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Free federal and state tax filing online 8. Free federal and state tax filing online   Paying Tax Through Withholding or Estimated Tax Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Notification of Alien Status Withholding From CompensationWithholding on Wages Withholding on Pensions Withholding on Tip Income Independent Contractors Withholding From Other IncomeTax Withheld on Partnership Income Withholding on Scholarships and Fellowship Grants Income Entitled to Tax Treaty BenefitsStudents, teachers, and researchers. Free federal and state tax filing online Tax Withheld on Real Property Sales Social Security and Medicare TaxesStudents and Exchange Visitors Agricultural Workers Self-Employment Tax International Social Security Agreements Estimated Tax Form 1040-ES (NR)Fiscal year. Free federal and state tax filing online Introduction This chapter discusses how to pay your U. Free federal and state tax filing online S. Free federal and state tax filing online income tax as you earn or receive income during the year. Free federal and state tax filing online In general, the federal income tax is a pay as you go tax. Free federal and state tax filing online There are two ways to pay as you go. Free federal and state tax filing online Withholding. Free federal and state tax filing online If you are an employee, your employer probably withholds income tax from your pay. Free federal and state tax filing online Tax may also be withheld from certain other income—including pensions, bonuses, commissions, and gambling winnings. Free federal and state tax filing online In each case, the amount withheld is paid to the U. Free federal and state tax filing online S. Free federal and state tax filing online Treasury in your name. Free federal and state tax filing online Estimated tax. Free federal and state tax filing online If you do not pay your tax through withholding, or do not pay enough tax that way, you might have to pay estimated tax. Free federal and state tax filing online People who are in business for themselves generally will have to pay their tax this way. Free federal and state tax filing online You may have to pay estimated tax if you receive income such as dividends, interest, rent, and royalties. Free federal and state tax filing online Estimated tax is used to pay not only income tax, but self-employment tax and alternative minimum tax as well. Free federal and state tax filing online Topics - This chapter discusses: How to notify your employer of your alien status, Income subject to withholding of income tax, Exemptions from withholding, Social security and Medicare taxes, and Estimated tax rules. Free federal and state tax filing online Useful Items - You may want to see: Publication 515 Withholding of Tax on Nonresident Aliens and Foreign Entities 901 U. Free federal and state tax filing online S. Free federal and state tax filing online Tax Treaties Form (and Instructions) W-4 Employee's Withholding Allowance Certificate W-8BEN Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting (Individuals) W-8ECI Certificate of Foreign Person's Claim That Income Is Effectively Connected With the Conduct of a Trade or Business in the United States W-9 Request for Taxpayer Identification Number and Certification 1040-ES (NR) U. Free federal and state tax filing online S. Free federal and state tax filing online Estimated Tax for Nonresident Alien Individuals 8233 Exemption From Withholding on Compensation for Independent (and Certain Dependent) Personal Services of a Nonresident Alien Individual 8288-B Application for Withholding Certificate for Dispositions by Foreign Persons of U. Free federal and state tax filing online S. Free federal and state tax filing online Real Property Interests 13930 Application for Central Withholding Agreement See chapter 12 for information about getting these publications and forms. Free federal and state tax filing online Notification of Alien Status You must let your employer know whether you are a resident or a nonresident alien so your employer can withhold the correct amount of tax from your wages. Free federal and state tax filing online If you are a resident alien under the rules discussed in chapter 1, you must file Form W-9 or a similar statement with your employer. Free federal and state tax filing online If you are a nonresident alien under those rules, you must furnish to your employer Form 8233 or Form W-8BEN, establishing that you are a foreign person, or Form W-4, establishing that your compensation is subject to graduated withholding at the same rates as resident aliens or U. Free federal and state tax filing online S. Free federal and state tax filing online citizens. Free federal and state tax filing online If you are a resident alien and you receive income other than wages (such as dividends and royalties) from sources within the United States, file Form W-9 or similar statement with the withholding agent (generally, the payer of the income) so the agent will not withhold tax on the income at the 30% (or lower treaty) rate. Free federal and state tax filing online If you receive this type of income as a nonresident alien, file Form W-8BEN with the withholding agent so that the agent will withhold tax at the 30% (or lower treaty) rate. Free federal and state tax filing online However, if the income is effectively connected with a U. Free federal and state tax filing online S. Free federal and state tax filing online trade or business, file Form W-8ECI instead. Free federal and state tax filing online Withholding From Compensation The following discussion generally applies only to nonresident aliens. Free federal and state tax filing online Tax is withheld from resident aliens in the same manner as U. Free federal and state tax filing online S. Free federal and state tax filing online citizens. Free federal and state tax filing online Wages and other compensation paid to a nonresident alien for services performed as an employee are usually subject to graduated withholding at the same rates as resident aliens and U. Free federal and state tax filing online S. Free federal and state tax filing online citizens. Free federal and state tax filing online Therefore, your compensation, unless it is specifically excluded from the term “wages” by law, or is exempt from tax by treaty, is subject to graduated withholding. Free federal and state tax filing online Withholding on Wages If you are an employee and you receive wages subject to graduated withholding, you will be required to fill out a Form W-4. Free federal and state tax filing online Also fill out Form W-4 for a scholarship or fellowship grant to the extent it represents payment for past, present, or future services and for which you are not claiming a tax treaty withholding exemption on Form 8233 (discussed later under Income Entitled to Tax Treaty Benefits). Free federal and state tax filing online These are services you are required to perform as an employee and as a condition of receiving the scholarship or fellowship (or tuition reduction). Free federal and state tax filing online Nonresident aliens should fill out Form W-4 using the following instructions instead of the instructions on the Form W-4. Free federal and state tax filing online This is because of the restrictions on a nonresident alien's filing status, the limited number of personal exemptions a nonresident alien is allowed, and because a nonresident alien cannot claim the standard deduction. Free federal and state tax filing online Enter your social security number (SSN) on line 2. Free federal and state tax filing online Do not enter an individual taxpayer identification number (ITIN). Free federal and state tax filing online Check only “Single” marital status on line 3 (regardless of your actual marital status). Free federal and state tax filing online Claim only one allowance on line 5, unless you are a resident of Canada, Mexico, or South Korea, or a U. Free federal and state tax filing online S. Free federal and state tax filing online national. Free federal and state tax filing online Write “Nonresident Alien” or “NRA” on the dotted line on line 6. Free federal and state tax filing online You can request additional withholding on line 6 at your option. Free federal and state tax filing online Do not claim “Exempt” withholding status on line 7. Free federal and state tax filing online A U. Free federal and state tax filing online S. Free federal and state tax filing online national is an individual who, although not a U. Free federal and state tax filing online S. Free federal and state tax filing online citizen, owes his or her allegiance to the United States. Free federal and state tax filing online U. Free federal and state tax filing online S. Free federal and state tax filing online nationals include American Samoans, and Northern Mariana Islanders who chose to become U. Free federal and state tax filing online S. Free federal and state tax filing online nationals instead of U. Free federal and state tax filing online S. Free federal and state tax filing online citizens. Free federal and state tax filing online See Withholding on Scholarships and Fellowship Grants later, for how to fill out Form W-4 if you receive a U. Free federal and state tax filing online S. Free federal and state tax filing online source scholarship or fellowship grant that is not a payment for services. Free federal and state tax filing online Students and business apprentices from India. Free federal and state tax filing online   If you are eligible for the benefits of Article 21(2) of the United States-India Income Tax Treaty, you may claim an additional withholding allowance for the standard deduction. Free federal and state tax filing online You can claim an additional withholding allowance for your spouse only if your spouse will have no gross income for 2013 and cannot be claimed as a dependent on another U. Free federal and state tax filing online S. Free federal and state tax filing online taxpayer's 2013 return. Free federal and state tax filing online You may also claim an additional withholding allowance 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. Free federal and state tax filing online S. Free federal and state tax filing online citizens. Free federal and state tax filing online Household employees. Free federal and state tax filing online   If you work as a household employee, your employer does not have to withhold income tax. Free federal and state tax filing online However, you may agree to voluntary income tax withholding by filing a Form W-4 with your employer. Free federal and state tax filing online The agreement goes into effect when your employer accepts the agreement by beginning the withholding. Free federal and state tax filing online You or your employer may end the agreement by letting the other know in writing. Free federal and state tax filing online Agricultural workers. Free federal and state tax filing online   If you are an agricultural worker on an H-2A visa, your employer does not have to withhold income tax. Free federal and state tax filing online However, your employer will withhold income tax only if you and your employer agree to withhold. Free federal and state tax filing online In that case, you must provide your employer with a properly completed Form W-4. Free federal and state tax filing online You can find more information about not having tax withheld at www. Free federal and state tax filing online irs. Free federal and state tax filing online gov/Individuals/International-Taxpayers/Foreign-Agricultural-Workers. Free federal and state tax filing online Wages Exempt From Withholding Wages that are exempt from U. Free federal and state tax filing online S. Free federal and state tax filing online income tax under an income tax treaty are generally exempt from withholding. Free federal and state tax filing online For information on how to claim this exemption from withholding, see Income Entitled to Tax Treaty Benefits , later. Free federal and state tax filing online Wages paid to aliens who are residents of American Samoa, Canada, Mexico, Puerto Rico, or the U. Free federal and state tax filing online S. Free federal and state tax filing online Virgin Islands may be exempt from withholding. Free federal and state tax filing online The following paragraphs explain these exemptions. Free federal and state tax filing online Residents of Canada or Mexico engaged in transportation-related employment. Free federal and state tax filing online   Certain residents of Canada or Mexico who enter or leave the United States at frequent intervals are not subject to withholding on their wages. Free federal and state tax filing online These persons either: Perform duties in transportation service between the United States and Canada or Mexico, or Perform duties connected to the construction, maintenance, or operation of a waterway, viaduct, dam, or bridge crossed by, or crossing, the boundary between the United States and Canada or the boundary between the United States and Mexico. Free federal and state tax filing online    This employment is subject to withholding of social security and Medicare taxes unless the services are performed for a railroad. Free federal and state tax filing online   To qualify for the exemption from withholding during a tax year, a Canadian or Mexican resident must give the employer a statement in duplicate with name, address, and identification number, certifying that the resident: Is not a U. Free federal and state tax filing online S. Free federal and state tax filing online citizen or resident, Is a resident of Canada or Mexico, whichever applies, and Expects to perform duties previously described during the tax year in question. Free federal and state tax filing online   The statement can be in any form, but it must be dated and signed by the employee and must include a written declaration that it is made under the penalties of perjury. Free federal and state tax filing online Residents of American Samoa and Puerto Rico. Free federal and state tax filing online   If you are a nonresident alien employee who is a resident of American Samoa or Puerto Rico, wages for services performed in American Samoa or Puerto Rico are generally not subject to withholding unless you are an employee of the United States or any of its agencies in American Samoa or Puerto Rico. Free federal and state tax filing online Residents of the U. Free federal and state tax filing online S. Free federal and state tax filing online Virgin Islands. Free federal and state tax filing online   Nonresident aliens who are bona fide residents of the U. Free federal and state tax filing online S Virgin Islands are not subject to withholding of U. Free federal and state tax filing online S. Free federal and state tax filing online tax on income earned while temporarily employed in the United States. Free federal and state tax filing online This is because those persons pay their income tax to the U. Free federal and state tax filing online S. Free federal and state tax filing online Virgin Islands. Free federal and state tax filing online To avoid having tax withheld on income earned in the United States, bona fide residents of the U. Free federal and state tax filing online S. Free federal and state tax filing online Virgin Islands should write a letter, in duplicate, to their employers, stating that they are bona fide residents of the U. Free federal and state tax filing online S. Free federal and state tax filing online Virgin Islands and expect to pay tax on all income to the U. Free federal and state tax filing online S. Free federal and state tax filing online Virgin Islands. Free federal and state tax filing online Withholding on Pensions If you receive a pension as a result of personal services performed in the United States, the pension income is subject to the 30% (or lower treaty) rate of withholding. Free federal and state tax filing online You may, however, have tax withheld at graduated rates on the portion of the pension that arises from the performance of services in the United States after December 31, 1986. Free federal and state tax filing online You must fill out Form W-8BEN and give it to the withholding agent or payer before the income is paid or credited to you. Free federal and state tax filing online Withholding on Tip Income Tips you receive during the year for services performed in the United States are subject to U. Free federal and state tax filing online S. Free federal and state tax filing online income tax. Free federal and state tax filing online Include them in taxable income. Free federal and state tax filing online In addition, tips received while working for one employer, amounting to $20 or more in a month, are subject to graduated withholding. Free federal and state tax filing online Independent Contractors If there is no employee-employer relationship between you and the person for whom you perform services, your compensation is subject to the 30% (or lower treaty) rate of withholding. Free federal and state tax filing online However, if you are engaged in a trade or business in the United States during the tax year, your compensation for personal services as an independent contractor (independent personal services) may be entirely or partly exempt from withholding if you reach an agreement with the Internal Revenue Service on the amount of withholding required. Free federal and state tax filing online An agreement that you reach with the IRS regarding withholding from your compensation for independent personal services is effective for payments covered by the agreement after it is agreed to by all parties. Free federal and state tax filing online You must agree to timely file an income tax return for the current tax year. Free federal and state tax filing online Central withholding agreements. Free federal and state tax filing online   If you are a nonresident alien entertainer or athlete performing or participating in athletic events in the United States, you may be able to enter into a withholding agreement with the IRS for reduced withholding provided certain requirements are met. Free federal and state tax filing online Under no circumstances will such a withholding agreement reduce taxes withheld to less than the anticipated amount of income tax liability. Free federal and state tax filing online   File Form 13930 and the required attachments with the IRS to request a central withholding agreement. Free federal and state tax filing online Either you or your authorized representative can file the form. Free federal and state tax filing online It should be sent to the IRS at least 45 days before the tour begins or the event occurs. Free federal and state tax filing online Exceptions will be considered on a case by case basis. Free federal and state tax filing online   For more information on the CWA program, go to www. Free federal and state tax filing online irs. Free federal and state tax filing online gov/Individuals/International-Taxpayers/Central-Withholding-Agreements. Free federal and state tax filing online Final payment exemption. Free federal and state tax filing online   Your final payment of compensation during the tax year for independent personal services may be entirely or partly exempt from withholding. Free federal and state tax filing online This exemption is available only once during your tax year and applies to a maximum of $5,000 of compensation. Free federal and state tax filing online To obtain this exemption, you or your agent must give the following statements and information to the Commissioner or his delegate. Free federal and state tax filing online A statement by each withholding agent from whom you have received gross income effectively connected with a trade or business in the United States during the tax year, showing the amount of income paid and the tax withheld. Free federal and state tax filing online Each statement must be signed by the withholding agent and verified by a declaration that it is made under penalties of perjury. Free federal and state tax filing online A statement by the withholding agent from whom you expect to receive the final payment of compensation, showing the amount of the payment and the amount of tax that would be withheld if a final payment exemption were not granted. Free federal and state tax filing online This statement must also be signed by the withholding agent and verified by a declaration that it is made under penalties of perjury. Free federal and state tax filing online A statement by you that you do not intend to receive any other income effectively connected with a trade or business in the United States during the current tax year. Free federal and state tax filing online The amount of tax that has been withheld or paid under any other provision of the Internal Revenue Code or regulations for any income effectively connected with your trade or business in the United States during the current tax year. Free federal and state tax filing online The amount of your outstanding tax liabilities, if any, including interest and penalties, from the current tax year or prior tax periods. Free federal and state tax filing online Any provision of an income tax treaty under which a partial or complete exemption from withholding may be claimed, the country of your residence, and a statement of sufficient facts to justify an exemption under the treaty. Free federal and state tax filing online A statement signed by you, and verified by a declaration that it is made under penalties of perjury, that all the information given is true and that to your knowledge no relevant information has been omitted. Free federal and state tax filing online   If satisfied with the information, the