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Amendment Tax Form

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Amendment Tax Form

Amendment tax form 5. Amendment tax form   Figuring Your Tax Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Tax Year Identification NumberF-1 and M-1 visa holders. Amendment tax form J-1 visa holders. Amendment tax form Filing StatusResident Aliens Nonresident Aliens Reporting Your Income DeductionsResident Aliens Nonresident Aliens ExemptionsResident Aliens Nonresident Aliens Itemized DeductionsResident Aliens Nonresident Aliens Tax Credits and PaymentsResident Aliens Nonresident Aliens Bona Fide Residents of American Samoa or Puerto Rico Introduction After you have determined your alien status, the source of your income, and if and how that income is taxed in the United States, your next step is to figure your tax. Amendment tax form The information in this chapter is not as comprehensive for resident aliens as it is for nonresident aliens. Amendment tax form Resident aliens should get publications, forms, and instructions for U. Amendment tax form S. Amendment tax form citizens, because the information for filing returns for resident aliens is generally the same as for U. Amendment tax form S. Amendment tax form citizens. Amendment tax form If you are both a nonresident alien and a resident alien in the same tax year, see chapter 6 for a discussion of dual-status aliens. Amendment tax form Topics - This chapter discusses: Identification numbers, Filing status, Deductions, Exemptions, Tax credits and payments, and Special rules for bona fide residents of American Samoa and Puerto Rico. Amendment tax form Useful Items - You may want to see: Publication 463 Travel, Entertainment, Gift, and Car Expenses 501 Exemptions, Standard Deduction, and Filing Information 521 Moving Expenses 526 Charitable Contributions 535 Business Expenses 597 Information on the United States–Canada Income Tax Treaty Form (and Instructions) W-7 Application for IRS Individual Taxpayer Identification Number 1040 U. Amendment tax form S. Amendment tax form Individual Income Tax Return 1040NR U. Amendment tax form S. Amendment tax form Nonresident Alien Income Tax Return 1040NR-EZ U. Amendment tax form S. Amendment tax form Income Tax Return for Certain Nonresident Aliens With No Dependents 2106 Employee Business Expenses 2106-EZ Unreimbursed Employee Business Expenses 3903 Moving Expenses 4563 Exclusion of Income for Bona Fide Residents of American Samoa 8959 Additional Medicare Tax See chapter 12 for information about getting these publications and forms. Amendment tax form Tax Year You must figure your income and file a tax return on the basis of an annual accounting period called a tax year. Amendment tax form If you have not previously established a fiscal tax year, your tax year is the calendar year. Amendment tax form A calendar year is 12 consecutive months ending on December 31. Amendment tax form If you have previously established a regular fiscal year (12 consecutive months ending on the last day of a month other than December or a 52–53 week year) and are considered to be a U. Amendment tax form S. Amendment tax form resident for any calendar year, you will be treated as a U. Amendment tax form S. Amendment tax form resident for any part of your fiscal year that falls within that calendar year. Amendment tax form Identification Number A taxpayer identification number must be furnished on returns, statements, and other tax-related documents. Amendment tax form For an individual, this is a social security number (SSN). Amendment tax form If you do not have and are not eligible to get an SSN, you must apply for an individual taxpayer identification number (ITIN). Amendment tax form An employer identification number (EIN) is required if you are engaged in a trade or business as a sole proprietor and have employees or a qualified retirement plan. Amendment tax form You must furnish a taxpayer identification number if you are: An alien who has income effectively connected with the conduct of a U. Amendment tax form S. Amendment tax form trade or business at any time during the year, An alien who has a U. Amendment tax form S. Amendment tax form office or place of business at any time during the year, A nonresident alien spouse treated as a resident, as discussed in chapter 1, or Any other alien who files a tax return, an amended return, or a refund claim (but not information returns). Amendment tax form Social security number (SSN). Amendment tax form   Generally, you can get an SSN if you have been lawfully admitted to the United States for permanent residence or under other immigration categories that authorize U. Amendment tax form S. Amendment tax form employment. Amendment tax form   To apply for this number, get Form SS-5, Application for a Social Security Card, from your local Social Security Administration (SSA) office or call the SSA at 1-800-772-1213. Amendment tax form You can also download Form SS-5 from the SSA's website at www. Amendment tax form socialsecurity. Amendment tax form gov/ssnumber/ss5. Amendment tax form htm. Amendment tax form You must visit an SSA office in person and submit your Form SS-5 along with original documentation showing your age, identity, immigration status, and authority to work in the United States. Amendment tax form Generally, you will receive your card about 2 weeks after the SSA has all of the necessary information. Amendment tax form F-1 and M-1 visa holders. Amendment tax form    If you are an F-1 or M-1 student, you must also show your Form I-20. Amendment tax form For more information, see SSA Publication 05-10181, International Students and Social Security Numbers, available online at www. Amendment tax form socialsecurity. Amendment tax form gov/pubs/10181. Amendment tax form html. Amendment tax form J-1 visa holders. Amendment tax form   If you are a J-1 exchange visitor, you will also need to show your Form DS-2019. Amendment tax form For more information, see SSA Publication 05-10107, Foreign Workers and Social Security Numbers, available online at www. Amendment tax form socialsecurity. Amendment tax form gov/pubs/10107. Amendment tax form html. Amendment tax form Individual taxpayer identification number (ITIN). Amendment tax form   If you do not have and are not eligible to get an SSN, you must apply for an ITIN. Amendment tax form For details on how to do so, see Form W-7 and its instructions. Amendment tax form Allow 6 to 10 weeks for the IRS to notify you of your ITIN. Amendment tax form If you already have an ITIN, enter it wherever an SSN is required on your tax return. Amendment tax form   An ITIN is for tax use only. Amendment tax form It does not entitle you to social security benefits or change your employment or immigration status under U. Amendment tax form S. Amendment tax form law. Amendment tax form   In addition to those aliens who are required to furnish a taxpayer identification number and are not eligible for an SSN, a Form W-7 must be filed for: Alien individuals who are claimed as dependents and are not eligible for an SSN, and Alien spouses who are claimed as exemptions and are not eligible for an SSN. Amendment tax form Employer identification number (EIN). Amendment tax form   An individual may use an SSN (or ITIN) for individual taxes and an EIN for business taxes. Amendment tax form To apply for an EIN, file Form SS-4, Application for Employer Identification Number, with the IRS. Amendment tax form Filing Status The amount of your tax depends on your filing status. Amendment tax form Your filing status is important in determining whether you can take certain deductions and credits. Amendment tax form The rules for determining your filing status are different for resident aliens and nonresident aliens. Amendment tax form Resident Aliens Resident aliens can use the same filing statuses available to U. Amendment tax form S. Amendment tax form citizens. Amendment tax form See your form instructions or Publication 501 for more information on filing status. Amendment tax form Married filing jointly. Amendment tax form   Generally, you can file as married filing jointly only if both you and your spouse were resident aliens for the entire tax year, or if you make one of the choices discussed in chapter 1 to treat your spouse as a resident alien for the entire tax year. Amendment tax form Qualifying widow(er). Amendment tax form   If your spouse died in 2011 or 2012, you did not remarry before the end of 2013, and you have a dependent child living with you, you may qualify to file as a qualifying widow(er) and use the joint return tax rates. Amendment tax form This applies only if you could have filed a joint return with your spouse for the year your spouse died. Amendment tax form Head of household. Amendment tax form   You can qualify as head of household if you are unmarried or considered unmarried on the last day of the year and you pay more than half the cost of keeping up a home for you and a qualifying person. Amendment tax form You must be a resident alien for the entire tax year. Amendment tax form   You are considered unmarried for this purpose if your spouse was a nonresident alien at any time during the year and you do not make one of the choices discussed in chapter 1 to treat your spouse as a resident alien for the entire tax year. Amendment tax form Note. Amendment tax form   Even if you are considered unmarried for head of household purposes because you are married to a nonresident alien, you may still be considered married for purposes of the earned income credit. Amendment tax form In that case, you will not be entitled to the credit. Amendment tax form See Publication 596 for more information. Amendment tax form Nonresident Aliens If you are a nonresident alien filing Form 1040NR, you may be able to use one of the filing statuses discussed later. Amendment tax form If you are filing Form 1040NR-EZ, you can only claim “Single nonresident alien” or “Married nonresident alien” as your filing status. Amendment tax form Married nonresident alien. Amendment tax form   Married nonresident aliens who are not married to U. Amendment tax form S. Amendment tax form citizens or residents generally must use the Tax Table column or the Tax Computation Worksheet for married filing separate returns when determining the tax on income effectively connected with a U. Amendment tax form S. Amendment tax form trade or business. Amendment tax form Exceptions. Amendment tax form   Married nonresident aliens normally cannot use the Tax Table column or the Tax Computation Worksheet for single individuals. Amendment tax form However, you may be able to file as single if you lived apart from your spouse during the last 6 months of the year and you are a married resident of Canada, Mexico, South Korea, or are a married U. Amendment tax form S. Amendment tax form national. Amendment tax form See the instructions for Form 1040NR or Form 1040NR-EZ to see if you qualify. Amendment tax form U. Amendment tax form S. Amendment tax form national is defined later in this section under Qualifying widow(er) . Amendment tax form   A nonresident alien generally cannot file as married filing jointly. Amendment tax form However, a nonresident alien who is married to a U. Amendment tax form S. Amendment tax form citizen or resident can choose to be treated as a resident and file a joint return on Form 1040, Form 1040A, or Form 1040EZ. Amendment tax form For information on these choices, see chapter 1. Amendment tax form If you do not make the choice to file jointly, file Form 1040NR or Form 1040NR-EZ and use the Tax Table column or the Tax Computation Worksheet for married individuals filing separately. Amendment tax form Qualifying widow(er). Amendment tax form   You may be eligible to file as a qualifying widow(er) and use the joint return tax rates if all of the following conditions apply. Amendment tax form You were a resident of Canada, Mexico, or South Korea, or a U. Amendment tax form S. Amendment tax form national (defined later). Amendment tax form Your spouse died in 2011 or 2012 and you did not remarry before the end of 2013. Amendment tax form You have a dependent child living with you. Amendment tax form See the instructions for Form 1040NR for the rules for filing as a qualifying widow(er) with a dependent child. Amendment tax form   A U. Amendment tax form S. Amendment tax form national is an individual who, although not a U. Amendment tax form S. Amendment tax form citizen, owes his or her allegiance to the United States. Amendment tax form U. Amendment tax form S. Amendment tax form nationals include American Samoans and Northern Mariana Islanders who chose to become U. Amendment tax form S. Amendment tax form nationals instead of U. Amendment tax form S. Amendment tax form citizens. Amendment tax form Head of household. Amendment tax form   You cannot file as head of household if you are a nonresident alien at any time during the tax year. Amendment tax form However, if you are married, your spouse can qualify as a head of household if: Your spouse is a resident alien or U. Amendment tax form S. Amendment tax form citizen for the entire tax year, You do not choose to be treated as a resident alien, and Your spouse meets the other requirements for this filing status, as discussed earlier under Resident Aliens . Amendment tax form Note. Amendment tax form   Even if