615 to figure the child's tax. 2010 ez 1040 form Attach the completed form to the child's Form 1040 or Form 1040A. 2010 ez 1040 form When Form 8615 must be filed. 2010 ez 1040 form   Form 8615 must be filed for a child if all of the following statements are true. 2010 ez 1040 form The child's investment income was more than $2,000. 2010 ez 1040 form The child is required to file a return for 2013. 2010 ez 1040 form The child either: Was under age 18 at the end of the year, Was age 18 at the end of the year and did not have earned income that was more than half of his or her support, or Was over age 18 and under age 24 at the end of the year, was a full-time student, and did not have earned income that was more than half of his or her support. 2010 ez 1040 form At least one of the child's parents was alive at the end of 2013. 2010 ez 1040 form The child does not file a joint return for 2013. 2010 ez 1040 form These conditions are also shown in  Figure 31-B. 2010 ez 1040 form Earned income. 2010 ez 1040 form   Earned income includes salaries, wages, tips, and other payments received for personal services performed. 2010 ez 1040 form It does not include unearned income as defined later in this chapter. 2010 ez 1040 form Support. 2010 ez 1040 form   Your child's support includes all amounts spent to provide the child with food, lodging, clothing, education, medical and dental care, recreation, transportation, and similar necessities. 2010 ez 1040 form To figure your child's support, count support provided by you, your child, and others. 2010 ez 1040 form However, a scholarship received by your child is not considered support if your child is a full-time student. 2010 ez 1040 form See chapter 3 for details about support. 2010 ez 1040 form Certain January 1 birthdays. 2010 ez 1040 form   Use the following chart to determine whether certain children with January 1 birthdays meet condition 3 under When Form 8615 must be filed. 2010 ez 1040 form Figure 31-B. 2010 ez 1040 form Do You Have To Use Form 8615 To Figure Your Child's Tax? Please click here for the text description of the image. 2010 ez 1040 form Figure 31-B. 2010 ez 1040 form Do You Have To Use Form 8615 To Figure Your Child's Tax?    IF a child was born on. 2010 ez 1040 form . 2010 ez 1040 form . 2010 ez 1040 form THEN, at the end of 2013, the child is considered to be. 2010 ez 1040 form . 2010 ez 1040 form . 2010 ez 1040 form January 1, 1996 18* January 1, 1995 19** January 1, 1990 24*** *This child is not under age 18. 2010 ez 1040 form The child meets condition 3 only if the child did not have earned income that was more than half of the child's support. 2010 ez 1040 form  **This child meets condition 3 only if the child was a full-time student who did not have earned income that was more than half of the child's support. 2010 ez 1040 form  ***Do not use Form 8615 for this child. 2010 ez 1040 form Providing Parental Information (Form 8615, lines A–C) On Form 8615, lines A and B, enter the parent's name and social security number. 2010 ez 1040 form (If the parents filed a joint return, enter the name and social security number listed first on the joint return. 2010 ez 1040 form ) On line C, check the box for the parent's filing status. 2010 ez 1040 form See Which Parent's Return To Use at the beginning of this chapter for information on which parent's return information must be used on Form 8615. 2010 ez 1040 form Parent with different tax year. 2010 ez 1040 form   If the parent and the child do not have the same tax year, complete Form 8615 using the information on the parent's return for the tax year that ends in the child's tax year. 2010 ez 1040 form Parent's return information not known timely. 2010 ez 1040 form   If the information needed from the parent's return is not known by the time the child's return is due (usually April 15), you can file the return using estimates. 2010 ez 1040 form   You can use any reasonable estimate. 2010 ez 1040 form This includes using information from last year's return. 2010 ez 1040 form If you use an estimated amount on Form 8615, enter “Estimated” on the line next to the amount. 2010 ez 1040 form    When you get the correct information, file an amended return on Form 1040X, Amended U. 2010 ez 1040 form S. 2010 ez 1040 form Individual Income Tax Return. 