IRS will determine the amount of your tentative income tax for the tax year on gross income effectively connected with your trade or business in the United States. Free federal and state tax filing online Ordinary and necessary business expenses can be taken into account if proven to the satisfaction of the Commissioner or his delegate. Free federal and state tax filing online   The Commissioner or his delegate will send you a letter, directed to the withholding agent, showing the amount of the final payment of compensation that is exempt from withholding and the amount that can be paid to you because of the exemption. Free federal and state tax filing online You must give two copies of the letter to the withholding agent and must also attach a copy of the letter to your income tax return for the tax year for which the exemption is effective. Free federal and state tax filing online Allowance for Personal Exemption Withholding on payments for independent personal services is generally based on the amount of your compensation payment minus the value of one exemption ($3,950 for 2014). Free federal and state tax filing online To determine the income for independent personal services performed in the United States to which the 30% (or lower treaty) rate will apply, you are allowed one personal exemption if you are not a U. Free federal and state tax filing online S. Free federal and state tax filing online national and are not a resident of Canada, Mexico, or South Korea. Free federal and state tax filing online For purposes of 30% withholding, the exemption is prorated at $10. Free federal and state tax filing online 82 a day in 2014 for the period that labor or personal services are performed in the United States. Free federal and state tax filing online To claim an exemption from withholding on the personal exemption amount, fill out the applicable parts of Form 8233 and give it to the withholding agent. Free federal and state tax filing online Example. Free federal and state tax filing online Eric Johannsen, who is a resident of Country X worked under a contract with a U. Free federal and state tax filing online S. Free federal and state tax filing online firm (not as an employee) in the United States for 100 days during 2014 before returning to his country. Free federal and state tax filing online He earned $6,000 for the services performed (not considered wages) in the United States. Free federal and state tax filing online Eric is married and has three dependent children. Free federal and state tax filing online His wife is not employed and has no income subject to U. Free federal and state tax filing online S. Free federal and state tax filing online tax. Free federal and state tax filing online The amount of the personal exemption to be allowed against the income for his personal services performed within the United States in 2014 is $1,082 (100 days × $10. Free federal and state tax filing online 82), and withholding at 30% is applied against the balance. Free federal and state tax filing online Thus, $1,475. Free federal and state tax filing online 40 in tax is withheld from Eric's earnings (30% of $4,918 ($6,000 − $1,082). Free federal and state tax filing online U. Free federal and state tax filing online S. Free federal and state tax filing online nationals or residents of Canada, Mexico, or South Korea. Free federal and state tax filing online   If you are a nonresident alien who is a resident of Canada, Mexico, or South Korea, or who is a national of the United States, you are subject to the same 30% withholding on your compensation for independent personal services performed in the United States. Free federal and state tax filing online However, if you are a U. Free federal and state tax filing online S. Free federal and state tax filing online national or a resident of Canada or Mexico, you are allowed the same personal exemptions as U. Free federal and state tax filing online S. Free federal and state tax filing online citizens. Free federal and state tax filing online For the 30% (or lower treaty) rate withholding, you can take $10. Free federal and state tax filing online 82 per day for each allowable exemption in 2014. Free federal and state tax filing online If you are a resident of South Korea, you are allowed personal exemptions for yourself and for your spouse and children who live with you in the United States at any time during the tax year. Free federal and state tax filing online However, the additional exemptions for your spouse and children must be further prorated as explained in chapter 5 under Exemptions . Free federal and state tax filing online Students and business apprentices from India. Free federal and state tax filing online   If you are eligible for the benefits of Article 21(2) of the United States-India Income Tax Treaty, you are allowed an exemption for your spouse only if your spouse will have no gross income for 2014 and cannot be claimed as a dependent on another U. Free federal and state tax filing online S. Free federal and state tax filing online taxpayer's 2014 return. Free federal and state tax filing online You are also allowed an exemption for each dependent 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. Free federal and state tax filing online S. Free federal and state tax filing online citizens. Free federal and state tax filing online For the 30% (or lower treaty rate) withholding on compensation for independent personal services performed in the United States, you are allowed $10. Free federal and state tax filing online 82 per day for each allowable exemption in 2014. Free federal and state tax filing online Refund of Taxes Withheld in Error Multi-level marketing. Free federal and state tax filing online   If you are a distributor for a multi-level marketing company who had taxes withheld in error, file a U. Free federal and state tax filing online S. Free federal and state tax filing online income tax return (Form 1040NR, Form 1040NR-EZ, or Form 1120-F) or, if a tax return has already been filed, a claim for refund (Form 1040X or amended Form 1120-F) to recover the amount withheld in error. Free federal and state tax filing online You must also attach to the U. Free federal and state tax filing online S. Free federal and state tax filing online income tax return or claim for refund supporting information that includes, but is not limited to, the following items. Free federal and state tax filing online A copy of your Form W-2, Form 1042-S, or Form 1099 to prove the amount of taxes withheld. Free federal and state tax filing online A statement explaining why income reported on your Form W-2, Form 1042-S, or Form 1099 is not subject to U. Free federal and state tax filing online S. Free federal and state tax filing online taxation. Free federal and state tax filing online A statement listing all the dates you entered and left the United States during the taxable year. Free federal and state tax filing online If the compensation is multi-year compensation, the statement must list all the dates you entered and left the United States during each of the taxable years to which the compensation is attributable. Free federal and state tax filing online A copy of any documents or records that show the number of days you actually were present in the United States during the years listed. Free federal and state tax filing online A statement providing: (a) the number of days (or unit of time less than a day, if appropriate) that personal services were performed in the United States in connection with recruiting, training, and supporting your lower-tier distributors; and (b) the total number of days (or unit of time less than a day, if appropriate) that personal services were performed globally in connection with recruiting, training, and supporting your lower-tier distributors. Free federal and state tax filing online Any further relevant document or record supporting your claim that the taxes were withheld in error. Free federal and state tax filing online Withholding From Other Income Other income subject to 30% withholding generally includes fixed or determinable income such as interest (other than portfolio interest), dividends, pensions and annuities, and gains from certain sales and exchanges, discussed in chapter 4. Free federal and state tax filing online It also includes 85% of social security benefits paid to nonresident aliens. Free federal and state tax filing online Refund of taxes withheld in error on social security benefits paid to resident aliens. Free federal and state tax filing online   Social security benefits paid to a lawful permanent resident (green card holder) are not subject to 30% withholding. Free federal and state tax filing online For U. Free federal and state tax filing online S. Free federal and state tax filing online income tax purposes, green card holders continue to be resident aliens until their lawful permanent resident status under immigration laws is either taken away or is administratively or judicially determined to have been abandoned. Free federal and state tax filing online See Green Card Test in chapter 1. Free federal and state tax filing online If you are a green card holder and tax was withheld in error on your social security benefits because you have a foreign address, the withholding tax is refundable by the Social Security Administration (SSA) or the IRS. Free federal and state tax filing online SSA will refund taxes erroneously withheld if the refund can be processed during the same calendar year in which the tax was withheld. Free federal and state tax filing online If SSA cannot refund the taxes withheld, you must file a Form 1040 or 1040A with the Department of the Treasury, Internal Revenue Service Center, Austin, TX 73301 to determine if you are entitled to a refund. Free federal and state tax filing online You must also attach the following to your Form 1040 or 1040A. Free federal and state tax filing online A copy of Form SSA-1042S, Social Security Benefit Statement. Free federal and state tax filing online A copy of the “green card. Free federal and state tax filing online ” A signed declaration that includes the following statements: The SSA should not have withheld income tax from my social security benefits because I am a U. Free federal and state tax filing online S. Free federal and state tax filing online lawful permanent resident and my green card has been neither revoked nor administratively or judicially determined to have been abandoned. Free federal and state tax filing online I am filing a U. Free federal and state tax filing online S. Free federal and state tax filing online income tax return for the tax year as a resident alien reporting all of my worldwide income. Free federal and state tax filing online I have not claimed benefits for the tax year under an income tax treaty as the resident of a country other than the United States. Free federal and state tax filing online Other income not subject to withholding of 30% (or lower treaty) rate. Free federal and state tax filing online   The following income is not subject to withholding at the 30% (or lower treaty) rate if you file Form W-8ECI with the payer of the income. Free federal and state tax filing online Income (other than compensation) that is effectively connected with your U. Free federal and state tax filing online S. Free federal and state tax filing online trade or business. Free federal and state tax filing online Income from real property that you choose to treat as effectively connected with a U. Free federal and state tax filing online S. Free federal and state tax filing online trade or business. Free federal and state tax filing online See Income From Real Property in chapter 4 for details about this choice. Free federal and state tax filing online   Special rules for withholding on partnership income, scholarships, and fellowships are explained next. Free federal and state tax filing online Tax Withheld on Partnership Income If you are a foreign partner in a U. Free federal and state tax filing online S. Free federal and state tax filing online or foreign partnership, the partnership will withhold tax on your share of effectively connected taxable income (ECTI) from the partnership. Free federal and state tax filing online You may be able to reduce your ECTI subject to withholding by certain partner-level deductions. Free federal and state tax filing online Generally, you must use Form 8804-C for this purpose. Free federal and state tax filing online See the Instructions for Form 8804-C for more information. Free federal and state tax filing online The withholding rate on your share of effectively connected income is generally the highest rate of tax specified under section 1 of the Code (39. Free federal and state tax filing online 6% for 2014). Free federal and state tax filing online However, the partnership may withhold at the highest rate that applies to a particular type of income allocable to you if you gave the partnership the appropriate documentation. Free federal and state tax filing online Long-term capital gain is an example of a particular type of income to which the highest tax rate applies. Free federal and state tax filing online Claim the tax withheld as a credit on your 2014 Form 1040NR. Free federal and state tax filing online The partnership will give you a statement on Form 8805, Foreign Partner's Information Statement of Section 1446 Withholding Tax, showing the tax withheld. Free federal and state tax filing online A partnership that is publicly traded will withhold tax on your actual distributions of effectively connected income. Free federal and state tax filing online In this case the partnership will give you a statement on Form 1042-S, Foreign Person's U. Free federal and state tax filing online S. Free federal and state tax filing online Source Income Subject to Withholding. Free federal and state tax filing online Withholding on Scholarships and Fellowship Grants There is no withholding on a qualified scholarship received by a candidate for a degree. Free federal and state tax filing online See chapter 3. Free federal and state tax filing online If you are a nonresident alien student or grantee with an “F,” “J,” “M,” or “Q” visa and you receive a U. Free federal and state tax filing online S. Free federal and state tax filing online source grant or scholarship that is not fully exempt, the withholding agent (usually the payer of the scholarship) withholds tax at 14% (or lower treaty rate) of the taxable part of the grant or scholarship that is not a payment for services. Free federal and state tax filing online However, if you are not a candidate for a degree and the grant does not meet certain requirements, tax will be withheld at the 30% (or lower treaty) rate. Free federal and state tax filing online Any part of a scholarship or fellowship grant that is a payment for services is subject to graduated withholding as discussed earlier under Withholding on Wages. Free federal and state tax filing online Alternate Withholding Procedure Your withholding agent may choose to use an alternate procedure by asking you to fill out Form W-4 and the Personal Allowances Worksheet (attached to Form W-4). Free federal and state tax filing online Use the following instructions instead of the Form W-4 instructions to complete the worksheet. Free federal and state tax filing online Line A. Free federal and state tax filing online   Enter the total of the following amounts on line A. Free federal and state tax filing online Personal exemption. Free federal and state tax filing online   Include the prorated part of your allowable personal exemption. Free federal and state tax filing online Figure the amount by multiplying the number of days you expect to be in the United States in 2014 by the daily exemption amount ($10. Free federal and state tax filing online 82). Free federal and state tax filing online Expenses. Free federal and state tax filing online   Include expenses that will be deductible on your return. Free federal and state tax filing online These include away-from-home expenses (meals, lodging, and transportation), certain state and local income taxes, charitable contributions, and casualty losses, discussed earlier under Itemized Deductions in chapter 5. Free federal and state tax filing online They also include business expenses, moving expenses, and the IRA deduction discussed under Deductions in chapter 5. Free federal and state tax filing online Nontaxable grant or scholarship. Free federal and state tax filing online   Include the part of your grant or scholarship that is not taxable under U. Free federal and state tax filing online S. Free federal and state tax filing online law or under a tax treaty. Free federal and state tax filing online Line B. Free federal and state tax filing online   Enter -0- unless the following paragraph applies to you. Free federal and state tax filing online   If you are a student who qualifies under Article 21(2) of the United States-India Income Tax Treaty, and you are not claiming deductions for away-from-home expenses or other itemized deductions (discussed earlier), enter the standard deduction on line B. Free federal and state tax filing online The standard deduction amount for 2013 is $6,100. Free federal and state tax filing online Lines C and D. Free federal and state tax filing online   Enter -0- on both lines unless the following paragraphs apply to you. Free federal and state tax filing online   If you are a resident of Canada, Mexico, South Korea, or a U. Free federal and state tax filing online S. Free federal and state tax filing online national, an additional daily exemption amount may be allowed for your spouse and each of your dependents. Free federal and state tax filing online   If you are a resident of India who is eligible for the benefits of Article 21(2) of the United States-India Income Tax Treaty, you can claim an additional daily exemption amount for your spouse only if your spouse will have no gross income for 2014 and cannot be claimed as a dependent on another U. Free federal and state tax filing online S. Free federal and state tax filing online taxpayer's 2014 return. Free federal and state tax filing online You can also claim an additional amount 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. Free federal and state tax filing online S. Free federal and state tax filing online citizens. Free federal and state tax filing online   Enter any additional amount for your spouse on line C. Free federal and state tax filing online Enter any additional amount for your dependents on line D. Free federal and state tax filing online Lines E, F, and G. Free federal and state tax filing online   No entries should be made on lines E, F, and G. Free federal and state tax filing online Line H. Free federal and state tax filing online   Add the amounts on lines A through D and enter the total on line H. Free federal and state tax filing online Form W-4. Free federal and state tax filing online   Complete lines 1 through 4 of Form W-4. Free federal and state tax filing online Sign and date the form and give it with the Personal Allowances Worksheet to your withholding agent. Free federal and state tax filing online   If you file a Form W-4 to reduce or eliminate the withholding on your scholarship or grant, you must file an annual U. Free federal and state tax filing online S. Free federal and state tax filing online income tax return to be allowed the exemptions and deductions you claimed on that form. Free federal and state tax filing online If you are in the United States during more than one tax year, you must attach a statement to your yearly Form W-4 indicating that you have filed a U. Free federal and state tax filing online S. Free federal and state tax filing online income tax return for the previous year. Free federal and state tax filing online If you have not been in the United States long enough to be required to file a return, you must attach a statement to your Form W-4 saying you will file a U. Free federal and state tax filing online S. Free federal and state tax filing online income tax return when required. Free federal and state tax filing online After the withholding agent has accepted your Form W-4, tax will be withheld on your scholarship or grant at the graduated rates that apply to wages. Free federal and state tax filing online The gross amount of the income is reduced by the amount on line H of the worksheet and the withholding tax is figured on the remainder. Free federal and state tax filing online You will receive a Form 1042-S from the withholding agent (usually the payer of your grant) showing the gross amount of your taxable scholarship or fellowship grant less the withholding allowance amount, the tax rate, and the amount of tax withheld. Free federal and state tax filing online Use this form to prepare your annual U. Free federal and state tax filing online S. Free federal and state tax filing online income tax return. Free federal and state tax filing online Income Entitled to Tax Treaty Benefits If a tax treaty between the United States and your country provides an exemption from, or a reduced rate of, tax for certain items of income, you should notify the payor of the income (the withholding agent) of your foreign status to claim a tax treaty withholding exemption. Free federal and state tax filing online Generally, you do this by filing either Form W-8BEN or Form 8233 with the withholding agent. Free federal and state tax filing online File Form W-8BEN for income that is not personal services income. Free federal and state tax filing online File Form 8233 for personal services income as discussed next. Free federal and state tax filing online Employees and independent contractors. Free