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Efile state taxes free 15. Efile state taxes free   Selling Your Home Table of Contents Reminder Introduction Useful Items - You may want to see: Main Home Figuring Gain or LossSelling Price Amount Realized Adjusted Basis Amount of Gain or Loss Dispositions Other Than Sales Determining Basis Excluding the GainMaximum Exclusion Ownership and Use Tests Reduced Maximum Exclusion Business Use or Rental of Home Reporting the SaleSeller-financed mortgage. Efile state taxes free More information. Efile state taxes free Special SituationsException for sales to related persons. Efile state taxes free Recapturing (Paying Back) a Federal Mortgage Subsidy Reminder Home sold with undeducted points. Efile state taxes free  If you have not deducted all the points you paid to secure a mortgage on your old home, you may be able to deduct the remaining points in the year of the sale. Efile state taxes free See Mortgage ending early under Points in chapter 23. Efile state taxes free Introduction This chapter explains the tax rules that apply when you sell your main home. Efile state taxes free In most cases, your main home is the one in which you live most of the time. Efile state taxes free If you sold your main home in 2013, you may be able to exclude from income any gain up to a limit of $250,000 ($500,000 on a joint return in most cases). Efile state taxes free See Excluding the Gain , later. Efile state taxes free Generally, if you can exclude all the gain, you do not need to report the sale on your tax return. Efile state taxes free If you have gain that cannot be excluded, it is taxable. Efile state taxes free Report it on Form 8949, Sales and Other Dispositions of Capital Assets, and Schedule D (Form 1040). Efile state taxes free You may also have to complete Form 4797, Sales of Business Property. Efile state taxes free See Reporting the Sale , later. Efile state taxes free If you have a loss on the sale, you generally cannot deduct it on your return. Efile state taxes free However, you may need to report it. Efile state taxes free See Reporting the Sale , later. Efile state taxes free The following are main topics in this chapter. Efile state taxes free Figuring gain or loss. Efile state taxes free Basis. Efile state taxes free Excluding the gain. Efile state taxes free Ownership and use tests. Efile state taxes free Reporting the sale. Efile state taxes free Other topics include the following. Efile state taxes free Business use or rental of home. Efile state taxes free Recapturing a federal mortgage subsidy. Efile state taxes free Useful Items - You may want to see: Publication 523 Selling Your Home 530 Tax Information for Homeowners 547 Casualties, Disasters, and Thefts Form (and Instructions) Schedule D (Form 1040) Capital Gains and Losses 982 Reduction of Tax Attributes Due to Discharge of Indebtedness 8828 Recapture of Federal Mortgage Subsidy 8949 Sales and Other Dispositions of Capital Assets Main Home This section explains the term “main home. Efile state taxes free ” Usually, the home you live in most of the time is your main home and can be a: House, Houseboat, Mobile home, Cooperative apartment, or Condominium. Efile state taxes free To exclude gain under the rules of this chapter, you in most cases must have owned and lived in the property as your main home for at least 2 years during the 5-year period ending on the date of sale. Efile state taxes free Land. Efile state taxes free   If you sell the land on which your main home is located, but not the house itself, you cannot exclude any gain you have from the sale of the land. Efile state taxes free However, if you sell vacant land used as part of your main home and that is adjacent to it, you may be able to exclude the gain from the sale under certain circumstances. Efile state taxes free See Vacant land under Main Home in Publication 523 for more information. Efile state taxes free Example. Efile state taxes free You buy a piece of land and move your main home to it. Efile state taxes free Then you sell the land on which your main home was located. Efile state taxes free This sale is not considered a sale of your main home, and you cannot exclude any gain on the sale of the land. Efile state taxes free More than one home. Efile state taxes free   If you have more than one home, you can exclude gain only from the sale of your main home. Efile state taxes free You must include in income gain from the sale of any other home. Efile state taxes free If you have two homes and live in both of them, your main home is ordinarily the one you live in most of the time during the year. Efile state taxes free Example 1. Efile state taxes free You own two homes, one in New York and one in Florida. Efile state taxes free From 2009 through 2013, you live in the New York home for 7 months and in the Florida residence for 5 months of each year. Efile state taxes free In the absence of facts and circumstances indicating otherwise, the New York home is your main home. Efile state taxes free You would be eligible to exclude the gain from the sale of the New York home but not of the Florida home in 2013. Efile state taxes free Example 2. Efile state taxes free You own a house, but you live in another house that you rent. Efile state taxes free The rented house is your main home. Efile state taxes free Example 3. Efile state taxes free You own two homes, one in Virginia and one in New Hampshire. Efile state taxes free In 2009 and 2010, you lived in the Virginia home. Efile state taxes free In 2011 and 2012, you lived in the New Hampshire home. Efile state taxes free In 2013, you lived again in the Virginia home. Efile state taxes free Your main home in 2009, 2010, and 2013 is the Virginia home. Efile state taxes free Your main home in 2011 and 2012 is the New Hampshire home. Efile state taxes free You would be eligible to exclude gain from the sale of either home (but not both) in 2013. Efile state taxes free Property used partly as your main home. Efile state taxes free   If you use only part of the property as your main home, the rules discussed in this publication apply only to the gain or loss on the sale of that part of the property. Efile state taxes free For details, see Business Use or Rental of Home , later. Efile state taxes free Figuring Gain or Loss To figure the gain or loss on the sale of your main home, you must know the selling price, the amount realized, and the adjusted basis. Efile state taxes free Subtract the adjusted basis from the amount realized to get your gain or loss. Efile state taxes free     Selling price     − Selling expenses       Amount realized       Amount realized     − Adjusted basis       Gain or loss   Selling Price The selling price is the total amount you receive for your home. Efile state taxes free It includes money and the fair market value of any other property or any other services you receive and all notes, mortgages