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Form 1040x 2012

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Form 1040x 2012

Form 1040x 2012 5. Form 1040x 2012   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. Form 1040x 2012 J-1 visa holders. Form 1040x 2012 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. Form 1040x 2012 The information in this chapter is not as comprehensive for resident aliens as it is for nonresident aliens. Form 1040x 2012 Resident aliens should get publications, forms, and instructions for U. Form 1040x 2012 S. Form 1040x 2012 citizens, because the information for filing returns for resident aliens is generally the same as for U. Form 1040x 2012 S. Form 1040x 2012 citizens. Form 1040x 2012 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. Form 1040x 2012 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. Form 1040x 2012 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. Form 1040x 2012 S. Form 1040x 2012 Individual Income Tax Return 1040NR U. Form 1040x 2012 S. Form 1040x 2012 Nonresident Alien Income Tax Return 1040NR-EZ U. Form 1040x 2012 S. Form 1040x 2012 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. Form 1040x 2012 Tax Year You must figure your income and file a tax return on the basis of an annual accounting period called a tax year. Form 1040x 2012 If you have not previously established a fiscal tax year, your tax year is the calendar year. Form 1040x 2012 A calendar year is 12 consecutive months ending on December 31. Form 1040x 2012 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. Form 1040x 2012 S. Form 1040x 2012 resident for any calendar year, you will be treated as a U. Form 1040x 2012 S. Form 1040x 2012 resident for any part of your fiscal year that falls within that calendar year. Form 1040x 2012 Identification Number A taxpayer identification number must be furnished on returns, statements, and other tax-related documents. Form 1040x 2012 For an individual, this is a social security number (SSN). Form 1040x 2012 If you do not have and are not eligible to get an SSN, you must apply for an individual taxpayer identification number (ITIN). Form 1040x 2012 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. Form 1040x 2012 You must furnish a taxpayer identification number if you are: An alien who has income effectively connected with the conduct of a U. Form 1040x 2012 S. Form 1040x 2012 trade or business at any time during the year, An alien who has a U. Form 1040x 2012 S. Form 1040x 2012 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). Form 1040x 2012 Social security number (SSN). Form 1040x 2012   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. Form 1040x 2012 S. Form 1040x 2012 employment. Form 1040x 2012   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. Form 1040x 2012 You can also download Form SS-5 from the SSA's website at www. Form 1040x 2012 socialsecurity. Form 1040x 2012 gov/ssnumber/ss5. Form 1040x 2012 htm. Form 1040x 2012 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. Form 1040x 2012 Generally, you will receive your card about 2 weeks after the SSA has all of the necessary information. Form 1040x 2012 F-1 and M-1 visa holders. Form 1040x 2012    If you are an F-1 or M-1 student, you must also show your Form I-20. Form 1040x 2012 For more information, see SSA Publication 05-10181, International Students and Social Security Numbers, available online at www. Form 1040x 2012 socialsecurity. Form 1040x 2012 gov/pubs/10181. Form 1040x 2012 html. Form 1040x 2012 J-1 visa holders. Form 1040x 2012   If you are a J-1 exchange visitor, you will also need to show your Form DS-2019. Form 1040x 2012 For more information, see SSA Publication 05-10107, Foreign Workers and Social Security Numbers, available online at www. Form 1040x 2012 socialsecurity. Form 1040x 2012 gov/pubs/10107. Form 1040x 2012 html. Form 1040x 2012 Individual taxpayer identification number (ITIN). Form 1040x 2012   If you do not have and are not eligible to get an SSN, you must apply for an ITIN. Form 1040x 2012 For details on how to do so, see Form W-7 and its instructions. Form 1040x 2012 Allow 6 to 10 weeks for the IRS to notify you of your ITIN. Form 1040x 2012 If you already have an ITIN, enter it wherever an SSN is required on your tax return. Form 1040x 2012   An ITIN is for tax use only. Form 1040x 2012 It does not entitle you to social security benefits or change your employment or immigration status under U. Form 1040x 2012 S. Form 1040x 2012 law. Form 1040x 2012   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. Form 1040x 2012 Employer identification number (EIN). Form 1040x 2012   An individual may use an SSN (or ITIN) for individual taxes and an EIN for business taxes. Form 1040x 2012 To apply for an EIN, file Form SS-4, Application for Employer Identification Number, with the IRS. Form 1040x 2012 Filing Status The amount of your tax depends on your filing status. Form 1040x 2012 Your filing status is important in determining whether you can take certain deductions and credits. Form 1040x 2012 The rules for determining your filing status are different for resident aliens and nonresident aliens. Form 1040x 2012 Resident Aliens Resident aliens can use the same filing statuses available to U. Form 1040x 2012 S. Form 1040x 2012 citizens. Form 1040x 2012 See your form instructions or Publication 501 for more information on filing status. Form 1040x 2012 Married filing jointly. Form 1040x 2012   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. Form 1040x 2012 Qualifying widow(er). Form 1040x 2012   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. Form 1040x 2012 This applies only if you could have filed a joint return with your spouse for the year your spouse died. Form 1040x 2012 Head of household. Form 1040x 2012   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. Form 1040x 2012 You must be a resident alien for the entire tax year. Form 1040x 2012   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. Form 1040x 2012 Note. Form 1040x 2012   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. Form 1040x 2012 In that case, you will not be entitled to the credit. Form 1040x 2012 See Publication 596 for more information. Form 1040x 2012 Nonresident Aliens If you are a nonresident alien filing Form 1040NR, you may be able to use one of the filing statuses discussed later. Form 1040x 2012 If you are filing Form 1040NR-EZ, you can only claim “Single nonresident alien” or “Married nonresident alien” as your filing status. Form 1040x 2012 Married nonresident alien. Form 1040x 2012   Married nonresident aliens who are not married to U. Form 1040x 2012 S. Form 1040x 2012 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. Form 1040x 2012 S. Form 1040x 2012 trade or business. Form 1040x 2012 Exceptions. Form 1040x 2012   Married nonresident aliens normally cannot use the Tax Table column or the Tax Computation Worksheet for single individuals. Form 1040x 2012 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. Form 1040x 2012 S. Form 1040x 2012 national. Form 1040x 2012 See the instructions for Form 1040NR or Form 1040NR-EZ to see if you qualify. Form 1040x 2012 U. Form 1040x 2012 S. Form 1040x 2012 national is defined later in this section under Qualifying widow(er) . Form 1040x 2012   A nonresident alien generally cannot file as married filing jointly. Form 1040x 2012 However, a nonresident alien who is married to a U. Form 1040x 2012 S. Form 1040x 2012 citizen or resident can choose to be treated as a resident and file a joint return on Form 1040, Form 1040A, or Form 1040EZ. Form 1040x 2012 For information on these choices, see chapter 1. Form 1040x 2012 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. Form 1040x 2012 Qualifying widow(er). Form 1040x 2012   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. Form 1040x 2012 You were a resident of Canada, Mexico, or South Korea, or a U. Form 1040x 2012 S. Form 1040x 2012 national (defined later). Form 1040x 2012 Your spouse died in 2011 or 2012 and you did not remarry before the end of 2013. Form 1040x 2012 You have a dependent child living with you. Form 1040x 2012 See the instructions for Form 1040NR for the rules for filing as a qualifying widow(er) with a dependent child. Form 1040x 2012   A U. Form 1040x 2012 S. Form 1040x 2012 national is an individual who, although not a U. Form 1040x 2012 S. Form 1040x 2012 citizen, owes his or her allegiance to the United States. Form 1040x 2012 U. Form 1040x 2012 S. Form 1040x 2012 nationals include American Samoans and Northern Mariana Islanders who chose to become U. Form 1040x 2012 S. Form 1040x 2012 nationals instead of U. Form 1040x 2012 S. Form 1040x 2012 citizens. Form 1040x 2012 Head of household. Form 1040x 2012   You cannot file as head of household if you are a nonresident alien at any time during the tax year. Form 1040x 2012 However, if you are married, your spouse can qualify as a head of household if: Your spouse is a resident alien or U. Form 1040x 2012 S. Form 1040x 2012 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 . Form 1040x 2012 Note. Form 1040x 2012   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. Form 1040x 2012 In that case, your spouse will not be entitled to the credit. Form 1040x 2012 See Publication 596 for more information. Form 1040x 2012 Estates and trusts. Form 1040x 2012   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. Form 1040x 2012 S. Form 1040x 2012 trade or business. Form 1040x 2012 Special rules for aliens from certain U. Form 1040x 2012 S. Form 1040x 2012 possessions. Form 1040x 2012   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. Form 1040x 2012 Reporting Your Income You must report each item of income that is taxable according to the rules in chapters 2, 3, and 4. Form 1040x 2012 For resident aliens, this includes income from sources both within and outside the United States. Form 1040x 2012 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. Form 1040x 2012 S. Form 1040x 2012 sources that is not effectively connected (subject to a flat 30% tax rate or lower tax treaty rate). Form 1040x 2012 Deductions Resident and nonresident aliens can claim similar deductions on their U. Form 1040x 2012 S. Form 1040x 2012 tax returns. Form 1040x 2012 However, nonresident aliens generally can claim only deductions related to income that is effectively connected with their U. Form 1040x 2012 S. Form 1040x 2012 trade or business. Form 1040x 2012 Resident Aliens You can claim the same deductions allowed to U. Form 1040x 2012 S. Form 1040x 2012 citizens if you are a resident alien for the entire tax year. Form 1040x 2012 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. Form 1040x 2012 You should get Form 1040 and instructions for more information on how to claim your allowable deductions. Form 1040x 2012 Nonresident Aliens You can claim deductions to figure your effectively connected taxable income. Form 1040x 2012 You generally cannot claim deductions related to income that is not connected with your U. Form 1040x 2012 S. Form 1040x 2012 business activities. Form 1040x 2012 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. Form 1040x 2012 Ordinary and necessary business expenses. Form 1040x 2012   You can deduct all ordinary and necessary expenses in the operation of your U. Form 1040x 2012 S. Form 1040x 2012 trade or business to the extent they relate to income effectively connected with that trade or business. Form 1040x 2012 The deduction for travel expenses while in the United States is discussed under Itemized Deductions, later. Form 1040x 2012 For information about other business expenses, see Publication 535. Form 1040x 2012 Losses. Form 1040x 2012   You can deduct losses resulting from transactions that you entered into for profit and that you were not reimbursed for by insurance, etc. Form 1040x 2012 to the extent that they relate to income that is effectively connected with a trade or business in the United States. Form 1040x 2012 Educator expenses. Form 1040x 2012   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. Form 1040x 2012 For more information, see your tax form instructions. Form 1040x 2012 Individual retirement arrangement (IRA). Form 1040x 2012   If you made contributions to a traditional IRA for 2013, you may be able to take an IRA deduction. Form 1040x 2012 But you must have taxable compensation effectively connected with a U. Form 1040x 2012 S. Form 1040x 2012 trade or business to do so. Form 1040x 2012 A Form 5498 should be sent to you by May 31, 2014, that shows all contributions to your traditional IRA for 2013. Form 1040x 2012 If you were covered by a retirement plan (qualified pension, profit-sharing (including 401(k)), annuity, SEP, SIMPLE, etc. Form 1040x 2012 ) at work or through self-employment, your IRA deduction may be reduced or eliminated. Form 1040x 2012 But you can still make contributions to a traditional IRA even if you cannot deduct them. Form 1040x 2012 If you made nondeductible contributions to a traditional IRA for 2013, you must report them on Form 8606, Nondeductible IRAs. Form 1040x 2012   For more information, see Publication 590, Individual Retirement Arrangements (IRAs). Form 1040x 2012 Moving expenses. Form 1040x 2012   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. Form 1040x 2012 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. Form 1040x 2012 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. Form 1040x 2012 If you had no former job location, the new job location must be at least 50 miles from your former home. Form 1040x 2012   You cannot deduct the moving expense you have when returning to your home abroad or moving to a foreign job site. Form 1040x 2012   Figure your deductible moving expenses to the United States on Form 3903, and deduct them on line 26 of Form 1040NR. Form 1040x 2012   For more information on the moving expense deduction, see Publication 521. Form 1040x 2012 Reimbursements. Form 1040x 2012   If your employer reimbursed you for allowable moving expenses under an accountable plan, your employer should have excluded these reimbursements from your income. Form 1040x 2012 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. Form 1040x 2012 For more information, see Publication 521. Form 1040x 2012 Moving expense or travel expense. Form 1040x 2012   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. Form 1040x 2012 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. Form 1040x 2012 Self-employed SEP, SIMPLE, and qualified retirement plans. Form 1040x 2012   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. Form 1040x 2012 To make deductible contributions for yourself, you must have net earnings from self-employment that are effectively connected with your U. Form 1040x 2012 S. Form 1040x 2012 trade or business. Form 1040x 2012   Get Publication 560, Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans), for further information. Form 1040x 2012 Penalty on early withdrawal of savings. Form 1040x 2012   You must include in income all effectively connected interest income you receive or that is credited to your account during the year. Form 1040x 2012 Do not reduce it by any penalty you must pay on an early withdrawal from a time savings account. Form 1040x 2012 However, if the interest income is effectively connected with your U. Form 1040x 2012 S. Form 1040x 2012 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. Form 1040x 2012 Student loan interest expense. Form 1040x 2012   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. Form 1040x 2012 Generally, you can claim the deduction if all the following requirements are met. Form 1040x 2012 Your filing status is any filing status except married filing separately. Form 1040x 2012 Your modified adjusted gross income is less than $75,000. Form 1040x 2012 No one else is claiming an exemption for you on his or her 2013 tax return. Form 1040x 2012 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. Form 1040x 2012 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. Form 1040x 2012 The education expenses were paid or incurred within a reasonable period of time before or after the loan was taken out. Form 1040x 2012 The person for whom the expenses were paid or incurred was an eligible student. Form 1040x 2012 Use the worksheet in the Form 1040NR or Form 1040NR-EZ instructions to figure the deduction. Form 1040x 2012 For more information, see Publication 970, Tax Benefits for Education. Form 1040x 2012 Exemptions Resident aliens can claim personal exemptions and exemptions