2010 ez 1040 form   Instead of using estimates, you can get an automatic 6-month extension of time to file if, by the date your return is due, you file Form 4868, Application for Automatic Extension of Time To File U. 2010 ez 1040 form S. 2010 ez 1040 form Individual Income Tax Return. 2010 ez 1040 form Extensions are discussed in chapter 1. 2010 ez 1040 form Step 1. 2010 ez 1040 form Figuring the Child's Net Unearned Income (Form 8615, Part I) The first step in figuring a child's tax using Form 8615 is to figure the child's net unearned income. 2010 ez 1040 form To do that, use Form 8615, Part I. 2010 ez 1040 form Line 1 (unearned income). 2010 ez 1040 form   If the child had no earned income, enter on this line the adjusted gross income shown on the child's return. 2010 ez 1040 form Adjusted gross income is shown on Form 1040, line 38, or Form 1040A, line 22. 2010 ez 1040 form Form 1040EZ cannot be used if Form 8615 must be filed. 2010 ez 1040 form   If the child had earned income, figure the amount to enter on Form 8615, line 1, by using the worksheet in the instructions for the form. 2010 ez 1040 form   However, if the child has: excluded any foreign earned income, deducted either a loss from self-employment, or deducted a net operating loss from another year, then use the Alternate Worksheet for Form 8615, Line 1, in Publication 929 to figure the amount to enter on Form 8615, line 1. 2010 ez 1040 form Unearned income defined. 2010 ez 1040 form   Unearned income is generally all income other than salaries, wages, and other amounts received as pay for work actually done. 2010 ez 1040 form It includes taxable interest, dividends (including capital gain distributions), capital gains, unemployment compensation, the taxable part of social security and pension payments, and certain distributions from trusts. 2010 ez 1040 form Unearned income includes amounts produced by assets the child obtained with earned income (such as interest on a savings account into which the child deposited wages). 2010 ez 1040 form Nontaxable income. 2010 ez 1040 form   For this purpose, unearned income includes only amounts the child must include in total income. 2010 ez 1040 form Nontaxable unearned income, such as tax-exempt interest and the nontaxable part of social security and pension payments, is not included. 2010 ez 1040 form Income from property received as a gift. 2010 ez 1040 form   A child's unearned income includes all income produced by property belonging to the child. 2010 ez 1040 form This is true even if the property was transferred to the child, regardless of when the property was transferred or purchased or who transferred it. 2010 ez 1040 form   A child's unearned income includes income produced by property given as a gift to the child. 2010 ez 1040 form This includes gifts to the child from grandparents or any other person and gifts made under the Uniform Gift to Minors Act. 2010 ez 1040 form Example. 2010 ez 1040 form Amanda Black, age 13, received the following income. 2010 ez 1040 form Dividends — $800 Wages — $2,100 Taxable interest — $1,200 Tax-exempt interest — $100 Net capital gains — $100 The dividends were qualified dividends on stock given to her by her grandparents. 2010 ez 1040 form Amanda's unearned income is $2,100. 2010 ez 1040 form This is the total of the dividends ($800), taxable interest ($1,200), and net capital gains ($100). 2010 ez 1040 form Her wages are earned (not unearned) income because they are received for work actually done. 2010 ez 1040 form Her tax-exempt interest is not included because it is nontaxable. 2010 ez 1040 form Trust income. 2010 ez 1040 form   If a child is the beneficiary of a trust, distributions of taxable interest, dividends, capital gains, and other unearned income from the trust are unearned income to the child. 2010 ez 1040 form   However, for purposes of completing Form 8615, a taxable distribution from a qualified disability trust is considered earned income, not unearned income. 2010 ez 1040 form Line 2 (deductions). 2010 ez 1040 form   If the child does not itemize deductions on Schedule A (Form 1040), enter $2,000 on line 2. 