or other debts assumed by the buyer as part of the sale. Efile state taxes free Payment by employer. Efile state taxes free   You may have to sell your home because of a job transfer. Efile state taxes free If your employer pays you for a loss on the sale or for your selling expenses, do not include the payment as part of the selling price. Efile state taxes free Your employer will include it as wages in box 1 of your Form W-2, and you will include it in your income on Form 1040, line 7. Efile state taxes free Option to buy. Efile state taxes free   If you grant an option to buy your home and the option is exercised, add the amount you receive for the option to the selling price of your home. Efile state taxes free If the option is not exercised, you must report the amount as ordinary income in the year the option expires. Efile state taxes free Report this amount on Form 1040, line 21. Efile state taxes free Form 1099-S. Efile state taxes free   If you received Form 1099-S, Proceeds From Real Estate Transactions, box 2 (Gross proceeds) should show the total amount you received for your home. Efile state taxes free   However, box 2 will not include the fair market value of any services or property other than cash or notes you received or will receive. Efile state taxes free Instead, box 4 will be checked to indicate your receipt or expected receipt of these items. Efile state taxes free Amount Realized The amount realized is the selling price minus selling expenses. Efile state taxes free Selling expenses. Efile state taxes free   Selling expenses include: Commissions, Advertising fees, Legal fees, and Loan charges paid by the seller, such as loan placement fees or “points. Efile state taxes free ” Adjusted Basis While you owned your home, you may have made adjustments (increases or decreases) to the basis. Efile state taxes free This adjusted basis must be determined before you can figure gain or loss on the sale of your home. Efile state taxes free For information on how to figure your home's adjusted basis, see Determining Basis , later. Efile state taxes free Amount of Gain or Loss To figure the amount of gain or loss, compare the amount realized to the adjusted basis. Efile state taxes free Gain on sale. Efile state taxes free   If the amount realized is more than the adjusted basis, the difference is a gain and, except for any part you can exclude, in most cases is taxable. Efile state taxes free Loss on sale. Efile state taxes free   If the amount realized is less than the adjusted basis, the difference is a loss. Efile state taxes free A loss on the sale of your main home cannot be deducted. Efile state taxes free Jointly owned home. Efile state taxes free   If you and your spouse sell your jointly owned home and file a joint return, you figure your gain or loss as one taxpayer. Efile state taxes free Separate returns. Efile state taxes free   If you file separate returns, each of you must figure your own gain or loss according to your ownership interest in the home. Efile state taxes free Your ownership interest is generally determined by state law. Efile state taxes free Joint owners not married. Efile state taxes free   If you and a joint owner other than your spouse sell your jointly owned home, each of you must figure your own gain or loss according to your ownership interest in the home. Efile state taxes free Each of you applies the rules discussed in this chapter on an individual basis. Efile state taxes free Dispositions Other Than Sales Some special rules apply to other dispositions of your main home. Efile state taxes free Foreclosure or repossession. Efile state taxes free   If your home was foreclosed on or repossessed, you have a disposition. Efile state taxes free See Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments, to determine if you have ordinary income, gain, or loss. Efile state taxes free Abandonment. Efile state taxes free   If you abandon your home, see Publication 4681 to determine if you have ordinary income, gain, or loss. Efile state taxes free Trading (exchanging) homes. Efile state taxes free   If you trade your old home for another home, treat the trade as a sale and a purchase. Efile state taxes free Example. Efile state taxes free You owned and lived in a home with an adjusted basis of $41,000. Efile state taxes free A real estate dealer accepted your old home as a trade-in and allowed you $50,000 toward a new home priced at $80,000. Efile state taxes free This is treated as a sale of your old home for $50,000 with a gain of $9,000 ($50,000 – $41,000). Efile state taxes free If the dealer had allowed you $27,000 and assumed your unpaid mortgage of $23,000 on your old home, your sales price would still be $50,000 (the $27,000 trade-in allowed plus the $23,000 mortgage assumed). Efile state taxes free Transfer to spouse. Efile state taxes free   If you transfer your home to your spouse or you transfer it to your former spouse incident to your divorce, you in most cases have no gain or loss. Efile state taxes free This is true even if you receive cash or other consideration for the home. Efile state taxes free As a result, the rules in this chapter do not apply. Efile state taxes free More information. Efile state taxes free   If you need more information, see Transfer to spouse in Publication 523 and Property Settlements in Publication 504, Divorced or Separated Individuals. Efile state taxes free Involuntary conversion. Efile state taxes free   You have a disposition when your home is destroyed or condemned and you receive other property or money in payment, such as insurance or a condemnation award. Efile state taxes free This is treated as a sale and you may be able to exclude all or part of any gain from the destruction or condemnation of your home, as explained later under Special Situations . Efile state taxes free Determining Basis You need to know your basis in your home to figure any gain or loss when you sell it. Efile state taxes free Your basis in your home is determined by how you got the home. Efile state taxes free Generally, your basis is its cost if you bought it or built it. Efile state taxes free If you got it in some other way (inheritance, gift, etc. Efile state taxes free ), your basis is generally either its fair market value when you received it or the adjusted basis of the previous owner. Efile state taxes free While you owned your home, you may have made adjustments (increases or decreases) to your home's basis. Efile state taxes free The result of these adjustments is your home's adjusted basis, which is used to figure gain or loss on the sale of your home. Efile state taxes free See Adjusted Basis , later. Efile state taxes free You can find more information on basis and adjusted basis in chapter 13 of this publication and in Publication 523. Efile state taxes free Cost As Basis The cost of property is the amount you paid for it in cash, debt obligations, other