for dependents in the same way as U. Form 1040x 2012 S. Form 1040x 2012 citizens. Form 1040x 2012 However, nonresident aliens generally can claim only a personal exemption for themselves on their U. Form 1040x 2012 S. Form 1040x 2012 tax return. Form 1040x 2012 Resident Aliens You can claim personal exemptions and exemptions for dependents according to the dependency rules for U. Form 1040x 2012 S. Form 1040x 2012 citizens. Form 1040x 2012 You can claim an exemption for your spouse on a separate return if your spouse had no gross income for U. Form 1040x 2012 S. Form 1040x 2012 tax purposes and was not the dependent of another taxpayer. Form 1040x 2012 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. Form 1040x 2012 You can claim an exemption for each person who qualifies as a dependent according to the rules for U. Form 1040x 2012 S. Form 1040x 2012 citizens. Form 1040x 2012 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. Form 1040x 2012 Get Publication 501 for more information. Form 1040x 2012 Your spouse and each dependent for whom you claim an exemption must have either an SSN or an ITIN. Form 1040x 2012 See Identification Number, earlier. Form 1040x 2012 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). Form 1040x 2012 You may be able to claim an exemption for a spouse and a dependent if you are described in any of the following discussions. Form 1040x 2012 Your spouse and each dependent for whom you claim an exemption must have either an SSN or an ITIN. Form 1040x 2012 See Identification Number, earlier. Form 1040x 2012 Residents of Mexico or Canada or U. Form 1040x 2012 S. Form 1040x 2012 nationals. Form 1040x 2012   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. Form 1040x 2012 S. Form 1040x 2012 tax purposes and cannot be claimed as the dependent on another U. Form 1040x 2012 S. Form 1040x 2012 taxpayer's return. Form 1040x 2012 In addition, you can claim exemptions for your dependents who meet certain tests. Form 1040x 2012 Residents of Mexico, Canada, or nationals of the United States must use the same rules as U. Form 1040x 2012 S. Form 1040x 2012 citizens to determine who is a dependent and for which dependents exemptions can be claimed. Form 1040x 2012 See Publication 501 for these rules. Form 1040x 2012 For purposes of these rules, dependents who are U. Form 1040x 2012 S. Form 1040x 2012 nationals meet the citizenship test discussed in Publication 501. Form 1040x 2012 Residents of South Korea. Form 1040x 2012   Nonresident aliens who are residents of South Korea may be able to claim exemptions for a spouse and children. Form 1040x 2012 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. Form 1040x 2012 S. Form 1040x 2012 source gross income effectively connected with a U. Form 1040x 2012 S. Form 1040x 2012 trade or business for the tax year to the alien's entire income from all sources during the tax year. Form 1040x 2012 Example. Form 1040x 2012 Mr. Form 1040x 2012 Park, a nonresident alien who is a resident of South Korea, lives temporarily in the United States with his wife and two children. Form 1040x 2012 During the tax year he receives U. Form 1040x 2012 S. Form 1040x 2012 compensation of $18,000. Form 1040x 2012 He also receives $6,000 of income from sources outside the United States that is not effectively connected with his U. Form 1040x 2012 S. Form 1040x 2012 trade or business. Form 1040x 2012 Thus, his total income for the year is $24,000. Form 1040x 2012 Mr. Form 1040x 2012 Park meets all requirements for claiming exemptions for his spouse and two children. Form 1040x 2012 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. Form 1040x 2012   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. Form 1040x 2012   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. Form 1040x 2012 S. Form 1040x 2012 taxpayer's return. Form 1040x 2012   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. Form 1040x 2012 S. Form 1040x 2012 citizens. Form 1040x 2012 See Publication 501 for these rules. Form 1040x 2012   List your spouse and dependents on line 7c of Form 1040NR. Form 1040x 2012 Enter the total on the appropriate line to the right of line 7c. Form 1040x 2012 Itemized Deductions Nonresident aliens can claim some of the same itemized deductions that resident aliens can claim. Form 1040x 2012 However, nonresident aliens can claim itemized deductions only if they have income effectively connected with their U. Form 1040x 2012 S. Form 1040x 2012 trade or business. Form 1040x 2012 Resident Aliens You can claim the same itemized deductions as U. Form 1040x 2012 S. Form 1040x 2012 citizens, using Schedule A of Form 1040. Form 1040x 2012 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. Form 1040x 2012 If you do not itemize your deductions, you can claim the standard deduction for your particular filing status. Form 1040x 2012 For further information, see Form 1040 and instructions. Form 1040x 2012 Nonresident Aliens You can deduct certain itemized deductions if you receive income effectively connected with your U. Form 1040x 2012 S. Form 1040x 2012 trade or business. Form 1040x 2012 These deductions include state and local income taxes, charitable contributions to U. Form 1040x 2012 S. Form 1040x 2012 organizations, casualty and theft losses, and miscellaneous deductions. Form 1040x 2012 Use Schedule A of Form 1040NR to claim itemized deductions. Form 1040x 2012 If you are filing Form 1040NR-EZ, you can only claim a deduction for state or local income taxes. Form 1040x 2012 If you are claiming any other itemized deduction, you must file Form 1040NR. Form 1040x 2012 Standard deduction. Form 1040x 2012   Nonresident aliens cannot claim the standard deduction. Form 1040x 2012 However, see Students and business apprentices from India , next. Form 1040x 2012 Students and business apprentices from India. Form 1040x 2012   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. Form 1040x 2012 You can claim the standard deduction provided you do not claim itemized deductions. Form 1040x 2012   Use Worksheet 5-1 to figure your standard deduction. Form 1040x 2012 If you are married and your spouse files a return and itemizes deductions, you cannot take the standard deduction. Form 1040x 2012 State and local income taxes. Form 1040x 2012   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. Form 1040x 2012 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. Form 1040x 2012 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. Form 1040x 2012 See Recoveries in Publication 525 for details on how to figure the amount to include in income. Form 1040x 2012 Charitable contributions. Form 1040x 2012   You can deduct your charitable contributions or gifts to qualified organizations subject to certain limits. Form 1040x 2012 Qualified organizations include organizations that are religious, charitable, educational, scientific, or literary in nature, or that work to prevent cruelty to children or animals. Form 1040x 2012 Certain organizations that promote national or international amateur sports competition are also qualified organizations. Form 1040x 2012 Foreign organizations. Form 1040x 2012   Contributions made directly to a foreign organization are not deductible. Form 1040x 2012 However, you can deduct contributions to a U. Form 1040x 2012 S. Form 1040x 2012 organization that transfers funds to a charitable foreign organization if the U. Form 1040x 2012 S. Form 1040x 2012 organization controls the use of the funds or if the foreign organization is only an administrative arm of the U. Form 1040x 2012 S. Form 1040x 2012 organization. Form 1040x 2012   For more information about organizations that qualify to receive charitable contributions, see Publication 526, Charitable Contributions. Form 1040x 2012 Worksheet 5-1. Form 1040x 2012 2013 Standard Deduction Worksheet for Students and Business Apprentices From India Caution. Form 1040x 2012 If you are married filing a separate return and your spouse itemizes deductions, do not complete this worksheet. Form 1040x 2012 You cannot take the standard deduction even if you were born before January 2, 1949, or are blind. Form 1040x 2012 1 Enter the amount shown below for your filing status. Form 1040x 2012           Single or married filing separately—$6,100 Qualifying widow(er)—$12,200 1. Form 1040x 2012           2 Can you be claimed as a dependent on someone else's U. Form 1040x 2012 S. Form 1040x 2012 income tax return?  No. Form 1040x 2012 Enter the amount from line 1 on line 4. Form 1040x 2012 Skip line 3 and go to line 5. Form 1040x 2012   Yes. Form 1040x 2012 Go to line 3. Form 1040x 2012         3 Is your earned income* more than $650?           Yes. Form 1040x 2012 Add $350 to your earned income. Form 1040x 2012 Enter the total. Form 1040x 2012           No. Form 1040x 2012 Enter $1,000 3. Form 1040x 2012       4 Enter the smaller of line 1 or line 3 4. Form 1040x 2012   5 If born before January 2, 1949, OR blind, enter $1,200 ($1,500 if single). Form 1040x 2012 If born before January 2, 1949, AND blind, enter $2,400 ($3,000 if single). Form 1040x 2012 Otherwise, enter -0- 5. Form 1040x 2012   6 Add lines 4 and 5. Form 1040x 2012 Enter the total here and on Form 1040NR, line 38 (or Form 1040NR-EZ, line 11). Form 1040x 2012 Print “Standard Deduction Allowed Under U. Form 1040x 2012 S. Form 1040x 2012 –India Income Tax Treaty” in the space to the left of these lines. Form 1040x 2012 This is your standard deduction for 2013. Form 1040x 2012 6. Form 1040x 2012   *Earned income includes wages, salaries, tips, professional fees, and other compensation received for personal services you performed. Form 1040x 2012 It also includes any amount received as a scholarship that you must include in your income. Form 1040x 2012 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). Form 1040x 2012 Contributions from which you benefit. Form 1040x 2012   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. Form 1040x 2012   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. Form 1040x 2012 For the excess amount to qualify, you must pay it with the intent to make a charitable contribution. Form 1040x 2012 Cash contributions. Form 1040x 2012   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. Form 1040x 2012 The written record must include the name of the charity, date of the contribution, and the amount of the contribution. Form 1040x 2012   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). Form 1040x 2012 If you received only intangible religious benefits, the organization must state this, but it does not have to describe or value the benefit. Form 1040x 2012 Noncash contributions. Form 1040x 2012   For contributions not made in cash, the records you must keep depend on the amount of your deduction. Form 1040x 2012 See Publication 526 for details. Form 1040x 2012 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. Form 1040x 2012 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. Form 1040x 2012 If your total deduction is over $5,000, you also may have to get appraisals of the values of the property. Form 1040x 2012 If the donated property is valued at more than $5,000, you must obtain a qualified appraisal. Form 1040x 2012 You generally must attach to your tax return an appraisal of any property if your deduction for the property is more than $500,000. Form 1040x 2012 See Form 8283 and its instructions for details. Form 1040x 2012 Contributions of appreciated property. Form 1040x 2012   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. Form 1040x 2012 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. Form 1040x 2012 Your basis in the property is generally what you paid for it. Form 1040x 2012 If you need more information about basis, get Publication 551, Basis of Assets. Form 1040x 2012   Different rules apply to figuring your deduction, depending on whether the property is: Ordinary income property, or Capital gain property. Form 1040x 2012 For information about these rules, see Publication 526. Form 1040x 2012 Limit. Form 1040x 2012   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. Form 1040x 2012 For a discussion of limits on charitable contributions and other information, get Publication 526. Form 1040x 2012 Casualty and theft losses. Form 1040x 2012   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. Form 1040x 2012 S. Form 1040x 2012 trade or business. Form 1040x 2012 The property can be personal use property or income-producing property not connected with a U. Form 1040x 2012 S. Form 1040x 2012 trade or business. Form 1040x 2012 The property must be located in the United States at the time of the casualty or theft. Form 1040x 2012 You can deduct theft losses only in the year in which you discover the loss. Form 1040x 2012   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. Form 1040x 2012 The fair market value of property immediately after a theft is considered zero, because you no longer have the property. Form 1040x 2012   If your property is covered by insurance, you should file a timely insurance claim for reimbursement. Form 1040x 2012 If you do not, you cannot deduct this loss as a casualty or theft loss. Form 1040x 2012   Figure your deductible casualty and theft losses on Form 4684, Casualties and Thefts. Form 1040x 2012 Losses from personal use property. Form 1040x 2012    You cannot deduct the first $100 of each casualty or theft loss to property held for personal use. Form 1040x 2012 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. Form 1040x 2012 Losses from income-producing property. Form 1040x 2012   These losses are not subject to the limitations that apply to personal use property. Form 1040x 2012 Use Section B of Form 4684 to figure your deduction for these losses. Form 1040x 2012 Job expenses and other miscellaneous deductions. Form 1040x 2012   You can deduct job expenses, such as allowable unreimbursed travel expenses (discussed next), and other miscellaneous deductions. Form 1040x 2012 Generally, the allowable deductions must be related to effectively connected income. Form 1040x 2012 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). Form 1040x 2012   Most miscellaneous itemized deductions are deductible only if they are more than 2% of your adjusted gross income (line 37, Form 1040NR). Form 1040x 2012 For more information on miscellaneous deductions, see the instructions for Form 1040NR. Form 1040x 2012 Travel expenses. Form 1040x 2012   You may be able to deduct your ordinary and necessary travel expenses while you are temporarily performing personal services in the United States. Form 1040x 2012 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. Form 1040x 2012 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. Form 1040x 2012   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. Form 1040x 2012 You cannot deduct travel expenses for other members of your family or party. Form 1040x 2012 Deductible travel expenses. Form 1040x 2012   If you qualify, you can deduct your expenses for: Transportation—airfare, local transportation, including train, bus, etc. Form 1040x 2012 , 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. Form 1040x 2012 You generally can deduct only 50% of unreimbursed meal expenses. Form 1040x 2012 The standard meal allowance rates for high-cost areas are available at www. Form 1040x 2012 gsa. Form 1040x 2012 gov/perdiem. Form 1040x 2012 The rates for other areas are in Publication 463. Form 1040x 2012   Use Form 2106 or 2106-EZ to figure your allowable expenses that you claim on line 7 of Schedule A (Form 1040NR). Form 1040x 2012 Expenses allocable to U. Form 1040x 2012 S. Form 1040x 2012 tax-exempt income. Form 1040x 2012   You cannot deduct an expense, or part of an expense, that is allocable to U. Form 1040x 2012 S. Form 1040x 2012 tax-exempt income, including income exempt by tax treaty. Form 1040x 2012 Example. Form 1040x 2012 Irina Oak, a citizen of Poland, resided in the United States for part of the year to acquire business experience from a U. Form 1040x 2012 S. Form 1040x 2012 company. Form 1040x 2012 During her stay in the United States, she received a salary of $8,000 from her Polish employer. Form 1040x 2012 She received no other U. Form 1040x 2012 S. Form 1040x 2012 source income. Form 1040x 2012 She spent $3,000 on travel expenses, of which $1,000 were for meals. Form 1040x 2012 None of these expenses were reimbursed. Form 1040x 2012 Under the tax treaty with Poland, $5,000 of her salary is exempt from U. Form 1040x 2012 S. Form 1040x 2012 income tax. Form 1040x 2012 In filling out Form 2106-EZ, she must