2010 ez 1040 form   If the child does itemize deductions, enter on line 2 the larger of: $1,000 plus the portion of the child's itemized deductions on Schedule A (Form 1040), line 29, that are directly connected with the production of unearned income entered on line 1, or $2,000. 2010 ez 1040 form Directly connected. 2010 ez 1040 form   Itemized deductions are directly connected with the production of unearned income if they are for expenses paid to produce or collect taxable income or to manage, conserve, or maintain property held for producing income. 2010 ez 1040 form These expenses include custodian fees and service charges, service fees to collect taxable interest and dividends, and certain investment counsel fees. 2010 ez 1040 form   These expenses are added to certain other miscellaneous itemized deductions on Schedule A (Form 1040). 2010 ez 1040 form Only the amount greater than 2% of the child's adjusted gross income can be deducted. 2010 ez 1040 form See chapter 28 for more information. 2010 ez 1040 form Example 1. 2010 ez 1040 form Roger, age 12, has unearned income of $8,000, no other income, no adjustments to income, and itemized deductions of $300 (net of the 2% limit) that are directly connected with his unearned income. 2010 ez 1040 form His adjusted gross income is $8,000, which is entered on Form 1040, line 38, and on Form 8615, line 1. 2010 ez 1040 form Roger enters $2,000 on line 2 because that is more than the total of $1,000 plus his directly connected itemized deductions of $300. 2010 ez 1040 form Example 2. 2010 ez 1040 form Eleanor, age 8, has unearned income of $16,000 and an early withdrawal penalty of $100. 2010 ez 1040 form She has no other income. 2010 ez 1040 form She has itemized deductions of $1,050 (net of the 2% limit) that are directly connected with the production of her unearned income. 2010 ez 1040 form Her adjusted gross income, entered on line 1, is $15,900 ($16,000 − $100). 2010 ez 1040 form The amount on line 2 is $2,050. 2010 ez 1040 form This is the larger of: $1,000 plus the $1,050 of directly connected itemized deductions, or $2,000. 2010 ez 1040 form Line 3. 2010 ez 1040 form   Subtract line 2 from line 1 and enter the result on this line. 2010 ez 1040 form If zero or less, do not complete the rest of the form. 2010 ez 1040 form However, you must still attach Form 8615 to the child's tax return. 2010 ez 1040 form Figure the tax on the child's taxable income in the normal manner. 2010 ez 1040 form Line 4 (child's taxable income). 2010 ez 1040 form   Enter on line 4 the child's taxable income from Form 1040, line 43, or Form 1040A, line 27. 2010 ez 1040 form   However, if the child files Form 2555 or 2555-EZ to claim the foreign earned income exclusion, housing exclusion, or housing deduction, see the Form 8615 instructions or Pub. 2010 ez 1040 form 929. 2010 ez 1040 form Line 5 (net unearned income). 2010 ez 1040 form   A child's net unearned income cannot be more than his or her taxable income. 2010 ez 1040 form Enter on Form 8615, line 5, the smaller of line 3 or line 4. 2010 ez 1040 form This is the child's net unearned income. 2010 ez 1040 form   If zero or less, do not complete the rest of the form. 2010 ez 1040 form However, you must still attach Form 8615 to the child's tax return. 2010 ez 1040 form Figure the tax on the child's taxable income in the normal manner. 2010 ez 1040 form Step 2. 2010 ez 1040 form Figuring Tentative Tax at the Parent's Tax Rate (Form 8615, Part II) The next step in completing Form 8615 is to figure a tentative tax on the child's net unearned income at the parent's tax rate. 2010 ez 1040 form The tentative tax at the parent's tax rate is the difference between the tax on the parent's taxable income figured with the child's net unearned income (plus the net unearned income of any other child whose Form 8615 includes the tax return information of that parent) and the tax figured without it. 2010 ez 1040 form When figuring the tentative tax at the parent's tax rate on Form 8615, do not refigure any of the exclusions, deductions, or credits on the parent's return because of the child's net unearned income. 2010 ez 1040 form For example, do not refigure the medical expense deduction. 2010 ez 1040 form Figure the tentative tax on Form 8615, lines 6 through 13. 