federal and state tax filing online   If you perform personal services as an employee or as an independent contractor and you can claim an exemption from withholding on that personal service income because of a tax treaty, give Form 8233 to each withholding agent from whom amounts will be received. Free federal and state tax filing online   Even if you submit Form 8233, the withholding agent may have to withhold tax from your income. Free federal and state tax filing online This is because the factors on which the treaty exemption is based may not be determinable until after the close of the tax year. Free federal and state tax filing online In this case, you must file Form 1040NR (or Form 1040NR-EZ if you qualify) to recover any overwithheld tax and to provide the IRS with proof that you are entitled to the treaty exemption. Free federal and state tax filing online Students, teachers, and researchers. Free federal and state tax filing online   Students, teachers, and researchers must attach the appropriate statement shown in Appendix A (for students) or Appendix B (for teachers and researchers) at the end of this publication to the Form 8233 and give it to the withholding agent. Free federal and state tax filing online For treaties not listed in the appendices, attach a statement in a format similar to those for other treaties. Free federal and state tax filing online   If you received a scholarship or fellowship and personal services income from the same withholding agent, use Form 8233 to claim an exemption from withholding based on a tax treaty for both types of income. Free federal and state tax filing online Special events and promotions. Free federal and state tax filing online   Withholding at the full 30% rate is required for payments made to a nonresident alien or foreign corporation for gate receipts (or television or other receipts) from rock music festivals, boxing promotions, and other entertainment or sporting events, unless the withholding agent has been specifically advised otherwise by letter from the IRS. Free federal and state tax filing online Form 13930 is used to request a reduction in withholding. Free federal and state tax filing online Withholding may be required even if the income may be exempt from taxation by provisions of a tax treaty. Free federal and state tax filing online One reason for this is that the partial or complete exemption is usually based on factors that cannot be determined until after the close of the tax year. Free federal and state tax filing online You will be required to pay U. Free federal and state tax filing online S. Free federal and state tax filing online tax, at the time of your departure from the United States, on any income for which you incorrectly claimed a treaty exemption. Free federal and state tax filing online For more details on treaty provisions that apply to compensation, see Publication 901. Free federal and state tax filing online Tax Withheld on Real Property Sales If you are a nonresident alien and you dispose of a U. Free federal and state tax filing online S. Free federal and state tax filing online real property interest, the transferee (buyer) of the property generally must withhold a tax equal to 10% of the amount realized on the disposition. Free federal and state tax filing online A distribution by a qualified investment entity to a nonresident alien shareholder that is treated as gain from the sale or exchange of a U. Free federal and state tax filing online S. Free federal and state tax filing online real property interest by the shareholder is subject to withholding at 35%. Free federal and state tax filing online Withholding is also required on certain distributions and other transactions by domestic or foreign corporations, partnerships, trusts, and estates. Free federal and state tax filing online These rules are covered in Publication 515. Free federal and state tax filing online For information on the tax treatment of dispositions of U. Free federal and state tax filing online S. Free federal and state tax filing online real property interests, see Real Property Gain or Loss in chapter 4. Free federal and state tax filing online If you are a partner in a domestic partnership, and the partnership disposes of a U. Free federal and state tax filing online S. Free federal and state tax filing online real property interest at a gain, the partnership will withhold tax on the amount of gain allocable to its foreign partners. Free federal and state tax filing online Your share of the income and tax withheld will be reported to you on Form 8805, Foreign Partner's Information Statement of Section 1446 Withholding Tax, or Form 1042-S, Foreign Person's U. Free federal and state tax filing online S. Free federal and state tax filing online Source Income Subject to Withholding (in the case of a publicly traded partnership). Free federal and state tax filing online Withholding is not required in the following situations. Free federal and state tax filing online The property is acquired by the buyer for use as a residence and the amount realized (sales price) is not more than $300,000. Free federal and state tax filing online The property disposed of is an interest in a domestic corporation if any class of stock of the corporation is regularly traded on an established securities market. Free federal and state tax filing online However, this exception does not apply to certain dispositions of substantial amounts of non-publicly traded interests in publicly traded corporations. Free federal and state tax filing online The property disposed of is an interest in a U. Free federal and state tax filing online S. Free federal and state tax filing online corporation that is not regularly traded on an established market and you (the seller) give the buyer a copy of a statement issued by the corporation certifying that the interest is not a U. Free federal and state tax filing online S. Free federal and state tax filing online real property interest. Free federal and state tax filing online You (the seller) give the buyer a certification stating, under penalties of perjury, that you are not a foreign person, and containing your name, U. Free federal and state tax filing online S. Free federal and state tax filing online taxpayer identification number, and home address. Free federal and state tax filing online You can give the certification to a qualified substitute. Free federal and state tax filing online The qualified substitute gives the buyer a statement, under penalties of perjury, that the certification is in the possession of the qualified substitute. Free federal and state tax filing online For this purpose, a qualified substitute is (a) the person (including any attorney or title company) responsible for closing the transaction, other than your agent, and (b) the buyer's agent. Free federal and state tax filing online The buyer receives a withholding certificate from the Internal Revenue Service. Free federal and state tax filing online You give the buyer written notice that you are not required to recognize any gain or loss on the transfer because of a nonrecognition provision in the Internal Revenue Code or a provision in a U. Free federal and state tax filing online S. Free federal and state tax filing online tax treaty. Free federal and state tax filing online The buyer must file a copy of the notice with the Ogden Service Center, P. Free federal and state tax filing online O. Free federal and state tax filing online Box 409101, Ogden, UT 84409. Free federal and state tax filing online You must verify the notice as true and sign it under penalties of perjury. Free federal and state tax filing online The notice must contain the following information. Free federal and state tax filing online A statement that the notice is a notice of nonrecognition under regulation section 1. Free federal and state tax filing online 1445-2(d)(2). Free federal and state tax filing online Your name, taxpayer identification number, and home address. Free federal and state tax filing online A statement that you are not required to recognize any gain or loss on the transfer. Free federal and state tax filing online A brief description of the transfer. Free federal and state tax filing online A brief summary of the law and facts supporting your claim that recognition of gain or loss is not required. Free federal and state tax filing online You may not give the buyer a written notice for any of the following transfers: the sale of your main home on which you exclude gain, a like-kind exchange that does not qualify for nonrecognition treatment in its entirety, or a deferred like-kind exchange that has not been completed at the time the buyer must file Form 8288. Free federal and state tax filing online Instead, a withholding certificate (described next) must be obtained. Free federal and state tax filing online The amount you realize on the transfer of a U. Free federal and state tax filing online S. Free federal and state tax filing online real property interest is zero. Free federal and state tax filing online The property is acquired by the United States, a U. Free federal and state tax filing online S. Free federal and state tax filing online state or possession, a political subdivision, or the District of Columbia. Free federal and state tax filing online The distribution is from a domestically controlled qualified investment entity (QIE) and is treated as a distribution of a U. Free federal and state tax filing online S. Free federal and state tax filing online real property interest only because an interest in the entity was disposed of in an applicable wash sale transaction. Free federal and state tax filing online For the definition of a QIE, see Qualified investment entities under Real Property Gain or Loss, earlier. Free federal and state tax filing online See Wash sale under Real Property Gain or Loss in chapter 4. Free federal and state tax filing online The certifications in (3) and (4) must be disregarded by the buyer if the buyer or qualified substitute has actual knowledge, or receives notice from a seller's or buyer's agent (or substitute), that they are false. Free federal and state tax filing online This also applies to the qualified substitute's statement under (4). Free federal and state tax filing online Withholding certificates. Free federal and state tax filing online   The tax required to be withheld on a disposition can be reduced or eliminated under a withholding certificate issued by the IRS. Free federal and state tax filing online Either you or the buyer can request a withholding certificate. Free federal and state tax filing online   A withholding certificate can be issued due to any of the following. Free federal and state tax filing online The IRS determines that reduced withholding is appropriate because either: The amount required to be withheld would be more than your maximum tax liability, or Withholding of the reduced amount would not jeopardize collection of the tax. Free federal and state tax filing online All of your realized gain is exempt from U. Free federal and state tax filing online S. Free federal and state tax filing online tax. Free federal and state tax filing online You or the buyer enters into an agreement for the payment of tax providing security for the tax liability. Free federal and state tax filing online   Get Publication 515 and Form 8288-B for information on procedures to request a withholding certificate. Free federal and state tax filing online Credit for tax withheld. Free federal and state tax filing online   The buyer must report and pay over the withheld tax within 20 days after the transfer using Form 8288, U. Free federal and state tax filing online S. Free federal and state tax filing online Withholding Tax Return for Dispositions by Foreign Persons of U. Free federal and state tax filing online S. Free federal and state tax filing online Real Property Interests. Free federal and state tax filing online This form is filed with the IRS with copies A and B of Form 8288-A, Statement of Withholding on Dispositions by Foreign Persons of U. Free federal and state tax filing online S. Free federal and state tax filing online Real Property Interests. Free federal and state tax filing online Copy B of this statement will be stamped received by the IRS and returned to you (the seller) if the statement is complete and includes your taxpayer identification number (TIN). Free federal and state tax filing online You must file Copy B with your tax return to take credit for the tax withheld. Free federal and state tax filing online   A stamped copy of Form 8288-A will not be provided to you if your TIN is not included on that form. Free federal and state tax filing online The IRS will send you a letter requesting the TIN and providing instructions for how to get a TIN. Free federal and state tax filing online When you provide the IRS with a TIN, the IRS will provide you with a stamped Copy B of Form 8288-A. Free federal and state tax filing online Social Security and Medicare Taxes If you work as an employee in the United States, you must pay social security and Medicare taxes in most cases. Free federal and state tax filing online Your payments of these taxes contribute to your coverage under the U. Free federal and state tax filing online S. Free federal and state tax filing online social security system. Free federal and state tax filing online Social security coverage provides retirement benefits, survivors and disability benefits, and medical insurance (Medicare) benefits to individuals who meet certain eligibility requirements. Free federal and state tax filing online In most cases, the first $113,700 of taxable wages received in 2013 for services performed in the United States is subject to social security tax. Free federal and state tax filing online All taxable wages are subject to Medicare tax. Free federal and state tax filing online Your employer deducts these taxes from each wage payment. Free federal and state tax filing online Your employer must deduct these taxes even if you do not expect to qualify for social security or Medicare benefits. Free federal and state tax filing online You can claim a credit for excess social security tax on your income tax return if you have more than one employer and the amount deducted from your combined wages for 2013 is more than $7,049. Free federal and state tax filing online 40. Free federal and state tax filing online Use the appropriate worksheet in chapter 3 of Publication 505, Tax Withholding and Estimated Tax, to figure your credit. Free federal and state tax filing online If any one employer deducted more than $7,049. Free federal and state tax filing online 40, you cannot claim a credit for that amount. Free federal and state tax filing online Ask your employer to refund the excess. Free federal and state tax filing online If your employer does not refund the excess, you can file a claim for refund using Form 843. Free federal and state tax filing online In general, U. Free federal and state tax filing online S. Free federal and state tax filing online social security and Medicare taxes apply to payments of wages for services performed as an employee in the United States, regardless of the citizenship or residence of either the employee or the employer. Free federal and state tax filing online In limited situations, these taxes apply to wages for services performed outside the United States. Free federal and state tax filing online Your employer should be able to tell you if social security and Medicare taxes apply to your wages. Free federal and state tax filing online You cannot make voluntary payments if no taxes are due. Free federal and state tax filing online Additional Medicare Tax. Free federal and state tax filing online   Beginning in 2013, in addition to the Medicare tax, a 0. Free federal and state tax filing online 9% Additional Medicare Tax applies to Medicare wages, Railroad Retirement Tax Act (RRTA) compensation, and self-employment income that are more than: $250,000 if married filing jointly, $125,000 if married filing separately, or $200,000 for any other filing status. Free federal and state tax filing online   There are no special rules for nonresident aliens for purposes of Additional Medicare Tax. Free federal and state tax filing online Wages, RRTA compensation, and self-employment income that are subject to Medicare tax will also be subject to Additional Medicare Tax if in excess of the applicable threshold. Free federal and state tax filing online   Your employer is responsible for withholding the 0. Free federal and state tax filing online 9% Additional Medicare Tax on Medicare wages or RRTA compensation it pays to you in excess of $200,000 in the calendar year. Free federal and state tax filing online If you intend to file a joint return and you anticipate that you and your spouse's individual wages are not going to be more than $200,000 but your combined wages and self-employment income are going to be more than $250,000, you may want to request additional withholding on Form W-4 and/or make estimated tax payments. Free federal and state tax filing online   If you file Form 1040NR, you must pay Additional Medicare Tax if the total of your wages and your self-employment income was more than $125,000 if married (Box 3, 4, or 5 on page 1 of Form 1040NR), or $200,000 if single or qualifying widow(er) (Box 1, 2, or 6 on page 1 of Form 1040NR). Free federal and state tax filing online    See Form 8959, Additional Medicare Tax, and the Instructions for Form 8959 to determine whether you are required to pay Additional Medicare Tax. Free federal and state tax filing online For more information on Additional Medicare Tax, go to IRS. Free federal and state tax filing online gov and enter “Additional Medicare Tax” in the search box. Free federal and state tax filing online   Self-employed individuals may also be required to pay Additional Medicare Tax. Free federal and state tax filing online See Self-Employment Tax , later. Free federal and state tax filing online Students and Exchange Visitors Generally, services performed by you as a nonresident alien temporarily in the United States as a nonimmigrant under subparagraph (F), (J), (M), or (Q) of section 101(a)(15) of the Immigration and Nationality Act are not covered under the social security program if the services are performed to carry out the purpose for which you were admitted to the United States. Free federal and state tax filing online This means that there will be no withholding of social security or Medicare taxes from the pay you receive for these services. Free federal and state tax filing online These types of services are very limited, and generally include only on-campus work, practical training, and economic hardship employment. Free federal and state tax filing online Social security and Medicare taxes will be withheld from your pay for these services if you are considered a resident alien as discussed in chapter 1, even though your nonimmigrant classification (“F,” “J,” “M,” or “Q”) remains the same. Free federal and state tax filing online Services performed by a spouse or minor child of nonimmigrant aliens with the classification of “F-2,” “J-2,” “M-2,” and “Q-3” are covered under social security. Free federal and state tax filing online Nonresident Alien Students If you are a nonresident alien temporarily admitted to the United States as a student, you generally are not permitted to work for a wage or salary or to engage in business while you are in the United States. Free federal and state tax filing online In some cases, a student admitted to the United States in “F-1,” “M-1,” or “J-1” status is granted permission to work. Free federal and state tax filing online Social security and Medicare taxes are not withheld from pay for the work unless the student is considered a resident alien. Free federal and state tax filing online Any student who is enrolled and regularly attending classes at a school may be exempt from social security and Medicare taxes on pay for services performed for that school. Free federal and state tax filing online The U. Free federal and state tax filing online S. Free federal and state tax filing online Citizenship and Immigration Services (USCIS) permits on-campus work for students in “F-1” status if it does not displace a U. Free federal and state tax filing online S. Free federal and state tax filing online resident. Free federal and state tax filing online On-campus work means work performed on the school's premises. Free federal and state tax filing online On-campus work includes work performed at an off-campus location that is educationally affiliated with the school. Free federal and state tax filing online On-campus work under the terms of a scholarship, fellowship, or assistantship is considered part of the academic program of a student taking a full course of study and is permitted by the USCIS. Free federal and state tax filing online Social security and Medicare taxes are not withheld from pay for this work unless the student is considered a resident alien. Free federal and state tax filing online If services performed by a nonresident alien student are not considered as performed to carry out the purpose for which the student was admitted to the United States, social security and Medicare taxes will be withheld from pay for the services unless the pay is exempt under the Internal Revenue Code. Free federal and state tax filing online Exchange Visitors Exchange visitors are temporarily admitted to the United States under section 101(a)(15)(J) of the Immigration and Nationality Act. Free federal and state tax filing online Social security and Medicare taxes are not withheld on pay for services of an exchange visitor who