your spouse is considered unmarried for head of household purposes because you are a nonresident alien, your spouse may still be considered married for purposes of the earned income credit. Amendment tax form In that case, your spouse will not be entitled to the credit. Amendment tax form See Publication 596 for more information. Amendment tax form Estates and trusts. Amendment tax form   A nonresident alien estate or trust using Form 1040NR must use Tax Rate Schedule W in the Form 1040NR instructions when determining the tax on income effectively connected with a U. Amendment tax form S. Amendment tax form trade or business. Amendment tax form Special rules for aliens from certain U. Amendment tax form S. Amendment tax form possessions. Amendment tax form   A nonresident alien who is a bona fide resident of American Samoa or Puerto Rico for the entire tax year and who is temporarily working in the United States should read Bona Fide Residents of American Samoa or Puerto Rico, at the end of this chapter, for information about special rules. Amendment tax form Reporting Your Income You must report each item of income that is taxable according to the rules in chapters 2, 3, and 4. Amendment tax form For resident aliens, this includes income from sources both within and outside the United States. Amendment tax form For nonresident aliens, this includes both income that is effectively connected with a trade or business in the United States (subject to graduated tax rates) and income from U. Amendment tax form S. Amendment tax form sources that is not effectively connected (subject to a flat 30% tax rate or lower tax treaty rate). Amendment tax form Deductions Resident and nonresident aliens can claim similar deductions on their U. Amendment tax form S. Amendment tax form tax returns. Amendment tax form However, nonresident aliens generally can claim only deductions related to income that is effectively connected with their U. Amendment tax form S. Amendment tax form trade or business. Amendment tax form Resident Aliens You can claim the same deductions allowed to U. Amendment tax form S. Amendment tax form citizens if you are a resident alien for the entire tax year. Amendment tax form While the discussion that follows contains some of the same general rules and guidelines that apply to you, it is specifically directed toward nonresident aliens. Amendment tax form You should get Form 1040 and instructions for more information on how to claim your allowable deductions. Amendment tax form Nonresident Aliens You can claim deductions to figure your effectively connected taxable income. Amendment tax form You generally cannot claim deductions related to income that is not connected with your U. Amendment tax form S. Amendment tax form business activities. Amendment tax form Except for personal exemptions, and certain itemized deductions, discussed later, you can claim deductions only to the extent they are connected with your effectively connected income. Amendment tax form Ordinary and necessary business expenses. Amendment tax form   You can deduct all ordinary and necessary expenses in the operation of your U. Amendment tax form S. Amendment tax form trade or business to the extent they relate to income effectively connected with that trade or business. Amendment tax form The deduction for travel expenses while in the United States is discussed under Itemized Deductions, later. Amendment tax form For information about other business expenses, see Publication 535. Amendment tax form Losses. Amendment tax form   You can deduct losses resulting from transactions that you entered into for profit and that you were not reimbursed for by insurance, etc. Amendment tax form to the extent that they relate to income that is effectively connected with a trade or business in the United States. Amendment tax form Educator expenses. Amendment tax form   If you were an eligible educator in 2013, you can deduct as an adjustment to income up to $250 in unreimbursed qualified expenses you paid or incurred during 2013 for books, supplies (other than nonathletic supplies for courses of instruction in health or physical education), computer equipment, and other equipment and materials used in the classroom. Amendment tax form For more information, see your tax form instructions. Amendment tax form Individual retirement arrangement (IRA). Amendment tax form   If you made contributions to a traditional IRA for 2013, you may be able to take an IRA deduction. Amendment tax form But you must have taxable compensation effectively connected with a U. Amendment tax form S. Amendment tax form trade or business to do so. Amendment tax form A Form 5498 should be sent to you by May 31, 2014, that shows all contributions to your traditional IRA for 2013. Amendment tax form If you were covered by a retirement plan (qualified pension, profit-sharing (including 401(k)), annuity, SEP, SIMPLE, etc. Amendment tax form ) at work or through self-employment, your IRA deduction may be reduced or eliminated. Amendment tax form But you can still make contributions to a traditional IRA even if you cannot deduct them. Amendment tax form If you made nondeductible contributions to a traditional IRA for 2013, you must report them on Form 8606, Nondeductible IRAs. Amendment tax form   For more information, see Publication 590, Individual Retirement Arrangements (IRAs). Amendment tax form Moving expenses. Amendment tax form   If you are a nonresident alien temporarily in the United States earning taxable income for performing personal services, you can deduct moving expenses to the United States if you meet both of the following tests. Amendment tax form You are a full-time employee for at least 39 weeks during the 12 months right after you move, or if you are self-employed, you work full time for at least 39 weeks during the first 12 months and 78 weeks during the first 24 months right after you move. Amendment tax form Your new job location is at least 50 miles farther (by the shortest commonly traveled route) from your former home than your former job location was. Amendment tax form If you had no former job location, the new job location must be at least 50 miles from your former home. Amendment tax form   You cannot deduct the moving expense you have when returning to your home abroad or moving to a foreign job site. Amendment tax form   Figure your deductible moving expenses to the United States on Form 3903, and deduct them on line 26 of Form 1040NR. Amendment tax form   For more information on the moving expense deduction, see Publication 521. Amendment tax form Reimbursements. Amendment tax form   If your employer reimbursed you for allowable moving expenses under an accountable plan, your employer should have excluded these reimbursements from your income. Amendment tax form You can only deduct allowable moving expenses that were not reimbursed by your employer or that were reimbursed but the reimbursement was included in your income. Amendment tax form For more information, see Publication 521. Amendment tax form Moving expense or travel expense. Amendment tax form   If you deduct moving expenses to the United States, you cannot also deduct travel expenses (discussed later under Itemized Deductions) while temporarily away from your tax home in a foreign country. Amendment tax form Moving expenses are based on a change in your principal place of business while travel expenses are based on your temporary absence from your principal place of business. Amendment tax form Self-employed SEP, SIMPLE, and qualified retirement plans. Amendment tax form   If you are self-employed, you may be able to deduct contributions to a SEP, SIMPLE, or qualified retirement plan that provides retirement benefits for yourself and your common-law employees, if any. Amendment tax form To make deductible contributions for yourself, you must have net earnings from self-employment that are effectively connected with your U. Amendment tax form S. Amendment tax form trade or business. Amendment tax form   Get Publication 560, Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans), for further information. Amendment tax form Penalty on early withdrawal of savings. Amendment tax form   You must include in income all effectively connected interest income you receive or that is credited to your account during the year. Amendment tax form Do not reduce it by any penalty you must pay on an early withdrawal from a time savings account. Amendment tax form However, if the interest income is effectively connected with your U. Amendment tax form S. Amendment tax form trade or business during the year, you can deduct on line 30 of Form 1040NR the amount of the early withdrawal penalty that the banking institution charged. Amendment tax form Student loan interest expense. Amendment tax form   If you paid interest on a student loan in 2013, you may be able to deduct up to $2,500 of the interest you paid. Amendment tax form Generally, you can claim the deduction if all the following requirements are met. Amendment tax form Your filing status is any filing status except married filing separately. Amendment tax form Your modified adjusted gross income is less than $75,000. Amendment tax form No one else is claiming an exemption for you on his or her 2013 tax return. Amendment tax form You paid interest on a loan taken out only to pay tuition and other qualified higher education expenses for yourself, your spouse, someone who was your dependent when the loan was taken out, or someone you could have claimed as a dependent for the year the loan was taken out except that: The person filed a joint return, The person had gross income that was equal to or more than the exemption amount for that year ($3,900 for 2013), or You could be claimed as a dependent on someone else's return. Amendment tax form The loan is not from a related person or a person who borrowed the proceeds under a qualified employer plan or a contract purchased under such a plan. Amendment tax form The education expenses were paid or incurred within a reasonable period of time before or after the loan was taken out. Amendment tax form The person for whom the expenses were paid or incurred was an eligible student. Amendment tax form Use the worksheet in the Form 1040NR or Form 1040NR-EZ instructions to figure the deduction. Amendment tax form For more information, see Publication 970, Tax Benefits for Education. Amendment tax form Exemptions Resident aliens can claim personal exemptions and exemptions for dependents in the same way as U. Amendment tax form S. Amendment tax form citizens. Amendment tax form However, nonresident aliens generally can claim only a personal exemption for themselves on their U. Amendment tax form S. Amendment tax form tax return. Amendment tax form Resident Aliens You can claim personal exemptions and exemptions for dependents according to the dependency rules for U. Amendment tax form S. Amendment tax form citizens. Amendment tax form You can claim an exemption for your spouse on a separate return if your spouse had no gross income for U. Amendment tax form S. Amendment tax form tax purposes and was not the dependent of another taxpayer. Amendment tax form You can claim this exemption even if your spouse has not been a resident alien for a full tax year or is an alien who has not come to the United States. Amendment tax form You can claim an exemption for each person who qualifies as a dependent according to the rules for U. Amendment tax form S. Amendment tax form citizens. Amendment tax form The dependent must be a citizen or national (defined earlier) of the United States or be a resident of the United States, Canada, or Mexico for some part of the calendar year in which your tax year begins. Amendment tax form Get Publication 501 for more information. Amendment tax form Your spouse and each dependent for whom you claim an exemption must have either an SSN or an ITIN. Amendment tax form See Identification Number, earlier. Amendment tax form Nonresident Aliens Generally, if you are a nonresident alien engaged in a trade or business in the United States, you can claim only one personal exemption ($3,900 for 2013). Amendment tax form You may be able to claim an exemption for a spouse and a dependent if you are described in any of the following discussions. Amendment tax form Your spouse and each dependent for whom you claim an exemption must have either an SSN or an ITIN. Amendment tax form See Identification Number, earlier. Amendment tax form Residents of Mexico or Canada or U. Amendment tax form S. Amendment tax form nationals. Amendment tax form   If you are a resident of Mexico or Canada or a national of the United States (defined earlier), you can also claim a personal exemption for your spouse if your spouse had no gross income for U. Amendment tax form S. Amendment tax form tax purposes and cannot be claimed as the dependent on another U. Amendment tax form S. Amendment tax form taxpayer's return. Amendment tax form In addition, you can claim exemptions for your dependents who meet certain tests. Amendment tax form Residents of Mexico, Canada, or nationals of the United States must use the same rules as U. Amendment tax form S. Amendment tax form citizens to determine who is a dependent and for which dependents exemptions can be claimed. Amendment tax form See Publication 501 for these rules. Amendment tax form For purposes of these rules, dependents