property, or services. Efile state taxes free Purchase. Efile state taxes free   If you bought your home, your basis is its cost to you. Efile state taxes free This includes the purchase price and certain settlement or closing costs. Efile state taxes free In most cases, your purchase price includes your down payment and any debt, such as a first or second mortgage or notes you gave the seller in payment for the home. Efile state taxes free If you build, or contract to build, a new home, your purchase price can include costs of construction, as discussed in Publication 523. Efile state taxes free Settlement fees or closing costs. Efile state taxes free   When you bought your home, you may have paid settlement fees or closing costs in addition to the contract price of the property. Efile state taxes free You can include in your basis some of the settlement fees and closing costs you paid for buying the home, but not the fees and costs for getting a mortgage loan. Efile state taxes free A fee paid for buying the home is any fee you would have had to pay even if you paid cash for the home (that is, without the need for financing). Efile state taxes free    Chapter 13 lists some of the settlement fees and closing costs that you can include in the basis of property, including your home. Efile state taxes free It also lists some settlement costs that cannot be included in basis. Efile state taxes free   Also see Publication 523 for additional items and a discussion of basis other than cost. Efile state taxes free Adjusted Basis Adjusted basis is your cost or other basis increased or decreased by certain amounts. Efile state taxes free To figure your adjusted basis, you can use Worksheet 1 in Publication 523. Efile state taxes free Do not use Worksheet 1 if you acquired an interest in your home from a decedent who died in 2010 and whose executor filed Form 8939, Allocation of Increase in Basis for Property Acquired From a Decedent. Efile state taxes free Increases to basis. Efile state taxes free   These include the following. Efile state taxes free Additions and other improvements that have a useful life of more than 1 year. Efile state taxes free Special assessments for local improvements. Efile state taxes free Amounts you spent after a casualty to restore damaged property. Efile state taxes free Improvements. Efile state taxes free   These add to the value of your home, prolong its useful life, or adapt it to new uses. Efile state taxes free You add the cost of additions and other improvements to the basis of your property. Efile state taxes free   For example, putting a recreation room or another bathroom in your unfinished basement, putting up a new fence, putting in new plumbing or wiring, putting on a new roof, or paving your unpaved driveway are improvements. Efile state taxes free An addition to your house, such as a new deck, a sunroom, or a new garage, is also an improvement. Efile state taxes free Repairs. Efile state taxes free   These maintain your home in good condition but do not add to its value or prolong its life. Efile state taxes free You do not add their cost to the basis of your property. Efile state taxes free   Examples of repairs include repainting your house inside or outside, fixing your gutters or floors, repairing leaks or plastering, and replacing broken window panes. Efile state taxes free Decreases to basis. Efile state taxes free   These include the following. Efile state taxes free Discharge of qualified principal residence indebtedness that was excluded from income. Efile state taxes free Some or all of the cancellation of debt income that was excluded due to your bankruptcy or insolvency. Efile state taxes free For details, see Publication 4681. Efile state taxes free Gain you postponed from the sale of a previous home before May 7, 1997. Efile state taxes free Deductible casualty losses. Efile state taxes free Insurance payments you received or expect to receive for casualty losses. Efile state taxes free Payments you received for granting an easement or right-of-way. Efile state taxes free Depreciation allowed or allowable if you used your home for business or rental purposes. Efile state taxes free Energy-related credits allowed for expenditures made on the residence. Efile state taxes free (Reduce the increase in basis otherwise allowable for expenditures on the residence by the amount of credit allowed for those expenditures. Efile state taxes free ) Adoption credit you claimed for improvements added to the basis of your home. Efile state taxes free Nontaxable payments from an adoption assistance program of your employer you used for improvements you added to the basis of your home. Efile state taxes free Energy conservation subsidy excluded from your gross income because you received it (directly or indirectly) from a public utility after 1992 to buy or install any energy conservation measure. Efile state taxes free An energy conservation measure is an installation or modification primarily designed either to reduce consumption of electricity or natural gas or to improve the management of energy demand for a home. Efile state taxes free District of Columbia first-time homebuyer credit (allowed on the purchase of a principal residence in the District of Columbia beginning on August 5, 1997 and before January 1, 2012). Efile state taxes free General sales taxes (allowed beginning 2004 and ending before 2014) claimed as an itemized deduction on Schedule A (Form 1040) that were imposed on the purchase of personal property, such as a houseboat used as your home or a mobile home. Efile state taxes free Discharges of qualified principal residence indebtedness. Efile state taxes free   You may be able to exclude from gross income a discharge of qualified principal residence indebtedness. Efile state taxes free This exclusion applies to discharges made after 2006 and before 2014. Efile state taxes free If you choose to exclude this income, you must reduce (but not below zero) the basis of the principal residence by the amount excluded from your gross income. Efile state taxes free   File Form 982 with your tax return. Efile state taxes free See the form's instructions for detailed information. Efile state taxes free Recordkeeping. Efile state taxes free You should keep records to prove your home's adjusted basis. Efile state taxes free Ordinarily, you must keep records for 3 years after the due date for filing your return for the tax year in which you sold your home. Efile state taxes free But if you sold a home before May 7, 1997, and postponed tax on any gain, the basis of that home affects the basis of the new home you bought. Efile state taxes free Keep records proving the basis of both homes as long as they are needed for tax purposes. Efile state taxes free The records you should keep include: Proof of the home's purchase price and purchase expenses, Receipts and other records for all improvements, additions, and