has been given permission to work and who possesses or obtains a letter of authorization from the sponsor unless the exchange visitor is considered a resident alien. Free federal and state tax filing online If services performed by an exchange visitor are not considered as performed to carry out the purpose for which the visitor was admitted to the United States, social security and Medicare taxes are withheld from pay for the services unless the pay is exempt under the Internal Revenue Code. Free federal and state tax filing online Nonresident aliens temporarily admitted to the United States as participants in international cultural exchange programs under section 101(a)(15)(Q) of the Immigration and Nationality Act may be exempt from social security and Medicare taxes. Free federal and state tax filing online The employer must be the petitioner through whom the alien obtained the “Q” visa. Free federal and state tax filing online Social security and Medicare taxes are not withheld from pay for this work unless the alien is considered a resident alien. Free federal and state tax filing online Refund of Taxes Withheld in Error If social security or Medicare taxes were withheld in error from pay that is not subject to these taxes, contact the employer who withheld the taxes for a refund. Free federal and state tax filing online If you are unable to get a full refund of the amount from your employer, file a claim for refund with the Internal Revenue Service on Form 843, Claim for Refund and Request for Abatement. Free federal and state tax filing online Attach the following items to Form 843. Free federal and state tax filing online A copy of your Form W-2 to prove the amount of social security and Medicare taxes withheld. Free federal and state tax filing online A copy of your visa. Free federal and state tax filing online Form I-94 (or other documentation showing your dates of arrival or departure). Free federal and state tax filing online If you have an F-1 visa, documentation showing permission to work in the U. Free federal and state tax filing online S. Free federal and state tax filing online If you have a J-1 visa, documentation showing permission to work in the U. Free federal and state tax filing online S. Free federal and state tax filing online If you are engaged in optional practical training or employment due to severe economic necessity, documentation showing permission to work in the U. Free federal and state tax filing online S. Free federal and state tax filing online A statement from your employer indicating the amount of the reimbursement your employer provided and the amount of the credit or refund your employer claimed or you authorized your employer to claim. Free federal and state tax filing online If you cannot obtain this statement from your employer, you must provide this information on your own statement and explain why you are not attaching a statement from your employer or on Form 8316 claiming your employer will not issue the refund. Free federal and state tax filing online If you were exempt from social security and Medicare tax for only part of the year, pay statements showing the tax paid during the period you were exempt. Free federal and state tax filing online File Form 843 (with attachments) with the Department of the Treasury, Internal Revenue Service Center, Ogden, UT 84201-0038. Free federal and state tax filing online Do not use Form 843 to request a refund of Additional Medicare Tax. Free federal and state tax filing online If Additional Medicare Tax was withheld from your pay in error, 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 with Form 1040 or 1040NR. Free federal and state tax filing online If Additional Medicare Tax was withheld in error in a prior year for which you already filed Form 1040 or 1040NR, you must file Form 1040X, Amended U. Free federal and state tax filing online S. Free federal and state tax filing online Individual Income Tax Return, for the prior year in which the wages or compensation were originally received to recover the Additional Medicare Tax withheld in error. Free federal and state tax filing online See the Instructions for Form 1040X. Free federal and state tax filing online Agricultural Workers Agricultural workers temporarily admitted into the United States on H-2A visas are exempt from social security and Medicare taxes on compensation paid to them for services performed in connection with the H-2A visa. Free federal and state tax filing online You can find more information about not having tax withheld at www. Free federal and state tax filing online irs. Free federal and state tax filing online gov/Individuals/International-Taxpayers/Foreign-Agricultural-Workers. Free federal and state tax filing online Self-Employment Tax Self-employment tax is the social security and Medicare taxes for individuals who are self-employed. Free federal and state tax filing online Nonresident aliens are not subject to self-employment tax unless an international social security agreement in effect determines that they are covered under the U. Free federal and state tax filing online S. Free federal and state tax filing online social security system. Free federal and state tax filing online Residents of the U. Free federal and state tax filing online S. Free federal and state tax filing online Virgin Islands, Puerto Rico, Guam, the Commonwealth of the Northern Mariana Islands, or American Samoa are considered U. Free federal and state tax filing online S. Free federal and state tax filing online residents for this purpose and are subject to the self-employment tax. Free federal and state tax filing online Resident aliens must pay self-employment tax under the same rules that apply to U. Free federal and state tax filing online S. Free federal and state tax filing online citizens. Free federal and state tax filing online However, a resident alien employed by an international organization, a foreign government, or a wholly-owned instrumentality of a foreign government is not subject to the self-employment tax on income earned in the United States. Free federal and state tax filing online Self-employment income you receive while you are a resident alien is subject to self-employment tax even if it was paid for services you performed as a nonresident alien. Free federal and state tax filing online Example. Free federal and state tax filing online Bill Jones is an author engaged in the business of writing books. Free federal and state tax filing online Bill had several books published in a foreign country while he was a citizen and resident of that country. Free federal and state tax filing online During 2013, Bill entered the United States as a resident alien. Free federal and state tax filing online After becoming a U. Free federal and state tax filing online S. Free federal and state tax filing online resident, he continued to receive royalties from his foreign publisher. Free federal and state tax filing online Bill reports his income and expenses on the cash basis (he reports income on his tax return when received and deducts expenses when paid). Free federal and state tax filing online Bill's 2013 self-employment income includes the royalties received after he became a U. Free federal and state tax filing online S. Free federal and state tax filing online resident even though the books were published while he was a nonresident alien. Free federal and state tax filing online This royalty income is subject to self-employment tax. Free federal and state tax filing online Reporting self-employment tax. Free federal and state tax filing online   Use Schedule SE (Form 1040) to report and figure your self-employment tax. Free federal and state tax filing online Then enter the tax on Form 1040, line 56, or Form 1040NR, line 54. Free federal and state tax filing online Attach Schedule SE to Form 1040 or Form 1040NR. Free federal and state tax filing online Additional Medicare Tax. Free federal and state tax filing online   Self-employed individuals must pay a 0. Free federal and state tax filing online 9% Additional Medicare Tax on self-employment income that exceeds one of the following threshold amounts (based on your filing status): Married filing jointly — $250,000; Married filing separately — $125,000; Single, Head of household, or Qualifying widow(er) — $200,000. Free federal and state tax filing online   If you have both wages and self-employment income, the threshold amount for applying the Additional Medicare Tax on the self-employment income is reduced (but not below zero) by the amount of wages subject to Additional Medicare Tax. Free federal and state tax filing online A self-employment loss should not be considered for purposes of this tax   If you file Form 1040NR, you must pay Additional Medicare Tax if the total of your wages and your self-employment income was more than $125,000 if married (Box 3, 4, or 5 on page 1 of Form 1040NR), or $200,000 if single or qualifying widow(er) (Box 1, 2, or 6 on page 1 of Form 1040NR). Free federal and state tax filing online   See Form 8959, Additional Medicare Tax, and the Instructions for Form 8959 to determine whether you are required to pay Additional Medicare Tax. Free federal and state tax filing online For more information on Additional Medicare Tax, go to IRS. Free federal and state tax filing online gov and enter “Additional Medicare Tax” in the search box. Free federal and state tax filing online Deduction for employer-equivalent portion of self-employment tax. Free federal and state tax filing online   If you must pay self-employment tax, you can deduct a portion of the self-employment tax paid in figuring your adjusted gross income. Free federal and state tax filing online This deduction is figured on Schedule SE (Form 1040). Free federal and state tax filing online Note. Free federal and state tax filing online No portion of the Additional Medicare Tax is deductible for self-employment tax. Free federal and state tax filing online More information. Free federal and state tax filing online   Get Publication 334, Tax Guide for Small Business, for more information about self-employment tax. Free federal and state tax filing online International Social Security Agreements The United States has entered into social security agreements with foreign countries to coordinate social security coverage and taxation of workers employed for part or all of their working careers in one of the countries. Free federal and state tax filing online These agreements are commonly referred to as totalization agreements. Free federal and state tax filing online Under these agreements, dual coverage and dual contributions (taxes) for the same work are eliminated. Free federal and state tax filing online The agreements generally make sure that social security taxes (including self-employment tax) are paid only to one country. Free federal and state tax filing online Agreements are in effect with the following countries. Free federal and state tax filing online Australia. Free federal and state tax filing online Austria. Free federal and state tax filing online Belgium. Free federal and state tax filing online Canada. Free federal and state tax filing online Chile. Free federal and state tax filing online Czech Republic. Free federal and state tax filing online Denmark. Free federal and state tax filing online Finland. Free federal and state tax filing online France. 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Free federal and state tax filing online   Generally, under these agreements, you are subject to social security taxes only in the country where you are working. Free federal and state tax filing online However, if you are temporarily sent to work for the same employer in the United States and your pay would normally be subject to social security taxes in both countries, most agreements provide that you remain covered only by the social security system of the country from which you were sent. Free federal and state tax filing online You can get more information on any agreement by contacting the U. Free federal and state tax filing online S. Free federal and state tax filing online Social Security Administration at the address given later. Free federal and state tax filing online If you have access to the Internet, you can get more information at www. Free federal and state tax filing online socialsecurity. Free federal and state tax filing online gov/international. Free federal and state tax filing online   To establish that your pay is subject only to foreign social security taxes and is exempt from U. Free federal and state tax filing online S. Free federal and state tax filing online social security taxes (including the Medicare tax) under an agreement, you or your employer should request a certificate of coverage from the appropriate agency of the foreign country. Free federal and state tax filing online This will usually be the same agency to which you or your employer pays your foreign social security taxes. Free federal and state tax filing online The foreign agency will be able to tell you what information is needed for them to issue the certificate. Free federal and state tax filing online Your employer should keep a copy of the certificate because it may be needed to show why you are exempt from U. Free federal and state tax filing online S. Free federal and state tax filing online social security taxes. Free federal and state tax filing online Only wages paid on or after the effective date of the agreement can be exempt from U. Free federal and state tax filing online S. Free federal and state tax filing online social security taxes. Free federal and state tax filing online    Some of the countries with which the United States has agreements will not issue certificates of coverage. Free federal and state tax filing online In this case, either you or your employer should request a statement that your wages are not covered by the U. Free federal and state tax filing online S. Free federal and state tax filing online social security system. Free federal and state tax filing online Request the statement from the following address. Free federal and state tax filing online U. Free federal and state tax filing online S. Free federal and state tax filing online Social Security Administration Office of International Programs P. Free federal and state tax filing online O. Free federal and state tax filing online Box 17741 Baltimore, MD 21235-7741 Self-employed individuals. Free federal and state tax filing online   Under most agreements, self-employed individuals are covered by the social security system of the country where they reside. Free federal and state tax filing online However, under some agreements, you may be exempt from U. Free federal and state tax filing online S. Free federal and state tax filing online self-employment tax if you temporarily transfer your business activity to or from the United States. Free federal and state tax filing online   If you believe that your self-employment income is subject only to U. Free federal and state tax filing online S. Free federal and state tax filing online self-employment tax and is exempt from foreign social security taxes, request a certificate of coverage from the U. Free federal and state tax filing online S. Free federal and state tax filing online Social Security Administration at the address given earlier. Free federal and state tax filing online This certificate will establish your exemption from foreign social security taxes. Free federal and state tax filing online   To establish that your self-employment income is subject only to foreign social security taxes and is exempt from U. Free federal and state tax filing online S. Free federal and state tax filing online self-employment tax, request a certificate of coverage from the appropriate agency of the foreign country. Free federal and state tax filing online If the foreign country will not issue the certificate, you should request a statement that your income is not covered by the U. Free federal and state tax filing online S. Free federal and state tax filing online social security system. Free federal and state tax filing online Request it from the U. Free federal and state tax filing online S. Free federal and state tax filing online Social Security Administration at the address given earlier. Free federal and state tax filing online Attach a photocopy of either statement to Form 1040 each year you are exempt. Free federal and state tax filing online Also print “Exempt, see attached statement” on the line for self-employment tax. Free federal and state tax filing online Estimated Tax Form 1040-ES (NR) You may have income from which no U. Free federal and state tax filing online S. Free federal and state tax filing online income tax is withheld. Free federal and state tax filing online Or the amount of tax withheld may be less than the income tax you estimate you will owe at the end of the year. Free federal and state tax filing online If so, you may have to pay estimated tax. Free federal and state tax filing online Generally, you must make estimated tax payments for 2014 if you expect to owe at least $1,000 in tax and you expect your withholding and certain refundable credits to be less than the smaller of: 90% of the tax to be shown on your 2014 income tax return, or 100% of the tax shown on your 2013 income tax return (if your 2013 return covered all 12 months of the year). Free federal and state tax filing online If your adjusted gross income for 2013 was more than $150,000 ($75,000 if your filing status for 2014 is married filing separately), substitute 110% for 100% in (2) above if you are not a farmer or fisherman. Free federal and state tax filing online Item (2) does not apply if you did not file a 2013 return. Free federal and state tax filing online A nonresident alien should use Form 1040-ES (NR) to figure and pay estimated tax. Free federal and state tax filing online If you pay by check, make it payable to the "United States Treasury. Free federal and state tax filing online " How to estimate your tax for 2014. Free federal and state tax filing online   If you filed a 2013 return on Form 1040NR or Form 1040NR-EZ and expect your income, number of exemptions, and total deductions for 2014 to be nearly the same, you should use your 2013 return as a guide to complete the Estimated Tax Worksheet in the Form 1040-ES (NR) instructions. Free federal and state tax filing online If you did not file a return for 2013, or if your income, exemptions, deductions, or credits will be different for 2014, you must estimate these amounts. Free federal and state tax filing online Figure your estimated tax liability using the Tax Rate Schedule in the 2014 Form 1040-ES (NR) instructions for your filing status. Free federal and state tax filing online Note. Free federal and state tax filing online If you expect to be a resident of Puerto Rico during the entire year, use Form 1040-ES or Formulario 1040-ES (PR). Free federal and state tax filing online When to pay estimated tax. Free federal and state tax filing online   Make your first estimated tax payment by the due date for filing the previous year's Form 1040NR or Form 1040NR-EZ. Free federal and state tax filing online If you have wages subject to the same withholding rules that apply to U. Free federal and state tax filing online S. Free federal and state tax filing online citizens, you must file Form 1040NR or Form 1040NR-EZ and make your first estimated tax payment by April 15, 2014. Free federal and state tax filing online If you do not have wages subject to withholding, file your income tax return and make your first estimated tax payment by June 16, 2014. Free federal and state tax filing online   If your first estimated tax payment is due April 15, 2014, you can pay your estimated tax in full at that time or in four equal installments by the dates shown next. Free federal and state tax filing online 1st installment April 15, 2014 2nd installment June 16, 2014 3rd installment Sept. Free federal and state tax filing online 15, 2014 4th installment Jan. Free federal and state tax filing online 15, 2015 If your first payment is not due until June 16, 2014, you can pay your estimated tax in full at that time or: ½ of your estimated tax by June 16, 2014, 1/4 of the tax by September 15, 2014, and 1/4 by January 15, 2015. Free federal and state tax filing online    You do not have to make the payment due January 15, 2015, if you file your 2014 Form 1040NR or 1040NR-EZ by February 2, 2015, and pay the entire balance due with your return. Free federal and state tax filing online Fiscal year. Free federal and state tax filing online   If your return is not on a calendar year basis, your due dates are the 15th day of the 4th, 6th, and 9th months of your fiscal year, and the 1st month of the following fiscal year. Free federal and state tax filing online If any date falls on a Saturday, Sunday, or legal holiday, use the next day that is not a Saturday, Sunday, or legal holiday. Free federal and state tax filing online Changes in income, deductions, or exemptions. Free federal and state tax filing online   Even if you are not required to make an estimated tax payment in April or June, your circumstances may change so that you will have to make estimated tax payments later. Free federal and state tax filing online This can happen if you receive additional income or if any of your deductions are reduced or eliminated. Free federal and state tax filing online If so, see the instructions for Form 1040-ES (NR) and Publication 505 for information on figuring your estimated tax. Free federal and state tax filing online Amended estimated tax. 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Tax Relief for Victims of Storms and Floods in Missouri