who are U. Amendment tax form S. Amendment tax form nationals meet the citizenship test discussed in Publication 501. Amendment tax form Residents of South Korea. Amendment tax form   Nonresident aliens who are residents of South Korea may be able to claim exemptions for a spouse and children. Amendment tax form The income tax treaty with South Korea imposes two additional requirements on South Korean residents: The spouse and all children claimed must live with the alien in the United States at some time during the tax year, and The additional deduction for the exemptions must be prorated based on the ratio of the alien's U. Amendment tax form S. Amendment tax form source gross income effectively connected with a U. Amendment tax form S. Amendment tax form trade or business for the tax year to the alien's entire income from all sources during the tax year. Amendment tax form Example. Amendment tax form Mr. Amendment tax form Park, a nonresident alien who is a resident of South Korea, lives temporarily in the United States with his wife and two children. Amendment tax form During the tax year he receives U. Amendment tax form S. Amendment tax form compensation of $18,000. Amendment tax form He also receives $6,000 of income from sources outside the United States that is not effectively connected with his U. Amendment tax form S. Amendment tax form trade or business. Amendment tax form Thus, his total income for the year is $24,000. Amendment tax form Mr. Amendment tax form Park meets all requirements for claiming exemptions for his spouse and two children. Amendment tax form The additional deduction for 2013 is $8,775 figured as follows: $18,000 $24,000 × $11,700* = $8,775               *3 × $3,900 = $11,700   Students and business apprentices from India. Amendment tax form   Students and business apprentices who are eligible for the benefits of Article 21(2) of the United States–India Income Tax Treaty may be able to claim exemptions for their spouse and dependents. Amendment tax form   You can claim an exemption for your spouse if he or she had no gross income during the year and cannot be claimed as a dependent on another U. Amendment tax form S. Amendment tax form taxpayer's return. Amendment tax form   You can claim exemptions for each of your dependents not admitted to the United States on “F-2,” “J-2,” or “M-2” visas if they meet the same rules that apply to U. Amendment tax form S. Amendment tax form citizens. Amendment tax form See Publication 501 for these rules. Amendment tax form   List your spouse and dependents on line 7c of Form 1040NR. Amendment tax form Enter the total on the appropriate line to the right of line 7c. Amendment tax form Itemized Deductions Nonresident aliens can claim some of the same itemized deductions that resident aliens can claim. Amendment tax form However, nonresident aliens can claim itemized deductions only if they have income effectively connected with their U. Amendment tax form S. Amendment tax form trade or business. Amendment tax form Resident Aliens You can claim the same itemized deductions as U. Amendment tax form S. Amendment tax form citizens, using Schedule A of Form 1040. Amendment tax form These deductions include certain medical and dental expenses, state and local income taxes, real estate taxes, interest you paid on a home mortgage, charitable contributions, casualty and theft losses, and miscellaneous deductions. Amendment tax form If you do not itemize your deductions, you can claim the standard deduction for your particular filing status. Amendment tax form For further information, see Form 1040 and instructions. Amendment tax form Nonresident Aliens You can deduct certain itemized deductions if you receive income effectively connected with your U. Amendment tax form S. Amendment tax form trade or business. Amendment tax form These deductions include state and local income taxes, charitable contributions to U. Amendment tax form S. Amendment tax form organizations, casualty and theft losses, and miscellaneous deductions. Amendment tax form Use Schedule A of Form 1040NR to claim itemized deductions. Amendment tax form If you are filing Form 1040NR-EZ, you can only claim a deduction for state or local income taxes. Amendment tax form If you are claiming any other itemized deduction, you must file Form 1040NR. Amendment tax form Standard deduction. Amendment tax form   Nonresident aliens cannot claim the standard deduction. Amendment tax form However, see Students and business apprentices from India , next. Amendment tax form Students and business apprentices from India. Amendment tax form   A special rule applies to students and business apprentices who are eligible for the benefits of Article 21(2) of the United States–India Income Tax Treaty. Amendment tax form You can claim the standard deduction provided you do not claim itemized deductions. Amendment tax form   Use Worksheet 5-1 to figure your standard deduction. Amendment tax form If you are married and your spouse files a return and itemizes deductions, you cannot take the standard deduction. Amendment tax form State and local income taxes. Amendment tax form   You can deduct state and local income taxes you paid on income that is effectively connected with a trade or business in the United States. Amendment tax form If you received a refund or rebate in 2013 of taxes you paid in an earlier year, do not reduce your deduction by that amount. Amendment tax form Instead, you must include the refund or rebate in income if you deducted the taxes in the earlier year and the deduction reduced your tax. Amendment tax form See Recoveries in Publication 525 for details on how to figure the amount to include in income. Amendment tax form Charitable contributions. Amendment tax form   You can deduct your charitable contributions or gifts to qualified organizations subject to certain limits. Amendment tax form Qualified organizations include organizations that are religious, charitable, educational, scientific, or literary in nature, or that work to prevent cruelty to children or animals. Amendment tax form Certain organizations that promote national or international amateur sports competition are also qualified organizations. Amendment tax form Foreign organizations. Amendment tax form   Contributions made directly to a foreign organization are not deductible. Amendment tax form However, you can deduct contributions to a U. Amendment tax form S. Amendment tax form organization that transfers funds to a charitable foreign organization if the U. Amendment tax form S. Amendment tax form organization controls the use of the funds or if the foreign organization is only an administrative arm of the U. Amendment tax form S. Amendment tax form organization. Amendment tax form   For more information about organizations that qualify to receive charitable contributions, see Publication 526, Charitable Contributions. Amendment tax form Worksheet 5-1. Amendment tax form 2013 Standard Deduction Worksheet for Students and Business Apprentices From India Caution. Amendment tax form If you are married filing a separate return and your spouse itemizes deductions, do not complete this worksheet. Amendment tax form You cannot take the standard deduction even if you were born before January 2, 1949, or are blind. Amendment tax form 1 Enter the amount shown below for your filing status. Amendment tax form           Single or married filing separately—$6,100 Qualifying widow(er)—$12,200 1. Amendment tax form           2 Can you be claimed as a dependent on someone else's U. Amendment tax form S. Amendment tax form income tax return?  No. Amendment tax form Enter the amount from line 1 on line 4. Amendment tax form Skip line 3 and go to line 5. Amendment tax form   Yes. Amendment tax form Go to line 3. Amendment tax form         3 Is your earned income* more than $650?           Yes. Amendment tax form Add $350 to your earned income. Amendment tax form Enter the total. Amendment tax form           No. Amendment tax form Enter $1,000 3. Amendment tax form       4 Enter the smaller of line 1 or line 3 4. Amendment tax form   5 If born before January 2, 1949, OR blind, enter $1,200 ($1,500 if single). Amendment tax form If born before January 2, 1949, AND blind, enter $2,400 ($3,000 if single). Amendment tax form Otherwise, enter -0- 5. Amendment tax form   6 Add lines 4 and 5. Amendment tax form Enter the total here and on Form 1040NR, line 38 (or Form 1040NR-EZ, line 11). Amendment tax form Print “Standard Deduction Allowed Under U. Amendment tax form S. Amendment tax form –India Income Tax Treaty” in the space to the left of these lines. Amendment tax form This is your standard deduction for 2013. Amendment tax form 6. Amendment tax form   *Earned income includes wages, salaries, tips, professional fees, and other compensation received for personal services you performed. Amendment tax form It also includes any amount received as a scholarship that you must include in your income. Amendment tax form Generally, your earned income is the total of the amount(s) you reported on Form 1040NR, lines 8,12,13, and 19, minus amounts on lines 27 and 31 (or Form 1040NR-EZ, lines 3 and 5, minus any amount on line 8). Amendment tax form Contributions from which you benefit. Amendment tax form   If you receive a benefit as a result of making a contribution to a qualified organization, you can deduct only the amount of your contribution that is more than the value of the benefit you receive. Amendment tax form   If you pay more than the fair market value to a qualified organization for merchandise, goods, or services, the amount you pay that is more than the value of the item can be a charitable contribution. Amendment tax form For the excess amount to qualify, you must pay it with the intent to make a charitable contribution. Amendment tax form Cash contributions. Amendment tax form   You cannot deduct a cash contribution, regardless of the amount, unless you keep as a record of the contribution a bank record (such as a canceled check, a bank copy of a canceled check, or a bank statement containing the name of the charity, the date, and the amount) or a written record from the charity. Amendment tax form The written record must include the name of the charity, date of the contribution, and the amount of the contribution. Amendment tax form   You may deduct a cash contribution of $250 or more only if you have a written statement from the charitable organization showing: The amount of any money contributed, Whether the organization gave you any goods or services in return for your contribution, and A description and estimate of the value of any goods or services described in (2). Amendment tax form If you received only intangible religious benefits, the organization must state this, but it does not have to describe or value the benefit. Amendment tax form Noncash contributions. Amendment tax form   For contributions not made in cash, the records you must keep depend on the amount of your deduction. Amendment tax form See Publication 526 for details. Amendment tax form For example, if you make a noncash contribution and the amount of your deduction is more than $500, you must complete and attach to your tax return Form 8283, Noncash Charitable Contributions. Amendment tax form If you deduct more than $500 for a contribution of a motor vehicle, boat, or airplane, you must also attach a statement from the charitable organization to your return. Amendment tax form If your total deduction is over $5,000, you also may have to get appraisals of the values of the property. Amendment tax form If the donated property is valued at more than $5,000, you must obtain a qualified appraisal. Amendment tax form You generally must attach to your tax return an appraisal of any property if your deduction for the property is more than $500,000. Amendment tax form See Form 8283 and its instructions for details. Amendment tax form Contributions of appreciated property. Amendment tax form   If you contribute property to a qualified organization, the amount of your charitable contribution is generally the fair market value of the property at the time of the contribution. Amendment tax form However, if you contribute property with a fair market value that is more than your basis in it, you may have to reduce the fair market value by the amount of appreciation (increase in value) when you figure your deduction. Amendment tax form Your basis in the property is generally what you paid for it. Amendment tax form If you need more information about basis, get Publication 551, Basis of Assets. Amendment tax form   Different rules apply to figuring your deduction, depending on whether the property is: Ordinary income property, or Capital gain property. Amendment tax form For information about these rules, see Publication 526. Amendment tax form Limit. Amendment tax form   The amount you can deduct in a tax year is limited in the same way it is for a citizen or resident of the United States. Amendment tax form For a discussion of limits on charitable contributions and other information, get Publication 526. Amendment tax form Casualty and theft losses. Amendment tax form   You can deduct your loss from fire, storm, shipwreck, or other casualty, or theft of property even though your property is not connected with a U. Amendment tax form S. Amendment tax form trade or business. Amendment tax form The property can be personal