other items that affect the home's adjusted basis, Any worksheets or other computations you used to figure the adjusted basis of the home you sold, the gain or loss on the sale, the exclusion, and the taxable gain, Any Form 982 you filed to report any discharge of qualified principal residence indebtedness, Any Form 2119, Sale of Your Home, you filed to postpone gain from the sale of a previous home before May 7, 1997, and Any worksheets you used to prepare Form 2119, such as the Adjusted Basis of Home Sold Worksheet or the Capital Improvements Worksheet from the Form 2119 instructions, or other source of computations. Efile state taxes free Excluding the Gain You may qualify to exclude from your income all or part of any gain from the sale of your main home. Efile state taxes free This means that, if you qualify, you will not have to pay tax on the gain up to the limit described under Maximum Exclusion , next. Efile state taxes free To qualify, you must meet the ownership and use tests described later. Efile state taxes free You can choose not to take the exclusion by including the gain from the sale in your gross income on your tax return for the year of the sale. Efile state taxes free You can use Worksheet 2 in Publication 523 to figure the amount of your exclusion and your taxable gain, if any. Efile state taxes free If you have any taxable gain from the sale of your home, you may have to increase your withholding or make estimated tax payments. Efile state taxes free See Publication 505, Tax Withholding and Estimated Tax. Efile state taxes free Maximum Exclusion You can exclude up to $250,000 of the gain (other than gain allocated to periods of nonqualified use) on the sale of your main home if all of the following are true. Efile state taxes free You meet the ownership test. Efile state taxes free You meet the use test. Efile state taxes free During the 2-year period ending on the date of the sale, you did not exclude gain from the sale of another home. Efile state taxes free For details on gain allocated to periods of nonqualified use, see Periods of nonqualified use , later. Efile state taxes free You may be able to exclude up to $500,000 of the gain (other than gain allocated to periods of nonqualified use) on the sale of your main home if you are married and file a joint return and meet the requirements listed in the discussion of the special rules for joint returns, later, under Married Persons . Efile state taxes free Ownership and Use Tests To claim the exclusion, you must meet the ownership and use tests. Efile state taxes free This means that during the 5-year period ending on the date of the sale, you must have: Owned the home for at least 2 years (the ownership test), and Lived in the home as your main home for at least 2 years (the use test). Efile state taxes free Exception. Efile state taxes free   If you owned and lived in the property as your main home for less than 2 years, you can still claim an exclusion in some cases. Efile state taxes free However, the maximum amount you may be able to exclude will be reduced. Efile state taxes free See Reduced Maximum Exclusion , later. Efile state taxes free Example 1—home owned and occupied for at least 2 years. Efile state taxes free Mya bought and moved into her main home in September 2011. Efile state taxes free She sold the home at a gain in October 2013. Efile state taxes free During the 5-year period ending on the date of sale in October 2013, she owned and lived in the home for more than 2 years. Efile state taxes free She meets the ownership and use tests. Efile state taxes free Example 2—ownership test met but use test not met. Efile state taxes free Ayden bought a home, lived in it for 6 months, moved out, and never occupied the home again. Efile state taxes free He later sold the home for a gain. Efile state taxes free He owned the home during the entire 5-year period ending on the date of sale. Efile state taxes free He meets the ownership test but not the use test. Efile state taxes free He cannot exclude any part of his gain on the sale unless he qualified for a reduced maximum exclusion (explained later). Efile state taxes free Period of Ownership and Use The required 2 years of ownership and use during the 5-year period ending on the date of the sale do not have to be continuous nor do they both have to occur at the same time. Efile state taxes free You meet the tests if you can show that you owned and lived in the property as your main home for either 24 full months or 730 days (365 × 2) during the 5-year period ending on the date of sale. Efile state taxes free Temporary absence. Efile state taxes free   Short temporary absences for vacations or other seasonal absences, even if you rent out the property during the absences, are counted as periods of use. Efile state taxes free The following examples assume that the reduced maximum exclusion (discussed later) does not apply to the sales. Efile state taxes free Example 1. Efile state taxes free David Johnson, who is single, bought and moved into his home on February 1, 2011. Efile state taxes free Each year during 2011 and 2012, David left his home for a 2-month summer vacation. Efile state taxes free David sold the house on March 1, 2013. Efile state taxes free Although the total time David used his home is less than 2 years (21 months), he meets the requirement and may exclude gain. Efile state taxes free The 2-month vacations are short temporary absences and are counted as periods of use in determining whether David used the home for the required 2 years. Efile state taxes free Example 2. Efile state taxes free Professor Paul Beard, who is single, bought and moved into a house on August 18, 2010. Efile state taxes free He lived in it as his main home continuously until January 5, 2012, when he went abroad for a 1-year sabbatical leave. Efile state taxes free On February 6, 2013, 1 month after returning from the leave, Paul sold the house at a gain. Efile state taxes free Because his leave was not a short temporary absence, he cannot include the period of leave to meet the 2-year use test. Efile state taxes free He cannot exclude any part of his gain, because he did not use the residence for the required 2 years. Efile state taxes free Ownership and use tests met at different times. Efile state taxes free   You can meet the ownership and use tests during different 2-year periods. Efile state taxes free However, you must meet both tests during the 5-year period ending on the date of the sale. Efile state taxes free Example. Efile state taxes free Beginning in 2002, Helen Jones lived in a rented apartment. Efile state taxes free The apartment building was later converted to condominiums, and she bought her same apartment on December 3, 2010. Efile state taxes free In 2011, Helen became ill and on April 14 of that year she moved to her daughter's home. Efile state taxes free On July 12, 2013, while still