KS-MO-2011-34, Aug. 17, 2011

ST. LOUIS — Victims of flooding beginning on June 1, 2011, in parts of Missouri may qualify for tax relief from the Internal Revenue Service.

The President has declared Andrew, Atchison, Buchanan, Holt, Lafayette and Platte counties a federal disaster area. Individuals who reside or have a business in these localities may qualify for tax relief.

As a result, the IRS has postponed until Aug. 1, 2011, certain deadlines occurring from June 1 to Aug. 1 that affect taxpayers who live or have a business in the disaster area. This includes the June 15 deadline for making estimated tax payments.

In addition, the IRS is abating the failure-to-deposit penalties for employment and excise tax deposits due on or after June 1 and on or before June 16, 2011, as long as the deposits were made by June 16, 2011.

If an affected taxpayer receives a penalty notice from the IRS, the taxpayer should call the telephone number on the notice to have the IRS abate any interest and any late filing or late payment penalties that would otherwise apply. Penalties or interest will be abated only for taxpayers who have an original or extended filing, payment or deposit due date, including an extended filing or payment due date, that falls within the postponement period.

The IRS automatically identifies taxpayers located in the covered disaster area and applies automatic filing and payment relief. But affected taxpayers who reside or have a business located outside the covered disaster area must call the IRS disaster hotline at 1-866-562-5227 to request this tax relief.

Covered Disaster Area

The areas listed above constitute a covered disaster area for purposes of Treas. Reg. § 301.7508A-1(d)(2) and are entitled to the relief detailed below.

Affected Taxpayers

Taxpayers considered to be affected taxpayers eligible for the postponement of time to file returns, pay taxes and perform other time-sensitive acts are those taxpayers listed in Treas. Reg. § 301.7508A-1(d)(1), and include individuals who live, and businesses whose principal place of business is located, in the covered disaster area. Taxpayers not in the covered disaster area, but whose records necessary to meet a deadline listed in Treas. Reg. § 301.7508A-1(c) are in the covered disaster area, are also entitled to relief. In addition, all relief workers affiliated with a recognized government or philanthropic organization assisting in the relief activities in the covered disaster area and any individual visiting the covered disaster area who was killed or injured as a result of the disaster are entitled to relief.

Grant of Relief

Under section 7508A, the IRS has given affected taxpayers until Aug. 1, 2011, to file most tax returns (including individual, corporate, and estate and trust income tax returns; partnership returns, S corporation returns, and trust returns; estate, gift, and generation-skipping transfer tax returns; and employment and certain excise tax returns), or to make tax payments, including estimated tax payments, that have either an original or extended due date occurring on or after June 1 and on or before Aug. 1, 2011.

The IRS also gives affected taxpayers until Aug. 1 to perform other time-sensitive actions described in Treas. Reg. § 301.7508A-1(c)(1) and Rev. Proc. 2007-56, 2007-34 I.R.B. 388 (Aug. 20, 2007), that are due to be performed on or after June 1 and on or before Aug. 1.

This relief also includes the filing of Form 5500 series returns, in the manner described in section 8 of Rev. Proc. 2007-56. The relief described in section 17 of Rev. Proc. 2007-56, pertaining to like-kind exchanges of property, also applies to certain taxpayers who are not otherwise affected taxpayers and may include acts required to be performed before or after the period above.

The postponement of time to file and pay does not apply to information returns in the W-2, 1098, 1099 series, or to Forms 1042-S or 8027. Penalties for failure to timely file information returns can be waived under existing procedures for reasonable cause. Likewise, the postponement does not apply to employment and excise tax deposits. The IRS, however, will abate penalties for failure to make timely employment and excise tax deposits due on or after June 1 and on or before June 16, provided the taxpayer made these deposits by June 16.

Casualty Losses

Affected taxpayers in a federally declared disaster area have the option of claiming disaster-related casualty losses on their federal income tax return for either this year or last year. Claiming the loss on an original or amended return for last year will get the taxpayer an earlier refund, but waiting to claim the loss on this year’s return could result in a greater tax saving, depending on other income factors.

Individuals may deduct personal property losses that are not covered by insurance or other reimbursements. For details, see Form 4684 and its instructions.
Affected taxpayers claiming the disaster loss on last year’s return should put the Disaster Designation, "Missouri/Flooding," at the top of the form so that the IRS can expedite the processing of the refund.

Other Relief

The IRS will waive the usual fees and expedite requests for copies of previously filed tax returns for affected taxpayers. Taxpayers should put the assigned Disaster Designation in red ink at the top of Form 4506, Request for Copy of Tax Return, or Form 4506-T, Request for Transcript of Tax Return, as appropriate, and submit it to the IRS.

Affected taxpayers who are contacted by the IRS on a collection or examination matter should explain how the disaster impacts them so that the IRS can provide appropriate consideration to their case.

Taxpayers may download forms and publications or order them by calling 1-800-TAX-FORM (1-800-829-3676). The IRS toll-free number for general tax questions is 1-800-829-1040.

Related Information:

Recent IRS Disaster Relief Announcements
 

 