use property or income-producing property not connected with a U. Amendment tax form S. Amendment tax form trade or business. Amendment tax form The property must be located in the United States at the time of the casualty or theft. Amendment tax form You can deduct theft losses only in the year in which you discover the loss. Amendment tax form   The amount of the loss is the fair market value of the property immediately before the casualty or theft less its fair market value immediately after the casualty or theft (but not more than its cost or adjusted basis) less any insurance or other reimbursement. Amendment tax form The fair market value of property immediately after a theft is considered zero, because you no longer have the property. Amendment tax form   If your property is covered by insurance, you should file a timely insurance claim for reimbursement. Amendment tax form If you do not, you cannot deduct this loss as a casualty or theft loss. Amendment tax form   Figure your deductible casualty and theft losses on Form 4684, Casualties and Thefts. Amendment tax form Losses from personal use property. Amendment tax form    You cannot deduct the first $100 of each casualty or theft loss to property held for personal use. Amendment tax form You can deduct only the total of these losses for the year (reduced by the $100 limit) that is more than 10% of your adjusted gross income (line 37, Form 1040NR) for the year. Amendment tax form Losses from income-producing property. Amendment tax form   These losses are not subject to the limitations that apply to personal use property. Amendment tax form Use Section B of Form 4684 to figure your deduction for these losses. Amendment tax form Job expenses and other miscellaneous deductions. Amendment tax form   You can deduct job expenses, such as allowable unreimbursed travel expenses (discussed next), and other miscellaneous deductions. Amendment tax form Generally, the allowable deductions must be related to effectively connected income. Amendment tax form Deductible expenses include: Union dues, Safety equipment and small tools needed for your job, Dues to professional organizations, Subscriptions to professional journals, Tax return preparation fees, and Casualty and theft losses of property used in performing services as an employee (employee property). Amendment tax form   Most miscellaneous itemized deductions are deductible only if they are more than 2% of your adjusted gross income (line 37, Form 1040NR). Amendment tax form For more information on miscellaneous deductions, see the instructions for Form 1040NR. Amendment tax form Travel expenses. Amendment tax form   You may be able to deduct your ordinary and necessary travel expenses while you are temporarily performing personal services in the United States. Amendment tax form Generally, a temporary assignment in a single location is one that is realistically expected to last (and does in fact last) for one year or less. Amendment tax form You must be able to show you were present in the United States on an activity that required your temporary absence from your regular place of work. Amendment tax form   For example, if you have established a “tax home” through regular employment in a foreign country, and intend to return to similar employment in the same country at the end of your temporary stay in the United States, you can deduct reasonable travel expenses you paid. Amendment tax form You cannot deduct travel expenses for other members of your family or party. Amendment tax form Deductible travel expenses. Amendment tax form   If you qualify, you can deduct your expenses for: Transportation—airfare, local transportation, including train, bus, etc. Amendment tax form , Lodging—rent paid, utilities (do not include telephone), hotel or motel room expenses, and Meal expenses—actual expenses allowed if you keep records of the amounts, or, if you do not wish to keep detailed records, you are generally allowed a standard meal allowance amount depending on the date and area of your travel. Amendment tax form You generally can deduct only 50% of unreimbursed meal expenses. Amendment tax form The standard meal allowance rates for high-cost areas are available at www. Amendment tax form gsa. Amendment tax form gov/perdiem. Amendment tax form The rates for other areas are in Publication 463. Amendment tax form   Use Form 2106 or 2106-EZ to figure your allowable expenses that you claim on line 7 of Schedule A (Form 1040NR). Amendment tax form Expenses allocable to U. Amendment tax form S. Amendment tax form tax-exempt income. Amendment tax form   You cannot deduct an expense, or part of an expense, that is allocable to U. Amendment tax form S. Amendment tax form tax-exempt income, including income exempt by tax treaty. Amendment tax form Example. Amendment tax form Irina Oak, a citizen of Poland, resided in the United States for part of the year to acquire business experience from a U. Amendment tax form S. Amendment tax form company. Amendment tax form During her stay in the United States, she received a salary of $8,000 from her Polish employer. Amendment tax form She received no other U. Amendment tax form S. Amendment tax form source income. Amendment tax form She spent $3,000 on travel expenses, of which $1,000 were for meals. Amendment tax form None of these expenses were reimbursed. Amendment tax form Under the tax treaty with Poland, $5,000 of her salary is exempt from U. Amendment tax form S. Amendment tax form income tax. Amendment tax form In filling out Form 2106-EZ, she must reduce her deductible meal expenses by half ($500). Amendment tax form She must reduce the remaining $2,500 of travel expenses by 62. Amendment tax form 5% ($1,563) because 62. Amendment tax form 5% ($5,000 ÷ $8,000) of her salary is exempt from tax. Amendment tax form She enters the remaining total of $937 on line 7 of Schedule A (Form 1040NR). Amendment tax form She completes the remaining lines according to the instructions for Schedule A. Amendment tax form More information. Amendment tax form   For more information about deductible expenses, reimbursements, and recordkeeping, get Publication 463. Amendment tax form Tax Credits and Payments This discussion covers tax credits and payments for resident aliens, followed by a discussion of the credits and payments for nonresident aliens. Amendment tax form Resident Aliens Resident aliens generally claim tax credits and report tax payments, including withholding, using the same rules that apply to U. Amendment tax form S. Amendment tax form citizens. Amendment tax form The following items are some of the credits you may be able to claim. Amendment tax form Foreign tax credit. Amendment tax form   You can claim a credit, subject to certain limits, for income tax you paid or accrued to a foreign country on foreign source income. Amendment tax form You cannot claim a credit for taxes paid or accrued on excluded foreign earned income. Amendment tax form To claim a credit for income taxes paid or accrued to a foreign country, you generally will file Form 1116, Foreign Tax Credit (Individual, Estate, or Trust), with your Form 1040. Amendment tax form   For more information, get Publication 514, Foreign Tax Credit for Individuals. Amendment tax form Child and dependent care credit. Amendment tax form   You may be able to take this credit if you pay someone to care for your qualifying child who is under age 13, or your disabled dependent or disabled spouse, so that you can work or look for work. Amendment tax form Generally, you must be able to claim an exemption for your dependent. Amendment tax form   For more information, get Publication 503, Child and Dependent Care Expenses, and Form 2441, Child and Dependent Care Expenses. Amendment tax form Credit for the elderly or the disabled. Amendment tax form   You may qualify for this credit if you are 65 or older or if you retired on permanent and total disability. Amendment tax form For more information on this credit, get Publication 524, Credit for the Elderly or the Disabled, and Schedule R (Form 1040A or 1040). Amendment tax form Education credits. Amendment tax form   You may qualify for these credits if you paid qualified education expenses for yourself, your spouse, or your dependent. Amendment tax form There are two education credits: the American Opportunity Credit and the lifetime learning credit. Amendment tax form You cannot claim these credits if you are married filing separately. Amendment tax form Use Form 8863, Education Credits (American Opportunity and Lifetime Learning Credits), to figure the credit. Amendment tax form For more information, see Publication 970. Amendment tax form Retirement savings contributions credit. Amendment tax form   You may qualify for this credit (also known as the saver's credit) if you made eligible contributions to an employer-sponsored retirement plan or to an individual retirement arrangement (IRA) in 2013. Amendment tax form You cannot claim this credit if: You were born after January 1, 1996, You were a full-time student, Your exemption is claimed by someone else on his or her 2013 tax return, or Your adjusted gross income is more than: $59,000, if your filing status is married filing jointly, $44,250, if your filing status is head of household, or $29,500, if your filing status is single, married filing separately, or qualifying widow(er). Amendment tax form Use Form 8880, Credit for Qualified Retirement Savings Contributions, to figure the credit. Amendment tax form For more information, see Publication 590. Amendment tax form Child tax credit. Amendment tax form   You may be able to take this credit if you have a qualifying child. Amendment tax form   A qualifying child for purposes of the child tax credit is a child who: Was under age 17 at the end of 2013. Amendment tax form Is your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, half brother, half sister, or a descendant of any of them (for example, your grandchild, niece, or nephew). Amendment tax form Is a U. Amendment tax form S. Amendment tax form citizen, a U. Amendment tax form S. Amendment tax form national, or a resident alien. Amendment tax form Did not provide over half of his or her own support for 2013. Amendment tax form Lived with you more than half of 2013. Amendment tax form Temporary absences, such as for school, vacation, or medical care, count as time lived in the home. Amendment tax form Is claimed as a dependent on your return. Amendment tax form An adopted child is always treated as your own child. Amendment tax form An adopted child includes a child lawfully placed with you for legal adoption. Amendment tax form   See your form instructions for additional details. Amendment tax form Adoption credit. Amendment tax form   You may qualify to take a tax credit of up to $12,970 for qualifying expenses paid to adopt an eligible child. Amendment tax form This amount may be allowed for the adoption of a child with special needs regardless of whether you have qualifying expenses. Amendment tax form To claim the adoption credit, file Form 8839, Qualified Adoption Expenses, with your Form 1040. Amendment tax form Earned income credit. Amendment tax form   You may qualify for an earned income credit of up to $3,250 if a child lived with you in the United States and your earned income and adjusted gross income were each less than $37,870 ($43,210 if married filing jointly). Amendment tax form If two children lived with you in the United States and your earned income and adjusted gross income were each less than $43,038 ($48,378 if married filing jointly), your credit could be as much as $5,372. Amendment tax form If three or more children lived with you in the United States and your earned income and adjusted gross income were each less than $46,227 ($51,567 if married filing jointly), your credit could be as much as $6,044. Amendment tax form If you do not have a qualifying child and your earned income and adjusted gross income were each less than $14,340 ($19,680 if married filing jointly), your credit could be as much as $487. Amendment tax form You cannot claim the earned income credit if your filing status is married filing separately. Amendment tax form    You and your spouse (if filing a joint return) and any qualifying child must have valid SSNs to claim this credit. Amendment tax form You cannot claim the credit using an ITIN. Amendment tax form If a social security card has a legend that says Not Valid for Employment and the number was issued so that you (or your spouse or your qualifying child) could receive a federally funded benefit, you cannot claim the earned income credit. Amendment tax form An example of a federally funded benefit is Medicaid. Amendment tax form If a card has this legend and the individual's immigration status has changed so that the individual is now a U. Amendment tax form S. Amendment tax form citizen or lawful permanent resident, ask the SSA to issue a new social security card without the legend. Amendment tax form Other information. Amendment tax form   There are other eligibility rules that are not discussed here. Amendment tax form For more information, get Publication 596, Earned Income Credit. Amendment tax form Nonresident Aliens You can claim some of the same credits that resident aliens can claim. Amendment tax form You can also report certain taxes you paid, are considered to have paid, or that were withheld from