reduce her deductible meal expenses by half ($500). Form 1040x 2012 She must reduce the remaining $2,500 of travel expenses by 62. Form 1040x 2012 5% ($1,563) because 62. Form 1040x 2012 5% ($5,000 ÷ $8,000) of her salary is exempt from tax. Form 1040x 2012 She enters the remaining total of $937 on line 7 of Schedule A (Form 1040NR). Form 1040x 2012 She completes the remaining lines according to the instructions for Schedule A. Form 1040x 2012 More information. Form 1040x 2012   For more information about deductible expenses, reimbursements, and recordkeeping, get Publication 463. Form 1040x 2012 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. Form 1040x 2012 Resident Aliens Resident aliens generally claim tax credits and report tax payments, including withholding, using the same rules that apply to U. Form 1040x 2012 S. Form 1040x 2012 citizens. Form 1040x 2012 The following items are some of the credits you may be able to claim. Form 1040x 2012 Foreign tax credit. Form 1040x 2012   You can claim a credit, subject to certain limits, for income tax you paid or accrued to a foreign country on foreign source income. Form 1040x 2012 You cannot claim a credit for taxes paid or accrued on excluded foreign earned income. Form 1040x 2012 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. Form 1040x 2012   For more information, get Publication 514, Foreign Tax Credit for Individuals. Form 1040x 2012 Child and dependent care credit. Form 1040x 2012   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. Form 1040x 2012 Generally, you must be able to claim an exemption for your dependent. Form 1040x 2012   For more information, get Publication 503, Child and Dependent Care Expenses, and Form 2441, Child and Dependent Care Expenses. Form 1040x 2012 Credit for the elderly or the disabled. Form 1040x 2012   You may qualify for this credit if you are 65 or older or if you retired on permanent and total disability. Form 1040x 2012 For more information on this credit, get Publication 524, Credit for the Elderly or the Disabled, and Schedule R (Form 1040A or 1040). Form 1040x 2012 Education credits. Form 1040x 2012   You may qualify for these credits if you paid qualified education expenses for yourself, your spouse, or your dependent. Form 1040x 2012 There are two education credits: the American Opportunity Credit and the lifetime learning credit. Form 1040x 2012 You cannot claim these credits if you are married filing separately. Form 1040x 2012 Use Form 8863, Education Credits (American Opportunity and Lifetime Learning Credits), to figure the credit. Form 1040x 2012 For more information, see Publication 970. Form 1040x 2012 Retirement savings contributions credit. Form 1040x 2012   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. Form 1040x 2012 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). Form 1040x 2012 Use Form 8880, Credit for Qualified Retirement Savings Contributions, to figure the credit. Form 1040x 2012 For more information, see Publication 590. Form 1040x 2012 Child tax credit. Form 1040x 2012   You may be able to take this credit if you have a qualifying child. Form 1040x 2012   A qualifying child for purposes of the child tax credit is a child who: Was under age 17 at the end of 2013. Form 1040x 2012 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). Form 1040x 2012 Is a U. Form 1040x 2012 S. Form 1040x 2012 citizen, a U. Form 1040x 2012 S. Form 1040x 2012 national, or a resident alien. Form 1040x 2012 Did not provide over half of his or her own support for 2013. Form 1040x 2012 Lived with you more than half of 2013. Form 1040x 2012 Temporary absences, such as for school, vacation, or medical care, count as time lived in the home. Form 1040x 2012 Is claimed as a dependent on your return. Form 1040x 2012 An adopted child is always treated as your own child. Form 1040x 2012 An adopted child includes a child lawfully placed with you for legal adoption. Form 1040x 2012   See your form instructions for additional details. Form 1040x 2012 Adoption credit. Form 1040x 2012   You may qualify to take a tax credit of up to $12,970 for qualifying expenses paid to adopt an eligible child. Form 1040x 2012 This amount may be allowed for the adoption of a child with special needs regardless of whether you have qualifying expenses. Form 1040x 2012 To claim the adoption credit, file Form 8839, Qualified Adoption Expenses, with your Form 1040. Form 1040x 2012 Earned income credit. Form 1040x 2012   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). Form 1040x 2012 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. Form 1040x 2012 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. Form 1040x 2012 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. Form 1040x 2012 You cannot claim the earned income credit if your filing status is married filing separately. Form 1040x 2012    You and your spouse (if filing a joint return) and any qualifying child must have valid SSNs to claim this credit. Form 1040x 2012 You cannot claim the credit using an ITIN. Form 1040x 2012 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. Form 1040x 2012 An example of a federally funded benefit is Medicaid. Form 1040x 2012 If a card has this legend and the individual's immigration status has changed so that the individual is now a U. Form 1040x 2012 S. Form 1040x 2012 citizen or lawful permanent resident, ask the SSA to issue a new social security card without the legend. Form 1040x 2012 Other information. Form 1040x 2012   There are other eligibility rules that are not discussed here. Form 1040x 2012 For more information, get Publication 596, Earned Income Credit. Form 1040x 2012 Nonresident Aliens You can claim some of the same credits that resident aliens can claim. Form 1040x 2012 You can also report certain taxes you paid, are considered to have paid, or that were withheld from your income. Form 1040x 2012 Credits Credits are allowed only if you receive effectively connected income. Form 1040x 2012 You may be able to claim some of the following credits. Form 1040x 2012 Foreign tax credit. Form 1040x 2012   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. Form 1040x 2012 S. Form 1040x 2012 possession on that income. Form 1040x 2012   If you do not have foreign source income effectively connected with a U. Form 1040x 2012 S. Form 1040x 2012 trade or business, you cannot claim credits against your U. Form 1040x 2012 S. Form 1040x 2012 tax for taxes paid or accrued to a foreign country or U. Form 1040x 2012 S. Form 1040x 2012 possession. Form 1040x 2012   You cannot take any credit for taxes imposed by a foreign country or U. Form 1040x 2012 S. Form 1040x 2012 possession on your U. Form 1040x 2012 S. Form 1040x 2012 source income if those taxes were imposed only because you are a citizen or resident of the foreign country or possession. Form 1040x 2012   If you claim a foreign tax credit, you generally will have to attach to your return a Form 1116. Form 1040x 2012 See Publication 514 for more information. Form 1040x 2012 Child and dependent care credit. Form 1040x 2012   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. Form 1040x 2012 Generally, you must be able to claim an exemption for your dependent. Form 1040x 2012   Married nonresident aliens can claim the credit only if they choose to file a joint return with a U. Form 1040x 2012 S. Form 1040x 2012 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). Form 1040x 2012   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. Form 1040x 2012 Earned income generally means wages, salaries, and professional fees for personal services performed. Form 1040x 2012   For more information, get Publication 503. Form 1040x 2012 Education credits. Form 1040x 2012   If you are a nonresident alien for any part of the year, you generally cannot claim the education credits. Form 1040x 2012 However, if you are married and choose to file a joint return with a U. Form 1040x 2012 S. Form 1040x 2012 citizen or resident spouse as discussed in chapter 1, you may be eligible for these credits. Form 1040x 2012 Retirement savings contributions credit. Form 1040x 2012   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. Form 1040x 2012 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. Form 1040x 2012 Use Form 8880 to figure the credit. Form 1040x 2012 For more information, see Publication 590. Form 1040x 2012 Child tax credit. Form 1040x 2012   You may be able to take this credit if you have a qualifying child. Form 1040x 2012   A qualifying child for purposes of the child tax credit is a child who: Was under age 17 at the end of 2013. Form 1040x 2012 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). Form 1040x 2012 Is a U. Form 1040x 2012 S. Form 1040x 2012 citizen, a U. Form 1040x 2012 S. Form 1040x 2012 national, or a resident alien. Form 1040x 2012 Did not provide over half of his or her own support for 2013. Form 1040x 2012 Lived with you more than half of 2013. Form 1040x 2012 Temporary absences, such as for school, vacation, or medical care, count as time lived in the home. Form 1040x 2012 Is claimed as a dependent on your return. Form 1040x 2012 An adopted child is always treated as your own child. Form 1040x 2012 An adopted child includes a child lawfully placed with you for legal adoption. Form 1040x 2012   See your form instructions for additional details. Form 1040x 2012 Adoption credit. Form 1040x 2012   You may qualify to take a tax credit of up to $12,970 for qualifying expenses paid to adopt an eligible child. Form 1040x 2012 This amount may be allowed for the adoption of a child with special needs regardless of whether you have qualifying expenses. Form 1040x 2012 To claim the adoption credit, file Form 8839 with your Form 1040NR. Form 1040x 2012   Married nonresident aliens can claim the credit only if they choose to file a joint return with a U. Form 1040x 2012 S. Form 1040x 2012 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). Form 1040x 2012 Credit for prior year minimum tax. Form 1040x 2012   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. Form 1040x 2012 Earned income credit. Form 1040x 2012   If you are a nonresident alien for any part of the tax year, you generally cannot get the earned income credit. Form 1040x 2012 However, if you are married and choose to file a joint return with a U. Form 1040x 2012 S. Form 1040x 2012 citizen or resident spouse as discussed in chapter 1, you may be eligible for the credit. Form 1040x 2012    You, your spouse, and any qualifying child must have valid SSNs to claim this credit. Form 1040x 2012 You cannot claim the credit using an ITIN. Form 1040x 2012 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. Form 1040x 2012 An example of a federally funded benefit is Medicaid. Form 1040x 2012 If a card has this legend and the individual's immigration status has changed so that the individual is now a U. Form 1040x 2012 S. Form 1040x 2012 citizen or lawful permanent resident, ask the SSA to issue a new social security card without the legend. Form 1040x 2012   See Publication 596 for more information on the credit. Form 1040x 2012 Tax Withheld You can claim the tax withheld during the year as a payment against your U. Form 1040x 2012 S. Form 1040x 2012 tax. Form 1040x 2012 You claim it on line 61 of Form 1040NR or on line 18 of Form 1040NR-EZ. Form 1040x 2012 The tax withheld reduces any tax you owe with Form 1040NR or Form 1040NR-EZ. Form 1040x 2012 Withholding from wages. Form 1040x 2012   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. Form 1040x 2012 S. Form 1040x 2012 income tax liability for the same year. Form 1040x 2012 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. Form 1040x 2012 Excess social security tax withheld. Form 1040x 2012   If you have two or more employers, you may be able to claim a credit against your U. Form 1040x 2012 S. Form 1040x 2012 income tax liability for social security tax withheld in excess of the maximum required. Form 1040x 2012 See Social Security and Medicare Taxes in chapter 8 for more information. Form 1040x 2012 Additional Medicare Tax. Form 1040x 2012   Your employer is responsible for withholding the 0. Form 1040x 2012 9% Additional Medicare Tax on Medicare wages or RRTA compensation it pays to you in excess of $200,000 in 2013. Form 1040x 2012 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. Form 1040x 2012 Tax paid on undistributed long-term capital gains. Form 1040x 2012   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. Form 1040x 2012 You will receive information on Form 2439, Notice to Shareholder of Undistributed Long-Term Capital Gains, which you must attach to your return. Form 1040x 2012 Tax withheld at the source. Form 1040x 2012   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. Form 1040x 2012 Fixed or determinable income includes interest, dividend, rental, and royalty income that you do not claim to be effectively connected income. Form 1040x 2012 Wage or salary payments can be fixed or determinable income to you, but usually are subject to withholding as discussed above. Form 1040x 2012 Taxes on fixed or determinable income are withheld at a 30% rate or at a lower treaty rate. Form 1040x 2012 Tax withheld on partnership income. Form 1040x 2012   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. Form 1040x 2012 The partnership will give you a statement on Form 8805, Foreign Partner's Information Statement of Section 1446 Withholding Tax, showing the tax withheld. Form 1040x 2012 A partnership that is publicly traded may withhold on your actual distributions of effectively connected income. Form 1040x 2012 In this case, the partnership will give you a statement on Form 1042-S. Form 1040x 2012 Claim the tax withheld as a payment on line 61b or 61d of Form 1040NR, as appropriate. Form 1040x 2012 Claiming tax withheld on your return. Form 1040x 2012   When you fill out your tax return, take extra care to enter the correct amount of any tax withheld shown on your information documents. Form 1040x 2012 The following table lists some of the more common information documents and shows where to find the amount of tax withheld. Form 1040x 2012 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. Form 1040x 2012 You should file Form 1040 and report all income from sources both in and outside the United States. Form 1040x 2012 However, you can exclude the income discussed in the following paragraphs. Form 1040x 2012 For tax purposes other than reporting income, however, you will be treated as a nonresident alien. Form 1040x 2012 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. Form 1040x 2012 There are also limits on what deductions and credits are allowed. Form 1040x 2012 See Nonresident Aliens under Deductions , Itemized Deductions , and Tax Credits and Payments in this chapter. Form 1040x 2012 Residents of Puerto Rico. Form 1040x 2012   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). Form 1040x 2012   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. Form 1040x 2012 You must also make your first payment of estimated tax by June 15. Form 1040x 2012 You cannot file a joint income tax return or make joint payments of estimated tax. Form 1040x 2012 However, if you are married to a U. Form 1040x 2012 S. Form 1040x 2012 citizen or resident, see Nonresident Spouse Treated as a Resident in chapter 1. Form 1040x 2012   If you earn wages subject to withholding, your U. Form 1040x 2012 S. Form 1040x 2012 income tax return is due by April 15. Form 1040x 2012 Your first payment of estimated tax is also due by April 15. Form 1040x 2012 For information on withholding and estimated tax, see chapter 8 . Form 1040x 2012 Residents of American Samoa. Form 1040x 2012   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. Form 1040x 2012 S. Form 1040x 2012 government or any of its agencies). Form 1040x 2012 An employee of the American Samoan government is not considered an employee of the U. Form 1040x 2012 S. Form 1040x 2012 government or any of its agencies for purposes of the exclusion. Form 1040x 2012 For more information about this exclusion, get Form 4563 and Publication 570, Tax Guide for Individuals With Income From U. Form 1040x 2012 S. Form 1040x 2012 Possessions. Form 1040x 2012 Prev  Up  Next   Home   More Online Publications
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To avoid insurance fraud:

  • When shopping for insurance on the Internet, check that the website is secure. Look for the lock icon, a URL that begins "https:" and never provide personal information if you don't trust the site.