Page Last Reviewed or Updated: 20-Feb-2014

The Free Federal And State Tax Filing Online

Free federal and state tax filing online Publication 929 - Main Content Table of Contents Part 1. Free federal and state tax filing online Rules for All Dependents Filing RequirementsEarned Income Only Unearned Income Only Both Earned and Unearned Income Other Filing Requirements Should a Return Be Filed Even If Not Required? Responsibility for Child's ReturnThird party designee. Free federal and state tax filing online Designated as representative. Free federal and state tax filing online IRS notice. Free federal and state tax filing online Standard DeductionStandard Deduction of Zero Dependent's Own Exemption Withholding From WagesExceptions. Free federal and state tax filing online Part 2. Free federal and state tax filing online Tax on Unearned Income of Certain ChildrenWhich Parent's Return To Use Parent's Election To Report Child's Interest and DividendsEffect of Making the Election Figuring Child's Income Figuring Additional Tax Tax for Certain Children Who Have Unearned IncomeProviding Parental Information (Form 8615, Lines A–C) Step 1. Free federal and state tax filing online Figuring the Child's Net Unearned Income (Form 8615, Part I) Step 2. Free federal and state tax filing online Figuring a Tentative Tax at the Parent's Tax Rate (Form 8615, Part II) Step 3. Free federal and state tax filing online Figuring the Child's Tax (Form 8615, Part III) Alternative Minimum Tax Illustrated Example Part 1. Free federal and state tax filing online Rules for All Dependents This part of the publication discusses the filing requirements for dependents, who is responsible for a child's return, how to figure a dependent's standard deduction and exemption (if any), and whether a dependent can claim exemption from federal income tax withholding. Free federal and state tax filing online Filing Requirements Whether a dependent has to file a return generally depends on the amount of the dependent's earned and unearned income and whether the dependent is married, is age 65 or older, or is blind. Free federal and state tax filing online A dependent may have to file a return even if his or her income is less than the amount that would normally require a return. Free federal and state tax filing online See Other Filing Requirements, later. Free federal and state tax filing online The following sections apply to dependents with: Earned income only, Unearned income only, and Both earned and unearned income. Free federal and state tax filing online  To find out whether a dependent must file, read the section that applies, or use Table 1. Free federal and state tax filing online Earned Income Only A dependent whose gross income is only earned income must file a return if the gross income is more than the amount listed in the following table. Free federal and state tax filing online Marital Status Amount Single   Under 65 and not blind $6,100 Either 65 or older or blind $7,600 65 or older and blind $9,100 Married*   Under 65 and not blind $6,100 Either 65 or older or blind $7,300 65 or older and blind $8,500 *If a dependent's spouse itemizes deductions on a separate return, the dependent must file a return if the dependent has $5 or more of gross income (earned and/or unearned). Free federal and state tax filing online Example. Free federal and state tax filing online William is 16. Free federal and state tax filing online His mother claims an exemption for him on her income tax return. Free federal and state tax filing online He worked part time on weekends during the school year and full time during the summer. Free federal and state tax filing online He earned $7,000 in wages. Free federal and state tax filing online He did not have any unearned income. Free federal and state tax filing online He must file a tax return because he has earned income only and his gross income is more than $6,100. Free federal and state tax filing online If he is blind, he does not have to file a return because his gross income is not more than $7,600. Free federal and state tax filing online Unearned Income Only A dependent whose gross income is only unearned income must file a return if the gross income is more than the amount listed in the following table. Free federal and state tax filing online Marital Status Amount Single   Under 65 and not blind $1,000 Either 65 or older or blind $2,500 65 or older and blind $4,000 Married*   Under 65 and not blind $1,000 Either 65 or older or blind $2,200 65 or older and blind $3,400 *If a dependent's spouse itemizes deductions on a separate return, the dependent must file a return if the dependent has $5 or more of gross income (earned and/or unearned). Free federal and state tax filing online Example. Free federal and state tax filing online Sarah is 18 and single. Free federal and state tax filing online Her parents can claim an exemption for her on their income tax return. Free federal and state tax filing online She received $1,970 of taxable interest and dividend income. Free federal and state tax filing online She did not work during the year. Free federal and state tax filing online She must file a tax return because she has unearned income only and her gross income is more than $1,000. Free federal and state tax filing online If she is blind, she does not have to file a return because she has unearned income only and her gross income is not more than $2,500. Free federal and state tax filing online Election to report child's unearned income on parent's return. Free federal and state tax filing online   A parent of a child under age 19 (or under age 24 if a full-time student) may be able to elect to include the child's interest and dividend income on the parent's return. Free federal and state tax filing online See Parent's Election To Report Child's Interest and Dividends in Part 2. Free federal and state tax filing online If the parent makes this election, the child does not have to file a return. Free federal and state tax filing online Both Earned and Unearned Income A dependent who has both earned and unearned income generally must file a return if the dependent's gross income is more than line 5 of the following worksheet. Free federal and state tax filing online Filing Requirement Worksheet for Most Dependents 1. Free federal and state tax filing online Enter dependent's earned income plus $350     2. Free federal and state tax filing online Minimum amount   $1,000 3. Free federal and state tax filing online Compare lines 1 and 2. Free federal and state tax filing online Enter the larger amount     4. Free federal and state tax filing online Maximum amount   6,100 5. Free federal and state tax filing online Compare lines 3 and 4. Free federal and state tax filing online Enter the smaller amount     6. Free federal and state tax filing online Enter the dependent's gross income. Free federal and state tax filing online If line 6 is more than line 5, the dependent must file an income tax return. Free federal and state tax filing online If the dependent is married and his or her spouse itemizes deductions on a separate return, the dependent must file an income tax return if line 6 is $5 or more. Free federal and state tax filing online       Table 1. Free federal and state tax filing online 2013 Filing Requirements for Dependents If your parent (or someone else) can claim you as a dependent, use this table to see if you must file a return. Free federal and state tax filing online   See the definitions of “dependent,”“earned income,”“unearned income,” and “gross income” in the Glossary. Free federal and state tax filing online   Single dependents—Were you either age 65 or older or blind?     No. Free federal and state tax filing online You must file a return if any of the following apply. Free federal and state tax filing online       Your unearned income was over $1,000. Free federal and state tax filing online Your earned income was over $6,100. Free federal and state tax filing online Your gross income was more than the larger of—       $1,000, or Your earned income (up to $5,750) plus $350. Free federal and state tax filing online         Yes. Free federal and state tax filing online You must file a return if any of the following apply. Free federal and state tax filing online     Your unearned income was over $2,500 ($4,000 if 65 or older and blind), Your earned income was over $7,600 ($9,100 if 65 or older and blind), Your gross income was more than the larger of—       $2,500 ($4,000 if 65 or older and blind), or Your earned income (up to $5,750) plus $1,850 ($3,350 if 65 or older and blind). Free federal and state tax filing online       Married dependents—Were you either age 65 or older or blind?     No. Free federal and state tax filing online You must file a return if any of the following apply. Free federal and state tax filing online       Your gross income was at least $5 and your spouse files a separate return and itemizes deductions. Free federal and state tax filing online Your unearned income was over $1,000. Free federal and state tax filing online Your earned income was over $6,100. Free federal and state tax filing online Your gross income was more than the larger of—       $1,000, or Your earned income (up to $5,750) plus $350. Free federal and state tax filing online       Yes. Free federal and state tax filing online You must file a return if any of the following apply. Free federal and state tax filing online       Your gross income was at least $5 and your spouse files a separate return and itemizes deductions. Free federal and state tax filing online Your unearned income was over $2,200 ($3,400 if 65 or older and blind), Your earned income was over $7,300 ($8,500 if 65 or older and blind), Your gross income was more than the larger of—       $2,200 ($3,400 if 65 or older and blind), or Your earned income (up to $5,750) plus $1,550 ($2,750 if 65 or older and blind). Free federal and state tax filing online       Example 1. Free federal and state tax filing online Joe is 20, single, not blind, and a full-time college student. 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Free federal and state tax filing online Maximum amount   6,100 5. Free federal and state tax filing online Compare lines 3 and 4. Free federal and state tax filing online Enter the smaller amount   3,100 6. Free federal and state tax filing online Enter the dependent's gross income. Free federal and state tax filing online If line 6 is more than line 5, the dependent must file an income tax return. Free federal and state tax filing online If the dependent is married and his or her spouse itemizes deductions on a separate return, the dependent must file an income tax return if line 6 is $5 or more. Free federal and state tax filing online   $ 2,950   Example 2. Free federal and state tax filing online The facts are the same as in Example 1 except that Joe had $600 taxable interest income. Free federal and state tax filing online He must file a tax return because his gross income of $3,350 ($600 interest plus $2,750 wages) is more than $3,100, the amount on line 5 of his filled-in worksheet (shown next). Free federal and state tax filing online Filled-in Example 2 Filing Requirement Worksheet for Most Dependents 1. Free federal and state tax filing online Enter dependent's earned income plus $350   $ 3,100 2. Free federal and state tax filing online Minimum amount   1,000 3. Free federal and state tax filing online Compare lines 1 and 2. Free federal and state tax filing online Enter the larger amount   3,100 4. Free federal and state tax filing online Maximum amount   6,100 5. Free federal and state tax filing online Compare lines 3 and 4. Free federal and state tax filing online Enter the smaller amount   3,100 6. Free federal and state tax filing online Enter the dependent's gross income. Free federal and state tax filing online If line 6 is more than line 5, the dependent must file an income tax return. Free federal and state tax filing online If the dependent is married and his or her spouse itemizes deductions on a separate return, the dependent must file an income tax return if line 6 is $5 or more. Free federal and state tax filing online   $ 3,350   Age 65 or older or blind. Free federal and state tax filing online A dependent who is age 65 or older or blind must file a return if his or her gross income is more than line 7 of the following worksheet. Free federal and state tax filing online Filing Requirement Worksheet  for Dependents Who Are Age 65 or Older or Blind 1. Free federal and state tax filing online Enter dependent's earned income plus $350     2. Free federal and state tax filing online Minimum amount   $1,000 3. Free federal and state tax filing online Compare lines 1 and 2. Free federal and state tax filing online Enter the larger amount     4. Free federal and state tax filing online Maximum amount   6,100 5. Free federal and state tax filing online Compare lines 3 and 4. Free federal and state tax filing online Enter the smaller amount     6. Free federal and state tax filing online Enter the amount from the following table that applies to the dependent       Marital Status Amount     Single         Either 65 or older or blind $1,500       65 or older and blind $3,000     Married         Either 65 or older or blind $1,200       65 or older and blind $2,400   7. Free federal and state tax filing online Add lines 5 and 6. Free federal and state tax filing online Enter the total     8. Free federal and state tax filing online Enter the dependent's gross income. Free federal and state tax filing online If line 8 is more than line 7, the dependent must file an income tax return. Free federal and state tax filing online If the dependent is married and his or her spouse itemizes deductions on a separate return, the dependent must file an income tax return if line 8 is $5 or more     Example 3. Free federal and state tax filing online The facts are the same as in Example 2 except that Joe is also blind. Free federal and state tax filing online He does not have to file a return because his gross income of $3,350 is not more than $4,600, the amount on line 7 of his filled-in Filing Requirement Worksheet for Dependents Who Are Age 65 or Older or Blind (shown next). Free federal and state tax filing online   Filled-in Example 3 Filing Requirement Worksheet  for Dependents Who Are Age 65 or Older or Blind 1. Free federal and state tax filing online Enter dependent's earned income plus $350   $3,100 2. Free federal and state tax filing online Minimum amount   1,000 3. Free federal and state tax filing online Compare lines 1 and 2. Free federal and state tax filing online Enter the larger amount   3,100 4. Free federal and state tax filing online Maximum amount   6,100 5. Free federal and state tax filing online Compare lines 3 and 4. Free federal and state tax filing online Enter the smaller amount   3,100 6. Free federal and state tax filing online Enter the amount from the following table that applies to the dependent   1,500   Marital Status Amount     Single         Either 65 or older or blind $1,500       65 or older and blind $3,000     Married         Either 65 or older or blind $1,200       65 or older and blind $2,400   7. Free federal and state tax filing online Add lines 5 and 6. Free federal and state tax filing online Enter the total   4,600 8. Free federal and state tax filing online Enter the dependent's gross income. Free federal and state tax filing online If line 8 is more than line 7, the dependent must file an income tax return. Free federal and state tax filing online If the dependent is married and his or her spouse itemizes deductions on a separate return, the dependent must file an income tax return if line 8 is $5 or more   $3,350 Other Filing Requirements Some dependents may have to file a tax return even if their income is less than the amount that would normally require them to file a return. Free federal and state tax filing online A dependent must file a tax return if he or she owes any other taxes, such as: Social security and Medicare taxes on tips not reported to his or her employer or on wages received from an employer who did not withhold these taxes, Uncollected social security and Medicare or railroad retirement taxes on tips reported to his or her employer or on group-term life insurance, Alternative minimum tax, Additional tax on a health savings account from Form 8889, Part III, Recapture taxes, such as the tax from recapture of an education credit, or Additional tax on a qualified plan, including an individual retirement arrangement (IRA), or other tax-favored account. Free federal and state tax filing online But if the dependent is filing a return only because of this tax, the dependent can file Form 5329 by itself. Free federal and state tax filing online A dependent must also file a tax return if he or she: Had wages of $108. Free federal and state tax filing online 28 or more from a church or qualified church-controlled organization that is exempt from employer social security and Medicare taxes, or Had net earnings from self-employment of at least $400. Free federal and state tax filing online Spouse itemizes. Free federal and state tax filing online   A dependent must file a return if the dependent's spouse itemizes deductions on a separate return and the dependent has $5 or more of gross income (earned and/or unearned). Free federal and state tax filing online Should a Return Be Filed Even If Not Required? Even if a dependent does not meet any of the filing requirements discussed earlier, he or she should file a tax return if either of the following applies. Free federal and state tax filing online Income tax was withheld from his or her income. Free federal and state tax filing online He or she qualifies for the earned income credit, additional child tax credit, health coverage tax credit, or refundable American opportunity education credit. Free federal and state tax filing online See the tax return instructions to find out who qualifies for these credits. Free federal and state tax filing online  By filing a return, the dependent can get a refund. Free federal and state tax filing online Responsibility for Child's Return Generally, a child is responsible for filing his or her own tax return and for paying any tax, penalties, or interest on that return. Free federal and state tax filing online If a child cannot file his or her own return for any reason, such as age, the child's parent, guardian, or other legally responsible person must file it for the child. Free federal and state tax filing online Signing the child's return. Free federal and state tax filing online   If the child cannot sign his or her return, a parent or guardian must sign the child's name followed by the words “By (signature), parent (or guardian) for minor child. Free federal and state tax filing online ” Authority of parent or guardian. Free federal and state tax filing online   A parent or guardian who signs a return on a child's behalf can deal with the IRS on all matters connected with the return. Free federal and state tax filing online   In general, a parent or guardian who does not sign the child's return can only provide information concerning the child's return and pay the child's tax. Free federal and state tax filing online That parent or guardian is not entitled to receive information from the IRS or legally bind the child to a tax liability arising from the return. Free federal and state tax filing online Third party designee. Free federal and state tax filing online   A child's parent or guardian who does not sign the child's return may be authorized, as a third party designee, to discuss the processing of the return with the IRS as well as provide information concerning the return. Free federal and state tax filing online The child or the person signing the return on the child's behalf must check the “Yes” box in the “Third Party Designee” area of the return and name the parent or guardian as the designee. Free federal and state tax filing online   If designated, a parent or guardian can respond to certain IRS notices and receive information about the processing of the return and the status of a refund or payment. Free federal and state tax filing online This designation does not authorize the parent or guardian to receive any refund