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2040 Ez Form

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2040 Ez Form

2040 ez form 4. 2040 ez form   How Income of Aliens Is Taxed Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Resident Aliens Nonresident AliensTrade or Business in the United States Effectively Connected Income The 30% Tax Income From Real Property Transportation Tax Interrupted Period of Residence Expatriation TaxExpatriation Before June 4, 2004 Expatriation After June 3, 2004, and Before June 17, 2008 Expatriation After June 16, 2008 Introduction Resident and nonresident aliens are taxed in different ways. 2040 ez form Resident aliens are generally taxed in the same way as U. 2040 ez form S. 2040 ez form citizens. 2040 ez form Nonresident aliens are taxed based on the source of their income and whether or not their income is effectively connected with a U. 2040 ez form S. 2040 ez form trade or business. 2040 ez form The following discussions will help you determine if income you receive during the tax year is effectively connected with a U. 2040 ez form S. 2040 ez form trade or business and how it is taxed. 2040 ez form Topics - This chapter discusses: Income that is effectively connected with a U. 2040 ez form S. 2040 ez form trade or business. 2040 ez form Income that is not effectively connected with a U. 2040 ez form S. 2040 ez form trade or business. 2040 ez form Interrupted period of residence. 2040 ez form Expatriation tax. 2040 ez form Useful Items - You may want to see: Publication 544 Sales and Other Dispositions of Assets 1212 List of Original Issue Discount Instruments Form (and Instructions) 6251 Alternative Minimum Tax—Individuals Schedule D (Form 1040) Capital Gains and Losses See chapter 12 for information about getting these publications and forms. 2040 ez form Resident Aliens Resident aliens are generally taxed in the same way as U. 2040 ez form S. 2040 ez form citizens. 2040 ez form This means that their worldwide income is subject to U. 2040 ez form S. 2040 ez form tax and must be reported on their U. 2040 ez form S. 2040 ez form tax return. 2040 ez form Income of resident aliens is subject to the graduated tax rates that apply to U. 2040 ez form S. 2040 ez form citizens. 2040 ez form Resident aliens use the Tax Table or Tax Computation Worksheets located in the Form 1040 instructions, which apply to U. 2040 ez form S. 2040 ez form citizens. 2040 ez form Nonresident Aliens A nonresident alien's income that is subject to U. 2040 ez form S. 2040 ez form income tax must be divided into two categories: Income that is effectively connected with a trade or business in the United States, and Income that is not effectively connected with a trade or business in the United States (discussed under The 30% Tax, later). 2040 ez form The difference between these two categories is that effectively connected income, after allowable deductions, is taxed at graduated rates. 2040 ez form These are the same rates that apply to U. 2040 ez form S. 2040 ez form citizens and residents. 2040 ez form Income that is not effectively connected is taxed at a flat 30% (or lower treaty) rate. 2040 ez form If you were formerly a U. 2040 ez form S. 2040 ez form citizen or resident alien, these rules may not apply. 2040 ez form See Expatriation Tax, later, in this chapter. 2040 ez form Trade or Business in the United States Generally, you must be engaged in a trade or business during the tax year to be able to treat income received in that year as effectively connected with that trade or business. 2040 ez form Whether you are engaged in a trade or business in the United States depends on the nature of your activities. 2040 ez form The discussions that follow will help you determine whether you are engaged in a trade or business in the United States. 2040 ez form Personal Services If you perform personal services in the United States at any time during the tax year, you usually are considered engaged in a trade or business in the United States. 2040 ez form Certain compensation paid to a nonresident alien by a foreign employer is not included in gross income. 2040 ez form For more information, see Services Performed for Foreign Employer in chapter 3. 2040 ez form Other Trade or Business Activities Other examples of being engaged in a trade or business in the United States follow. 2040 ez form Students and trainees. 2040 ez form   You are considered engaged in a trade or business in the United States if you are temporarily present in the United States as a nonimmigrant under an “F,” “J,” “M,” or “Q” visa. 2040 ez form A nonresident alien temporarily present in the United States under a “J” visa includes a nonresident alien individual admitted to the United States as an exchange visitor under the Mutual Educational and Cultural Exchange Act of 1961. 2040 ez form The taxable part of any scholarship or fellowship grant that is U. 2040 ez form S. 2040 ez form source income is treated as effectively connected with a trade or business in the United States. 2040 ez form Business operations. 2040 ez form   If you own and operate a business in the United States selling services, products, or merchandise, you are, with certain exceptions, engaged in a trade or business in the United States. 2040 ez form Partnerships. 2040 ez form   If you are a member of a partnership that at any time during the tax year is engaged in a trade or business in the United States, you are considered to be engaged in a trade or business in the United States. 2040 ez form Beneficiary of an estate or trust. 2040 ez form   If you are the beneficiary of an estate or trust that is engaged in a trade or business in the United States, you are treated as being engaged in the same trade or business. 2040 ez form Trading in stocks, securities, and commodities. 2040 ez form   If your only U. 2040 ez form S. 2040 ez form business activity is trading in stocks, securities, or commodities (including hedging transactions) through a U. 2040 ez form S. 2040 ez form resident broker or other agent, you are not engaged in a trade or business in the United States. 2040 ez form   For transactions in stocks or securities, this applies to any nonresident alien, including a dealer or broker in stocks and securities. 2040 ez form   For transactions in commodities, this applies to commodities that are usually traded on an organized commodity exchange and to transactions that are usually carried out at such an exchange. 2040 ez form   This discussion does not apply if you have a U. 2040 ez form S. 2040 ez form office or other fixed place of business at any time during the tax year through which, or by the direction of which, you carry out your transactions in stocks, securities, or commodities. 2040 ez form Trading for a nonresident alien's own account. 2040 ez form   You are not engaged in a trade or business in the United States if trading for your own account in stocks, securities, or commodities is your only U. 2040 ez form S. 2040 ez form business activity. 2040 ez form This applies even if the trading takes place while you are present in the United States or is done by your employee or your broker or other agent. 2040 ez form   This does not apply to trading for your own account if you are a dealer in stocks, securities, or commodities. 2040 ez form This does not necessarily mean, however, that as a dealer you are considered to be engaged in a trade or business in the United States. 2040 ez form Determine that based on the facts and circumstances in each case or under the rules given above in Trading in stocks, securities, and commodities . 2040 ez form Effectively Connected Income If you are engaged in a U. 2040 ez form S. 2040 ez form trade or business, all income, gain, or loss for the tax year that you get from sources within the United States (other than certain investment income) is treated as effectively connected income. 2040 ez form This applies whether or not there is any connection between the income and the trade or business being carried on in the United States during the tax year. 2040 ez form Two tests, described next under Investment Income, determine whether certain items of investment income (such as interest, dividends, and royalties) are treated as effectively connected with that business. 2040 ez form In limited circumstances, some kinds of foreign source income may be treated as effectively connected with a trade or business in the United States. 2040 ez form For a discussion of these rules, see Foreign Income , later. 2040 ez form Investment Income Investment income from U. 2040 ez form S. 2040 ez form sources that may or may not be treated as effectively connected with a U. 2040 ez form S. 2040 ez form trade or business generally falls into the following three categories. 