  • Be wary of people selling insurance door-to-door and over the telephone.
  • Be suspicious if, after an accident, a stranger contacts you to offer "quick cash" or recommends a particular attorney or health care provider. Report the incident to your police department.
  • Don't give your insurance identification numbers to companies you don't know.
  • Carry a disposable camera in your glove compartment. If you are in an accident, take pictures of the damage and the people involved. Ask for names, telephone numbers, and driver's license information for all those involved. Getting contact information for any witnesses is also a good idea.

If you suspect fraud, call the National Insurance Crime Bureau's hotline at 1-800-835-6422. For more information, check out the Coalition Against Insurance Fraud

The Form 1040x 2012

Form 1040x 2012 Publication 542 - Main Content Table of Contents Businesses Taxed as CorporationsPersonal services. Form 1040x 2012 Employee-owners. Form 1040x 2012 Other rules. Form 1040x 2012 Other rules. Form 1040x 2012 Property Exchanged for StockNonqualified preferred stock. Form 1040x 2012 Liabilities. Form 1040x 2012 Election to reduce basis. Form 1040x 2012 Capital Contributions Filing and Paying Income TaxesIncome Tax Return Penalties Estimated Tax U. Form 1040x 2012 S. Form 1040x 2012 Real Property Interest Accounting MethodsSection 481(a) adjustment. Form 1040x 2012 Accounting Periods Recordkeeping Income, Deductions, and Special ProvisionsCosts of Going Into Business Related Persons Income From Qualifying Shipping Activities Election to Expense Qualified Refinery Property Deduction to Comply With EPA Sulfur Regulations Energy-Efficient Commercial Building Property Deduction Corporate Preference Items Dividends-Received Deduction Extraordinary Dividends Below-Market Loans Charitable Contributions Capital Losses Net Operating Losses At-Risk Limits Passive Activity Limits Figuring TaxTax Rate Schedule Alternative Minimum Tax (AMT) Credits Recapture Taxes Accumulated Earnings Tax Distributions to ShareholdersMoney or Property Distributions Distributions of Stock or Stock Rights Constructive Distributions Reporting Dividends and Other Distributions How To Get Tax Help Businesses Taxed as Corporations The rules you must use to determine whether a business is taxed as a corporation changed for businesses formed after 1996. Form 1040x 2012 Business formed before 1997. Form 1040x 2012   A business formed before 1997 and taxed as a corporation under the old rules will generally continue to be taxed as a corporation. Form 1040x 2012 Business formed after 1996. Form 1040x 2012   The following businesses formed after 1996 are taxed as corporations. Form 1040x 2012 A business formed under a federal or state law that refers to it as a corporation, body corporate, or body politic. Form 1040x 2012 A business formed under a state law that refers to it as a joint-stock company or joint-stock association. Form 1040x 2012 An insurance company. Form 1040x 2012 Certain banks. Form 1040x 2012 A business wholly owned by a state or local government. Form 1040x 2012 A business specifically required to be taxed as a corporation by the Internal Revenue Code (for example, certain publicly traded partnerships). Form 1040x 2012 Certain foreign businesses. Form 1040x 2012 Any other business that elects to be taxed as a corporation. Form 1040x 2012 For example, a limited liability company (LLC) can elect to be treated as an association taxable as a corporation by filing Form 8832, Entity Classification Election. Form 1040x 2012 For more information about LLCs, see Publication 3402, Taxation of Limited Liability Companies. Form 1040x 2012 S corporations. Form 1040x 2012   Some corporations may meet the qualifications for electing to be S corporations. Form 1040x 2012 For information on S corporations, see the instructions for Form 1120S, U. Form 1040x 2012 S. Form 1040x 2012 Income Tax Return for an S Corporation. Form 1040x 2012 Personal service corporations. Form 1040x 2012   A corporation is a personal service corporation if it meets all of the following requirements. Form 1040x 2012 Its principal activity during the “testing period” is performing personal services (defined later). Form 1040x 2012 Generally, the testing period for any tax year is the prior tax year. Form 1040x 2012 If the corporation has just been formed, the testing period begins on the first day of its tax year and ends on the earlier of: The last day of its tax year, or The last day of the calendar year in which its tax year begins. Form 1040x 2012 Its employee-owners substantially perform the services in (1), above. Form 1040x 2012 This requirement is met if more than 20% of the corporation's compensation cost for its activities of performing personal services during the testing period is for personal services performed by employee-owners. Form 1040x 2012 Its employee-owners own more than 10% of the fair market value of its outstanding stock on the last day of the testing period. Form 1040x 2012 Personal services. Form 1040x 2012   Personal services include any activity performed in the fields of accounting, actuarial science, architecture, consulting, engineering, health (including veterinary services), law, and the performing arts. Form 1040x 2012 Employee-owners. Form 1040x 2012   A person is an employee-owner of a personal service corporation if both of the following apply. Form 1040x 2012 He or she is an employee of the corporation or performs personal services for, or on behalf of, the corporation (even if he or she is an independent contractor for other purposes) on any day of the testing period. Form 1040x 2012 He or she owns any stock in the corporation at any time during the testing period. Form 1040x 2012 Other rules. Form 1040x 2012   For other rules that apply to personal service corporations see Accounting Periods, later. Form 1040x 2012 Closely held corporations. Form 1040x 2012   A corporation is closely held if all of the following apply. Form 1040x 2012 It is not a personal service corporation. Form 1040x 2012 At any time during the last half of the tax year, more than 50% of the value of its outstanding stock is, directly or indirectly, owned by or for five or fewer individuals. Form 1040x 2012 “Individual” includes certain trusts and private foundations. Form 1040x 2012 Other rules. Form 1040x 2012   For the at-risk rules that apply to closely held corporations, seeAt-Risk Limits, later. Form 1040x 2012 Property Exchanged for Stock If you transfer property (or money and property) to a corporation in exchange for stock in that corporation (other than nonqualified preferred stock, described later), and immediately afterward you are in control of the corporation, the exchange is usually not taxable. Form 1040x 2012 This rule applies both to individuals and to groups who transfer property to a corporation. Form 1040x 2012 It also applies whether the corporation is being formed or is already operating. Form 1040x 2012 It does not apply in the following situations. Form 1040x 2012 The corporation is an investment company. Form 1040x 2012 You transfer the property in a bankruptcy or similar proceeding in exchange for stock used to pay creditors. Form 1040x 2012 The stock is received in exchange for the corporation's debt (other than a security) or for interest on the corporation's debt (including a security) that accrued while you held the debt. Form 1040x 2012 Both the corporation and any person involved in a nontaxable exchange of property for stock must attach to their income tax returns a complete statement of all facts pertinent to the exchange. Form 1040x 2012 For more information, see section 1. Form 1040x 2012 351-3 of the Regulations. Form 1040x 2012 Control of a corporation. Form 1040x 2012   To be in control of a corporation, you or your group of transferors must own, immediately after the exchange, at least 80% of the total combined voting power of all classes of stock entitled to vote and at least 80% of the outstanding shares of each class of nonvoting stock. Form 1040x 2012 Example 1. Form 1040x 2012 You and Bill Jones buy property for $100,000. Form 1040x 2012 You both organize a corporation when the property has a fair market value of $300,000. Form 1040x 2012 You transfer the property to the corporation for all its authorized capital stock, which has a par value of $300,000. Form 1040x 2012 No gain is recognized by you, Bill, or the corporation. Form 1040x 2012 Example 2. Form 1040x 2012 You and Bill transfer the property with a basis of $100,000 to a corporation in exchange for stock with a fair market value of $300,000. Form 1040x 2012 This represents only 75% of each class of stock of the corporation. Form 1040x 2012 The other 25% was already issued to someone else. Form 1040x 2012 You and Bill recognize a taxable gain of $200,000 on the transaction. Form 1040x 2012 Services rendered. Form 1040x 2012   The term property does not include services rendered or to be rendered to the issuing corporation. Form 1040x 2012 The value of stock received for services is income to the recipient. Form 1040x 2012 Example. Form 1040x 2012 You transfer property worth $35,000 and render services valued at $3,000 to a corporation in exchange for stock valued at $38,000. Form 1040x 2012 Right after the exchange, you own 85% of the outstanding stock. Form 1040x 2012 No gain is recognized on the exchange of property. Form 1040x 2012 However, you recognize ordinary income of $3,000 as payment for services you rendered to the corporation. Form 1040x 2012 Property of relatively small value. Form 1040x 2012   The term property does not include property of a relatively small value when it is compared to the value of stock and securities already owned or to be received for services by the transferor if the main purpose of the transfer is to qualify for the nonrecognition of gain or loss by other transferors. Form 1040x 2012   Property transferred will not be considered to be of relatively small value if its fair market value is at least 10% of the fair market value of the stock and securities already owned or to be received for services by the transferor. Form 1040x 2012 Stock received in disproportion to property transferred. Form 1040x 2012   If a group of transferors exchange property for corporate stock, each transferor does not have to receive stock in proportion to his or her interest in the property transferred. Form 1040x 2012 If a disproportionate transfer takes place, it will be treated for tax purposes in accordance with its true nature. Form 1040x 2012 It may be treated as if the stock were first received in proportion and then some of it used to make gifts, pay compensation for services, or satisfy the transferor's obligations. Form 1040x 2012 Money or other property received. Form 1040x 2012   If, in an otherwise nontaxable exchange of property for corporate stock, you also receive money or property other than stock, you may have to recognize gain. Form 1040x 2012 You must recognize gain only up to the amount of money plus the fair market value of the other property you receive. Form 1040x 2012 The rules for figuring the recognized gain in this situation generally follow those for a partially nontaxable exchange discussed in Publication 544 under Like-Kind Exchanges. Form 1040x 2012 If the property you give up includes depreciable property, the recognized gain may have to be reported as ordinary income from depreciation. Form 1040x 2012 See chapter 3 of Publication 544. Form 1040x 2012 No loss is recognized. Form 1040x 2012 Nonqualified preferred stock. Form 1040x 2012   Nonqualified preferred stock is treated as property other than stock. Form 1040x 2012 Generally, it is preferred stock with any of the following features. Form 1040x 2012 The holder has the right to require the issuer or a related person to redeem or buy the stock. Form 1040x 2012 The issuer or a related person is required to redeem or buy the stock. Form 1040x 2012 The issuer or a related person has the right to redeem or buy the stock and, on the issue date, it is more likely than not that the right will be exercised. Form 1040x 2012 The dividend rate on the stock varies with reference to interest rates, commodity prices, or similar indices. Form 1040x 2012 For a detailed definition of nonqualified preferred stock, see section 351(g)(2) of the Internal Revenue Code. Form 1040x 2012 Liabilities. Form 1040x 2012   If the corporation assumes your liabilities, the exchange generally is not treated as if you received money or other property. Form 1040x 2012 There are two exceptions to this treatment. Form 1040x 2012 If the liabilities the corporation assumes are more than your adjusted basis in the property you transfer, gain is recognized up to the difference. Form 1040x 2012 However, if the liabilities assumed give rise to a deduction when paid, such as a trade account payable or interest, no gain is recognized. Form 1040x 2012 If there is no good business reason for the corporation to assume your liabilities, or if your main purpose in the exchange is to avoid federal income tax, the assumption is treated as if you received money in the amount of the liabilities. Form 1040x 2012 For more information on the assumption of liabilities, see section 357(d) of the Internal Revenue Code. Form 1040x 2012 Example. Form 1040x 2012 You transfer property to a corporation for stock. Form 1040x 2012 Immediately after the transfer, you control the corporation. Form 1040x 2012 You also receive $10,000 in the exchange. Form 1040x 2012 Your adjusted basis in the transferred property is $20,000. Form 1040x 2012 The stock you receive has a fair market value (FMV) of $16,000. Form 1040x 2012 The corporation also assumes a $5,000 mortgage on the property for which you are personally liable. Form 1040x 2012 Gain is realized as follows. Form 1040x 2012 FMV of stock received $16,000 Cash received 10,000 Liability assumed by corporation 5,000 Total received $31,000 Minus: Adjusted basis of property transferred 20,000 Realized gain $11,000   The liability assumed is not treated as money or other property. Form 1040x 2012 The recognized gain is limited to $10,000, the cash received. Form 1040x 2012 Loss on exchange. Form 1040x 2012   If you have a loss from an exchange and own, directly or indirectly, more than 50% of the corporation's stock, you cannot deduct the loss. Form 1040x 2012 For more information, see Nondeductible Loss under Sales and Exchanges Between Related Persons in chapter 2 of Publication 544. Form 1040x 2012 Basis of stock or other property received. Form 1040x 2012   The basis of the stock you receive is generally the adjusted basis of the property you transfer. Form 1040x 2012 Increase this amount by any amount treated as a dividend, plus any gain recognized on the exchange. Form 1040x 2012 Decrease this amount by any cash you received, the fair market value of any other property you received, and any loss recognized on the exchange. Form 1040x 2012 Also decrease this amount by the amount of any liability the