living in her daughter's home, she sold her condominium. Efile state taxes free Helen can exclude gain on the sale of her condominium because she met the ownership and use tests during the 5-year period from July 13, 2008, to July 12, 2013, the date she sold the condominium. Efile state taxes free She owned her condominium from December 3, 2010, to July 12, 2013 (more than 2 years). Efile state taxes free She lived in the property from July 13, 2008 (the beginning of the 5-year period), to April 14, 2011 (more than 2 years). Efile state taxes free The time Helen lived in her daughter's home during the 5-year period can be counted toward her period of ownership, and the time she lived in her rented apartment during the 5-year period can be counted toward her period of use. Efile state taxes free Cooperative apartment. Efile state taxes free   If you sold stock as a tenant-stockholder in a cooperative housing corporation, the ownership and use tests are met if, during the 5-year period ending on the date of sale, you: Owned the stock for at least 2 years, and Lived in the house or apartment that the stock entitles you to occupy as your main home for at least 2 years. Efile state taxes free Exceptions to Ownership and Use Tests The following sections contain exceptions to the ownership and use tests for certain taxpayers. Efile state taxes free Exception for individuals with a disability. Efile state taxes free   There is an exception to the use test if: You become physically or mentally unable to care for yourself, and You owned and lived in your home as your main home for a total of at least 1 year during the 5-year period before the sale of your home. Efile state taxes free Under this exception, you are considered to live in your home during any time within the 5-year period that you own the home and live in a facility (including a nursing home) licensed by a state or political subdivision to care for persons in your condition. Efile state taxes free If you meet this exception to the use test, you still have to meet the 2-out-of-5-year ownership test to claim the exclusion. Efile state taxes free Previous home destroyed or condemned. Efile state taxes free   For the ownership and use tests, you add the time you owned and lived in a previous home that was destroyed or condemned to the time you owned and lived in the replacement home on whose sale you wish to exclude gain. Efile state taxes free This rule applies if any part of the basis of the home you sold depended on the basis of the destroyed or condemned home. Efile state taxes free Otherwise, you must have owned and lived in the same home for 2 of the 5 years before the sale to qualify for the exclusion. Efile state taxes free Members of the uniformed services or Foreign Service, employees of the intelligence community, or employees or volunteers of the Peace Corps. Efile state taxes free   You can choose to have the 5-year test period for ownership and use suspended during any period you or your spouse serve on “qualified official extended duty” as a member of the uniformed services or Foreign Service of the United States, or as an employee of the intelligence community. Efile state taxes free You can choose to have the 5-year test period for ownership and use suspended during any period you or your spouse serve outside the United States either as an employee of the Peace Corps on "qualified official extended duty" or as an enrolled volunteer or volunteer leader of the Peace Corps. Efile state taxes free This means that you may be able to meet the 2-year use test even if, because of your service, you did not actually live in your home for at least the required 2 years during the 5-year period ending on the date of sale. Efile state taxes free   If this helps you qualify to exclude gain, you can choose to have the 5-year test period suspended by filing a return for the year of sale that does not include the gain. Efile state taxes free For more information about the suspension of the 5-year test period, see Members of the uniformed services or Foreign Service, employees of the intelligence community, or employees or volunteers of the Peace Corps in Publication 523. Efile state taxes free Married Persons If you and your spouse file a joint return for the year of sale and one spouse meets the ownership and use tests, you can exclude up to $250,000 of the gain. Efile state taxes free (But see Special rules for joint returns , next. Efile state taxes free ) Special rules for joint returns. Efile state taxes free   You can exclude up to $500,000 of the gain on the sale of your main home if all of the following are true. Efile state taxes free You are married and file a joint return for the year. Efile state taxes free Either you or your spouse meets the ownership test. Efile state taxes free Both you and your spouse meet the use test. Efile state taxes free During the 2-year period ending on the date of the sale, neither you nor your spouse excluded gain from the sale of another home. Efile state taxes free If either spouse does not satisfy all these requirements, the maximum exclusion that can be claimed by the couple is the total of the maximum exclusions that each spouse would qualify for if not married and the amounts were figured separately. Efile state taxes free For this purpose, each spouse is treated as owning the property during the period that either spouse owned the property. Efile state taxes free Example 1—one spouse sells a home. Efile state taxes free Emily sells her home in June 2013 for a gain of $300,000. Efile state taxes free She marries Jamie later in the year. Efile state taxes free She meets the ownership and use tests, but Jamie does not. Efile state taxes free Emily can exclude up to $250,000 of gain on a separate or joint return for 2013. Efile state taxes free The $500,000 maximum exclusion for certain joint returns does not apply because Jamie does not meet the use test. Efile state taxes free Example 2—each spouse sells a home. Efile state taxes free The facts are the same as in Example 1 except that Jamie also sells a home in 2013 for a gain of $200,000 before he marries Emily. Efile state taxes free He meets the ownership and use tests on his home, but Emily does not. Efile state taxes free Emily can exclude $250,000 of gain and Jamie can exclude $200,000 of gain on the respective sales of their individual homes. Efile state taxes free However, Emily cannot use Jamie's unused exclusion to exclude more than $250,000 of gain. Efile state taxes free Therefore, Emily and Jamie must recognize $50,000 of gain on the sale of Emily's home. Efile state taxes free The $500,000 maximum exclusion for certain joint returns does not apply because Emily and Jamie do not both meet the use test for the same home. Efile state taxes free Sale of main home by surviving spouse. Efile state taxes free   If your spouse died and you did not remarry before the date of sale, you are