your income. Amendment tax form Credits Credits are allowed only if you receive effectively connected income. Amendment tax form You may be able to claim some of the following credits. Amendment tax form Foreign tax credit. Amendment tax form   If you receive foreign source income that is effectively connected with a trade or business in the United States, you can claim a credit for any income taxes paid or accrued to any foreign country or U. Amendment tax form S. Amendment tax form possession on that income. Amendment tax form   If you do not have foreign source income effectively connected with a U. Amendment tax form S. Amendment tax form trade or business, you cannot claim credits against your U. Amendment tax form S. Amendment tax form tax for taxes paid or accrued to a foreign country or U. Amendment tax form S. Amendment tax form possession. Amendment tax form   You cannot take any credit for taxes imposed by a foreign country or U. Amendment tax form S. Amendment tax form possession on your U. Amendment tax form S. Amendment tax form source income if those taxes were imposed only because you are a citizen or resident of the foreign country or possession. Amendment tax form   If you claim a foreign tax credit, you generally will have to attach to your return a Form 1116. Amendment tax form See Publication 514 for more information. Amendment tax form Child and dependent care credit. Amendment tax form   You may qualify for this credit if you pay someone to care for your qualifying child who is under age 13, or your disabled dependent or disabled spouse, so that you can work or look for work. Amendment tax form Generally, you must be able to claim an exemption for your dependent. Amendment tax form   Married nonresident aliens can claim the credit only if they choose to file a joint return with a U. Amendment tax form S. Amendment tax form citizen or resident spouse as discussed in chapter 1, or if they qualify as certain married individuals living apart (see Joint Return Test in Publication 503). Amendment tax form   The amount of your child and dependent care expense that qualifies for the credit in any tax year cannot be more than your earned income from the United States for that tax year. Amendment tax form Earned income generally means wages, salaries, and professional fees for personal services performed. Amendment tax form   For more information, get Publication 503. Amendment tax form Education credits. Amendment tax form   If you are a nonresident alien for any part of the year, you generally cannot claim the education credits. Amendment tax form However, if you are married and choose to file a joint return with a U. Amendment tax form S. Amendment tax form citizen or resident spouse as discussed in chapter 1, you may be eligible for these credits. Amendment tax form Retirement savings contributions credit. Amendment tax form   You may qualify for this credit (also known as the saver's credit) if you made eligible contributions to an employer-sponsored retirement plan or to an individual retirement arrangement (IRA) in 2013. Amendment tax form You cannot claim this credit if: You were born after January 1, 1996, You were a full-time student, Your exemption is claimed by someone else on his or her 2013 tax return, or Your adjusted gross income is more than $29,500. Amendment tax form Use Form 8880 to figure the credit. Amendment tax form For more information, see Publication 590. Amendment tax form Child tax credit. Amendment tax form   You may be able to take this credit if you have a qualifying child. Amendment tax form   A qualifying child for purposes of the child tax credit is a child who: Was under age 17 at the end of 2013. Amendment tax form Is your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, half brother, half sister, or a descendant of any of them (for example, your grandchild, niece, or nephew). Amendment tax form Is a U. Amendment tax form S. Amendment tax form citizen, a U. Amendment tax form S. Amendment tax form national, or a resident alien. Amendment tax form Did not provide over half of his or her own support for 2013. Amendment tax form Lived with you more than half of 2013. Amendment tax form Temporary absences, such as for school, vacation, or medical care, count as time lived in the home. Amendment tax form Is claimed as a dependent on your return. Amendment tax form An adopted child is always treated as your own child. Amendment tax form An adopted child includes a child lawfully placed with you for legal adoption. Amendment tax form   See your form instructions for additional details. Amendment tax form Adoption credit. Amendment tax form   You may qualify to take a tax credit of up to $12,970 for qualifying expenses paid to adopt an eligible child. Amendment tax form This amount may be allowed for the adoption of a child with special needs regardless of whether you have qualifying expenses. Amendment tax form To claim the adoption credit, file Form 8839 with your Form 1040NR. Amendment tax form   Married nonresident aliens can claim the credit only if they choose to file a joint return with a U. Amendment tax form S. Amendment tax form citizen or resident spouse as discussed in chapter 1, or if they qualify as certain married individuals living apart (see Married Persons Not Filing Jointly in the Form 8839 instructions). Amendment tax form Credit for prior year minimum tax. Amendment tax form   If you paid alternative minimum tax in a prior year, get Form 8801, Credit for Prior Year Minimum Tax—Individuals, Estates, and Trusts, to see if you qualify for this credit. Amendment tax form Earned income credit. Amendment tax form   If you are a nonresident alien for any part of the tax year, you generally cannot get the earned income credit. Amendment tax form However, if you are married and choose to file a joint return with a U. Amendment tax form S. Amendment tax form citizen or resident spouse as discussed in chapter 1, you may be eligible for the credit. Amendment tax form    You, your spouse, and any qualifying child must have valid SSNs to claim this credit. Amendment tax form You cannot claim the credit using an ITIN. Amendment tax form If a social security card has a legend that says Not Valid for Employment and the number was issued so that you (or your spouse or your qualifying child) could receive a federally funded benefit, you cannot claim the earned income credit. Amendment tax form An example of a federally funded benefit is Medicaid. Amendment tax form If a card has this legend and the individual's immigration status has changed so that the individual is now a U. Amendment tax form S. Amendment tax form citizen or lawful permanent resident, ask the SSA to issue a new social security card without the legend. Amendment tax form   See Publication 596 for more information on the credit. Amendment tax form Tax Withheld You can claim the tax withheld during the year as a payment against your U. Amendment tax form S. Amendment tax form tax. Amendment tax form You claim it on line 61 of Form 1040NR or on line 18 of Form 1040NR-EZ. Amendment tax form The tax withheld reduces any tax you owe with Form 1040NR or Form 1040NR-EZ. Amendment tax form Withholding from wages. Amendment tax form   Any federal income tax withheld from your wages during the tax year while you were a nonresident alien is allowed as a payment against your U. Amendment tax form S. Amendment tax form income tax liability for the same year. Amendment tax form You can claim the income tax withheld whether or not you were engaged in a trade or business in the United States during the year, and whether or not the wages (or any other income) were connected with a trade or business in the United States. Amendment tax form Excess social security tax withheld. Amendment tax form   If you have two or more employers, you may be able to claim a credit against your U. Amendment tax form S. Amendment tax form income tax liability for social security tax withheld in excess of the maximum required. Amendment tax form See Social Security and Medicare Taxes in chapter 8 for more information. Amendment tax form Additional Medicare Tax. Amendment tax form   Your employer is responsible for withholding the 0. Amendment tax form 9% Additional Medicare Tax on Medicare wages or RRTA compensation it pays to you in excess of $200,000 in 2013. Amendment tax form If you do not owe Additional Medicare Tax, you can claim a credit for any withheld Additional Medicare Tax against the total tax liability shown on your tax return by filing Form 8959. Amendment tax form Tax paid on undistributed long-term capital gains. Amendment tax form   If you are a shareholder in a mutual fund (or other regulated investment company) or real estate investment trust, you can claim a credit for your share of any taxes paid by the company on its undistributed long-term capital gains. Amendment tax form You will receive information on Form 2439, Notice to Shareholder of Undistributed Long-Term Capital Gains, which you must attach to your return. Amendment tax form Tax withheld at the source. Amendment tax form   You can claim as a payment any tax withheld at the source on investment and other fixed or determinable annual or periodic income paid to you. Amendment tax form Fixed or determinable income includes interest, dividend, rental, and royalty income that you do not claim to be effectively connected income. Amendment tax form Wage or salary payments can be fixed or determinable income to you, but usually are subject to withholding as discussed above. Amendment tax form Taxes on fixed or determinable income are withheld at a 30% rate or at a lower treaty rate. Amendment tax form Tax withheld on partnership income. Amendment tax form   If you are a foreign partner in a partnership, the partnership will withhold tax on your share of effectively connected taxable income from the partnership. Amendment tax form The partnership will give you a statement on Form 8805, Foreign Partner's Information Statement of Section 1446 Withholding Tax, showing the tax withheld. Amendment tax form A partnership that is publicly traded may withhold on your actual distributions of effectively connected income. Amendment tax form In this case, the partnership will give you a statement on Form 1042-S. Amendment tax form Claim the tax withheld as a payment on line 61b or 61d of Form 1040NR, as appropriate. Amendment tax form Claiming tax withheld on your return. Amendment tax form   When you fill out your tax return, take extra care to enter the correct amount of any tax withheld shown on your information documents. Amendment tax form The following table lists some of the more common information documents and shows where to find the amount of tax withheld. Amendment tax form Form number Location  of tax  withheld RRB-1042S Box 12 SSA-1042S Box 9 W-2 Box 2 W-2c Box 2 1042-S Box 9 8805 Line 10 8288-A Box 2 Bona Fide Residents of American Samoa or Puerto Rico If you are a nonresident alien who is a bona fide resident of American Samoa or Puerto Rico for the entire tax year, you generally are taxed the same as resident aliens. Amendment tax form You should file Form 1040 and report all income from sources both in and outside the United States. Amendment tax form However, you can exclude the income discussed in the following paragraphs. Amendment tax form For tax purposes other than reporting income, however, you will be treated as a nonresident alien. Amendment tax form For example, you are not allowed the standard deduction, you cannot file a joint return, and you are not allowed a deduction for a dependent unless that person is a citizen or national of the United States. Amendment tax form There are also limits on what deductions and credits are allowed. Amendment tax form See Nonresident Aliens under Deductions , Itemized Deductions , and Tax Credits and Payments in this chapter. Amendment tax form Residents of Puerto Rico. Amendment tax form   If you are a bona fide resident of Puerto Rico for the entire year, you can exclude from gross income all income from sources in Puerto Rico (other than amounts for services performed as an employee of the United States or any of its agencies). Amendment tax form   If you report income on a calendar year basis and you do not have wages subject to withholding, file your return and pay your tax by June 15. Amendment tax form You must also make your first payment of estimated tax by June 15. Amendment tax form You cannot file a joint income tax return or make joint payments of estimated tax. Amendment tax form However, if you are married to a U. Amendment tax form S. Amendment tax form citizen or resident, see Nonresident Spouse Treated as a Resident in chapter 1. Amendment tax form   If you earn wages subject to withholding, your U. Amendment tax form S. Amendment tax form income tax return is due by April 15. Amendment tax form Your first payment of estimated tax is also due by April 15. Amendment tax form For information on withholding and estimated tax, see chapter 8 . Amendment tax form Residents of American Samoa. Amendment tax form   If you are a bona fide resident of American Samoa for the entire year, you can exclude from gross income all income from sources in American Samoa (other than amounts for services performed as an employee of the U. Amendment tax form S. Amendment tax form government or any of its agencies). Amendment tax form An employee of the American Samoan government is not considered an employee of the U. Amendment tax form S. Amendment tax form government or any of its agencies for purposes of the exclusion. Amendment tax form For more information about this exclusion, get Form 4563 and Publication 570, Tax Guide for Individuals With Income From U. Amendment tax form S. Amendment tax form Possessions. 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The Amendment Tax Form