corporation or another party to the exchange assumed from you, unless payment of the liability gives rise to a deduction when paid. Form 1040x 2012    Further decreases may be required when the corporation or another party to the exchange assumes from you a liability that gives rise to a deduction when paid, if the basis of the stock would otherwise be higher than its fair market value on the date of the exchange. Form 1040x 2012 This rule does not apply if the entity assuming the liability acquired either substantially all of the assets or the trade or business with which the liability is associated. Form 1040x 2012 The basis of any other property you receive is its fair market value on the date of the trade. Form 1040x 2012 Basis of property transferred. Form 1040x 2012   A corporation that receives property from you in exchange for its stock generally has the same basis you had in the property, increased by any gain you recognized on the exchange. Form 1040x 2012 However, the increase for the gain recognized may be limited. Form 1040x 2012 For more information, see section 362 of the Internal Revenue Code. Form 1040x 2012 Election to reduce basis. Form 1040x 2012   In a section 351 transaction, if the adjusted basis of the property transferred exceeds the property's fair market value, the transferor and transferee may make an irrevocable election to treat the basis of the stock received by the transferor as having a basis equal to the fair market value of the property transferred. Form 1040x 2012 The transferor and transferee make this election by attaching a statement to their tax returns filed by the due date (including extensions) for the tax year in which the transaction occurred. Form 1040x 2012 However, if the transferor makes the election by including the certification provided in Notice 2005-70, 2005-41, I. Form 1040x 2012 R. Form 1040x 2012 B. Form 1040x 2012 694, on or with its tax return filed by the due date (including extensions), then no election need be made by the transferee. Form 1040x 2012    For more information on making this election, see section 362(e)(2)(C) of the Internal Revenue Code, and Notice 2005-70. Form 1040x 2012 Capital Contributions This section explains the tax treatment of contributions from shareholders and nonshareholders. Form 1040x 2012 Paid-in capital. Form 1040x 2012   Contributions to the capital of a corporation, whether or not by shareholders, are paid-in capital. Form 1040x 2012 These contributions are not taxable to the corporation. Form 1040x 2012 Basis. Form 1040x 2012   The corporation's basis of property contributed to capital by a shareholder is the same as the basis the shareholder had in the property, increased by any gain the shareholder recognized on the exchange. Form 1040x 2012 However, the increase for the gain recognized may be limited. Form 1040x 2012 For more information, see Basis of property transferred, above, and section 362 of the Internal Revenue Code. Form 1040x 2012   The basis of property contributed to capital by a person other than a shareholder is zero. Form 1040x 2012   If a corporation receives a cash contribution from a person other than a shareholder, the corporation must reduce the basis of any property acquired with the contribution during the 12-month period beginning on the day it received the contribution by the amount of the contribution. Form 1040x 2012 If the amount contributed is more than the cost of the property acquired, then reduce, but not below zero, the basis of the other properties held by the corporation on the last day of the 12-month period in the following order. Form 1040x 2012 Depreciable property. Form 1040x 2012 Amortizable property. Form 1040x 2012 Property subject to cost depletion but not to percentage depletion. Form 1040x 2012 All other remaining properties. Form 1040x 2012   Reduce the basis of property in each category to zero before going on to the next category. Form 1040x 2012   There may be more than one piece of property in each category. Form 1040x 2012 Base the reduction of the basis of each property on the following ratio:   Basis of each piece of property   Bases of all properties (within that category) If the corporation wishes to make this adjustment in some other way, it must get IRS approval. Form 1040x 2012 The corporation files a request for approval with its income tax return for the tax year in which it receives the contribution. Form 1040x 2012 Filing and Paying Income Taxes The federal income tax is a pay-as-you-go tax. Form 1040x 2012 A corporation generally must make estimated tax payments as it earns or receives income during its tax year. Form 1040x 2012 After the end of the year, the corporation must file an income tax return. Form 1040x 2012 This section will help you determine when and how to pay and file corporate income taxes. Form 1040x 2012 For certain corporations affected by Presidentially declared disasters such as hurricanes, the due dates for filing returns, paying taxes, and performing other time-sensitive acts may be extended. Form 1040x 2012 The IRS may also forgive the interest and penalties on any underpaid tax for the length of any extension. Form 1040x 2012 For more information, visit www. Form 1040x 2012 irs. Form 1040x 2012 gov/newsroom/article/0,,id=108362. Form 1040x 2012 00. Form 1040x 2012 Income Tax Return This section will help you determine when and how to report a corporation's income tax. Form 1040x 2012 Who must file. Form 1040x 2012   Unless exempt under section 501 of the Internal Revenue Code, all domestic corporations in existence for any part of a tax year (including corporations in bankruptcy) must file an income tax return whether or not they have taxable income. Form 1040x 2012 Which form to file. Form 1040x 2012   A corporation generally must file Form 1120, U. Form 1040x 2012 S. Form 1040x 2012 Corporation Income Tax Return, to report its income, gains, losses, deductions, credits, and to figure its income tax liability. Form 1040x 2012 Certain organizations and entities must file special returns. Form 1040x 2012 For more information, see Special Returns for Certain Organizations, in the Instructions for Form 1120. Form 1040x 2012 Electronic filing. Form 1040x 2012   Corporations can generally electronically file (e-file) Form 1120 and certain related forms, schedules, and attachments. Form 1040x 2012 Certain corporations with total assets of $10 million or more, that file at least 250 returns a year must e-file Form 1120. Form 1040x 2012 However, in certain instances, these corporations can request a waiver. Form 1040x 2012 For more information regarding electronic filing, visit www. Form 1040x 2012 irs. Form 1040x 2012 gov/efile. Form 1040x 2012 When to file. Form 1040x 2012   Generally, a corporation must file its income tax return by the 15th day of the 3rd month after the end of its tax year. Form 1040x 2012 A new corporation filing a short-period return must generally file by the 15th day of the 3rd month after the short period ends. Form 1040x 2012 A corporation that has dissolved must generally file by the 15th day of the 3rd month after the date it dissolved. Form 1040x 2012 Example 1. Form 1040x 2012 A corporation's tax year ends December 31. Form 1040x 2012 It must file its income tax return by March 15th. Form 1040x 2012 Example 2. Form 1040x 2012 A corporation's tax year ends June 30. Form 1040x 2012 It must file its income tax return by September 15th. Form 1040x 2012   If the due date falls on a Saturday, Sunday, or legal holiday, the due date is extended to the next business day. Form 1040x 2012 Extension of time to file. Form 1040x 2012   File Form 7004, Application for Automatic Extension of Time To File Certain Business Income Tax, Information and Other Returns, to request an extension of time to file a corporation income tax return. Form 1040x 2012 The IRS will grant the extension if you complete the form properly, file it, and pay any tax due by the original due date for the return. Form 1040x 2012   Form 7004 does not extend the time for paying the tax due on the return. Form 1040x 2012 Interest, and possibly penalties, will be charged on any part of the final tax due not shown as a balance due on Form 7004. Form 1040x 2012 The interest is figured from the original due date of the return to the date of payment. Form 1040x 2012   For more information, see the instructions for Form 7004. Form 1040x 2012 How to pay your taxes. Form 1040x 2012   A corporation must pay its tax due in full no later than the 15th day of the 3rd month after the end of its tax year. Form 1040x 2012 Electronic Federal Tax Payment System (EFTPS). Form 1040x 2012   Corporations generally must use EFTPS to make deposits of all tax liabilities (including social security, Medicare, withheld income, excise, and corporate income taxes). Form 1040x 2012 For more information on EFTPS and enrollment, visit www. Form 1040x 2012 eftps. Form 1040x 2012 gov or call 1-800-555-4477. Form 1040x 2012 Also see Publication 966, The Secure Way to Pay Your Federal Taxes. Form 1040x 2012 Note. Form 1040x 2012 Forms 8109 and 8109-B, Federal Tax Deposit Coupon, can no longer be used to make federal tax deposits. Form 1040x 2012 Penalties Generally, if the corporation receives a notice about interest and penalties after it files its return, send the IRS an explanation and we will determine if the corporation meets reasonable-cause criteria. Form 1040x 2012 Do not attach an explanation when the corporation's return is filed. Form 1040x 2012 See the instructions for your income tax return. Form 1040x 2012 Late filing of return. Form 1040x 2012    A corporation that does not file its tax return by the due date, including extensions, may be penalized 5% of the unpaid tax for each month or part of a month the return is late, up to a maximum of 25% of the unpaid tax. Form 1040x 2012 If the corporation is charged a penalty for late payment of tax (discussed next) for the same period of time, the penalty for late filing is reduced by the amount of the penalty for late payment. Form 1040x 2012 The minimum penalty for a return that is over 60 days late is the smaller of the tax due or $100. Form 1040x 2012 The penalty will not be imposed if the corporation can show the failure to file on time was due to a reasonable cause. Form 1040x 2012 Late payment of tax. Form 1040x 2012    A corporation that does not pay the tax when due may be penalized ½ of 1% of the unpaid tax for each month or part of a month the tax is not paid, up to a maximum of 25% of the unpaid tax. Form 1040x 2012 The penalty will not be imposed if the corporation can show that the failure to pay on time was due to a reasonable cause. Form 1040x 2012 Trust fund recovery penalty. Form 1040x 2012   If income, social security, and Medicare taxes that a corporation must withhold from employee wages are not withheld or are not deposited or paid to the United States Treasury, the trust fund recovery penalty may apply. Form 1040x 2012 The penalty is the full amount of the unpaid trust fund tax. Form 1040x 2012 This penalty may apply to you if these unpaid taxes cannot be immediately collected from the business. Form 1040x 2012   The trust fund recovery penalty may be imposed on all persons who are determined by the IRS to be responsible for collecting, accounting for, and paying these taxes, and who acted willfully in not doing so. Form 1040x 2012   A responsible person can be an officer or employee of a corporation, an accountant, or a volunteer director/trustee. Form 1040x 2012 A responsible person also may include one who signs checks for the corporation or otherwise has authority to cause the spending of business funds. Form 1040x 2012   Willfully means voluntarily, consciously, and intentionally. Form 1040x 2012 A responsible person acts willfully if the person knows the required actions are not taking place. Form 1040x 2012   For more information on withholding and paying these taxes, see Publication 15 (Circular E), Employer's Tax Guide, and Publication 51, (Circular A), Agricultural Employer's Tax Guide. Form 1040x 2012 Other penalties. Form 1040x 2012   Other penalties can be imposed for negligence, substantial understatement of tax, reportable transaction understatements, and fraud. Form 1040x 2012 See sections 6662, 6662A, and 6663 of the Internal Revenue Code. Form 1040x 2012 Estimated Tax Generally, a corporation must make installment payments if it expects its estimated tax for the year to be $500 or more. Form 1040x 2012 If the corporation does not pay the installments when they are due, it could be subject to an underpayment penalty. Form 1040x 2012 This section will explain how to avoid this penalty. Form 1040x 2012 When to pay estimated tax. Form 1040x 2012   Installment payments are due by the 15th day of the 4th, 6th, 9th, and 12th months of the corporation's tax year. Form 1040x 2012 Example 1. Form 1040x 2012 Your corporation's tax year ends December 31. Form 1040x 2012 Installment payments are due on April 15, June 15, September 15, and December 15. Form 1040x 2012 Example 2. Form 1040x 2012 Your corporation's tax year ends June 30. Form 1040x 2012 Installment payments are due on October 15, December 15, March 15, and June 15. Form 1040x 2012   If any due date falls on a Saturday, Sunday, or legal holiday, the installment is due on the next business day. Form 1040x 2012 How to figure each required installment. Form 1040x 2012   Use Form 1120-W, Estimated Tax for Corporations, as a worksheet to figure each required installment of estimated tax. Form 1040x 2012 You will generally use one of the following two methods to figure each required installment. Form 1040x 2012 You should use the method that yields the smallest installment payments. Form 1040x 2012 Note. Form 1040x 2012 In these discussions, “return” generally refers to the corporation's original return. Form 1040x 2012 However, an amended return is considered the original return if it is filed by the due date (including extensions) of the original return. Form 1040x 2012 Method 1. Form 1040x 2012   Each required installment is 25% of the income tax the corporation will show on its return for the current year. Form 1040x 2012 Method 2. Form 1040x 2012   Each required installment is 25% of the income tax shown on the corporation's return for the previous year. Form 1040x 2012   To use Method 2: The corporation must have filed a return for the previous year, The return must have been for a full 12 months, and The return must have shown a positive tax liability (not zero). Form 1040x 2012 Also, if the corporation is a large corporation, it can use Method 2 to figure the first installment only. Form 1040x 2012   See the Instructions for Form 1120-W, for the definition of a large corporation and other special rules for large corporations. Form 1040x 2012 Other methods. Form 1040x 2012   If a corporation's income is expected to vary during the year because, for example, its business is seasonal, it may be able to lower the amount of one or more required installments by using one or both of the following