2040 ez form Fixed or determinable income (interest, dividends, rents, royalties, premiums, annuities, etc. 2040 ez form ). 2040 ez form Gains (some of which are considered capital gains) from the sale or exchange of the following types of property. 2040 ez form Timber, coal, or domestic iron ore with a retained economic interest. 2040 ez form Patents, copyrights, and similar property on which you receive contingent payments after October 4, 1966. 2040 ez form Patents transferred before October 5, 1966. 2040 ez form Original issue discount obligations. 2040 ez form Capital gains (and losses). 2040 ez form Use the two tests, described next, to determine whether an item of U. 2040 ez form S. 2040 ez form source income falling in one of the three categories above and received during the tax year is effectively connected with your U. 2040 ez form S. 2040 ez form trade or business. 2040 ez form If the tests indicate that the item of income is effectively connected, you must include it with your other effectively connected income. 2040 ez form If the item of income is not effectively connected, include it with all other income discussed under The 30% Tax later, in this chapter. 2040 ez form Asset-use test. 2040 ez form   This test usually applies to income that is not directly produced by trade or business activities. 2040 ez form Under this test, if an item of income is from assets (property) used in, or held for use in, the trade or business in the United States, it is considered effectively connected. 2040 ez form   An asset is used in, or held for use in, the trade or business in the United States if the asset is: Held for the principal purpose of promoting the conduct of a trade or business in the United States, Acquired and held in the ordinary course of the trade or business conducted in the United States (for example, an account receivable or note receivable arising from that trade or business), or Otherwise held to meet the present needs of the trade or business in the United States and not its anticipated future needs. 2040 ez form Generally, stock of a corporation is not treated as an asset used in, or held for use in, a trade or business in the United States. 2040 ez form Business-activities test. 2040 ez form   This test usually applies when income, gain, or loss comes directly from the active conduct of the trade or business. 2040 ez form The business-activities test is most important when: Dividends or interest are received by a dealer in stocks or securities, Royalties are received in the trade or business of licensing patents or similar property, or Service fees are earned by a servicing business. 2040 ez form Under this test, if the conduct of the U. 2040 ez form S. 2040 ez form trade or business was a material factor in producing the income, the income is considered effectively connected. 2040 ez form Personal Service Income You usually are engaged in a U. 2040 ez form S. 2040 ez form trade or business when you perform personal services in the United States. 2040 ez form Personal service income you receive in a tax year in which you are engaged in a U. 2040 ez form S. 2040 ez form trade or business is effectively connected with a U. 2040 ez form S. 2040 ez form trade or business. 2040 ez form Income received in a year other than the year you performed the services is also effectively connected if it would have been effectively connected if received in the year you performed the services. 2040 ez form Personal service income includes wages, salaries, commissions, fees, per diem allowances, and employee allowances and bonuses. 2040 ez form The income may be paid to you in the form of cash, services, or property. 2040 ez form If you are engaged in a U. 2040 ez form S. 2040 ez form trade or business only because you perform personal services in the United States during the tax year, income and gains from assets, and gains and losses from the sale or exchange of capital assets are generally not effectively connected with your trade or business. 2040 ez form However, if there is a direct economic relationship between your holding of the asset and your trade or business of performing personal services, the income, gain, or loss is effectively connected. 2040 ez form Pensions. 2040 ez form   If you were a nonresident alien engaged in a U. 2040 ez form S. 2040 ez form trade or business after 1986 because you performed personal services in the United States, and you later receive a pension or retirement pay attributable to these services, such payments are effectively connected income in each year you receive them. 2040 ez form This is true whether or not you are engaged in a U. 2040 ez form S. 2040 ez form trade or business in the year you receive the retirement pay. 2040 ez form Transportation Income Transportation income (defined in chapter 2) is effectively connected if you meet both of the following conditions. 2040 ez form You had a fixed place of business in the United States involved in earning the income. 2040 ez form At least 90% of your U. 2040 ez form S. 2040 ez form source transportation income is attributable to regularly scheduled transportation. 2040 ez form “Fixed place of business” generally means a place, site, structure, or other similar facility through which you engage in a trade or business. 2040 ez form “Regularly scheduled transportation” means that a ship or aircraft follows a published schedule with repeated sailings or flights at regular intervals between the same points for voyages or flights that begin or end in the United States. 2040 ez form This definition applies to both scheduled and chartered air transportation. 2040 ez form If you do not meet the two conditions above, the income is not effectively connected and is taxed at a 4% rate. 2040 ez form See Transportation Tax, later, in this chapter. 2040 ez form Business Profits and Losses and Sales Transactions All profits or losses from U. 2040 ez form S. 2040 ez form sources that are from the operation of a business in the United States are effectively connected with a trade or business in the United States. 2040 ez form For example, profit from the sale in the United States of inventory property purchased either in this country or in a foreign country is effectively connected trade or business income. 2040 ez form A share of U. 2040 ez form S. 2040 ez form source profits or losses of a partnership that is engaged in a trade or business in the United States is also effectively connected with a trade or business in the United States. 2040 ez form Real Property Gain or Loss Gains and losses from the sale or exchange of U. 2040 ez form S. 2040 ez form real property interests (whether or not they are capital assets) are taxed as if you are engaged in a trade or business in the United States. 2040 ez form You must treat the gain or loss as effectively connected with that trade or business. 2040 ez form U. 2040 ez form S. 2040 ez form real property interest. 2040 ez form   This is any interest in real property located in the United States or the U. 2040 ez form S. 2040 ez form Virgin Islands or any interest (other than as a creditor) in a domestic corporation that is a U. 2040 ez form S. 2040 ez form real property holding corporation. 2040 ez form Real property includes the following. 2040 ez form Land and unsevered natural products of the land, such as growing crops and timber, and mines, wells, and other natural deposits. 2040 ez form Improvements on land, including buildings, other permanent structures, and their structural components. 2040 ez form Personal property associated with the use of real property, such as equipment used in farming, mining, forestry, or construction or property used in lodging facilities or rented office space, unless the personal property is: Disposed of more than one year before or after the disposition of the real property, or Separately sold to persons unrelated either to the seller or to the buyer of the real property. 2040 ez form U. 2040 ez form S. 2040 ez form real property holding corporation. 2040 ez form   A corporation is a U. 2040 ez form S. 2040 ez form real property holding corporation if the fair market value of the corporation's U. 2040 ez form S. 2040 ez form real property interests are at least 50% of the total fair market value of: The corporation's U. 2040 ez form S. 2040 ez form real property interests, plus The corporation's interests in real property located outside the United States, plus The corporation's other assets that are used in, or held for use in, a trade or business. 2040 ez form   Gain or loss on the sale of the stock in any domestic corporation is taxed as if you are engaged in a U. 2040 ez form S. 2040 ez form trade or business unless you establish that the corporation is not a U. 2040 ez form S. 2040 ez form real property holding corporation. 