2010 ez 1040 form Note. 2010 ez 1040 form If the child or parent has any capital gains or losses, get Publication 929 for help in completing Form 8615, Part II. 2010 ez 1040 form Line 6 (parent's taxable income). 2010 ez 1040 form   Enter on line 6 the parent's taxable income from Form 1040, line 43, Form 1040A, line 27, or Form 1040EZ, line 6. 2010 ez 1040 form   If the Foreign Earned Income Tax Worksheet (in the Form 1040 instructions) was used to figure the parent's tax, enter the amount from line 3 of that worksheet instead of the parent's taxable income. 2010 ez 1040 form Line 7 (net unearned income of other children). 2010 ez 1040 form   If the tax return information of the parent is also used on any other child's Form 8615, enter on line 7 the total of the amounts from line 5 of all the other children's Forms 8615. 2010 ez 1040 form Do not include the amount from line 5 of the Form 8615 being completed. 2010 ez 1040 form Example. 2010 ez 1040 form Paul and Jane Persimmon have three children, Sharon, Jerry, and Mike, who must attach Form 8615 to their tax returns. 2010 ez 1040 form The children's net unearned income amounts on line 5 of their Forms 8615 are: Sharon — $800 Jerry — $600 Mike — $1,000 Line 7 of Sharon's Form 8615 will show $1,600, the total of the amounts on line 5 of Jerry's and Mike's Forms 8615. 2010 ez 1040 form Line 7 of Jerry's Form 8615 will show $1,800 ($800 + $1,000). 2010 ez 1040 form Line 7 of Mike's Form 8615 will show $1,400 ($800 + $600). 2010 ez 1040 form Other children's information not available. 2010 ez 1040 form   If the net unearned income of the other children is not available when the return is due, either file the return using estimates or get an extension of time to file. 2010 ez 1040 form See Parent's return information not known timely , earlier. 2010 ez 1040 form Line 11 (tentative tax). 2010 ez 1040 form   Subtract line 10 from line 9 and enter the result on this line. 2010 ez 1040 form This is the tentative tax. 2010 ez 1040 form   If line 7 is blank, skip lines 12a and 12b and enter the amount from line 11 on line 13. 2010 ez 1040 form Also skip the discussion for lines 12a and 12b that follows. 2010 ez 1040 form Lines 12a and 12b (dividing the tentative tax). 2010 ez 1040 form   If an amount is entered on line 7, divide the tentative tax shown on line 11 among the children according to each child's share of the total net unearned income. 2010 ez 1040 form This is done on lines 12a, 12b, and 13. 2010 ez 1040 form Add the amount on line 7 to the amount on line 5 and enter the total on line 12a. 2010 ez 1040 form Divide the amount on line 5 by the amount on line 12a and enter the result, as a decimal, on line 12b. 2010 ez 1040 form Example. 2010 ez 1040 form In the earlier example under Line 7 (net unearned income of other children), Sharon's Form 8615 shows $1,600 on line 7. 2010 ez 1040 form The amount entered on line 12a is $2,400, the total of the amounts on lines 5 and 7 ($800 + $1,600). 2010 ez 1040 form The decimal on line 12b is  . 2010 ez 1040 form 333, figured as follows and rounded to three places. 2010 ez 1040 form   $800 = . 2010 ez 1040 form 333     $2,400   Step 3. 2010 ez 1040 form Figuring the Child's Tax (Form 8615, Part III) The final step in figuring a child's tax using Form 8615 is to determine the larger of: The total of: The child's share of the tentative tax based on the parent's tax rate, plus The tax on the child's taxable income in excess of net unearned income, figured at the child's tax rate, or The tax on the child's taxable income, figured at the child's tax rate. 2010 ez 1040 form This is the child's tax. 2010 ez 1040 form It is figured on Form 8615, lines 14 through 18. 2010 ez 1040 form Alternative minimum tax. 2010 ez 1040 form   A child may be subject to alternative minimum tax (AMT) if he or she has certain items given preferential treatment under the tax law. 2010 ez 1040 form See Alternative Minimum Tax (AMT) in chapter 30. 2010 ez 1040 form    For more information on who is liable for AMT and how to figure it, see Form 6251, Alternative Minimum Tax—Individuals. 2010 ez 1040 form For information on special limits that apply to a child who files Form 6251, see Certain Children Under Age 24 in the Instructions for Form 6251. 2010 ez 1040 form Prev  Up  Next   Home   More Online Publications