methods. Form 1040x 2012 The annualized income installment method. Form 1040x 2012 The adjusted seasonal installment method. Form 1040x 2012 Use Schedule A of Form 1120-W to determine if using one or both of these methods will lower the amount of any required installments. Form 1040x 2012 Refiguring required installments. Form 1040x 2012   If after the corporation figures and deposits its estimated tax it finds that its tax liability for the year will be more or less than originally estimated, it may have to refigure its required installments to see if an underpayment penalty may apply. Form 1040x 2012 An immediate catchup payment should be made to reduce any penalty resulting from the underpayment of any earlier installments. Form 1040x 2012 Underpayment penalty. Form 1040x 2012   If the corporation does not pay a required installment of estimated tax by its due date, it may be subject to a penalty. Form 1040x 2012 The penalty is figured separately for each installment due date. Form 1040x 2012 The corporation may owe a penalty for an earlier due date, even if it paid enough tax later to make up the underpayment. Form 1040x 2012 This is true even if the corporation is due a refund when its return is filed. Form 1040x 2012 Form 2220. Form 1040x 2012   Use Form 2220, Underpayment of Estimated Tax by Corporations, to determine if a corporation is subject to the penalty for underpayment of estimated tax and to figure the amount of the penalty. Form 1040x 2012   If the corporation is charged a penalty, the amount of the penalty depends on the following three factors. Form 1040x 2012 The amount of the underpayment. Form 1040x 2012 The period during which the underpayment was due and unpaid. Form 1040x 2012 The interest rate for underpayments published quarterly by the IRS in the Internal Revenue Bulletin. Form 1040x 2012   A corporation generally does not have to file Form 2220 with its income tax return because the IRS will figure any penalty and bill the corporation. Form 1040x 2012 However, even if the corporation does not owe a penalty, complete and attach the form to the corporation's tax return if any of the following apply. Form 1040x 2012 The annualized income installment method was used to figure any required installment. Form 1040x 2012 The adjusted seasonal installment method was used to figure any required installment. Form 1040x 2012 The corporation is a large corporation figuring its first required installment based on the prior year's tax. Form 1040x 2012 How to pay estimated tax. Form 1040x 2012   A corporation is generally required to use EFTPS to pay its taxes. Form 1040x 2012 See Electronic Federal Tax Payment System (EFTPS), earlier. Form 1040x 2012 Also see the Instructions for Form 1120-W. Form 1040x 2012 Quick refund of overpayments. Form 1040x 2012   A corporation that has overpaid its estimated tax for the tax year may be able to apply for a quick refund. Form 1040x 2012 Use Form 4466, Corporation Application for Quick Refund of Overpayment of Estimated Tax, to apply for a quick refund of an overpayment of estimated tax. Form 1040x 2012 A corporation can apply for a quick refund if the overpayment is: At least 10% of its expected tax liability, and At least $500. Form 1040x 2012 Use Form 4466 to figure the corporation's expected tax liability and the overpayment of estimated tax. Form 1040x 2012 File Form 4466 before the 16th day of the 3rd month after the end of the tax year, but before the corporation files its income tax return. Form 1040x 2012 Do not file Form 4466 before the end of the corporation's tax year. Form 1040x 2012 An extension of time to file the corporation's income tax return will not extend the time for filing Form 4466. Form 1040x 2012 The IRS will act on the form within 45 days from the date you file it. Form 1040x 2012 U. Form 1040x 2012 S. Form 1040x 2012 Real Property Interest If a domestic corporation acquires a U. Form 1040x 2012 S. Form 1040x 2012 real property interest from a foreign person or firm, the corporation may have to withhold tax on the amount it pays for the property. Form 1040x 2012 The amount paid includes cash, the fair market value of other property, and any assumed liability. Form 1040x 2012 If a domestic corporation distributes a U. Form 1040x 2012 S. Form 1040x 2012 real property interest to a foreign person or firm, it may have to withhold tax on the fair market value of the property. Form 1040x 2012 A corporation that fails to withhold may be liable for the tax, and any penalties and interest that apply. Form 1040x 2012 For more information, see section 1445 of the Internal Revenue Code; Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities; Form 8288, U. Form 1040x 2012 S. Form 1040x 2012 Withholding Tax Return for Dispositions by Foreign Persons of U. Form 1040x 2012 S. Form 1040x 2012 Real Property Interests; and Form 8288-A, Statement of Withholding on Dispositions by Foreign Persons of U. Form 1040x 2012 S. Form 1040x 2012 Real Property Interests. Form 1040x 2012 Accounting Methods An accounting method is a set of rules used to determine when and how income and expenses are reported. Form 1040x 2012 Taxable income should be determined using the method of accounting regularly used in keeping the corporation's books and records. Form 1040x 2012 In all cases, the method used must clearly show taxable income. Form 1040x 2012 Generally, permissible methods include: Cash, Accrual, or Any other method authorized by the Internal Revenue Code. Form 1040x 2012 Accrual method. Form 1040x 2012   Generally, a corporation (other than a qualified personal service corporation) must use the accrual method of accounting if its average annual gross receipts exceed $5 million. Form 1040x 2012 A corporation engaged in farming operations also must use the accrual method. Form 1040x 2012   If inventories are required, the accrual method generally must be used for sales and purchases of merchandise. Form 1040x 2012 However, qualifying taxpayers and eligible businesses of qualifying small business taxpayers are excepted from using the accrual method for eligible trades or businesses and may account for inventoriable items as materials and supplies that are not incidental. Form 1040x 2012   Under the accrual method, an amount is includable in income when: All the events have occurred that fix the right to receive the income, which is the earliest of the date: The required performance takes place, Payment is due, or Payment is received; and The amount can be determined with reasonable accuracy. Form 1040x 2012   Generally, an accrual basis taxpayer can deduct accrued expenses in the tax year when: All events that determine the liability have occurred, The amount of the liability can be figured with reasonable accuracy, and Economic performance takes place with respect to the expense. Form 1040x 2012   There are exceptions to the economic performance rule for certain items, including recurring expenses. Form 1040x 2012 See section 461(h) of the Internal Revenue Code and the related regulations for the rules for determining when economic performance takes place. Form 1040x 2012 Nonaccrual experience method. Form 1040x 2012   Accrual method corporations are not required to maintain accruals for certain amounts from the performance of services that, on the basis of their experience, will not be collected, if: The services are in the fields of health, law, engineering, architecture, accounting, actuarial science, performing arts, or consulting; or The corporation's average annual gross receipts for the 3 prior tax years does not exceed $5 million. Form 1040x 2012   This provision does not apply if interest is required to be paid on the amount or if there is any penalty for failure to pay the amount timely. Form 1040x 2012 Percentage of completion method. Form 1040x 2012   Long-term contracts (except for certain real property construction contracts) must generally be accounted for using the percentage of completion method described in section 460 of the Internal Revenue Code. Form 1040x 2012 Mark-to-market accounting method. Form 1040x 2012   Generally, dealers in securities must use the mark-to-market accounting method described in section 475 of the Internal Revenue Code. Form 1040x 2012 Under this method any security held by a dealer as inventory must be included in inventory at its FMV. Form 1040x 2012 Any security not held as inventory at the close of the tax year is treated as sold at its FMV on the last business day of the tax year. Form 1040x 2012 Any gain or loss must be taken into account in determining gross income. Form 1040x 2012 The gain or loss taken into account is treated as ordinary gain or loss. Form 1040x 2012   Dealers in commodities and traders in securities and commodities can elect to use the mark-to-market accounting method. Form 1040x 2012 Change in accounting method. Form 1040x 2012   A corporation can change its method of accounting used to report taxable income (for income as a whole or for the treatment of any material item). Form 1040x 2012 The corporation must file Form 3115, Application for Change in Accounting Method. Form 1040x 2012 For more information, see Form 3115 and Publication 538. Form 1040x 2012 Section 481(a) adjustment. Form 1040x 2012   The corporation may have to make an adjustment under section 481(a) of the Internal Revenue Code to prevent amounts of income or expense from being duplicated or omitted. Form 1040x 2012 The section 481(a) adjustment period is generally 1 year for a net negative adjustment and 4 years for a net positive adjustment. Form 1040x 2012 However, a corporation can elect to use a 1-year adjustment period if the net section 481(a) adjustment for the change is less than $25,000. Form 1040x 2012 The corporation must complete the appropriate lines of Form 3115 to make the election. Form 1040x 2012 See the Instructions for Form 3115. Form 1040x 2012 Accounting Periods A corporation must figure its taxable income on the basis of a tax year. Form 1040x 2012 A tax year is the annual accounting period a corporation uses to keep its records and report its income and expenses. Form 1040x 2012 Generally, corporations can use either a calendar year or a fiscal year as its tax year. Form 1040x 2012 Unless special rules apply, a corporation generally adopts a tax year by filing its first federal income tax return using that tax year. Form 1040x 2012 For more information, see Publication 538. Form 1040x 2012 Personal service corporation. Form 1040x 2012   A personal service corporation must use a calendar year as its tax year unless: It elects to use a 52–53 week tax year that ends with reference to the calendar year; It can establish a business purpose for a different tax year and obtains approval of the IRS. Form 1040x 2012 See Form 1128, Application To Adopt, Change, or Retain a Tax Year, and Publication 538; or It elects under section 444 of the Internal Revenue Code to have a tax year other than a calendar year. Form 1040x 2012 Use Form 8716, Election to Have a Tax Year Other Than a Required Tax Year, to make the election. Form 1040x 2012   If a personal service corporation makes a section 444 election, its deduction for certain amounts paid to employee-owners may be limited. Form 1040x 2012 See Schedule H (Form 1120), Section 280H Limitations for a Personal Service Corporation (PSC), to figure the maximum deduction. Form 1040x 2012 Change of tax year. Form 1040x 2012   Generally, a corporation must get the consent of the IRS before changing its tax year by filing Form 1128. Form 1040x 2012 However, under certain conditions, a corporation can change its tax year without getting the consent. Form 1040x 2012 For more information, see Form 1128 and Publication 538. Form 1040x 2012 Recordkeeping A corporation should keep its records for as long as they may be needed for the administration of any provision of the Internal Revenue Code. Form 1040x 2012 Usually records that support items of income, deductions, or credits on the return must be kept for 3 years from the date the return is due or filed, whichever is later. Form 1040x 2012 Keep records that verify the corporation's basis in property for as long as they are needed to figure the basis of the original or replacement property. Form 1040x 2012 The corporation should keep copies of all filed returns. Form 1040x 2012 They help in preparing future and amended returns and in the calculation of earnings and profits. Form 1040x 2012 Income, Deductions, and Special Provisions Rules on income and deductions that apply to individuals also apply, for the most part, to corporations. Form 1040x 2012 However, the following special provisions apply only to corporations. Form 1040x 2012 Costs of Going Into Business When you go into business, treat all costs you incur to get your business started as capital expenses. Form 1040x 2012 However, a corporation can elect to deduct a limited amount of start-up or organizational costs. Form 1040x 2012 Any costs not deducted can be amortized. Form 1040x 2012 Start-up costs are costs for creating an active trade or business or investigating the creation or acquisition of an active trade or business. Form 1040x 2012 Organizational costs are the direct costs of creating the corporation. Form 1040x 2012 For more information on deducting or amortizing start-up and organizational costs, see the instructions for your income tax return. Form 1040x 2012 Also see, Publication 535, chapter 7, Costs You Can Deduct or Capitalize, and chapter 8, Amortization. Form 1040x 2012 Related Persons A corporation that uses an accrual method of accounting cannot deduct business expenses and interest owed to a related person who uses the cash method of accounting until the corporation makes the payment and the corresponding amount is includible in the related person's gross income. Form 1040x 2012 Determine the relationship, for this rule, as of the end of the tax year for which the expense or interest would otherwise be deductible. Form 1040x 2012 If a deduction is denied, the rule will continue to apply even if the corporation's relationship with the person ends before the expense or interest is includible in the gross income of that person. Form 1040x 2012 These rules also deny the deduction of losses on the sale or exchange of property between related persons. Form 1040x 2012 Related persons. Form 1040x 2012   For purposes of this rule, the following persons are related to a corporation. Form 1040x 2012 Another corporation, that is a member of the same controlled group (as defined in section 267(f) of the Internal Revenue Code). Form 1040x 2012 An individual who owns, directly or indirectly, more than 50% of the value of the outstanding stock of the corporation. Form 1040x 2012 A trust fiduciary, when the trust or the grantor of the trust owns, directly or indirectly, more than 50% in value of the outstanding stock of the corporation. Form 1040x 2012 An S corporation, if the same persons own more than 50% in value of the outstanding stock of each corporation. Form 1040x 2012 A partnership, if the