2040 ez form   A U. 2040 ez form S. 2040 ez form real property interest does not include a class of stock of a corporation that is regularly traded on an established securities market, unless you hold more than 5% of the fair market value of that class of stock. 2040 ez form An interest in a foreign corporation owning U. 2040 ez form S. 2040 ez form real property generally is not a U. 2040 ez form S. 2040 ez form real property interest unless the corporation chooses to be treated as a domestic corporation. 2040 ez form Qualified investment entities. 2040 ez form   Special rules apply to qualified investment entities (QIEs). 2040 ez form A QIE is any real estate investment trust (REIT) or any regulated investment company (RIC) that is a U. 2040 ez form S. 2040 ez form real property holding corporation. 2040 ez form    Generally, any distribution from a QIE to a shareholder that is attributable to gain from the sale or exchange of a U. 2040 ez form S. 2040 ez form real property interest is treated as a U. 2040 ez form S. 2040 ez form real property gain by the shareholder receiving the distribution. 2040 ez form A distribution by a QIE on stock regularly traded on an established securities market in the United States is not treated as gain from the sale or exchange of a U. 2040 ez form S. 2040 ez form real property interest if you did not own more than 5% of that stock at any time during the 1-year period ending on the date of the distribution. 2040 ez form A distribution that you do not treat as gain from the sale or exchange of a U. 2040 ez form S. 2040 ez form real property interest is included in your gross income as a regular dividend. 2040 ez form Note. 2040 ez form Beginning January 1, 2014 (unless extended by legislation), a RIC that is a U. 2040 ez form S. 2040 ez form real property holding corporation will only be treated as a QIE for certain distributions from the RIC that are directly or indirectly attributable to distributions received by the RIC from a REIT. 2040 ez form Domestically controlled QIE. 2040 ez form   The sale of an interest in a domestically controlled QIE is not the sale of a U. 2040 ez form S. 2040 ez form real property interest. 2040 ez form The entity is domestically controlled if at all times during the testing period less than 50% in value of its stock was held, directly or indirectly, by foreign persons. 2040 ez form The testing period is the shorter of (a) the 5-year period ending on the date of disposition, or (b) the period during which the entity was in existence. 2040 ez form Wash sale. 2040 ez form    If you dispose of an interest in a domestically controlled QIE in an applicable wash sale transaction, special rules apply. 2040 ez form An applicable wash sale transaction is one in which you: Dispose of an interest in the domestically controlled QIE during the 30-day period before the ex-dividend date of a distribution that you would (but for the disposition) have treated as gain from the sale or exchange of a U. 2040 ez form S. 2040 ez form real property interest, and Acquire, or enter into a contract or option to acquire, a substantially identical interest in that entity during the 61-day period that began on the first day of the 30-day period. 2040 ez form If this occurs, you are treated as having gain from the sale or exchange of a U. 2040 ez form S. 2040 ez form real property interest in an amount equal to the distribution made after June 15, 2006, that would have been treated as such gain. 2040 ez form This also applies to any substitute dividend payment. 2040 ez form   A transaction is not treated as an applicable wash sale transaction if: You actually receive the distribution from the domestically controlled QIE related to the interest disposed of, or acquired, in the transaction, or You dispose of any class of stock in a QIE that is regularly traded on an established securities market in the United States but only if you did not own more than 5% of that class of stock at any time during the 1-year period ending on the date of the distribution. 2040 ez form Alternative minimum tax. 2040 ez form   There may be a minimum tax on your net gain from the disposition of U. 2040 ez form S. 2040 ez form real property interests. 2040 ez form Figure the amount of this tax, if any, on Form 6251. 2040 ez form Withholding of tax. 2040 ez form   If you dispose of a U. 2040 ez form S. 2040 ez form real property interest, the buyer may have to withhold tax. 2040 ez form See the discussion of Tax Withheld on Real Property Sales in chapter 8. 2040 ez form Foreign Income You must treat three kinds of foreign source income as effectively connected with a trade or business in the United States if: You have an office or other fixed place of business in the United States to which the income can be attributed, That office or place of business is a material factor in producing the income, and The income is produced in the ordinary course of the trade or business carried on through that office or other fixed place of business. 2040 ez form An office or other fixed place of business is a material factor if it significantly contributes to, and is an essential economic element in, the earning of the income. 2040 ez form The three kinds of foreign source income are listed below. 2040 ez form Rents and royalties for the use of, or for the privilege of using, intangible personal property located outside the United States or from any interest in such property. 2040 ez form Included are rents or royalties for the use, or for the privilege of using, outside the United States, patents, copyrights, secret processes and formulas, goodwill, trademarks, trade brands, franchises, and similar properties if the rents or royalties are from the active conduct of a trade or business in the United States. 2040 ez form Dividends, interest, or amounts received for the provision of a guarantee of indebtedness issued after September 27, 2010, from the active conduct of a banking, financing, or similar business in the United States. 2040 ez form A substitute dividend or interest payment received under a securities lending transaction or a sale-repurchase transaction is treated the same as the amounts received on the transferred security. 2040 ez form Income, gain, or loss from the sale outside the United States, through the U. 2040 ez form S. 2040 ez form office or other fixed place of business, of: Stock in trade, Property that would be included in inventory if on hand at the end of the tax year, or Property held primarily for sale to customers in the ordinary course of business. 2040 ez form Item (3) will not apply if you sold the property for use, consumption, or disposition outside the United States and an office or other fixed place of business in a foreign country was a material factor in the sale. 2040 ez form Any foreign source income that is equivalent to any item of income described above is treated as effectively connected with a U. 2040 ez form S. 2040 ez form trade or business. 2040 ez form For example, foreign source interest and dividend equivalents are treated as U. 2040 ez form S. 2040 ez form effectively connected income if the income is derived by a foreign person in the active conduct of a banking, financing, or similar business within the United States. 2040 ez form Tax on Effectively Connected Income Income you receive during the tax year that is effectively connected with your trade or business in the United States is, after allowable deductions, taxed at the rates that apply to U. 2040 ez form S. 2040 ez form citizens and residents. 2040 ez form Generally, you can receive effectively connected income only if you are a nonresident alien engaged in trade or business in the United States during the tax year. 2040 ez form However, income you receive from the sale or exchange of property, the performance of services, or any other transaction in another tax year is treated as effectively connected in that year if it would have been effectively connected in the year the transaction took place or you performed the services. 2040 ez form Example. 2040 ez form Ted Richards, a nonresident alien, entered the United States in August 2012, to perform personal services in the U. 2040 ez form S. 2040 ez form office of his overseas employer. 2040 ez form He worked in the U. 2040 ez form S. 2040 ez form office until December 25, 2012, but did not leave this country until January 11, 2013. 2040 ez form On January 8, 2013, he received his final paycheck for services performed in the United States during 2012. 2040 ez form All of Ted's income during his stay here is U. 2040 ez form S. 2040 ez form source income. 2040 ez form During 2012, Ted was engaged in the trade or business of performing personal services in the United States. 2040 ez form Therefore, all amounts paid to him in 2012 for services performed in the United States during 2012 are effectively connected with that trade or business during 2012. 