Amendment tax form 13. Amendment tax form   Basis of Property Table of Contents Introduction Useful Items - You may want to see: Cost BasisReal Property Adjusted BasisIncreases to Basis Decreases to Basis Basis Other Than CostProperty Received for Services Taxable Exchanges Involuntary Conversions Nontaxable Exchanges Property Transferred From a Spouse Property Received as a Gift Inherited Property Property Changed From Personal to Business or Rental Use Stocks and Bonds Introduction This chapter discusses how to figure your basis in property. Amendment tax form It is divided into the following sections. Amendment tax form Cost basis. Amendment tax form Adjusted basis. Amendment tax form Basis other than cost. Amendment tax form Your basis is the amount of your investment in property for tax purposes. Amendment tax form Use the basis to figure gain or loss on the sale, exchange, or other disposition of property. Amendment tax form Also use it to figure deductions for depreciation, amortization, depletion, and casualty losses. Amendment tax form If you use property for both business or investment purposes and for personal purposes, you must allocate the basis based on the use. Amendment tax form Only the basis allocated to the business or investment use of the property can be depreciated. Amendment tax form Your original basis in property is adjusted (increased or decreased) by certain events. Amendment tax form For example, if you make improvements to the property, increase your basis. Amendment tax form If you take deductions for depreciation or casualty losses, or claim certain credits, reduce your basis. Amendment tax form Keep accurate records of all items that affect the basis of your property. Amendment tax form For more information on keeping records, see chapter 1. Amendment tax form Useful Items - You may want to see: Publication 15-B Employer's Tax Guide to Fringe Benefits 525 Taxable and Nontaxable Income 535 Business Expenses 537 Installment Sales 544 Sales and Other Dispositions of Assets 550 Investment Income and Expenses 551 Basis of Assets 946 How To Depreciate Property Cost Basis The basis of property you buy is usually its cost. Amendment tax form The cost is the amount you pay in cash, debt obligations, other property, or services. Amendment tax form Your cost also includes amounts you pay for the following items: Sales tax, Freight, Installation and testing, Excise taxes, Legal and accounting fees (when they must be capitalized), Revenue stamps, Recording fees, and Real estate taxes (if you assume liability for the seller). Amendment tax form In addition, the basis of real estate and business assets may include other items. Amendment tax form Loans with low or no interest. Amendment tax form    If you buy property on a time-payment plan that charges little or no interest, the basis of your property is your stated purchase price minus any amount considered to be unstated interest. Amendment tax form You generally have unstated interest if your interest rate is less than the applicable federal rate. Amendment tax form   For more information, see Unstated Interest and Original Issue Discount (OID) in Publication 537. Amendment tax form Real Property Real property, also called real estate, is land and generally anything built on, growing on, or attached to land. Amendment tax form If you buy real property, certain fees and other expenses you pay are part of your cost basis in the property. Amendment tax form Lump sum purchase. Amendment tax form   If you buy buildings and the land on which they stand for a lump sum, allocate the cost basis among the land and the buildings. Amendment tax form Allocate the cost basis according to the respective fair market values (FMVs) of the land and buildings at the time of purchase. Amendment tax form Figure the basis of each asset by multiplying the lump sum by a fraction. Amendment tax form The numerator is the FMV of that asset and the denominator is the FMV of the whole property at the time of purchase. Amendment tax form    If you are not certain of the FMVs of the land and buildings, you can allocate the basis according to their assessed values for real estate tax purposes. Amendment tax form Fair market value (FMV). Amendment tax form   FMV is the price at which the property would change hands between a willing buyer and a willing seller, neither having to buy or sell, and both having reasonable knowledge of all the necessary facts. Amendment tax form Sales of similar property on or about the same date may be helpful in figuring the FMV of the property. Amendment tax form Assumption of mortgage. Amendment tax form   If you buy property and assume (or buy the property subject to) an existing mortgage on the property, your basis includes the amount you pay for the property plus the amount to be paid on the mortgage. Amendment tax form Settlement costs. Amendment tax form   Your basis includes the settlement fees and closing costs you paid for buying the property. Amendment tax form (A fee for buying property is a cost that must be paid even if you buy the property for cash. Amendment tax form ) Do not include fees and costs for getting a loan on the property in your basis. Amendment tax form   The following are some of the settlement fees or closing costs you can include in the basis of your property. Amendment tax form Abstract fees (abstract of title fees). Amendment tax form Charges for installing utility services. Amendment tax form Legal fees (including fees for the title search and preparation of the sales contract and deed). Amendment tax form Recording fees. Amendment tax form Survey fees. Amendment tax form Transfer taxes. Amendment tax form Owner's title insurance. Amendment tax form Any amounts the seller owes that you agree to pay, such as back taxes or interest, recording or mortgage fees, charges for improvements or repairs, and sales commissions. Amendment tax form   Settlement costs do not include amounts placed in escrow for the future payment of items such as taxes and insurance. Amendment tax form   The following are some of the settlement fees and closing costs you cannot include in the basis of property. Amendment tax form Casualty insurance premiums. Amendment tax form Rent for occupancy of the property before closing. Amendment tax form Charges for utilities or other services related to occupancy of the property before closing. Amendment tax form Charges connected with getting a loan, such as points (discount points, loan origination fees), mortgage insurance premiums, loan assumption fees, cost of a credit report, and fees for an appraisal required by a lender. Amendment tax form Fees for refinancing a mortgage. Amendment tax form Real estate taxes. Amendment tax form   If you pay real estate taxes the seller owed on real property you bought, and the seller did not reimburse you, treat those taxes as part of your basis. Amendment tax form You cannot deduct them as an expense. Amendment tax form    If you reimburse the seller for taxes the seller paid for you, you can usually deduct that amount as an expense in the year of purchase. Amendment tax form Do not include that amount in the basis of your property. Amendment tax form If you did not reimburse the seller, you must reduce your basis by the amount of those taxes. Amendment tax form Points. Amendment tax form   If you pay points to get a loan (including a mortgage, second mortgage, line of credit, or a home equity loan), do not add the points to the basis of the related property. Amendment tax form Generally, you deduct the points over the term of the loan. Amendment tax form For more information on how to deduct points, see chapter 23. Amendment tax form Points on home mortgage. Amendment tax form   Special rules may apply to points you and the seller pay when you get a mortgage to buy your main home. Amendment tax form If certain requirements are met, you can deduct the points in full for the year in which they are paid. Amendment tax form Reduce the basis of your home by any seller-paid points. Amendment tax form Adjusted Basis Before figuring gain or loss on a sale, exchange, or other disposition of property or figuring allowable depreciation, depletion, or amortization, you must usually make certain adjustments (increases and decreases) to the cost basis or basis other than cost (discussed later) of the property. Amendment tax form The result is the adjusted basis. Amendment tax form Increases to Basis Increase the basis of any property by all items properly added to a capital account. Amendment tax form Examples of items that increase basis are shown in Table 13-1. Amendment tax form These include the items discussed below. Amendment tax form Improvements. Amendment tax form   Add to your basis in property the cost of improvements having a useful life of more than 1 year, that increase the value of the property, lengthen its life, or adapt it to a different use. Amendment tax form For example, improvements include putting a recreation room in your unfinished basement, adding another bathroom or bedroom, putting up a fence, putting in new plumbing or wiring, installing a new roof, or paving your driveway. Amendment tax form Assessments for local improvements. Amendment tax form   Add to the basis of property assessments for improvements such as streets and sidewalks if they increase the value of the property assessed. Amendment tax form Do not deduct them as taxes. Amendment tax form However, you can deduct as taxes assessments for maintenance or repairs, or for meeting interest charges related to the improvements. Amendment tax form Example. Amendment tax form Your city changes the street in front of your store into an enclosed pedestrian mall and assesses you and other affected property owners for the cost of the conversion. Amendment tax form Add the assessment to your property's basis. Amendment tax form In this example, the assessment is a depreciable asset. Amendment tax form Decreases to Basis Decrease the basis of any property by all items that represent a return of capital for the period during which you held the property. Amendment tax form Examples of items that decrease basis are shown in Table 13-1. Amendment tax form These include the items discussed below. Amendment tax form Table 13-1. Amendment tax form Examples of Adjustments to Basis Increases to Basis Decreases to Basis • Capital improvements: • Exclusion from income of   Putting an addition on your home subsidies for energy conservation   Replacing an entire roof measures   Paving your driveway     Installing central air conditioning • Casualty or theft loss deductions   Rewiring your home and insurance reimbursements       • Assessments for local improvements:     Water connections     Extending utility service lines to the property • Postponed gain from the sale of a home   Sidewalks • Alternative motor vehicle credit  (Form 8910)   Roads       • Alternative fuel vehicle refueling     property credit (Form 8911)           • Residential energy credits (Form 5695)       • Casualty losses: • Depreciation and section 179 deduction   Restoring damaged property     • Nontaxable corporate distributions • Legal fees:     Cost of defending and perfecting a title • Certain canceled debt excluded from   Fees for getting a reduction of an assessment income     • Zoning costs • Easements           • Adoption tax benefits Casualty and theft losses. Amendment tax form   If you have a casualty or theft loss, decrease the basis in your property by any insurance proceeds or other reimbursement and by any deductible loss not covered by insurance. Amendment tax form    You must increase your basis in the property by the amount you spend on repairs that restore the property to its pre-casualty condition. Amendment tax form   For more information on casualty and theft losses, see chapter 25. Amendment tax form Depreciation and section 179 deduction. Amendment tax form   Decrease the basis of your qualifying business property by any section 179 deduction you take and the depreciation you deducted, or could have deducted (including any special depreciation allowance), on your tax returns under the method of depreciation you selected. Amendment tax form   For more information about depreciation and the section 179 deduction, see Publication 946 and the Instructions for Form 4562. Amendment tax form Example. Amendment tax form You owned a duplex used as rental property that cost you $40,000, of which $35,000 was allocated to the building and $5,000 to the land. Amendment tax form You added an improvement to the duplex that cost $10,000. Amendment tax form In February last year, the duplex was damaged by fire. Amendment tax form Up to that time, you had been allowed depreciation of $23,000. Amendment tax form You sold some salvaged material for $1,300 and collected $19,700 from your insurance company. Amendment tax form You deducted a casualty loss of $1,000 on your income tax return for last year. Amendment tax form You spent $19,000 