same persons own more than 50% in value of the outstanding stock of the corporation and more than 50% of the capital or profits interest in the partnership. Form 1040x 2012 Any employee-owner, if the corporation is a personal service corporation (see Personal service corporation, earlier), regardless of the amount of stock owned by the employee-owner. Form 1040x 2012 Ownership of stock. Form 1040x 2012   To determine whether an individual directly or indirectly owns any of the outstanding stock of a corporation, the following apply. Form 1040x 2012 Stock owned, directly or indirectly, by or for a corporation, partnership, estate, or trust, is treated as being owned proportionately by or for its shareholders, partners, or beneficiaries. Form 1040x 2012 An individual is treated as owning the stock owned, directly or indirectly, by or for the individual's family. Form 1040x 2012 Family includes only brothers and sisters (including half brothers and half sisters), a spouse, ancestors, and lineal descendants. Form 1040x 2012 Any individual owning (other than by applying (2), above) stock in a corporation, is treated as also owning the stock owned directly or indirectly by that individual's partner. Form 1040x 2012 To apply (1), (2), or (3), above, stock constructively owned by a person under (1) is treated as actually owned by that person. Form 1040x 2012 But stock constructively owned by an individual under (2) or (3) is not treated as actually owned by the individual for applying either (2) or (3) to make another person the constructive owner of that stock. Form 1040x 2012 Reallocation of income and deductions. Form 1040x 2012   Where it is necessary to clearly show income or prevent tax evasion, the IRS can reallocate gross income, deductions, credits, or allowances between two or more organizations, trades, or businesses owned or controlled directly, or indirectly, by the same interests. Form 1040x 2012 Complete liquidations. Form 1040x 2012   The disallowance of losses from the sale or exchange of property between related persons does not apply to liquidating distributions. Form 1040x 2012 More information. Form 1040x 2012   For more information about the related person rules, see Publication 544. Form 1040x 2012 Income From Qualifying Shipping Activities A corporation may make an election to be taxed on its notional shipping income at the highest corporate tax rate. Form 1040x 2012 If a corporation makes this election it may exclude income from qualifying shipping activities from gross income. Form 1040x 2012 Also if the election is made, the corporation generally may not claim any loss, deduction, or credit with respect to qualifying shipping activities. Form 1040x 2012 A corporation making this election may also elect to defer gain on the disposition of a qualifying vessel. Form 1040x 2012 A corporation uses Form 8902, Alternative Tax on Qualifying Shipping Activities, to make the election and figure the alternative tax. Form 1040x 2012 For more information regarding the election, see Form 8902. Form 1040x 2012 Election to Expense Qualified Refinery Property A corporation can make an irrevocable election on its tax return filed by the due date (including extensions) to deduct 50% of the cost of qualified refinery property (defined in section 179C(c) of the Internal Revenue Code), placed in service before January 1, 2014. Form 1040x 2012 The deduction is allowed for the year in which the property is placed in service. Form 1040x 2012 A subchapter T cooperative can make an irrevocable election on its return by the due date (including extensions) to allocate this deduction to its owners based on their ownership interest. Form 1040x 2012 For more information, see section 179C of the Internal Revenue Code and the related Regulations. Form 1040x 2012 Deduction to Comply With EPA Sulfur Regulations A small business refiner can make an irrevocable election on its tax return filed by the due date (including extensions) to deduct up to 75% of qualified costs paid or incurred to comply with the Highway Diesel Fuel Sulfur Control Requirements of the Environmental Protection Agency (EPA). Form 1040x 2012 A subchapter T cooperative can make an irrevocable election on its return filed by the due date (including extensions) to allocate the deduction to its owners based on their ownership interest. Form 1040x 2012 For more information, see sections 45H and 179B of the Internal Revenue Code and the related Regulations. Form 1040x 2012 Energy-Efficient Commercial Building Property Deduction A corporation can claim a deduction for costs associated with energy-efficient commercial building property, placed in service before January 1, 2014. Form 1040x 2012 In order to qualify for the deduction: The costs must be associated with depreciable or amortizable property in a Standard 90. Form 1040x 2012 1-2001 domestic building; The property must be either a part of the interior lighting system, the heating, cooling, ventilation and hot water system, or the building envelope (defined in section 179D(c)(1)(C) of the Internal Revenue Code); and The property must be installed as part of a plan to reduce the total annual energy and power costs of the building by 50% or more. Form 1040x 2012 The deduction is limited to $1. Form 1040x 2012 80 per square foot of the building less the total amount of deductions taken for this property in prior tax years. Form 1040x 2012 Other rules and limitations apply. Form 1040x 2012 The corporation must reduce the basis of any property by any deduction taken. Form 1040x 2012 The deduction is subject to recapture if the corporation fails to fully implement an energy savings plan. Form 1040x 2012 For more information, see section 179D of the Internal Revenue Code. Form 1040x 2012 Also see Notice 2006-52, 2006-26 I. Form 1040x 2012 R. Form 1040x 2012 B. Form 1040x 2012 1175, clarified and amplified by Notice 2008-40, 2008-14 I. Form 1040x 2012 R. Form 1040x 2012 B. Form 1040x 2012 725, and any successor. Form 1040x 2012 Corporate Preference Items A corporation must make special adjustments to certain items before it takes them into account in determining its taxable income. Form 1040x 2012 These items are known as corporate preference items and they include the following. Form 1040x 2012 Gain on the disposition of section 1250 property. Form 1040x 2012 For more information, see section 1250 Property under Depreciation Recapture in chapter 3 of Publication 544. Form 1040x 2012 Percentage depletion for iron ore and coal (including lignite). Form 1040x 2012 For more information, see Mines and Geothermal Deposits under Mineral Property in chapter 9 of Publication 535. Form 1040x 2012 Amortization of pollution control facilities. Form 1040x 2012 For more information, see Pollution Control Facilities in chapter 8 of Publication 535 and section 291(a)(5) of the Internal Revenue Code. Form 1040x 2012 Mineral exploration and development costs. Form 1040x 2012 For more information, see Exploration Costs and Development Costs in chapter 7 of Publication 535. Form 1040x 2012 For more information on corporate preference items, see section 291 of the Internal Revenue Code. Form 1040x 2012 Dividends-Received Deduction A corporation can deduct a percentage of certain dividends received during its tax year. Form 1040x 2012 This section discusses the general rules that apply. Form 1040x 2012 The deduction is figured on Form 1120, Schedule C, or the applicable schedule of your income tax return. Form 1040x 2012 For more information, see the Instructions for Form 1120, or the instructions for your applicable income tax return. Form 1040x 2012 Dividends from domestic corporations. Form 1040x 2012   A corporation can deduct, within certain limits, 70% of the dividends received if the corporation receiving the dividend owns less than 20% of the corporation distributing the dividend. Form 1040x 2012 If the corporation owns 20% or more of the distributing corporation's stock, it can, subject to certain limits, deduct 80% of the dividends received. Form 1040x 2012 Ownership. Form 1040x 2012   Determine ownership, for these rules, by the amount of voting power and value of the paying corporation's stock (other than certain preferred stock) the receiving corporation owns. Form 1040x 2012 Small business investment companies. Form 1040x 2012   Small business investment companies can deduct 100% of the dividends received from taxable domestic corporations. Form 1040x 2012 Dividends from regulated investment companies. Form 1040x 2012   Regulated investment company dividends received are subject to certain limits. Form 1040x 2012 Capital gain dividends received from a regulated investment company do not qualify for the deduction. Form 1040x 2012 For more information, see section 854 of the Internal Revenue Code. Form 1040x 2012 No deduction allowed for certain dividends. Form 1040x 2012   Corporations cannot take a deduction for dividends received from the following entities. Form 1040x 2012 A real estate investment trust (REIT). Form 1040x 2012 A corporation exempt from tax under section 501 or 521 of the Internal Revenue Code either for the tax year of the distribution or the preceding tax year. Form 1040x 2012 A corporation whose stock was held less than 46 days during the 91-day period beginning 45 days before the stock became ex-dividend with respect to the dividend. Form 1040x 2012 Ex-dividend means the holder has no rights to the dividend. Form 1040x 2012 A corporation whose preferred stock was held less than 91 days during the 181-day period beginning 90 days before the stock became ex-dividend with respect to the dividend if the dividends received are for a period or periods totaling more than 366 days. Form 1040x 2012 Any corporation, if your corporation is under an obligation (pursuant to a short sale or otherwise) to make related payments with respect to positions in substantially similar or related property. Form 1040x 2012 Dividends on deposits. Form 1040x 2012   Dividends on deposits or withdrawable accounts in domestic building and loan associations, mutual savings banks, cooperative banks, and similar organizations are interest, not dividends. Form 1040x 2012 They do not qualify for this deduction. Form 1040x 2012 Limit on deduction for dividends. Form 1040x 2012   The total deduction for dividends received or accrued is generally limited (in the following order) to: 80% of the difference between taxable income and the 100% deduction allowed for dividends received from affiliated corporations, or by a small business investment company, for dividends received or accrued from 20%-owned corporations, then 70% of the difference between taxable income and the 100% deduction allowed for dividends received from affiliated corporations, or by a small business investment company, for dividends received or accrued from less-than-20%-owned corporations (reducing taxable income by the total dividends received from 20%-owned corporations). Form 1040x 2012 Figuring the limit. Form 1040x 2012   In figuring the limit, determine taxable income without the following items. Form 1040x 2012 The net operating loss deduction. Form 1040x 2012 The domestic production activities deduction. Form 1040x 2012 The deduction for dividends received. Form 1040x 2012 Any adjustment due to the nontaxable part of an extraordinary dividend (see Extraordinary Dividends, below). Form 1040x 2012 Any capital loss carryback to the tax year. Form 1040x 2012 Effect of net operating loss. Form 1040x 2012   If a corporation has a net operating loss (NOL) for a tax year, the limit of 80% (or 70%) of taxable income does not apply. Form 1040x 2012 To determine whether a corporation has an NOL, figure the dividends-received deduction without the 80% (or 70%) of taxable income limit. Form 1040x 2012 Example 1. Form 1040x 2012 A corporation loses $25,000 from operations. Form 1040x 2012 It receives $100,000 in dividends from a 20%-owned corporation. Form 1040x 2012 Its taxable income is $75,000 ($100,000 – $25,000) before the deduction for dividends received. Form 1040x 2012 If it claims the full dividends-received deduction of $80,000 ($100,000 × 80%) and combines it with an operations loss of $25,000, it will have an NOL of ($5,000). Form 1040x 2012 Therefore, the 80% of taxable income limit does not apply. Form 1040x 2012 The corporation can deduct the full $80,000. Form 1040x 2012 Example 2. Form 1040x 2012 Assume the same facts as in Example 1, except that the corporation only loses $15,000 from operations. Form 1040x 2012 Its taxable income is $85,000 before the deduction for dividends received. Form 1040x 2012 After claiming the dividends-received deduction of $80,000 ($100,000 × 80%), its taxable income is $5,000. Form 1040x 2012 Because the corporation will not have an NOL after applying a full dividends-received deduction, its allowable dividends-received deduction is limited to 80% of its taxable income, or $68,000 ($85,000 × 80%). Form 1040x 2012 Extraordinary Dividends If a corporation receives an extraordinary dividend on stock held 2 years or less before the dividend announcement date, it generally must reduce its basis in the stock by the nontaxed part of the dividend. Form 1040x 2012 The nontaxed part is any dividends-received deduction allowable for the dividends. Form 1040x 2012 Extraordinary dividend. Form 1040x 2012   An extraordinary dividend is any dividend on stock that equals or exceeds a certain percentage of the corporation's adjusted basis in the stock. Form 1040x 2012 The percentages are: 5% for stock preferred as to dividends, or 10% for other stock. Form 1040x 2012 Treat all dividends received that have ex-dividend dates within an 85-consecutive-day period as one dividend. Form 1040x 2012 Treat all dividends received that have ex-dividend dates within a 365-consecutive-day period as extraordinary dividends if the total of the dividends exceeds 20% of the corporation's adjusted basis in the stock. Form 1040x 2012 Disqualified preferred stock. Form 1040x 2012   Any dividend on disqualified preferred stock is treated as an extraordinary dividend regardless of the period of time the corporation held the stock. Form 1040x 2012   Disqualified preferred stock is any stock preferred as to dividends if any of the following apply. Form 1040x 2012 The stock when issued has a dividend rate that declines (or can reasonably be expected to decline) in the future. Form 1040x 2012 The issue price of the stock exceeds its liquidation rights or stated redemption price. Form 1040x 2012 The stock is otherwise structured to avoid the rules for extraordinary dividends and to enable corporate shareholders to reduce tax through a combination of dividends-received deductions and loss on the disposition of the stock. Form 1040x 2012   These rules apply to stock issued after July 10, 1989, unless it was issued under a written binding contract in effect on that date, and thereafter, before the issuance of the stock. Form 1040x 2012 More information. Form 1040x 2012   For more information on extraordinary dividends, see section 