considered to have owned and lived in the property as your main home during any period of time when your spouse owned and lived in it as a main home. Efile state taxes free   If you meet all of the following requirements, you may qualify to exclude up to $500,000 of any gain from the sale or exchange of your main home. Efile state taxes free The sale or exchange took place after 2008. Efile state taxes free The sale or exchange took place no more than 2 years after the date of death of your spouse. Efile state taxes free You have not remarried. Efile state taxes free You and your spouse met the use test at the time of your spouse's death. Efile state taxes free You or your spouse met the ownership test at the time of your spouse's death. Efile state taxes free Neither you nor your spouse excluded gain from the sale of another home during the last 2 years. Efile state taxes free Example. Efile state taxes free   Harry owned and used a house as his main home since 2009. Efile state taxes free Harry and Wilma married on July 1, 2013, and from that date they use Harry's house as their main home. Efile state taxes free Harry died on August 15, 2013, and Wilma inherited the property. Efile state taxes free Wilma sold the property on September 3, 2013, at which time she had not remarried. Efile state taxes free Although Wilma owned and used the house for less than 2 years, Wilma is considered to have satisfied the ownership and use tests because her period of ownership and use includes the period that Harry owned and used the property before death. Efile state taxes free Home transferred from spouse. Efile state taxes free   If your home was transferred to you by your spouse (or former spouse if the transfer was incident to divorce), you are considered to have owned it during any period of time when your spouse owned it. Efile state taxes free Use of home after divorce. Efile state taxes free   You are considered to have used property as your main home during any period when: You owned it, and Your spouse or former spouse is allowed to live in it under a divorce or separation instrument and uses it as his or her main home. Efile state taxes free Reduced Maximum Exclusion If you fail to meet the requirements to qualify for the $250,000 or $500,000 exclusion, you may still qualify for a reduced exclusion. Efile state taxes free This applies to those who: Fail to meet the ownership and use tests, or Have used the exclusion within 2 years of selling their current home. Efile state taxes free In both cases, to qualify for a reduced exclusion, the sale of your main home must be due to one of the following reasons. Efile state taxes free A change in place of employment. Efile state taxes free Health. Efile state taxes free Unforeseen circumstances. Efile state taxes free Unforeseen circumstances. Efile state taxes free   The sale of your main home is because of an unforeseen circumstance if your primary reason for the sale is the occurrence of an event that you could not reasonably have anticipated before buying and occupying your main home. Efile state taxes free   See Publication 523 for more information and to use Worksheet 3 to figure your reduced maximum exclusion. Efile state taxes free Business Use or Rental of Home You may be able to exclude gain from the sale of a home you have used for business or to produce rental income. Efile state taxes free But you must meet the ownership and use tests. Efile state taxes free Periods of nonqualified use. Efile state taxes free   In most cases, gain from the sale or exchange of your main home will not qualify for the exclusion to the extent that the gains are allocated to periods of nonqualified use. Efile state taxes free Nonqualified use is any period after 2008 during which neither you nor your spouse (or your former spouse) used the property as a main home with the following exceptions. Efile state taxes free Exceptions. Efile state taxes free   A period of nonqualified use does not include: Any portion of the 5-year period ending on the date of the sale or exchange after the last date you (or your spouse) use the property as a main home; Any period (not to exceed an aggregate period of 10 years) during which you (or your spouse) are serving on qualified official extended duty: As a member of the uniformed services; As a member of the Foreign Service of the United States; or As an employee of the intelligence community; and Any other period of temporary absence (not to exceed an aggregate period of 2 years) due to change of employment, health conditions, or such other unforeseen circumstances as may be specified by the IRS. Efile state taxes free The gain resulting from the sale of the property is allocated between qualified and nonqualified use periods based on the amount of time the property was held for qualified and nonqualified use. Efile state taxes free Gain from the sale or exchange of a main home allocable to periods of qualified use will continue to qualify for the exclusion for the sale of your main home. Efile state taxes free Gain from the sale or exchange of property allocable to nonqualified use will not qualify for the exclusion. Efile state taxes free Calculation. Efile state taxes free   To figure the portion of the gain allocated to the period of nonqualified use, multiply the gain by the following fraction:   Total nonqualified use during the period of ownership after 2008      Total period of ownership     This calculation can be found in Worksheet 2, line 10, in Publication 523. Efile state taxes free Example 1. Efile state taxes free On May 23, 2007, Amy, who is unmarried for all years in this example, bought a house. Efile state taxes free She moved in on that date and lived in it until May 31, 2009, when she moved out of the house and put it up for rent. Efile state taxes free The house was rented from June 1, 2009, to March 31, 2011. Efile state taxes free Amy claimed depreciation deductions in 2009 through 2011 totaling $10,000. Efile state taxes free Amy moved back into the house on April 1, 2011, and lived there until she sold it on January 31, 2013, for a gain of $200,000. Efile state taxes free During the 5-year period ending on the date of the sale (January 31, 2008-January 31, 2013), Amy owned and lived in the house for more than 2 years as shown in the following table. Efile state taxes free Five Year Period Used as  Home Used as  Rental 1/31/08 – 5/31/09 16 months       6/1/09 – 3/31/11   22 months 4/1/11 – 1/31/13 22 months         38 months 22 months During the period Amy owned the house (2,080 days), her period of nonqualified use was 668 days. Efile state taxes free Amy divides 668 by 2,080 and obtains a decimal (rounded to at least three decimal places) of 0. Efile state taxes free 321. Efile state taxes free To figure her gain attributable to the period of nonqualified use, she multiplies $190,000 (the gain not attributable to the $10,000 depreciation deduction) by 