of the insurance proceeds for restoration of the duplex, which was completed this year. Amendment tax form You must use the duplex's adjusted basis after the restoration to determine depreciation for the rest of the property's recovery period. Amendment tax form Figure the adjusted basis of the duplex as follows: Original cost of duplex $35,000 Addition to duplex 10,000 Total cost of duplex $45,000 Minus: Depreciation 23,000 Adjusted basis before casualty $22,000 Minus: Insurance proceeds $19,700     Deducted casualty loss 1,000     Salvage proceeds 1,300 22,000 Adjusted basis after casualty $-0- Add: Cost of restoring duplex 19,000 Adjusted basis after restoration $19,000 Note. Amendment tax form Your basis in the land is its original cost of $5,000. Amendment tax form Easements. Amendment tax form   The amount you receive for granting an easement is generally considered to be proceeds from the sale of an interest in real property. Amendment tax form It reduces the basis of the affected part of the property. Amendment tax form If the amount received is more than the basis of the part of the property affected by the easement, reduce your basis in that part to zero and treat the excess as a recognized gain. Amendment tax form   If the gain is on a capital asset, see chapter 16 for information about how to report it. Amendment tax form If the gain is on property used in a trade or business, see Publication 544 for information about how to report it. Amendment tax form Exclusion of subsidies for energy conservation measures. Amendment tax form   You can exclude from gross income any subsidy you received from a public utility company for the purchase or installation of an energy conservation measure for a dwelling unit. Amendment tax form Reduce the basis of the property for which you received the subsidy by the excluded amount. Amendment tax form For more information about this subsidy, see chapter 12. Amendment tax form Postponed gain from sale of home. Amendment tax form    If you postponed gain from the sale of your main home under rules in effect before May 7, 1997, you must reduce the basis of the home you acquired as a replacement by the amount of the postponed gain. Amendment tax form For more information on the rules for the sale of a home, see chapter 15. Amendment tax form Basis Other Than Cost There are many times when you cannot use cost as basis. Amendment tax form In these cases, the fair market value or the adjusted basis of the property can be used. Amendment tax form Fair market value (FMV) and adjusted basis were discussed earlier. Amendment tax form Property Received for Services If you receive property for your services, include the FMV of the property in income. Amendment tax form The amount you include in income becomes your basis. Amendment tax form If the services were performed for a price agreed on beforehand, it will be accepted as the FMV of the property if there is no evidence to the contrary. Amendment tax form Restricted property. Amendment tax form   If you receive property for your services and the property is subject to certain restrictions, your basis in the property is its FMV when it becomes substantially vested. Amendment tax form However, this rule does not apply if you make an election to include in income the FMV of the property at the time it is transferred to you, less any amount you paid for it. Amendment tax form Property is substantially vested when it is transferable or when it is not subject to a substantial risk of forfeiture (you do not have a good chance of losing it). Amendment tax form For more information, see Restricted Property in Publication 525. Amendment tax form Bargain purchases. Amendment tax form   A bargain purchase is a purchase of an item for less than its FMV. Amendment tax form If, as compensation for services, you buy goods or other property at less than FMV, include the difference between the purchase price and the property's FMV in your income. Amendment tax form Your basis in the property is its FMV (your purchase price plus the amount you include in income). Amendment tax form   If the difference between your purchase price and the FMV is a qualified employee discount, do not include the difference in income. Amendment tax form However, your basis in the property is still its FMV. Amendment tax form See Employee Discounts in Publication 15-B. Amendment tax form Taxable Exchanges A taxable exchange is one in which the gain is taxable or the loss is deductible. Amendment tax form A taxable gain or deductible loss also is known as a recognized gain or loss. Amendment tax form If you receive property in exchange for other property in a taxable exchange, the basis of the property you receive is usually its FMV at the time of the exchange. Amendment tax form Involuntary Conversions If you receive replacement property as a result of an involuntary conversion, such as a casualty, theft, or condemnation, figure the basis of the replacement property using the basis of the converted property. Amendment tax form Similar or related property. Amendment tax form   If you receive replacement property similar or related in service or use to the converted property, the replacement property's basis is the same as the converted property's basis on the date of the conversion, with the following adjustments. Amendment tax form Decrease the basis by the following. Amendment tax form Any loss you recognize on the involuntary conversion. Amendment tax form Any money you receive that you do not spend on similar property. Amendment tax form Increase the basis by the following. Amendment tax form Any gain you recognize on the involuntary conversion. Amendment tax form Any cost of acquiring the replacement property. Amendment tax form Money or property not similar or related. Amendment tax form    If you receive money or property not similar or related in service or use to the converted property, and you buy replacement property similar or related in service or use to the converted property, the basis of the replacement property is its cost decreased by the gain not recognized on the conversion. Amendment tax form Example. Amendment tax form The state condemned your property. Amendment tax form The adjusted basis of the property was $26,000 and the state paid you $31,000 for it. Amendment tax form You realized a gain of $5,000 ($31,000 − $26,000). Amendment tax form You bought replacement property similar in use to the converted property for $29,000. Amendment tax form You recognize a gain of $2,000 ($31,000 − $29,000), the unspent part of the payment from the state. Amendment tax form Your unrecognized gain is $3,000, the difference between the $5,000 realized gain and the $2,000 recognized gain. Amendment tax form The basis of the replacement property is figured as follows: Cost of replacement property $29,000 Minus: Gain not recognized 3,000 Basis of replacement property $26,000 Allocating the basis. Amendment tax form   If you buy more than one piece of replacement property, allocate your basis among the properties based on their respective costs. Amendment tax form Basis for depreciation. Amendment tax form   Special rules apply in determining and depreciating the basis of MACRS property acquired in an involuntary conversion. Amendment tax form For information, see What Is the Basis of Your Depreciable Property? in chapter 1 of Publication 946. Amendment tax form Nontaxable Exchanges A nontaxable exchange is an exchange in which you are not taxed on any gain and you cannot deduct any loss. Amendment tax form If you receive property in a nontaxable exchange, its basis is generally the same as the basis of the property you transferred. Amendment tax form See Nontaxable Trades in chapter 14. Amendment tax form Like-Kind Exchanges The exchange of property for the same kind of property is the most common type of nontaxable exchange. Amendment tax form To qualify as a like-kind exchange, the property traded and the property received must be both of the following. Amendment tax form Qualifying property. Amendment tax form Like-kind property. Amendment tax form The basis of the property you receive is generally the same as the adjusted basis of the property you gave up. Amendment tax form If you trade property in a like-kind exchange and also pay money, the basis of the property received is the adjusted basis of the property you gave up increased by the money you paid. Amendment tax form Qualifying property. Amendment tax form   In a like-kind exchange, you must hold for investment or for productive use in your trade or business both the property you give up and the property you receive. Amendment tax form Like-kind property. Amendment tax form   There must be an exchange of like-kind property. Amendment tax form Like-kind properties are properties of the same nature or character, even if they differ in grade or quality. Amendment tax form The exchange of real estate for real estate and personal property for similar personal property are exchanges of like-kind property. Amendment tax form Example. Amendment tax form You trade in an old truck used in your business with an adjusted basis of $1,700 for a new one costing $6,800. Amendment tax form The dealer allows you $2,000 on the old truck, and you pay $4,800. Amendment tax form This is a like-kind exchange. Amendment tax form The basis of the new truck is $6,500 (the adjusted basis of the old one, $1,700, plus the amount you paid, $4,800). Amendment tax form If you sell your old truck to a third party for $2,000 instead of trading it in and then buy a new one from the dealer, you have a taxable gain of $300 on the sale (the $2,000 sale price minus the $1,700 adjusted basis). Amendment tax form The basis of the new truck is the price you pay the dealer. Amendment tax form Partially nontaxable exchanges. Amendment tax form   A partially nontaxable exchange is an exchange in which you receive unlike property or money in addition to like-kind property. Amendment tax form The basis of the property you receive is the same as the adjusted basis of the property you gave up, with the following adjustments. Amendment tax form Decrease the basis by the following amounts. Amendment tax form Any money you receive. Amendment tax form Any loss you recognize on the exchange. Amendment tax form Increase the basis by the following amounts. Amendment tax form Any additional costs you incur. Amendment tax form Any gain you recognize on the exchange. Amendment tax form If the other party to the exchange assumes your liabilities, treat the debt assumption as money you received in the exchange. Amendment tax form Allocation of basis. Amendment tax form   If you receive like-kind and unlike properties in the exchange, allocate the basis first to the unlike property, other than money, up to its FMV on the date of the exchange. Amendment tax form The rest is the basis of the like-kind property. Amendment tax form More information. Amendment tax form   See Like-Kind Exchanges in chapter 1 of Publication 544 for more information. Amendment tax form Basis for depreciation. Amendment tax form   Special rules apply in determining and depreciating the basis of MACRS property acquired in a like-kind exchange. Amendment tax form For information, see What Is the Basis of Your Depreciable Property? in chapter 1 of Publication 946. Amendment tax form Property Transferred From a Spouse The basis of property transferred to you or transferred in trust for your benefit by your spouse is the same as your spouse's adjusted basis. Amendment tax form The same rule applies to a transfer by your former spouse that is incident to divorce. Amendment tax form However, for property transferred in trust, adjust your basis for any gain recognized by your spouse or former spouse if the liabilities assumed, plus the liabilities to which the property is subject, are more than the adjusted basis of the property transferred. Amendment tax form If the property transferred to you is a series E, series EE, or series I U. Amendment tax form S. Amendment tax form savings bond, the transferor must include in income the interest accrued to the date of transfer. Amendment tax form Your basis in the bond immediately after the transfer is equal to the transferor's basis increased by the interest income includible in the transferor's income. Amendment tax form For more information on these bonds, see chapter 7. Amendment tax form At the time of the transfer, the transferor must give you the records needed to determine the adjusted basis and holding period of the property as of the date of the transfer. Amendment tax form For more information about the transfer of property from a spouse, see chapter 14. Amendment tax form Property Received as a Gift To figure the basis of property you receive as a gift, you must know its adjusted basis to the donor just before it was given to you, its FMV at the time it was given to you, and any gift tax paid on it. Amendment tax form FMV less than donor's adjusted basis. Amendment tax form   If the FMV of the property at the time of the gift is less than the donor's adjusted basis, your basis depends on whether you have a gain or a loss when you dispose of the property. Amendment tax form Your basis for figuring gain is the same as the donor's adjusted basis plus or minus any required adjustments to basis while you held the property. Amendment tax form Your basis for figuring loss is its FMV when