1059 of the Internal Revenue Code. Form 1040x 2012 Below-Market Loans If a corporation receives a below-market loan and uses the proceeds for its trade or business, it may be able to deduct the forgone interest. Form 1040x 2012 A below-market loan is a loan on which no interest is charged or on which interest is charged at a rate below the applicable federal rate. Form 1040x 2012 A below-market loan generally is treated as an arm's-length transaction in which the borrower is considered as having received both the following: A loan in exchange for a note that requires payment of interest at the applicable federal rate, and An additional payment in an amount equal to the forgone interest. Form 1040x 2012 Treat the additional payment as a gift, dividend, contribution to capital, payment of compensation, or other payment, depending on the substance of the transaction. Form 1040x 2012 Foregone interest. Form 1040x 2012   For any period, forgone interest is equal to: The interest that would be payable for that period if interest accrued on the loan at the applicable federal rate and was payable annually on December 31, minus Any interest actually payable on the loan for the period. Form 1040x 2012 See Below-market loans, in chapter 4 of Publication 535 for more information. Form 1040x 2012 Charitable Contributions A corporation can claim a limited deduction for charitable contributions made in cash or other property. Form 1040x 2012 The contribution is deductible if made to, or for the use of, a qualified organization. Form 1040x 2012 For more information on qualified organizations, see Publication 526, Charitable Contributions. Form 1040x 2012 Also see, Exempt Organizations Select Check (EO Select Check) at www. Form 1040x 2012 irs. Form 1040x 2012 gov/charities, the on-line search tool for finding information on organizations eligible to receive tax-deductible contributions. Form 1040x 2012 Note. Form 1040x 2012 You cannot take a deduction if any of the net earnings of an organization receiving contributions benefit any private shareholder or individual. Form 1040x 2012 Cash method corporation. Form 1040x 2012   A corporation using the cash method of accounting deducts contributions in the tax year paid. Form 1040x 2012 Accrual method corporation. Form 1040x 2012   A corporation using an accrual method of accounting can choose to deduct unpaid contributions for the tax year the board of directors authorizes them if it pays them by the 15th day of the 3rd month after the close of that tax year. Form 1040x 2012 Make the choice by reporting the contribution on the corporation's return for the tax year. Form 1040x 2012 A declaration stating that the board of directors adopted the resolution during the tax year must accompany the return. Form 1040x 2012 The declaration must include the date the resolution was adopted. Form 1040x 2012 Limitations on deduction. Form 1040x 2012   A corporation cannot deduct charitable contributions that exceed 10% of its taxable income for the tax year. Form 1040x 2012 Figure taxable income for this purpose without the following. Form 1040x 2012 The deduction for charitable contributions. Form 1040x 2012 The dividends-received deduction. Form 1040x 2012 The deduction allowed under section 249 of the Internal Revenue Code. Form 1040x 2012 The domestic production activities deduction. Form 1040x 2012 Any net operating loss carryback to the tax year. Form 1040x 2012 Any capital loss carryback to the tax year. Form 1040x 2012 Farmers and ranchers. Form 1040x 2012    Corporations that are farmers and ranchers should see section 170(b)(2) of the Internal Revenue Code for special rules that may affect the deduction limit. Form 1040x 2012 Carryover of excess contributions. Form 1040x 2012   You can carry over, within certain limits, to each of the subsequent 5 years any charitable contributions made during the current year that exceed the 10% limit. Form 1040x 2012 You lose any excess not used within that period. Form 1040x 2012 For example, if a corporation has a carryover of excess contributions paid in 2010 and it does not use all the excess on its return for 2011, it can carry any excess over to 2012, 2013, 2014, and 2015, if applicable. Form 1040x 2012 Any excess not used in 2015 is lost. Form 1040x 2012 Do not deduct a carryover of excess contributions in the carryover year until after you deduct contributions made in that year (subject to the 10% limit). Form 1040x 2012 You cannot deduct a carryover of excess contributions to the extent it increases a net operating loss carryover. Form 1040x 2012 Cash contributions. Form 1040x 2012   A corporation must maintain a record of any contribution of cash, check, or other monetary contribution, regardless of the amount. Form 1040x 2012 The record can be a bank record, receipt, letter, or other written communication from the donee indicating the name of the organization, the date of the contribution, and the amount of the contribution. Form 1040x 2012 Keep the record of the contribution with the other corporate records. Form 1040x 2012 Do not attach the records to the corporation's return. Form 1040x 2012 For more information on cash contributions, see Publication 526. Form 1040x 2012 Gifts of $250 or more. Form 1040x 2012   Generally, no deduction is allowed for any contribution of $250 or more unless the corporation gets a written acknowledgement from the donee organization. Form 1040x 2012 The acknowledgement should show the amount of cash contributed, a description of the property contributed, and either gives a description and a good faith estimate of the value of any goods or services provided in return for the contribution or states that no goods or services were provided in return for the contribution. Form 1040x 2012 The acknowledgement should be received by the due date (including extensions) of the return, or, if earlier, the date the return was filed. Form 1040x 2012 Keep the acknowledgement with other corporate records. Form 1040x 2012 Do not attach the acknowledgement to the return. Form 1040x 2012 Contributions of property other than cash. Form 1040x 2012   If a corporation (other than a closely-held or a personal service corporation) claims a deduction of more than $500 for contributions of property other than cash, a schedule describing the property and the method used to determine its fair market value must be attached to the corporation's return. Form 1040x 2012 In addition the corporation should keep a record of: The approximate date and manner of acquisition of the donated property and The cost or other basis of the donated property held by the donor for less than 12 months prior to contribution. Form 1040x 2012   Closely held and personal service corporations must complete and attach Form 8283, Noncash Charitable Contributions, to their returns if they claim a deduction of more than $500 for non-cash contributions. Form 1040x 2012 For all other corporations, if the deduction claimed for donated property exceeds $5,000, complete Form 8283 and attach it to the corporation's return. Form 1040x 2012   A corporation must obtain a qualified appraisal for all deductions of property claimed in excess of $5,000. Form 1040x 2012 A qualified appraisal is not required for the donation of cash, publicly traded securities, inventory, and any qualified vehicles sold by a donee organization without any significant intervening use or material improvement. Form 1040x 2012 The appraisal should be maintained with other corporate records and only attached to the corporation's return when the deduction claimed exceeds $500,000; $20,000 for donated art work. Form 1040x 2012   See Form 8283 for more information. Form 1040x 2012 Qualified conservation contributions. Form 1040x 2012   If a corporation makes a qualified conservation contribution, the corporation must provide information regarding the legal interest being donated, the fair market value of the underlying property before and after the donation, and a description of the conservation purpose for which the property will be used. Form 1040x 2012 For more information, see section 170(h) of the Internal Revenue Code. Form 1040x 2012 Contributions of used vehicles. Form 1040x 2012   A corporation is allowed a deduction for the contribution of used motor vehicles, boats, and airplanes. Form 1040x 2012 The deduction is limited, and other special rules apply. Form 1040x 2012 For more information, see Publication 526. Form 1040x 2012 Reduction for contributions of certain property. Form 1040x 2012   For a charitable contribution of property, the corporation must reduce the contribution by the sum of: The ordinary income and short-term capital gain that would have resulted if the property were sold at its FMV and For certain contributions, the long-term capital gain that would have resulted if the property were sold at its FMV. Form 1040x 2012   The reduction for the long-term capital gain applies to: Contributions of tangible personal property for use by an exempt organization for a purpose or function unrelated to the basis for its exemption; Contributions of any property to or for the use of certain private foundations except for stock for which market quotations are readily available; and Contributions of any patent, certain copyrights, trademark, trade name, trade secret, know-how, software (that is a section 197 intangible), or similar property, or applications or registrations of such property. Form 1040x 2012 Larger deduction. Form 1040x 2012   A corporation (other than an S corporation) may be able to claim a deduction equal to the lesser of (a) the basis of the donated inventory or property plus one-half of the inventory or property's appreciation (gain if the donated inventory or property was sold at fair market value on the date of the donation), or (b) two times basis of the donated inventory or property. Form 1040x 2012 This deduction may be allowed for certain contributions of: Certain inventory and other property made to a donee organization and used solely for the care of the ill, the needy, and infants. Form 1040x 2012 Scientific property constructed by the corporation (other than an S corporation, personal holding company, or personal service corporation) and donated no later than 2 years after substantial completion of the construction. Form 1040x 2012 The property must be donated to a qualified organization and its original use must be by the donee for research, experimentation, or research training within the United States in the area of physical or biological science. Form 1040x 2012 Computer technology and equipment acquired or constructed and donated no later than 3 years after either acquisition or substantial completion of construction to an educational organization for educational purposes within the United States. Form 1040x 2012 Contributions to organizations conducting lobbying activities. Form 1040x 2012   Contributions made to an organization that conducts lobbying activities are not deductible if: The lobbying activities relate to matters of direct financial interest to the donor's trade or business and The principal purpose of the contribution was to avoid federal income tax by obtaining a deduction for activities that would have been nondeductible under the lobbying expense rules if conducted directly by the donor. Form 1040x 2012 More information. Form 1040x 2012   For more information on charitable contributions, including substantiation and recordkeeping requirements, see section 170 of the Internal Revenue Code, the related regulations, and Publication 526. Form 1040x 2012 Capital Losses A corporation can deduct capital losses only up to the amount of its capital gains. Form 1040x 2012 In other words, if a corporation has an excess capital loss, it cannot deduct the loss in the current tax year. Form 1040x 2012 Instead, it carries the loss to other tax years and deducts it from any net capital gains that occur in those years. Form 1040x 2012 A capital loss is carried to other years in the following order. Form 1040x 2012 3 years prior to the loss year. Form 1040x 2012 2 years prior to the loss year. Form 1040x 2012 1 year prior to the loss year. Form 1040x 2012 Any loss remaining is carried forward for 5 years. Form 1040x 2012 When you carry a net capital loss to another tax year, treat it as a short-term loss. Form 1040x 2012 It does not retain its original identity as long term or short term. Form 1040x 2012 Example. Form 1040x 2012 A calendar year corporation has a net short-term capital gain of $3,000 and a net long-term capital loss of $9,000. Form 1040x 2012 The short-term gain offsets some of the long-term loss, leaving a net capital loss of $6,000. Form 1040x 2012 The corporation treats this $6,000 as a short-term loss when carried back or forward. Form 1040x 2012 The corporation carries the $6,000 short-term loss back 3 years. Form 1040x 2012 In year 1, the corporation had a net short-term capital gain of $8,000 and a net long-term capital gain of $5,000. Form 1040x 2012 It subtracts the $6,000 short-term loss first from the net short-term gain. Form 1040x 2012 This results in a net capital gain for year 1 of $7,000. Form 1040x 2012 This consists of a net short-term capital gain of $2,000 ($8,000 − $6,000) and a net long-term capital gain of $5,000. Form 1040x 2012 S corporation status. Form 1040x 2012   A corporation may not carry a capital loss from, or to, a year for which it is an S corporation. Form 1040x 2012 Rules for carryover and carryback. Form 1040x 2012   When carrying a capital loss from one year to another, the following rules apply. Form 1040x 2012 When figuring the current year's net capital loss, you cannot combine it with a capital loss carried from another year. Form 1040x 2012 In other words, you can carry capital losses only to years that would otherwise have a total net capital gain. Form 1040x 2012 If you carry capital losses from 2 or more years to the same year, deduct the loss from the earliest year first. Form 1040x 2012 You cannot use a capital loss carried from another year to produce or increase a net operating loss in the year to which you carry it back. Form 1040x 2012 Refunds. Form 1040x 2012   When you carry back a capital loss to an earlier tax year, refigure your tax for that year. Form 1040x 2012 If your corrected tax is less than the tax you originally owed, use either Form 1139, Corporate Application for Tentative Refund, or Form 1120X, Amended U. Form 1040x 2012 S. Form 1040x 2012 Corporation Income Tax Return, to apply for a refund. Form 1040x 2012 Form 1139. Form 1040x 2012    A corporation can get a refund faster by using Form 1139. Form 1040x 2012 It cannot file Form 1139 before filing the return for the corporation's capital loss year, but it must file Form 1139 no later than 1 year after the year it sustains the capital loss. Form 1040x 2012 Form 1120X. Form 1040x 2012   If the corporation does not file Form 1139, it must file Form 1120X to apply for a refund. Form 1040x 2012 The corporation must file the Form 1120X within 3 years of the due date, includin