2040 ez form The salary payment Ted received in January 2013 is U. 2040 ez form S. 2040 ez form source income to him in 2013. 2040 ez form It is effectively connected with a trade or business in the United States because he was engaged in a trade or business in the United States during 2012 when he performed the services that earned the income. 2040 ez form Real property income. 2040 ez form   You may be able to choose to treat all income from real property as effectively connected. 2040 ez form See Income From Real Property , later, in this chapter. 2040 ez form The 30% Tax Tax at a 30% (or lower treaty) rate applies to certain items of income or gains from U. 2040 ez form S. 2040 ez form sources but only if the items are not effectively connected with your U. 2040 ez form S. 2040 ez form trade or business. 2040 ez form Fixed or Determinable Income The 30% (or lower treaty) rate applies to the gross amount of U. 2040 ez form S. 2040 ez form source fixed or determinable annual or periodic gains, profits, or income. 2040 ez form Income is fixed when it is paid in amounts known ahead of time. 2040 ez form Income is determinable whenever there is a basis for figuring the amount to be paid. 2040 ez form Income can be periodic if it is paid from time to time. 2040 ez form It does not have to be paid annually or at regular intervals. 2040 ez form Income can be determinable or periodic even if the length of time during which the payments are made is increased or decreased. 2040 ez form Items specifically included as fixed or determinable income are interest (other than original issue discount), dividends, dividend equivalent payments (defined in chapter 2), rents, premiums, annuities, salaries, wages, and other compensation. 2040 ez form A substitute dividend or interest payment received under a securities lending transaction or a sale-repurchase transaction is treated the same as the amounts received on the transferred security. 2040 ez form Other items of income, such as royalties, also may be subject to the 30% tax. 2040 ez form Some fixed or determinable income may be exempt from U. 2040 ez form S. 2040 ez form tax. 2040 ez form See chapter 3 if you are not sure whether the income is taxable. 2040 ez form Original issue discount (OID). 2040 ez form   If you sold, exchanged, or received a payment on a bond or other debt instrument that was issued at a discount after March 31, 1972, all or part of the original issue discount (OID) (other than portfolio interest) may be subject to the 30% tax. 2040 ez form The amount of OID is the difference between the stated redemption price at maturity and the issue price of the debt instrument. 2040 ez form The 30% tax applies in the following circumstances. 2040 ez form You received a payment on a debt instrument. 2040 ez form In this case, the amount of OID subject to tax is the OID that accrued while you held the debt instrument minus the OID previously taken into account. 2040 ez form But the tax on the OID cannot be more than the payment minus the tax on the interest payment on the debt instrument. 2040 ez form You sold or exchanged the debt instrument. 2040 ez form The amount of OID subject to tax is the OID that accrued while you held the debt instrument minus the amount already taxed in (1) above. 2040 ez form   Report on your return the amount of OID shown on Form 1042-S, Foreign Person's U. 2040 ez form S. 2040 ez form Source Income Subject to Withholding, if you bought the debt instrument at original issue. 2040 ez form However, you must recompute your proper share of OID shown on Form 1042-S if any of the following apply. 2040 ez form You bought the debt instrument at a premium or paid an acquisition premium. 2040 ez form The debt instrument is a stripped bond or a stripped coupon (including zero coupon instruments backed by U. 2040 ez form S. 2040 ez form Treasury securities). 2040 ez form The debt instrument is a contingent payment or inflation-indexed debt instrument. 2040 ez form For the definition of premium and acquisition premium and instructions on how to recompute OID, get Publication 1212. 2040 ez form   If you held a bond or other debt instrument that was issued at a discount before April 1, 1972, contact the IRS for further information. 2040 ez form See chapter 12. 2040 ez form Gambling Winnings In general, nonresident aliens are subject to the 30% tax on the gross proceeds from gambling won in the United States if that income is not effectively connected with a U. 2040 ez form S. 2040 ez form trade or business and is not exempted by treaty. 2040 ez form However, no tax is imposed on nonbusiness gambling income a nonresident alien wins playing blackjack, baccarat, craps, roulette, or big-6 wheel in the United States. 2040 ez form Nonresident aliens are taxed at graduated rates on net gambling income won in the United States that is effectively connected with a U. 2040 ez form S. 2040 ez form trade or business. 2040 ez form Social Security Benefits A nonresident alien must include 85% of any U. 2040 ez form S. 2040 ez form social security benefit (and the social security equivalent part of a tier 1 railroad retirement benefit) in U. 2040 ez form S. 2040 ez form source fixed or determinable annual or periodic income. 2040 ez form Social security benefits include monthly retirement, survivor, and disability benefits. 2040 ez form This income is exempt under some tax treaties. 2040 ez form See Table 1 in Publication 901, U. 2040 ez form S. 2040 ez form Tax Treaties, for a list of tax treaties that exempt U. 2040 ez form S. 2040 ez form social security benefits from U. 2040 ez form S. 2040 ez form tax. 2040 ez form Sales or Exchanges of Capital Assets These rules apply only to those capital gains and losses from sources in the United States that are not effectively connected with a trade or business in the United States. 2040 ez form They apply even if you are engaged in a trade or business in the United States. 2040 ez form These rules do not apply to the sale or exchange of a U. 2040 ez form S. 2040 ez form real property interest or to the sale of any property that is effectively connected with a trade or business in the United States. 2040 ez form See Real Property Gain or Loss , earlier, under Effectively Connected Income. 2040 ez form A capital asset is everything you own except: Inventory. 2040 ez form Business accounts or notes receivable. 2040 ez form Depreciable property used in a trade or business. 2040 ez form Real property used in a trade or business. 2040 ez form Supplies regularly used in a trade or business. 2040 ez form Certain copyrights, literary or musical or artistic compositions, letters or memoranda, or similar property. 2040 ez form Certain U. 2040 ez form S. 2040 ez form government publications. 2040 ez form Certain commodities derivative financial instruments held by a commodities derivatives dealer. 2040 ez form Hedging transactions. 2040 ez form A capital gain is a gain on the sale or exchange of a capital asset. 2040 ez form A capital loss is a loss on the sale or exchange of a capital asset. 2040 ez form If the sale is in foreign currency, for the purpose of determining gain, the cost and selling price of the property should be expressed in U. 2040 ez form S. 2040 ez form currency at the rate of exchange prevailing as of the date of the purchase and date of the sale, respectively. 2040 ez form You may want to read Publication 544. 2040 ez form However, use Publication 544 only to determine what is a sale or exchange of a capital asset, or what is treated as such. 2040 ez form Specific tax treatment that applies to U. 2040 ez form S. 2040 ez form citizens or residents generally does not apply to you. 2040 ez form The following gains are subject to the 30% (or lower treaty) rate without regard to the 183-day rule, discussed later. 2040 ez form Gains on the disposal of timber, coal, or domestic iron ore with a retained economic interest. 2040 ez form Gains on contingent payments received from the sale or exchange of patents, copyrights, and similar property after October 4, 1966. 2040 ez form Gains on certain transfers of all substantial rights to, or an undivided interest in, patents if the transfers were made before October 5, 1966. 2040 ez form Gains on the sale or exchange of original issue discount obligations. 2040 ez form Gains in (1) are not subject to the 30% (or lower treaty) rate if you choose to treat the gains as effectively connected with a U. 2040 ez form S. 2040 ez form trade or business. 2040 ez form See Income From Real Property , later. 2040 ez form 183-day rule. 2040 ez form   If you were in the United States for 183 days or more during the tax year, your net gain from sales or exchanges of capital assets is taxed at a 30% (or lower treaty) rate. 2040 ez form For purposes of the 30% (or lower treaty) rate, net gain is the excess of your capital gains from U. 2040 ez form S. 2040 ez form sources over your capital losses from U. 2040 ez form S. 2040 ez form sources. 