0. Efile state taxes free 321. Efile state taxes free Because the gain attributable to periods of nonqualified use is $60,990, Amy can exclude $129,010 of her gain. Efile state taxes free Example 2. Efile state taxes free William owned and used a house as his main home from 2007 through 2010. Efile state taxes free On January 1, 2011, he moved to another state. Efile state taxes free He rented his house from that date until April 30, 2013, when he sold it. Efile state taxes free During the 5-year period ending on the date of sale (May 1, 2008-April 30, 2013), William owned and lived in the house for more than 2 years. Efile state taxes free He must report the sale on Form 4797 because it was rental property at the time of sale. Efile state taxes free Because the period of nonqualified use does not include any part of the 5-year period after the last date William lived in the house, he has no period of nonqualified use. Efile state taxes free Because he met the ownership and use tests, he can exclude gain up to $250,000. Efile state taxes free However, he cannot exclude the part of the gain equal to the depreciation he claimed or could have claimed for renting the house, as explained next. Efile state taxes free Depreciation after May 6, 1997. Efile state taxes free   If you were entitled to take depreciation deductions because you used your home for business purposes or as rental property, you cannot exclude the part of your gain equal to any depreciation allowed or allowable as a deduction for periods after May 6, 1997. Efile state taxes free If you can show by adequate records or other evidence that the depreciation allowed was less than the amount allowable, then you may limit the amount of gain recognized to the depreciation allowed. Efile state taxes free See Publication 544 for more information. Efile state taxes free Property used partly for business or rental. Efile state taxes free   If you used property partly as a home and partly for business or to produce rental income, see Publication 523. Efile state taxes free Reporting the Sale Do not report the 2013 sale of your main home on your tax return unless: You have a gain and do not qualify to exclude all of it, You have a gain and choose not to exclude it, or You received Form 1099-S. Efile state taxes free If any of these conditions apply, report the entire gain or loss. Efile state taxes free For details on how to report the gain or loss, see the Instructions for Schedule D (Form 1040) and the Instructions for Form 8949. Efile state taxes free If you used the home for business or to produce rental income, you may have to use Form 4797 to report the sale of the business or rental part (or the sale of the entire property if used entirely for business or rental). Efile state taxes free See Business Use or Rental of Home in Publication 523 and the Instructions for Form 4797. Efile state taxes free Installment sale. Efile state taxes free    Some sales are made under arrangements that provide for part or all of the selling price to be paid in a later year. Efile state taxes free These sales are called “installment sales. Efile state taxes free ” If you finance the buyer's purchase of your home yourself instead of having the buyer get a loan or mortgage from a bank, you probably have an installment sale. Efile state taxes free You may be able to report the part of the gain you cannot exclude on the installment basis. Efile state taxes free    Use Form 6252, Installment Sale Income, to report the sale. Efile state taxes free Enter your exclusion on line 15 of Form 6252. Efile state taxes free Seller-financed mortgage. Efile state taxes free   If you sell your home and hold a note, mortgage, or other financial agreement, the payments you receive in most cases consist of both interest and principal. Efile state taxes free You must separately report as interest income the interest you receive as part of each payment. Efile state taxes free If the buyer of your home uses the property as a main or second home, you must also report the name, address, and social security number (SSN) of the buyer on line 1 of Schedule B (Form 1040A or 1040). Efile state taxes free The buyer must give you his or her SSN, and you must give the buyer your SSN. Efile state taxes free Failure to meet these requirements may result in a $50 penalty for each failure. Efile state taxes free If either you or the buyer does not have and is not eligible to get an SSN, see Social Security Number in chapter 1. Efile state taxes free More information. Efile state taxes free   For more information on installment sales, see Publication 537, Installment Sales. Efile state taxes free Special Situations The situations that follow may affect your exclusion. Efile state taxes free Sale of home acquired in a like-kind exchange. Efile state taxes free   You cannot claim the exclusion if: You acquired your home in a like-kind exchange (also known as a section 1031 exchange), or your basis in your home is determined by reference to the basis of the home in the hands of the person who acquired the property in a like-kind exchange (for example, you received the home from that person as a gift), and You sold the home during the 5-year period beginning with the date your home was acquired in the like-kind exchange. Efile state taxes free Gain from a like-kind exchange is not taxable at the time of the exchange. Efile state taxes free This means that gain will not be taxed until you sell or otherwise dispose of the property you receive. Efile state taxes free To defer gain from a like-kind exchange, you must have exchanged business or investment property for business or investment property of a like kind. Efile state taxes free For more information about like-kind exchanges, see Publication 544, Sales and Other Dispositions of Assets. Efile state taxes free Home relinquished in a like-kind exchange. Efile state taxes free   If you use your main home partly for business or rental purposes and then exchange the home for another property, see Publication 523. Efile state taxes free Expatriates. Efile state taxes free   You cannot claim the exclusion if the expatriation tax applies to you. Efile state taxes free The expatriation tax applies to certain U. Efile state taxes free S. Efile state taxes free citizens who have renounced their citizenship (and to certain long-term residents who have ended their residency). Efile state taxes free For more information about the expatriation tax, see Expatriation Tax in chapter 4 of Publication 519, U. Efile state taxes free S. Efile state taxes free Tax Guide for Aliens. Efile state taxes free Home destroyed or condemned. Efile state taxes free   If your home was destroyed or condemned, any gain (for example, because of insurance proceeds you received) qualifies for the exclusion. Efile state taxes free   Any part of the gain that cannot be excluded (because it is more than the maximum exclusion) can