check, bind the child to any tax liability, or otherwise represent the child before the IRS. Free federal and state tax filing online See the return instructions for more information. Free federal and state tax filing online Designated as representative. Free federal and state tax filing online   A parent or guardian who does not sign the child's return may be designated as the child's representative by the child or the person signing the return on the child's behalf. Free federal and state tax filing online Form 2848, Power of Attorney and Declaration of Representative, is used to designate a child's representative. Free federal and state tax filing online See Publication 947, Practice Before the IRS and Power of Attorney, for more information. Free federal and state tax filing online   If designated, a parent or guardian can receive information about the child's return but cannot legally bind the child to a tax liability unless authorized to do so by the law of the state in which the child lives. Free federal and state tax filing online IRS notice. Free federal and state tax filing online   If you or the child receives a notice from the IRS concerning the child's return or tax liability, you should immediately inform the IRS that the notice concerns a child. Free federal and state tax filing online The notice will show who to contact. Free federal and state tax filing online The IRS will try to resolve the matter with the parent(s) or guardian(s) of the child consistent with their authority. Free federal and state tax filing online Child's earnings. Free federal and state tax filing online   For federal income tax purposes, amounts a child earns by performing services are included in the gross income of the child and not the gross income of the parent. Free federal and state tax filing online This is true even if, under state law, the parent has the right to the earnings and may actually have received them. Free federal and state tax filing online If the child does not pay the tax due on this income, the parent may be liable for the tax. Free federal and state tax filing online Child's expenses. Free federal and state tax filing online   Deductions for payments that are made out of a child's earnings are the child's, even if the payments are made by the parent. Free federal and state tax filing online Example. Free federal and state tax filing online You made payments on your child's behalf that are deductible as a business expense and a charitable contribution. Free federal and state tax filing online You made the payments out of your child's earnings. Free federal and state tax filing online These items can be deducted only on the child's return. Free federal and state tax filing online Standard Deduction The standard deduction for an individual who can be claimed as a dependent on another person's tax return is generally limited to the larger of: $1,000, or The individual's earned income plus $350, but not more than the regular standard deduction (generally $6,100). Free federal and state tax filing online However, the standard deduction may be higher for a dependent who: Is 65 or older, or Is blind. Free federal and state tax filing online Certain dependents cannot claim any standard deduction. Free federal and state tax filing online See Standard Deduction of Zero , later. Free federal and state tax filing online Worksheet 1. Free federal and state tax filing online   Use Worksheet 1 to figure the dependent's standard deduction. Free federal and state tax filing online Worksheet 1. Free federal and state tax filing online Standard Deduction Worksheet for Dependents Use this worksheet only if someone else can claim you (or your spouse, if filing jointly) as a dependent. Free federal and state tax filing online If you were 65 or older and/or blind, check the correct number of boxes below. Free federal and state tax filing online Put the total number of boxes checked in box c and go to line 1. Free federal and state tax filing online a. Free federal and state tax filing online You 65 or older   Blind   b. Free federal and state tax filing online Your spouse, if claiming  spouse's exemption 65 or older   Blind   c. Free federal and state tax filing online Total boxes checked         1. Free federal and state tax filing online Enter your earned income (defined below) plus $350. Free federal and state tax filing online If none, enter -0-. Free federal and state tax filing online 1. Free federal and state tax filing online     2. Free federal and state tax filing online Minimum amount. Free federal and state tax filing online   2. Free federal and state tax filing online $1,000   3. Free federal and state tax filing online Compare lines 1 and 2. Free federal and state tax filing online Enter the larger of the two amounts here. Free federal and state tax filing online 3. Free federal and state tax filing online     4. Free federal and state tax filing online Enter on line 4 the amount shown below for your filing status. Free federal and state tax filing online       Single or Married filing separately—$6,100 Married filing jointly—$12,200 Head of household—$8,950 4. Free federal and state tax filing online     5. Free federal and state tax filing online Standard deduction. Free federal and state tax filing online         a. Free federal and state tax filing online Compare lines 3 and 4. Free federal and state tax filing online Enter the smaller amount here. Free federal and state tax filing online If under 65 and not blind, stop here. Free federal and state tax filing online This is your standard deduction. Free federal and state tax filing online Otherwise, go on to line 5b. Free federal and state tax filing online 5a. Free federal and state tax filing online     b. Free federal and state tax filing online If 65 or older or blind, multiply $1,500 ($1,200 if married) by the number in box c above. Free federal and state tax filing online Enter the result here. Free federal and state tax filing online 5b. Free federal and state tax filing online     c. Free federal and state tax filing online Add lines 5a and 5b. Free federal and state tax filing online This is your standard deduction for 2013. Free federal and state tax filing online 5c. Free federal and state tax filing online     Earned income includes wages, salaries, tips, professional fees, and other compensation received for personal services you performed. Free federal and state tax filing online It also includes any amount received as a scholarship that you must include in income. Free federal and state tax filing online   Example 1. Free federal and state tax filing online Michael is single, age 15, and not blind. Free federal and state tax filing online His parents can claim him as a dependent on their tax return. Free federal and state tax filing online He has taxable interest income of $800 and wages of $150. Free federal and state tax filing online He enters $500 (his earned income plus $350) on line 1 of Worksheet 1. Free federal and state tax filing online On line 3, he enters $1,000, the larger of $500 or $1,000. Free federal and state tax filing online Michael enters $6,100 on line 4. Free federal and state tax filing online On line 5a, he enters $1,000, the smaller of $1,000 or $6,100. Free federal and state tax filing online His standard deduction is $1,000. Free federal and state tax filing online Example 2. Free federal and state tax filing online Judy, a full-time student, is single, age 22, and not blind. Free federal and state tax filing online Her parents can claim her as a dependent on their tax return. Free federal and state tax filing online She has dividend income of $275 and wages of $2,500. Free federal and state tax filing online She enters $2,850 (her earned income plus $350) on line 1 of Worksheet 1. Free federal and state tax filing online On line 3, she enters $2,850, the larger of $2,850 or $1,000. Free federal and state tax filing online She enters $6,100 on line 4. Free federal and state tax filing online On line 5a, she enters $2,850 (the smaller of $2,850 or $6,100) as her standard deduction. Free federal and state tax filing online Example 3. Free federal and state tax filing online Amy, who is single, is claimed as a dependent on her parents' tax return. Free federal and state tax filing online She is 18 years old and blind. Free federal and state tax filing online She has taxable interest income of $1,000 and wages of $2,000. Free federal and state tax filing online She enters $2,350 (her earned income plus $350) on line 1 of Worksheet 1. Free federal and state tax filing online She enters $2,350 (the larger of $2,350 or $1,000) on line 3, $6,100 on line 4, and $2,350 (the smaller of $2,350 or $6,100) on line 5a. Free federal and state tax filing online Because Amy is blind, she checks the box for blindness and enters “1” in box c at the top of Worksheet 1. Free federal and state tax filing online She enters $1,500 (the number in box c times $1,500) on line 5b. Free federal and state tax filing online Her standard deduction on line 5c is $3,850 ($2,350 + $1,500). Free federal and state tax filing online Standard Deduction of Zero The standard deduction for the following dependents is zero. Free federal and state tax filing online A married dependent filing a separate return whose spouse itemizes deductions. Free federal and state tax filing online A dependent who files a return for a period of less than 12 months due to a change in his or her annual accounting period. Free federal and state tax filing online A nonresident or dual-status alien dependent, unless the dependent is married to a U. Free federal and state tax filing online S. Free federal and state tax filing online citizen or resident alien at the end of the year and chooses to be treated as a U. Free federal and state tax filing online S. Free federal and state tax filing online resident for the year. Free federal and state tax filing online See Publication 519, U. Free federal and state tax filing online S. Free federal and state tax filing online Tax Guide for Aliens, for information on making this choice. Free federal and state tax filing online Example. Free federal and state tax filing online Jennifer, who is a dependent of her parents, is entitled to file a joint return with her husband. Free federal and state tax filing online However, her husband elects to file a separate return and itemize his deductions. Free federal and state tax filing online Because he itemizes, Jennifer's standard deduction on her return is zero. Free federal and state tax filing online She can, however, itemize any of her allowable deductions. Free federal and state tax filing online Dependent's Own Exemption A person who can be claimed as a dependent on another taxpayer's return cannot claim his or her own exemption. Free federal and state tax filing online This is true even if the other taxpayer does not actually claim the exemption. Free federal and state tax filing online Example. Free federal and state tax filing online James and Barbara can claim their child, Ben, as a dependent on their return. Free federal and state tax filing online Ben is a college student who works during the summer and must file a tax return. Free federal and state tax filing online Ben cannot claim his own exemption on his return. Free federal and state tax filing online This is true even if James and Barbara do not claim him as a dependent on their return. Free federal and state tax filing online Withholding From Wages Employers generally withhold federal income tax, social security tax, and Medicare tax from an employee's wages. Free federal and state tax filing online If the employee claims exemption from withholding on Form W-4, the employer will not withhold federal income tax. Free federal and state tax filing online The exemption from withholding does not apply to social security and Medicare taxes. Free federal and state tax filing online Conditions for exemption from withholding. Free federal and state tax filing online   An employee can claim exemption from withholding for 2014 only if he or she meets both of the following conditions. Free federal and state tax filing online For 2013, the employee had a right to a refund of all federal income tax withheld because he or she had no tax liability. Free federal and state tax filing online For 2014, the employee expects a refund of all federal income tax withheld because he or she expects to have no tax liability. Free federal and state tax filing online Dependents. Free federal and state tax filing online   An employee who is a dependent ordinarily cannot claim exemption from withholding if both of the following are true. Free federal and state tax filing online The employee's gross income will be more than $1,000, the minimum standard deduction for 2014. Free federal and state tax filing online The employee's unearned income will be more than $350. Free federal and state tax filing online Exceptions. Free federal and state tax filing online   An employee may be able to claim exemption from withholding even if the employee is a dependent, if the employee: Is age 65 or older, Is blind, or Will claim on his or her 2014 tax return: Adjustments to income, Tax credits, or Itemized deductions. Free federal and state tax filing online The above exceptions do not apply to supplemental wages greater than $1,000,000. Free federal and state tax filing online For more information, see Exemption From Withholding in chapter 1 of Publication 505. Free federal and state tax filing online Example. Free federal and state tax filing online Guy is 17 and a student. Free federal and state tax filing online During the summer he works part time at a grocery store. Free federal and state tax filing online He expects to earn about $1,200 this year. Free federal and state tax filing online He also worked at the store last summer and received a refund of all his withheld income tax because he did not have a tax liability. Free federal and state tax filing online The only other income he expects during the year is $375 interest on a savings account. Free federal and state tax filing online He expects that his parents will be able to claim him as a dependent on their tax return. Free federal and state tax filing online He is not blind and will not claim adjustments to income, itemized deductions, a higher standard deduction, or tax credits on his return. Free federal and state tax filing online Guy cannot claim exemption from withholding when he fills out Form W-4 because his parents will be able to claim him as a dependent, his gross income will be more than $1,000 (the minimum standard deduction amount) and his unearned income will be more than $350. Free federal and state tax filing online Claiming exemption from withholding. Free federal and state tax filing online    To claim exemption from withholding, an employee must enter “Exempt” in the space provided on Form W-4, line 7. Free federal and state tax filing online The employee must complete the rest of the form, as explained in the form instructions, and give it to his or her employer. Free federal and state tax filing online Renewing an exemption from withholding. Free federal and state tax filing online   An exemption from withholding is good for only one year. Free federal and state tax filing online An employee must file a new Form W-4 by February 15 each year to continue the exemption. Free federal and state tax filing online Part 2. Free federal and state tax filing online Tax on Unearned Income of Certain Children The two rules that follow may affect the tax on the unearned income of certain children. Free federal and state tax filing online If the child's interest and dividend income (including capital gain distributions) total less than $10,000, the child's parent may be able to choose to include that income on the parent's return rather than file a return for the child. Free federal and state tax filing online (See Parent's Election To Report Child's Interest and Dividends , later. Free federal and state tax filing online ) If the child's interest, dividends, and other unearned income total more than $2,000, part of that income may be taxed at the parent's tax rate instead of the child's tax rate. Free federal and state tax filing online (See Tax for Certain Children Who Have Unearned Income , later. Free federal and state tax filing online ) For these rules, the term “child” includes a legally adopted child and a stepchild. Free federal and state tax filing online These rules apply whether or not the child is a dependent. Free federal and state tax filing online These rules do not apply if neither of the child's parents were living at the end of the year. Free federal and state tax filing online Which Parent's Return To Use If a child's parents are married to each other and file a joint return, use the joint return to figure the tax on the child's unearned income. Free federal and state tax filing online The tax rate and other return information from that return are used to figure the child's tax as explained later under Tax for Certain Children Who Have Unearned Income . Free federal and state tax filing online Parents Who Do Not File a Joint Return For parents who do not file a joint return, the following discussions explain which parent's tax return must be used to figure the tax. Free federal and state tax filing online Only the parent whose tax return is used can make the election described under Parent's Election To Report Child's Interest and Dividends . Free federal and state tax filing online Parents are married. Free federal and state tax filing online   If the child's parents file separate returns, use the return of the parent with the greater taxable income. Free federal and state tax filing online Parents not living together. Free federal and state tax filing online   If the child's parents are married to each other but not living together, and the parent with whom the child lives (the custodial parent) is considered unmarried, use the return of the custodial parent. Free federal and state tax filing online If the custodial parent is not considered unmarried, use the return of the parent with the greater taxable income. Free federal and state tax filing online   For an explanation of when a married person living apart from his or her spouse is considered unmarried, see Head of Household in Publication 501. Free federal and state tax filing online Parents are divorced. Free federal and state tax filing online   If the child's parents are divorced or legally separated, and the parent who had custody of the child for the greater part of the year (the custodial parent) has not remarried, use the return of the custodial parent. Free federal and state tax filing online Custodial parent remarried. Free federal and state tax filing online   If the custodial parent has remarried, the stepparent (rather than the noncustodial parent) is treated as the child's other parent. Free federal and state tax filing online Therefore, if the custodial parent and the stepparent file a joint return, use that joint return. Free federal and state tax filing online Do not use the return of the noncustodial parent. Free federal and state tax filing online   If the custodial parent and the stepparent are married, but file separate returns, use the return of the one with the greater taxable income. Free federal and state tax filing online If the custodial parent and the stepparent are married but not living together, the earlier discussion under Parents not living together applies. Free federal and state tax filing online Parents never married. Free federal and state tax filing online   If a child's parents have never been married to each other, but lived together all year, use the return of the parent with the greater taxable income. Free federal and state tax filing online If the parents did not live together all year, the rules explained earlier under Parents are divorced apply. Free federal and state tax filing online Widowed parent remarried. Free federal and state tax filing online   If a widow or widower remarries, the new spouse is treated as the child's other parent. Free federal and state tax filing online The rules explained earlier under Custodial parent remarried apply. Free federal and state tax filing online Parent's Election To Report Child's Interest and Dividends You may be