2040 ez form This rule applies even if any of the transactions occurred while you were not in the United States. 2040 ez form   To determine your net gain, consider the amount of your gains and losses that would be recognized and taken into account only if, and to the extent that, they would be recognized and taken into account if you were in a U. 2040 ez form S. 2040 ez form trade or business during the year and the gains and losses were effectively connected with that trade or business during the tax year. 2040 ez form   In arriving at your net gain, do not take the following into consideration. 2040 ez form The four types of gains listed earlier. 2040 ez form The deduction for a capital loss carryover. 2040 ez form Capital losses in excess of capital gains. 2040 ez form Exclusion for gain from the sale or exchange of qualified small business stock (section 1202 exclusion). 2040 ez form Losses from the sale or exchange of property held for personal use. 2040 ez form However, losses resulting from casualties or thefts may be deductible on Schedule A (Form 1040NR). 2040 ez form See Itemized Deductions in chapter 5. 2040 ez form   If you are not engaged in a trade or business in the United States and have not established a tax year for a prior period, your tax year will be the calendar year for purposes of the 183-day rule. 2040 ez form Also, you must file your tax return on a calendar-year basis. 2040 ez form   If you were in the United States for less than 183 days during the tax year, capital gains (other than gains listed earlier) are tax exempt unless they are effectively connected with a trade or business in the United States during your tax year. 2040 ez form Reporting. 2040 ez form   Report your gains and losses from the sales or exchanges of capital assets that are not effectively connected with a trade or business in the United States on page 4 of Form 1040NR. 2040 ez form Report gains and losses from sales or exchanges of capital assets (including real property) that are effectively connected with a trade or business in the United States on a separate Schedule D (Form 1040), Form 4797, or both. 2040 ez form Attach them to Form 1040NR. 2040 ez form Income From Real Property If you have income from real property located in the United States that you own or have an interest in and hold for the production of income, you can choose to treat all income from that property as income effectively connected with a trade or business in the United States. 2040 ez form The choice applies to all income from real property located in the United States and held for the production of income and to all income from any interest in such property. 2040 ez form This includes income from rents, royalties from mines, oil or gas wells, or other natural resources. 2040 ez form It also includes gains from the sale or exchange of timber, coal, or domestic iron ore with a retained economic interest. 2040 ez form You can make this choice only for real property income that is not otherwise effectively connected with your U. 2040 ez form S. 2040 ez form trade or business. 2040 ez form If you make the choice, you can claim deductions attributable to the real property income and only your net income from real property is taxed. 2040 ez form This choice does not treat a nonresident alien, who is not otherwise engaged in a U. 2040 ez form S. 2040 ez form trade or business, as being engaged in a trade or business in the United States during the year. 2040 ez form Example. 2040 ez form You are a nonresident alien and are not engaged in a U. 2040 ez form S. 2040 ez form trade or business. 2040 ez form You own a single-family house in the United States that you rent out. 2040 ez form Your rental income for the year is $10,000. 2040 ez form This is your only U. 2040 ez form S. 2040 ez form source income. 2040 ez form As discussed earlier under The 30% Tax, the rental income is subject to a tax at a 30% (or lower treaty) rate. 2040 ez form You received a Form 1042-S showing that your tenants properly withheld this tax from the rental income. 2040 ez form You do not have to file a U. 2040 ez form S. 2040 ez form tax return (Form 1040NR) because your U. 2040 ez form S. 2040 ez form tax liability is satisfied by the withholding of tax. 2040 ez form If you make the choice discussed earlier, you can offset the $10,000 income by certain rental expenses. 2040 ez form (See Publication 527, Residential Rental Property, for information on rental expenses. 2040 ez form ) Any resulting net income is taxed at graduated rates. 2040 ez form If you make this choice, report the rental income and expenses on Schedule E (Form 1040) and attach the schedule to Form 1040NR. 2040 ez form For the first year you make the choice, also attach the statement discussed next. 2040 ez form Making the choice. 2040 ez form   Make the initial choice by attaching a statement to your return, or amended return, for the year of the choice. 2040 ez form Include the following in your statement. 2040 ez form That you are making the choice. 2040 ez form Whether the choice is under Internal Revenue Code section 871(d) (explained earlier) or a tax treaty. 2040 ez form A complete list of all your real property, or any interest in real property, located in the United States. 2040 ez form Give the legal identification of U. 2040 ez form S. 2040 ez form timber, coal, or iron ore in which you have an interest. 2040 ez form The extent of your ownership in the property. 2040 ez form The location of the property. 2040 ez form A description of any major improvements to the property. 2040 ez form The dates you owned the property. 2040 ez form Your income from the property. 2040 ez form Details of any previous choices and revocations of the real property income choice. 2040 ez form   This choice stays in effect for all later tax years unless you revoke it. 2040 ez form Revoking the choice. 2040 ez form   You can revoke the choice without IRS approval by filing Form 1040X, Amended U. 2040 ez form S. 2040 ez form Individual Income Tax Return, for the year you made the choice and for later tax years. 2040 ez form You must file Form 1040X within 3 years from the date your return was filed or 2 years from the time the tax was paid, whichever is later. 2040 ez form If this time period has expired for the year of choice, you cannot revoke the choice for that year. 2040 ez form However, you may revoke the choice for later tax years only if you have IRS approval. 2040 ez form For information on how to get IRS approval, see Regulation section 1. 2040 ez form 871-10(d)(2). 2040 ez form Transportation Tax A 4% tax rate applies to transportation income that is not effectively connected because it does not meet the two conditions listed earlier under Transportation Income . 2040 ez form If you receive transportation income subject to the 4% tax, you should figure the tax and show it on line 57 of Form 1040NR. 2040 ez form Attach a statement to your return that includes the following information (if applicable). 2040 ez form Your name, taxpayer identification number, and tax year. 2040 ez form A description of the types of services performed (whether on or off board). 2040 ez form Names of vessels or registration numbers of aircraft on which you performed the services. 2040 ez form Amount of U. 2040 ez form S. 2040 ez form source transportation income derived from each type of service for each vessel or aircraft for the calendar year. 2040 ez form Total amount of U. 2040 ez form S. 2040 ez form source transportation income derived from all types of services for the calendar year. 2040 ez form This 4% tax applies to your U. 2040 ez form S. 2040 ez form source gross transportation income. 2040 ez form This only includes transportation income that is treated as derived from sources in the United States if the transportation begins or ends in the United States. 2040 ez form For transportation income from personal services, the transportation must be between the United States and a U. 2040 ez form S. 2040 ez form possession. 2040 ez form For personal services of a nonresident alien, this only applies to income derived from, or in connection with, an aircraft. 2040 ez form Interrupted Period of Residence You are subject to tax under a special rule if you interrupt your period of U. 2040 ez form S. 2040 ez form residence with a period of nonresidence. 2040 ez form The special rule applies if you meet all of the following conditions. 2040 ez form You were a U. 2040 ez form S. 2040 ez form resident for a period that includes at least 3 consecutive calendar years. 2040 ez form You were a U. 2040 ez form S. 2040 ez form resident for at least 183 days in each of those years. 