be postponed under the rules explained in: Publication 547, in the case of a home that was destroyed, or Publication 544, chapter 1, in the case of a home that was condemned. Efile state taxes free Sale of remainder interest. Efile state taxes free   Subject to the other rules in this chapter, you can choose to exclude gain from the sale of a remainder interest in your home. Efile state taxes free If you make this choice, you cannot choose to exclude gain from your sale of any other interest in the home that you sell separately. Efile state taxes free Exception for sales to related persons. Efile state taxes free   You cannot exclude gain from the sale of a remainder interest in your home to a related person. Efile state taxes free Related persons include your brothers, sisters, half-brothers, half-sisters, spouse, ancestors (parents, grandparents, etc. Efile state taxes free ), and lineal descendants (children, grandchildren, etc. Efile state taxes free ). Efile state taxes free Related persons also include certain corporations, partnerships, trusts, and exempt organizations. Efile state taxes free Recapturing (Paying Back) a Federal Mortgage Subsidy If you financed your home under a federally subsidized program (loans from tax-exempt qualified mortgage bonds or loans with mortgage credit certificates), you may have to recapture all or part of the benefit you received from that program when you sell or otherwise dispose of your home. Efile state taxes free You recapture the benefit by increasing your federal income tax for the year of the sale. Efile state taxes free You may have to pay this recapture tax even if you can exclude your gain from income under the rules discussed earlier; that exclusion does not affect the recapture tax. Efile state taxes free Loans subject to recapture rules. Efile state taxes free   The recapture applies to loans that: Came from the proceeds of qualified mortgage bonds, or Were based on mortgage credit certificates. Efile state taxes free The recapture also applies to assumptions of these loans. Efile state taxes free When recapture applies. Efile state taxes free   Recapture of the federal mortgage subsidy applies only if you meet both of the following conditions. Efile state taxes free You sell or otherwise dispose of your home at a gain within the first 9 years after the date you close your mortgage loan. Efile state taxes free Your income for the year of disposition is more than that year's adjusted qualifying income for your family size for that year (related to the income requirements a person must meet to qualify for the federally subsidized program). Efile state taxes free When recapture does not apply. Efile state taxes free   Recapture does not apply in any of the following situations. Efile state taxes free Your mortgage loan was a qualified home improvement loan (QHIL) of not more than $15,000 used for alterations, repairs, and improvements that protect or improve the basic livability or energy efficiency of your home. Efile state taxes free Your mortgage loan was a QHIL of not more than $150,000 in the case of a QHIL used to repair damage from Hurricane Katrina to homes in the hurricane disaster area; a QHIL funded by a qualified mortgage bond that is a qualified Gulf Opportunity Zone Bond; or a QHIL for an owner-occupied home in the Gulf Opportunity Zone (GO Zone), Rita GO Zone, or Wilma GO Zone. Efile state taxes free For more information, see Publication 4492, Information for Taxpayers Affected by Hurricanes Katrina, Rita, and Wilma. Efile state taxes free Also see Publication 4492-B, Information for Affected Taxpayers in the Midwestern Disaster Areas. Efile state taxes free The home is disposed of as a result of your death. Efile state taxes free You dispose of the home more than 9 years after the date you closed your mortgage loan. Efile state taxes free You transfer the home to your spouse, or to your former spouse incident to a divorce, where no gain is included in your income. Efile state taxes free You dispose of the home at a loss. Efile state taxes free Your home is destroyed by a casualty, and you replace it on its original site within 2 years after the end of the tax year when the destruction happened. Efile state taxes free The replacement period is extended for main homes destroyed in a federally declared disaster area, a Midwestern disaster area, the Kansas disaster area, and the Hurricane Katrina disaster area. Efile state taxes free For more information, see Replacement Period in Publication 547. Efile state taxes free You refinance your mortgage loan (unless you later meet the conditions listed previously under When recapture applies ). Efile state taxes free Notice of amounts. Efile state taxes free   At or near the time of settlement of your mortgage loan, you should receive a notice that provides the federally subsidized amount and other information you will need to figure your recapture tax. Efile state taxes free How to figure and report the recapture. Efile state taxes free    The recapture tax is figured on Form 8828. Efile state taxes free If you sell your home and your mortgage is subject to recapture rules, you must file Form 8828 even if you do not owe a recapture tax. Efile state taxes free Attach Form 8828 to your Form 1040. Efile state taxes free For more information, see Form 8828 and its instructions. Efile state taxes free Prev  Up  Next   Home   More Online Publications
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The mission of the Office of Governmental Liaison and Disclosure is to improve tax administration by efficiently partnering with other government agencies and by effectively administering the Disclosure statutes.

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The IRS information sharing program saves government resources by partnering with agencies at all levels of government to enhance voluntary compliance with tax laws.

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The IRS Freedom of Information Program website contains information on contacting local IRS Disclosure Offices.

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Disclosure - Protecting Federal Tax Information: A Pocket Guide for Government Employees (PDF)
Publication 4761, Protecting Federal Tax Information: A Pocket Guide for Government Employees, is for federal, state and local agency employees who receive and use federal tax information (FTI). It provides basic disclosure concepts and warns of civil and criminal sanctions for misuse of FTI. It can be ordered by government agencies.

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The Safeguards program and staff are responsible for ensuring that federal, state and local agencies receiving federal tax information protect it as if the information remained in IRS’s hands.

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The Efile State Taxes Free

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