you received the gift plus or minus any required adjustments to basis while you held the property. Amendment tax form See Adjusted Basis , earlier. Amendment tax form Example. Amendment tax form You received an acre of land as a gift. Amendment tax form At the time of the gift, the land had an FMV of $8,000. Amendment tax form The donor's adjusted basis was $10,000. Amendment tax form After you received the property, no events occurred to increase or decrease your basis. Amendment tax form If you later sell the property for $12,000, you will have a $2,000 gain because you must use the donor's adjusted basis at the time of the gift ($10,000) as your basis to figure gain. Amendment tax form If you sell the property for $7,000, you will have a $1,000 loss because you must use the FMV at the time of the gift ($8,000) as your basis to figure loss. Amendment tax form If the sales price is between $8,000 and $10,000, you have neither gain nor loss. Amendment tax form Business property. Amendment tax form   If you hold the gift as business property, your basis for figuring any depreciation, depletion, or amortization deductions is the same as the donor's adjusted basis plus or minus any required adjustments to basis while you hold the property. Amendment tax form FMV equal to or greater than donor's adjusted basis. Amendment tax form   If the FMV of the property is equal to or greater than the donor's adjusted basis, your basis is the donor's adjusted basis at the time you received the gift. Amendment tax form Increase your basis by all or part of any gift tax paid, depending on the date of the gift, explained later. Amendment tax form   Also, for figuring gain or loss from a sale or other disposition or for figuring depreciation, depletion, or amortization deductions on business property, you must increase or decrease your basis (the donor's adjusted basis) by any required adjustments to basis while you held the property. Amendment tax form See Adjusted Basis , earlier. Amendment tax form   If you received a gift during the tax year, increase your basis in the gift (the donor's adjusted basis) by the part of the gift tax paid on it due to the net increase in value of the gift. Amendment tax form Figure the increase by multiplying the gift tax paid by a fraction. Amendment tax form The numerator of the fraction is the net increase in value of the gift and the denominator is the amount of the gift. Amendment tax form   The net increase in value of the gift is the FMV of the gift minus the donor's adjusted basis. Amendment tax form The amount of the gift is its value for gift tax purposes after reduction by any annual exclusion and marital or charitable deduction that applies to the gift. Amendment tax form Example. Amendment tax form In 2013, you received a gift of property from your mother that had an FMV of $50,000. Amendment tax form Her adjusted basis was $20,000. Amendment tax form The amount of the gift for gift tax purposes was $36,000 ($50,000 minus the $14,000 annual exclusion). Amendment tax form She paid a gift tax of $7,320 on the property. Amendment tax form Your basis is $26,076, figured as follows: Fair market value $50,000 Minus: Adjusted basis −20,000 Net increase in value $30,000     Gift tax paid $7,320 Multiplied by ($30,000 ÷ $36,000) × . Amendment tax form 83 Gift tax due to net increase in value $6,076 Adjusted basis of property to your mother +20,000 Your basis in the property $26,076 Note. Amendment tax form If you received a gift before 1977, your basis in the gift (the donor's adjusted basis) includes any gift tax paid on it. Amendment tax form However, your basis cannot exceed the FMV of the gift at the time it was given to you. Amendment tax form Inherited Property Your basis in property you inherited from a decedent, who died before January 1, 2010, or after December 31, 2010, is generally one of the following: The FMV of the property at the date of the decedent's death. Amendment tax form The FMV on the alternate valuation date if the personal representative for the estate elects to use alternate valuation. Amendment tax form The value under the special-use valuation method for real property used in farming or a closely held business if elected for estate tax purposes. Amendment tax form The decedent's adjusted basis in land to the extent of the value excluded from the decedent's taxable estate as a qualified conservation easement. Amendment tax form If a federal estate tax return does not have to be filed, your basis in the inherited property is its appraised value at the date of death for state inheritance or transmission taxes. Amendment tax form For more information, see the instructions to Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return. Amendment tax form Property inherited from a decedent who died in 2010. Amendment tax form   If you inherited property from a decedent who died in 2010, special rules may apply. Amendment tax form For more information, see Publication 4895, Tax Treatment of Property Acquired From a Decedent Dying in 2010. Amendment tax form Community property. Amendment tax form   In community property states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin), husband and wife are each usually considered to own half the community property. Amendment tax form When either spouse dies, the total value of the community property, even the part belonging to the surviving spouse, generally becomes the basis of the entire property. Amendment tax form For this rule to apply, at least half the value of the community property interest must be includible in the decedent's gross estate, whether or not the estate must file a return. Amendment tax form Example. Amendment tax form You and your spouse owned community property that had a basis of $80,000. Amendment tax form When your spouse died, half the FMV of the community interest was includible in your spouse's estate. Amendment tax form The FMV of the community interest was $100,000. Amendment tax form The basis of your half of the property after the death of your spouse is $50,000 (half of the $100,000 FMV). Amendment tax form The basis of the other half to your spouse's heirs is also $50,000. Amendment tax form For more information about community property, see Publication 555, Community Property. Amendment tax form Property Changed From Personal to Business or Rental Use If you hold property for personal use and then change it to business use or use it to produce rent, you can begin to depreciate the property at the time of the change. Amendment tax form To do so, you must figure its basis for depreciation at the time of the change. Amendment tax form An example of changing property held for personal use to business or rental use would be renting out your former personal residence. Amendment tax form Basis for depreciation. Amendment tax form   The basis for depreciation is the lesser of the following amounts. Amendment tax form The FMV of the property on the date of the change. Amendment tax form Your adjusted basis on the date of the change. Amendment tax form Example. Amendment tax form Several years ago, you paid $160,000 to have your house built on a lot that cost $25,000. Amendment tax form You paid $20,000 for permanent improvements to the house and claimed a $2,000 casualty loss deduction for damage to the house before changing the property to rental use last year. Amendment tax form Because land is not depreciable, you include only the cost of the house when figuring the basis for depreciation. Amendment tax form Your adjusted basis in the house when you changed its use was $178,000 ($160,000 + $20,000 − $2,000). Amendment tax form On the same date, your property had an FMV of $180,000, of which $15,000 was for the land and $165,000 was for the house. Amendment tax form The basis for figuring depreciation on the house is its FMV on the date of the change ($165,000) because it is less than your adjusted basis ($178,000). Amendment tax form Sale of property. Amendment tax form   If you later sell or dispose of property changed to business or rental use, the basis you use will depend on whether you are figuring gain or loss. Amendment tax form Gain. Amendment tax form   The basis for figuring a gain is your adjusted basis in the property when you sell the property. Amendment tax form Example. Amendment tax form Assume the same facts as in the previous example except that you sell the property at a gain after being allowed depreciation deductions of $37,500. Amendment tax form Your adjusted basis for figuring gain is $165,500 ($178,000 + $25,000 (land) − $37,500). Amendment tax form Loss. Amendment tax form   Figure the basis for a loss starting with the smaller of your adjusted basis or the FMV of the property at the time of the change to business or rental use. Amendment tax form Then make adjustments (increases and decreases) for the period after the change in the property's use, as discussed earlier under Adjusted Basis . Amendment tax form Example. Amendment tax form Assume the same facts as in the previous example, except that you sell the property at a loss after being allowed depreciation deductions of $37,500. Amendment tax form In this case, you would start with the FMV on the date of the change to rental use ($180,000), because it is less than the adjusted basis of $203,000 ($178,000 + $25,000 (land)) on that date. Amendment tax form Reduce that amount ($180,000) by the depreciation deductions ($37,500). Amendment tax form The basis for loss is $142,500 ($180,000 − $37,500). Amendment tax form Stocks and Bonds The basis of stocks or bonds you buy generally is the purchase price plus any costs of purchase, such as commissions and recording or transfer fees. Amendment tax form If you get stocks or bonds other than by purchase, your basis is usually determined by the FMV or the previous owner's adjusted basis, as discussed earlier. Amendment tax form You must adjust the basis of stocks for certain events that occur after purchase. Amendment tax form For example, if you receive additional stock from nontaxable stock dividends or stock splits, reduce your basis for each share of stock by dividing the adjusted basis of the old stock by the number of shares of old and new stock. Amendment tax form This rule applies only when the additional stock received is identical to the stock held. Amendment tax form Also reduce your basis when you receive nontaxable distributions. Amendment tax form They are a return of capital. Amendment tax form Example. Amendment tax form In 2011 you bought 100 shares of XYZ stock for $1,000 or $10 a share. Amendment tax form In 2012 you bought 100 shares of XYZ stock for $1,600 or $16 a share. Amendment tax form In 2013 XYZ declared a 2-for-1 stock split. Amendment tax form You now have 200 shares of stock with a basis of $5 a share and 200 shares with a basis of $8 a share. Amendment tax form Other basis. Amendment tax form   There are other ways to figure the basis of stocks or bonds depending on how you acquired them. Amendment tax form For detailed information, see Stocks and Bonds under Basis of Investment Property in chapter 4 of Publication 550. Amendment tax form Identifying stocks or bonds sold. Amendment tax form   If you can adequately identify the shares of stock or the bonds you sold, their basis is the cost or other basis of the particular shares of stocks or bonds. Amendment tax form If you buy and sell securities at various times in varying quantities and you cannot adequately identify the shares you sell, the basis of the securities you sell is the basis of the securities you acquired first. Amendment tax form For more information about identifying securities you sell, see Stocks and Bonds under Basis of Investment Property in chapter 4 of Publication 550. Amendment tax form Mutual fund shares. Amendment tax form   If you sell mutual fund shares you acquired at various times and prices and left on deposit in an account kept by a custodian or agent, you can elect to use an average basis. Amendment tax form For more information, see Publication 550. Amendment tax form Bond premium. Amendment tax form   If you buy a taxable bond at a premium and elect to amortize the premium, reduce the basis of the bond by the amortized premium you deduct each year. Amendment tax form See Bond Premium Amortization in chapter 3 of Publication 550 for more information. Amendment tax form Although you cannot deduct the premium on a tax-exempt bond, you must amortize the premium each year and reduce your basis in the bond by the amortized amount. Amendment tax form Original issue discount (OID) on debt instruments. Amendment tax form   You must increase your basis in an OID debt instrument by the OID you include in income for that instrument. Amendment tax form See Original Issue Discount (OID) in chapter 7 and Publication 1212, Guide To Original Issue Discount (OID) Instruments. Amendment tax form Tax-exempt obligations. Amendment tax form    OID on tax-exempt obligations is generally not taxable. Amendment tax form However, when you dispose of a tax-exempt obligation issued after September 3, 1982, and acquired after March 1, 1984, you must accrue OID on the obligation to determine its adjusted basis. Amendment tax form The accrued OID is added to the basis of the obligation to determine your gain or loss. Amendment tax form See chapter 4 of Publication 550. Amendment tax form Prev  Up  Next   Home   More Online Publications