2040 ez form You ceased to be treated as a U. 2040 ez form S. 2040 ez form resident. 2040 ez form You then again became a U. 2040 ez form S. 2040 ez form resident before the end of the third calendar year after the end of the period described in (1) above. 2040 ez form Under this special rule, you are subject to tax on your U. 2040 ez form S. 2040 ez form source gross income and gains on a net basis at the graduated rates applicable to individuals (with allowable deductions) for the period you were a nonresident alien, unless you would be subject to a higher tax under the 30% tax (discussed earlier) on income not connected with a U. 2040 ez form S. 2040 ez form trade or business. 2040 ez form For information on how to figure the special tax, see How To Figure the Expatriation Tax (If You Expatriated Before June 17, 2008) under Expatriation Tax , below. 2040 ez form Example. 2040 ez form John Willow, a citizen of New Zealand, entered the United States on April 1, 2008, as a lawful permanent resident. 2040 ez form On August 1, 2010, John ceased to be a lawful permanent resident and returned to New Zealand. 2040 ez form During his period of residence, he was present in the United States for at least 183 days in each of three consecutive years (2008, 2009, and 2010). 2040 ez form He returned to the United States on October 5, 2013, as a lawful permanent resident. 2040 ez form He became a resident before the close of the third calendar year (2013) beginning after the end of his first period of residence (August 1, 2010). 2040 ez form Therefore, he is subject to tax under the special rule for the period of nonresidence (August 2, 2010, through October 4, 2013) if it is more than the tax that would normally apply to him as a nonresident alien. 2040 ez form Reporting requirements. 2040 ez form   If you are subject to this tax for any year in the period you were a nonresident alien, you must file Form 1040NR for that year. 2040 ez form The return is due by the due date (including extensions) for filing your U. 2040 ez form S. 2040 ez form income tax return for the year that you again become a U. 2040 ez form S. 2040 ez form resident. 2040 ez form If you already filed returns for that period, you must file amended returns. 2040 ez form You must attach a statement to your return that identifies the source of all of your U. 2040 ez form S. 2040 ez form and foreign gross income and the items of income subject to this special rule. 2040 ez form Expatriation Tax The expatriation tax provisions apply to U. 2040 ez form S. 2040 ez form citizens who have renounced their citizenship and long-term residents who have ended their residency. 2040 ez form The rules that apply are based on the dates of expatriation, which are described in the following sections. 2040 ez form Expatriation Before June 4, 2004. 2040 ez form Expatriation After June 3, 2004, and Before June 17, 2008. 2040 ez form Expatriation After June 16, 2008. 2040 ez form Long-term resident defined. 2040 ez form   You are a long-term resident if you were a lawful permanent resident of the United States in at least 8 of the last 15 tax years ending with the year your residency ends. 2040 ez form In determining if you meet the 8-year requirement, do not count any year that you are treated as a resident of a foreign country under a tax treaty and do not waive treaty benefits. 2040 ez form Expatriation Before June 4, 2004 If you expatriated before June 4, 2004, the expatriation rules apply if one of the principal purposes of the action is the avoidance of U. 2040 ez form S. 2040 ez form taxes. 2040 ez form Unless you received a ruling from the IRS that you did not expatriate to avoid U. 2040 ez form S. 2040 ez form taxes, you are presumed to have tax avoidance as a principal purpose if: Your average annual net income tax for the last 5 tax years ending before the date of your action to relinquish your citizenship or terminate your residency was more than $100,000, or Your net worth on the date of your action was $500,000 or more. 2040 ez form The amounts above are adjusted for inflation if your expatriation action is after 1997 (see Table 4-1). 2040 ez form Table 4-1. 2040 ez form Inflation-Adjusted Amounts for Expatriation Actions Before June 4, 2004 IF you expatriated during . 2040 ez form . 2040 ez form . 2040 ez form   THEN the rules outlined on this page apply if . 2040 ez form . 2040 ez form . 2040 ez form     Your 5-year average annual net income tax was more than . 2040 ez form . 2040 ez form . 2040 ez form OR Your net worth equaled or exceeded . 2040 ez form . 2040 ez form . 2040 ez form 1999   110,000   552,000 2000   112,000   562,000 2001   116,000   580,000 2002   120,000   599,000 2003   122,000   608,000 2004 (before June 4)*   124,000   622,000 *If you expatriated after June 3, 2004, see Expatriation After June 3, 2004, and Before June 17, 2008 or Expatriation After June 16, 2008. 2040 ez form Reporting requirements. 2040 ez form   If you lost your U. 2040 ez form S. 2040 ez form citizenship, you should have filed Form 8854 with a consular office or a federal court at the time of loss of citizenship. 2040 ez form If you ended your long-term residency, you should have filed Form 8854 with the Internal Revenue Service when you filed your dual-status tax return for the year your residency ended. 2040 ez form   Your U. 2040 ez form S. 2040 ez form residency is considered to have ended when you ceased to be a lawful permanent resident or you began to be treated as a resident of another country under a tax treaty and do not waive treaty benefits. 2040 ez form Penalties. 2040 ez form   If you failed to file Form 8854, you may have to pay a penalty equal to the greater of 5% of the expatriation tax or $1,000. 2040 ez form The penalty will be assessed for each year of the 10-year period beginning on the date of expatriation during which your failure to file continues. 2040 ez form The penalty will not be imposed if you can show that the failure is due to reasonable cause and not willful neglect. 2040 ez form Expatriation tax. 2040 ez form   The expatriation tax applies to the 10-year period following the date of expatriation or termination of residency. 2040 ez form It is figured in the same way as for those expatriating after June 3, 2004, and before June 17, 2008. 2040 ez form See How To Figure the Expatriation Tax (If You Expatriated Before June 17, 2008) in the next section. 2040 ez form Expatriation After June 3, 2004, and Before June 17, 2008 If you expatriated after June 3, 2004, and before June 17, 2008, the expatriation rules apply to you if any of the following statements apply. 2040 ez form Your average annual net income tax for the 5 tax years ending before the date of expatriation or termination of residency is more than: $124,000 if you expatriated or terminated residency in 2004. 2040 ez form $127,000 if you expatriated or terminated residency in 2005. 2040 ez form $131,000 if you expatriated or terminated residency in 2006. 2040 ez form $136,000 if you expatriated or terminated residency in 2007. 2040 ez form $139,000 if you expatriated or terminated residency in 2008. 2040 ez form Your net worth is $2 million or more on the date of your expatriation or termination of residency. 2040 ez form You fail to certify on Form 8854 that you have complied with all U. 2040 ez form S. 2040 ez form federal tax obligations for the 5 tax years preceding the date of your expatriation or termination of residency. 2040 ez form Exception for dual-citizens and certain minors. 2040 ez form   Certain dual-citizens and certain minors (defined next) are not subject to the expatriation tax even if they meet (1) or (2) earlier. 2040 ez form However, they still must provide the certification required in (3). 2040 ez form Certain dual-citizens. 2040 ez form   You may qualify for the exception described above if all of the following apply. 2040 ez form You became at birth a U. 2040 ez form S. 2040 ez form citizen and a citizen of another country and you continue to be a citizen of that other country. 2040 ez form You were never a resident alien of the United States (as defined in chapter 1). 2040 ez form You never held a U. 2040 ez form S. 2040 ez form passport. 2040 ez form You were present in the United States for no more than 30 days during any calendar year that is 1 of the 10 calendar years preceding your loss of U. 2040 ez form S. 2040 ez form citizenship. 2040 ez form Certain minors. 2040 ez form   You may qualify for the exception described above if you meet all of the following requirements. 2040 ez form You became a U. 2040 ez form S. 2040 ez form citizen at birth. 2040 ez form Neither of your parents was a U. 2040 ez form S. 2040 ez form citizen at the time of your birth. 2040 ez form You expatriated before you were 18½. 2040 ez form You were present in the United States for not more than 30 days during any calendar year that is 1 of the 10 calendar years preceding your expatriation. 2040 ez form Tax consequences of presence in the United States. 2040 ez form   The following rules apply if you do not meet the exception above for dual-citizens and certain minors and the expatriation rules would otherwise apply to you. 2040 ez form   The expatriation tax does not apply to any tax year during the 10-year period if you are physically present in the United States for more than 30 days during the calendar year ending in that year. 2040 ez form Instead, you are treated as a U. 2040 ez form S. 2040 ez form citizen or resident and taxed on your worldwide income for that tax year. 2040 ez form You must file Form 1040, 1040A, or 1040EZ and figure your tax as prescribed in the instructions for those forms. 2040 ez form   When counting the number of days of presence during a calendar year, count any day you were physically present in the United States at any time during the day. 2040 ez form However, do not count any days (up to a limit of 30 days) on which you performed personal services in the United States for an employer who is not related to you if either of the following apply. 2040 ez form You have ties with other countries. 2040 ez form You have ties with other countries if: You became (within a reasonable period after your expatriation or termination of residency) a citizen or resident of the country in which you, your spouse, or either of your parents were born, and You became fully liable for income tax in that country. 2040 ez form You were physically present in the United States for 30 days or less during each year in the 10-year period ending on the date of expatriation or termination of residency. 2040 ez form Do not count any day you were an exempt individual or were unable to leave the United States because of a medical condition that arose while you were in the United States. 2040 ez form See Exempt individual and Medical condition in chapter 1 under Substantial Presence Test, but disregard the information about Form 8843. 2040 ez form Related employer. 2040 ez form   If your employer in the United States is any of the following, then your employer is related to you. 2040 ez form You must count any days you performed services in the United States for that employer as days of presence in the United States. 2040 ez form Members of your family. 2040 ez form This includes only your brothers and sisters, half-brothers and half-sisters, spouse, ancestors (parents, grandparents, etc. 2040 ez form ), and lineal descendants (children, grandchildren, etc. 2040 ez form ). 2040 ez form A partnership in which you directly or indirectly own more than 50% of the capital interest or the profits interest. 2040 ez form A corporation in which you directly or indirectly own more than 50% in value of the outstanding stock. 2040 ez form (See Publication 550, chapter 4, Constructive ownership of stock, for how to determine whether you directly or indirectly own outstanding stock. 2040 ez form ) A tax-exempt charitable or educational organization that is directly or indirectly controlled, in any manner or by any method, by you or by a member of your family, whether or not this control is legally enforceable. 2040 ez form Date of tax expatriation. 2040 ez form   For purposes of U. 2040 ez form S. 2040 ez form tax rules, the date of your expatriation or termination of residency is the later of the dates on which you perform the following actions. 2040 ez form You notify either the Department of State or the Department of Homeland Security (whichever is appropriate) of your expatriating act or termination of residency. 2040 ez form You file Form 8854 in accordance with the form instructions. 2040 ez form Annual return. 2040 ez form   If the expatriation tax applies to you, you must file Form 8854 each year during the 10-year period following the date of expatriation. 2040 ez form You must file this form even if you owe no U. 2040 ez form S. 2040 ez form tax. 2040 ez form Penalty. 2040 ez form   If you fail to file Form 8854 for any tax year, fail to include all information required to be shown on the form, or include incorrect information, you may have to pay a penalty of $10,000. 2040 ez form You will not have to pay a penalty if you show that the failure is due to reasonable cause and not to willful neglect. 2040 ez form How To Figure the Expatriation Tax (If You Expatriated Before June 17, 2008) If the expatriation tax applies to you, you are generally subject to tax on your U. 2040 ez form S. 2040 ez form source gross income and gains on a net basis at the graduated rates applicable to individuals (with allowable deductions) unless you would be subject to a higher tax under the 30% tax (discussed earlier) on income not connected with a U. 2040 ez form S. 2040 ez form trade or business. 2040 ez form For this purpose, U. 2040 ez form S. 2040 ez form source gross income (defined in chapter 2) includes gains from the sale or exchange of: Property (other than stock or debt obligations) located in the United States, Stock issued by a U. 2040 ez form S. 2040 ez form domestic corporation, and Debt obligations of U. 2040 ez form S. 2040 ez form persons or of the United States, a state or political subdivision thereof, or the District of Columbia. 2040 ez form U. 2040 ez form S. 2040 ez form source income also includes any income or gain derived from stock in certain controlled foreign corporations if you owned, or were considered to own, at any time during the 2-year period ending on the date of expatriation, more than 50% of: The total combined voting power of all classes of that corporation's stock, or The total value of the stock. 2040 ez form The income or gain is considered U. 2040 ez form S. 2040 ez form source income only to the extent of your share of earnings and profits earned or accumulated before the date of expatriation and during the periods you met the ownership requirements discussed above. 2040 ez form Any exchange of property is treated as a sale of the property at its fair market value on the date of the exchange and any gain is treated as U. 2040 ez form S. 2040 ez form source gross income in the tax year of the exchange unless you enter into a gain recognition agreement under Notice 97-19. 2040 ez form Other information. 2040 ez form   For more information on the expatriation tax provisions, including exceptions to the tax and special U. 2040 ez form S. 2040 ez form source rules, see section 877 of the Internal Revenue Code. 2040 ez form Expatriation Tax Return If you expatriated or terminated your U. 2040 ez form S. 2040 ez form residency, or you are subject to the expatriation tax, you must file Form 8854, Initial and Annual Expatriation Statement. 2040 ez form Attach it to Form 1040NR if you are required to file that form. 2040 ez form If you are present in the United States following your expatriation and are subject to tax as a U. 2040 ez form S. 2040 ez form citizen or resident, file Form 8854 with Form 1040. 2040 ez form Expatriation After June 16, 2008 If you expatriated after June 16, 2008, the expatriation rules apply to you if you meet any of the following conditions. 2040 ez form Your average annual net income tax for the 5 years ending before the date of expatriation or termination of residency is more than: $139,000 if you expatriated or terminated residency in 2008. 2040 ez form $145,000 if you expatriated or terminated residency in 2009 or 2010. 2040 ez form $147,000 if you expatriated or terminated residency in 2011. 2040 ez form $151,000 if you expatriated or terminated residency in 2012. 2040 ez form $155,000 if you expatriated or terminated residency in 2013. 2040 ez form Your net worth is $2 million or more on the date of your expatriation or termination of residency. 2040 ez form You fail to certify on Form 8854 that you have complied with all U. 2040 ez form S. 2040 ez form federal tax obligations for the 5 years preceding the date of your expatriation or termination of residency. 2040 ez form Exception for dual-citizens and certain minors. 2040 ez form   Certain dual-citizens and certain minors (defined next) are not subject to the expatriation tax even if they meet (1) or (2) above. 2040 ez form However, they still must provide the certification required in (3) above. 2040 ez form Certain dual-citizens. 2040 ez form   You may qualify for the exception described above if both of the following apply. 2040 ez form You became at birth a U. 2040 ez form S. 2040 ez form citizen and a citizen of another country and you continue to be a citizen of, and are taxed as a resident of, that other country. 2040 ez form You have been a resident of the United States for not more than 10 years during the 15-year tax period ending with the tax year during which the expatriation occurs. 2040 ez form For the purpose of determining U. 2040 ez form S. 2040 ez form residency, use the substantial presence test described in chapter 1. 2040 ez form Certain minors. 2040 ez form   You may qualify for the exception described earlier if you meet both of the following requirements. 2040 ez form You expatriated before you were 18½. 2040 ez form You have been a resident of the United States for not more than 10 tax years before the expatriation occurs. 2040 ez form For the purpose of determining U. 2040 ez form S. 2040 ez form residency, use the substantial presence test described in chapter 1. 2040 ez form Expatriation date. 2040 ez form   Your expatriation date is the date you relinquish U. 2040 ez form S. 2040 ez form citizenship (in the case of a former citizen) or terminate your long-term residency (in the case of a former U. 2040 ez form S. 2040 ez form resident). 2040 ez form Former U. 2040 ez form S. 2040 ez form citizen. 2040 ez form   You are considered to have relinquished your U. 2040 ez form S. 2040 ez form citizenship on the earliest of the following dates. 2040 ez form The date you renounced U. 2040 ez form S. 2040 ez form citizenship before a diplomatic or consular officer of the United States (provided that the voluntary renouncement was later confirmed by the issuance of a certificate of loss of nationality). 2040 ez form The date you furnished to the State Department a signed statement of voluntary relinquishment of U. 2040 ez form S. 2040 ez form nationality confirming the performance of an expatriating act (provided that the voluntary relinquishment was later confirmed by the issuance of a certificate of loss of nationality). 2040 ez form The date the State Department issued a certificate of loss of nationality. 2040 ez form The date that a U. 2040 ez form S. 2040 ez form court canceled your certificate of naturalization. 2040 ez form Former long-term resident. 2040 ez form   You are considered to have terminated your long-term residency on the earliest of the following dates. 2040 ez form The date you voluntarily relinquished your lawful permanent resident status by filing Department of Homeland Security Form I-407 with a U. 2040 ez form S. 2040 ez form consular or immigration officer, and the Department of Homeland Security determined that you have, in fact, abandoned your lawful permanent resident status. 2040 ez form The date you became subject to a final administrative order for your removal from the United States under the Immigration and Nationality Act and you actually left the United States as a result of that order. 2040 ez form If you were a dual resident of the United States and a country with which the United States has an income tax treaty, the date you began to be treated as a resident of that country and you determined that, for purposes of the treaty, you are a resident of the treaty country and notify the IRS of that treatment on Forms 8833 and 8854. 2040 ez form See Effect of Tax Treaties in chapter 1 for more information about dual residents. 2040 ez form How To Figure the Expatriation Tax (If You Expatriate After June 16, 2008) In the year you expatriate, you are subject to income tax on the net unrealized gain (or loss) in your property as if the property had been sold for its fair market value on the day before your expatriation date (“mark-to-market tax”). 2040 ez form This applies to most types of property interests you held on the date of relinquishment of citizenship or termination of residency. 2040 ez form But see Exceptions , later. 2040 ez form Gains arising from deemed sales must be taken into account for the tax year of the deemed sale without regard to other U. 2040 ez form S. 2040 ez form internal revenue laws. 2040 ez form Losses from deemed sales must be taken into account to the extent otherwise provided under U. 2040 ez form S. 2040 ez form internal revenue laws. 2040 ez form However, Internal Revenue Code section 1091 (relating to the disallowance of losses on wash sales of stock and securities) does not apply. 2040 ez form The net gain that you otherwise must include in your income is reduced (but not below zero) by: $600,000 if you expatriated or terminated residency before January 1, 2009. 2040 ez form $626,000 if you expatriated or terminated residency in 2009. 2040 ez form $627,000 if you expatriated or terminated residency in 2010. 2040 ez form $636,000 if you expatriated or terminated residency in 2011. 2040 ez form $651,000 if you expatriated or terminated residency in 2012. 2040 ez form $668,000 if you expatriated or terminated residency in 2013. 2040 ez form Exceptions. 2040 ez form   The mark-to-market tax does not apply to the following. 2040 ez form Eligible deferred compensation items. 2040 ez form Ineligible deferred compensation items. 2040 ez form Interests in nongrantor trusts. 2040 ez form Specified tax deferred accounts. 2040 ez form Instead, items (1) and (3) may be subject to withholding at source. 2040 ez form In the case of item (2), you are treated as receiving the present value of your accrued benefit as of the day before the expatriation date. 2040 ez form In the case of item (4), you are treated as receiving a distribution of your entire interest in the account on the day before your expatriation date. 2040 ez form See paragraphs (d), (e), and (f) of section 877A for more information. 2040 ez form Expatriation Tax Return If you expatriated or terminated your U. 2040 ez form S. 2040 ez form residency, or you are subject to the expatriation rules (as discussed earlier in the first paragraph under Expatriation After June 16, 2008), you must file Form 8854. 2040 ez form Attach it to Form 1040 or Form 1040NR if you are required to file either of those forms. 2040 ez form Deferral of payment of mark-to-market tax. 2040 ez form   You can make an irrevocable election to defer payment of the mark-to-market tax imposed on the deemed sale of property. 2040 ez form If you make this election, the following rules apply. 2040 ez form You can make the election on a property-by-property basis. 2040 ez form The deferred tax attributable to a particular property is due on the return for the tax year in which you dispose of the property. 2040 ez form Interest is charged for the period the tax is deferred. 2040 ez form The due date for the payment of the deferred tax cannot be extended beyond the earlier of the following dates. 2040 ez form The due date of the return required for the year of death. 2040 ez form The time that the security provided for the property fails to be adequate. 2040 ez form See item (6) below. 2040 ez form You make the election on Form 8854. 2040 ez form You must provide adequate security (such as a bond). 2040 ez form You must make an irrevocable waiver of any right under any treaty of the United States which would preclude assessment or collection of the mark-to-market tax. 2040 ez form   For more information about the deferral of payment, see the Instructions for Form 8854. 2040 ez form Prev  Up  Next   Home   More Online Publications
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2012 Offshore Voluntary Disclosure Program


Update Jan. 24, 2014 — Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts, is now obsolete. After June 30, 2013, the FBAR must be filed electronically with FinCEN

The IRS began an open-ended offshore voluntary disclosure program (OVDP) in January 2012 on the heels of strong interest in the 2011 and 2009 programs. The IRS may end the 2012 program at any time in the future. The IRS is offering people with undisclosed income from offshore accounts another opportunity to get current with their tax returns. The 2012 OVDP has a higher penalty rate than the previous program but offers clear benefits to encourage taxpayers to disclose foreign accounts now rather than risk detection by the IRS and possible criminal prosecution.

2012 OVDP Documents and Forms

Questions and Answers

Documents

Forms

Worksheets

News Releases and Fact Sheets

  • IR-2012-64, IRS Says Offshore Effort tops $5 Billion, Announces New Details on the Voluntary Disclosure Program and Closing of Offshore Loophole
  • IR-2012-64SP, Esfuerzo Extranjero del IRS Supera $5 Mil Millones; Detalles del Programa de Divulgación Voluntaria y Cierre de Laguna Jurídica
  • IR-2012-65, IRS Announces Efforts to Help U.S. Citizens Overseas, Including Dual Citizens and Those with Foreigh Retirement Plans
  • IR-2012-65SP, IRS Anuncia Ayuda a Estadounidenses en el Extranjero, Incluyendo Aquellos con Doble Nacionalidad y Planes de Jubilación Extranjeros
  • IR-2012-5, IRS Offshore Programs Produce $4.4 Billion To Date for Nation’s Taxpayers; Offshore Voluntary Disclosure Program Reopens

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Page Last Reviewed or Updated: 24-Jan-2014

The 2040 Ez Form

2040 ez form Publication 15 - Additional Material Prev  Up  Next   Home   More Online Publications