able to elect to include your child's interest and dividend income (including capital gain distributions) on your tax return. Free federal and state tax filing online If you do, your child will not have to file a return. Free federal and state tax filing online You can make this election only if all the following conditions are met. Free federal and state tax filing online Your child was under age 19 (or under age 24 if a full-time student) at the end of the year. Free federal and state tax filing online Your child had income only from interest and dividends (including capital gain distributions and Alaska Permanent Fund dividends). Free federal and state tax filing online The child's gross income was less than $10,000. Free federal and state tax filing online The child is required to file a return unless you make this election. Free federal and state tax filing online The child does not file a joint return for the year. Free federal and state tax filing online No estimated tax payment was made for the year, and no overpayment from the previous year (or from any amended return) was applied to this year under your child's name and social security number. Free federal and state tax filing online No federal income tax was withheld from your child's income under the backup withholding rules. Free federal and state tax filing online You are the parent whose return must be used when applying the special tax rules for children. Free federal and state tax filing online (See Which Parent's Return To Use , earlier. Free federal and state tax filing online ) These conditions are also shown in Figure 1. Free federal and state tax filing online Certain January 1 birthdays. Free federal and state tax filing online   A child born on January 1, 1995, is considered to be age 19 at the end of 2013. Free federal and state tax filing online You cannot make this election for such a child unless the child was a full-time student. Free federal and state tax filing online   A child born on January 1, 1990, is considered to be age 24 at the end of 2013. Free federal and state tax filing online You cannot make this election for such a child. Free federal and state tax filing online How to make the election. Free federal and state tax filing online    Make the election by attaching Form 8814 to your Form 1040 or Form 1040NR. Free federal and state tax filing online (If you make this election, you cannot file Form 1040A or Form 1040EZ. Free federal and state tax filing online ) Attach a separate Form 8814 for each child for whom you make the election. Free federal and state tax filing online You can make the election for one or more children and not for others. Free federal and state tax filing online Effect of Making the Election The federal income tax on your child's income may be more if you make the Form 8814 election. Free federal and state tax filing online Rate may be higher. Free federal and state tax filing online   If your child received qualified dividends or capital gain distributions, you may pay up to $100 more tax if you make this election instead of filing a separate tax return for the child. Free federal and state tax filing online This is because the tax rate on the child's income between $1,000 and $2,000 is 10% if you make this election. Free federal and state tax filing online However, if you file a separate return for the child, the tax rate may be as low as 0% (zero percent) because of the preferential tax rates for qualified dividends and capital gain distributions. Free federal and state tax filing online Deductions you cannot take. Free federal and state tax filing online   By making the Form 8814 election, you cannot take any of the following deductions that the child would be entitled to on his or her return. Free federal and state tax filing online The additional standard deduction if the child is blind. Free federal and state tax filing online The deduction for a penalty on an early withdrawal of your child's savings. Free federal and state tax filing online Itemized deductions (such as your child's investment expenses or charitable contributions). Free federal and state tax filing online Figure 1. Free federal and state tax filing online Can You Include Your Child's Income On Your Tax Return? Please click here for the text description of the image. Free federal and state tax filing online Figure 1. Free federal and state tax filing online Can You Include Your Child's Income On Your Tax Return? Deductible investment interest. Free federal and state tax filing online   If you use Form 8814, your child's unearned income is considered your unearned income. Free federal and state tax filing online To figure the limit on your deductible investment interest, add the child's unearned income to yours. Free federal and state tax filing online However, if your child received qualified dividends, capital gain distributions, or Alaska Permanent Fund dividends, see chapter 3 of Publication 550 for information about how to figure the limit. Free federal and state tax filing online Alternative minimum tax. Free federal and state tax filing online    If your child received tax-exempt interest (or exempt-interest dividends paid by a regulated investment company) from certain private activity bonds, you must determine if that interest is a tax preference item for alternative minimum tax (AMT) purposes. Free federal and state tax filing online If it is, you must include it with your own tax preference items when figuring your AMT. Free federal and state tax filing online See Form 6251, Alternative Minimum Tax—Individuals, and its instructions for details. Free federal and state tax filing online Reduced deductions or credits. Free federal and state tax filing online   If you use Form 8814, your increased adjusted gross income may reduce certain deductions or credits on your return, including the following. Free federal and state tax filing online Deduction for contributions to a traditional individual retirement arrangement (IRA). Free federal and state tax filing online Deduction for student loan interest. Free federal and state tax filing online Itemized deductions for medical expenses, casualty and theft losses, and certain miscellaneous expenses. Free federal and state tax filing online Credit for child and dependent care expenses. Free federal and state tax filing online Child tax credit. Free federal and state tax filing online Education tax credits. Free federal and state tax filing online Earned income credit. Free federal and state tax filing online Penalty for underpayment of estimated tax. Free federal and state tax filing online   If you make this election for 2013 and did not have enough tax withheld or pay enough estimated tax to cover the tax you owe, you may be subject to a penalty. Free federal and state tax filing online If you plan to make this election for 2014, you may need to increase your federal income tax withholding or your estimated tax payments to avoid the penalty. Free federal and state tax filing online Get Publication 505 for more information. Free federal and state tax filing online Figuring Child's Income Use Form 8814, Part I, to figure your child's interest and dividend income to report on your return. Free federal and state tax filing online Only the amount over $2,000 is added to your income. Free federal and state tax filing online The amount over $2,000 is shown on Form 8814, line 6. Free federal and state tax filing online Unless the child's income includes qualified dividends or capital gain distributions (discussed next), the same amount is shown on Form 8814, line 12. Free federal and state tax filing online Include the amount from Form 8814, line 12, on Form 1040 or Form 1040NR, line 21. Free federal and state tax filing online If you file more than one Form 8814, include the total amounts from line 12 of all your Forms 8814 on Form 1040 or Form 1040NR, line 21. Free federal and state tax filing online On the dotted line next to line 21, enter “Form 8814” and the total of the Form 8814, line 12 amounts. Free federal and state tax filing online Note. Free federal and state tax filing online The tax on the first $2,000 is figured on Form 8814, Part II. Free federal and state tax filing online See Figuring Additional Tax , later. Free federal and state tax filing online Qualified dividends. Free federal and state tax filing online   Enter on Form 8814, line 2a, any ordinary dividends your child received. Free federal and state tax filing online This amount may include qualified dividends. Free federal and state tax filing online Qualified dividends are those dividends reported on Form 1040, line 9b, or Form 1040NR, line 10b, and are eligible for lower tax rates that apply to a net capital gain. Free federal and state tax filing online For detailed information about qualified dividends, see Publication 550. Free federal and state tax filing online   If your child received qualified dividends, the amount of these dividends that is added to your income must be reported on Form 1040, lines 9a and 9b, or Form 1040NR, lines 10a and 10b. Free federal and state tax filing online You do not include these dividends on Form 8814, line 12, or on line 21 of Form 1040 or Form 1040NR. Free federal and state tax filing online   Enter the child's qualified dividends on Form 8814, line 2b. Free federal and state tax filing online But do not include this amount on Form 1040, lines 9a and 9b, or Form 1040NR, lines 10a and 10b. Free federal and state tax filing online Instead, include the amount from Form 8814, line 9, on Form 1040, lines 9a and 9b, or Form 1040NR, lines 10a and 10b. Free federal and state tax filing online (The amount on Form 8814, line 9, may be less than the amount on Form 8814, line 2b, because lines 7 through 12 of the form divide the $2,000 base amount on Form 8814, line 5, between the child's qualified dividends, capital gain distributions, and other interest and dividend income, reducing each of those amounts. Free federal and state tax filing online ) Capital gain distributions. Free federal and state tax filing online   Enter on Form 8814, line 3, any capital gain distributions your child received. Free federal and state tax filing online The amount of these distributions that is added to your income must be reported on Schedule D (Form 1040), line 13, or, if you are not required to file Schedule D, on Form 1040, line 13, or Form 1040NR, line 14. Free federal and state tax filing online You do not include it on Form 8814, line 12, or on line 21 of Form 1040 or Form 1040NR. Free federal and state tax filing online   Include the amount from Form 8814, line 10, on Schedule D, line 13; Form 1040, line 13; or Form 1040NR, line 14, whichever applies. Free federal and state tax filing online (The amount on Form 8814, line 10, may be less than the amount on Form 8814, line 3, because lines 7 through 12 of the form divide the $2,000 base amount on Form 8814, line 5, between the child's qualified dividends, capital gain distributions, and other interest and dividend income, reducing each of those amounts. Free federal and state tax filing online ) Collectibles (28% rate) gain. Free federal and state tax filing online    If any of the child's capital gain distributions are reported on Form 1099-DIV as collectibles (28% rate) gain, you must determine how much to also include on line 4 of the 28% Rate Gain Worksheet, in the instructions for Schedule D, line 18. Free federal and state tax filing online Multiply the child's capital gain distribution included on Schedule D, line 13, by a fraction. Free federal and state tax filing online The numerator is the part of the child's total capital gain distribution that is collectibles (28% rate) gain. Free federal and state tax filing online The denominator is the child's total capital gain distribution. Free federal and state tax filing online Enter the result on line 4 of the 28% Rate Gain Worksheet. Free federal and state tax filing online Unrecaptured section 1250 gain. Free federal and state tax filing online   If any of the child's capital gain distributions are reported on Form 1099-DIV as unrecaptured section 1250 gain, you must determine how much to include on line 11 of the Unrecaptured Section 1250 Gain Worksheet in the instructions for Schedule D, line 19. Free federal and state tax filing online Multiply the child's capital gain distribution included on Schedule D, line 13, by a fraction. Free federal and state tax filing online The numerator is the part of the child's total capital gain distribution that is unrecaptured section 1250 gain. Free federal and state tax filing online The denominator is the child's total capital gain distribution. Free federal and state tax filing online Enter the result on the Unrecaptured Section 1250 Gain Worksheet, line 11. Free federal and state tax filing online Section 1202 gain. Free federal and state tax filing online   If any of the child's capital gain distributions are reported as section 1202 gain (gain on qualified small business stock) on Form 1099-DIV, part or all of that gain may be eligible for the section 1202 exclusion. Free federal and state tax filing online (For information about the exclusion, see chapter 4 of Publication 550. Free federal and state tax filing online ) To figure that part, multiply the child's capital gain distribution included on Schedule D, line 13, by a fraction. Free federal and state tax filing online The numerator is the part of the child's total capital gain distribution that is section 1202 gain. Free federal and state tax filing online The denominator is the child's total capital gain distribution. Free federal and state tax filing online Your section 1202 exclusion is generally 50% of the result, but may be subject to a limit. Free federal and state tax filing online In some cases, the exclusion is more than 50%. Free federal and state tax filing online See the instructions for Schedule D for details and information on how to report the exclusion amount. Free federal and state tax filing online Example. Free federal and state tax filing online Fred is 6 years old. Free federal and state tax filing online In 2013, he received dividend income of $2,100, which included $1,575 of ordinary dividends and a $525 capital gain distribution from a mutual fund. Free federal and state tax filing online (None of the distributions were reported on Form 1099-DIV as unrecaptured section 1250 gain, section 1202 gain, or collectibles (28% rate) gain. Free federal and state tax filing online ) All of the ordinary dividends are qualified dividends. Free federal and state tax filing online He has no other income and is not subject to backup withholding. Free federal and state tax filing online No estimated tax payments were made under his name and social security number. Free federal and state tax filing online Fred's parents elect to include Fred's income on their tax return instead of filing a return for him. Free federal and state tax filing online They figure the amount to report on Form 1040, lines 9a and 9b, the amount to report on their Schedule D, line 13, and the amount to report on Form 1040, line 21, as follows. Free federal and state tax filing online They leave lines 1a and 1b of Form 8814 blank because Fred does not have any interest income. Free federal and state tax filing online They enter his ordinary dividends of $1,575 on lines 2a and 2b because all of Fred's ordinary dividends are qualified dividends. Free federal and state tax filing online They enter the amount of Fred's capital gain distributions, $525, on line 3. Free federal and state tax filing online Next, they add the amounts on lines 1a, 2a, and 3 and enter the result, $2,100, on line 4. Free federal and state tax filing online They subtract the base amount on line 5, $2,000, from the amount on line 4, $2,100, and enter the result, $100, on line 6. Free federal and state tax filing online This is the total amount from Form 8814 to be reported on their return. Free federal and state tax filing online Next, they figure how much of this amount is qualified dividends and how much is capital gain distributions. Free federal and state tax filing online They divide the amount on line 2b, $1,575, by the amount on line 4, $2,100. Free federal and state tax filing online They enter the result, . Free federal and state tax filing online 75, on line 7. Free federal and state tax filing online They divide the amount on line 3, $525, by the amount on line 4, $2,100. Free federal and state tax filing online They enter the result, . Free federal and state tax filing online 25, on line 8. Free federal and state tax filing online They multiply the amount on line 6, $100, by the decimal on line 7, . Free federal and state tax filing online 75, and enter the result, $75, on line 9. Free federal and state tax filing online They multiply the amount on line 6, $100, by the decimal on line 8, . Free federal and state tax filing online 25, and enter the result, $25, on line 10. Free federal and state tax filing online They include the amount from line 9, $75, on lines 9a and 9b of their Form 1040 and enter “Form 8814 – $75” on the dotted lines next to lines 9a and 9b. Free federal and state tax filing online They include the amount from line 10, $25, on line 13 of their Schedule D (Form 1040) and enter “Form 8814 – $25” on the dotted line next to Schedule D, line 13. Free federal and state tax filing online They enter $100 ($75 + $25) on line 11 and -0- ($100 – $100) on line 12. Free federal and state tax filing online Because the amount on line 12 is -0-, they do not include any amount from Form 8814 on their Form 1040, line 21. Free federal and state tax filing online Figuring Additional Tax Use Form 8814, Part II, to figure the tax on the $2,000 of your child's interest and dividends that you do not include in your income. Free federal and state tax filing online This tax is added to the tax figured on your income. Free federal and state tax filing online This additional tax is the smaller of: 10% x (your child's gross income − $1,000), or $100. Free federal and state tax filing online Include the amount from line 15 of all your Forms 8814 in the total on Form 1040, line 44, or Form 1040NR, line 42. Free federal and state tax filing online Check box a on Form 1040, line 44, or Form 1040NR, line 42. Free federal and state tax filing online Tax for Certain Children Who Have Unearned Income If a child's interest, dividends, and other unearned income total more than $2,000, part of that income may be taxed at the parent's tax rate instead of the child's tax rate. Free federal and state tax filing online If the parent does not or cannot choose to include the child's income on the parent's return, use Form 8615 to figure the child's tax. Free federal and state tax filing online Attach the completed form to the child's Form 1040, Form 1040A, or Form 1040NR. Free federal and state tax filing online When Form 8615 must be filed. Free federal and state tax filing online   Form 8615 must be filed for a child if all of the following statements are true. Free federal and state tax filing online The child's unearned income was more than $2,000. Free federal and state tax filing online The child is required to file a return for 2013. Free federal and state tax filing online The child either: Was under age 18 at the end of the year, Was age 18 at the end of the year and did not have earned income that was more than half of his or her support, or Was over age 18 and under age 24 at the end of the year, was a full-time student, and did not have earned income that was more than half of his or her support. Free federal and state tax filing online At least one of the child's parents was alive at the end of 2013. Free federal and state tax filing online The child does not file a joint return for 2013. Free federal and state tax filing online These conditions are also shown in Figure 2. Free federal and state tax filing online Certain January 1 birthdays. Free federal and state tax filing online   Use the following chart to determine whether certain children with January 1 birthdays meet condition 3 under When Form 8615 must be filed. Free federal and state tax filing online IF a child was born on. Free federal and state tax filing online . Free federal and state tax filing online . Free federal and state tax filing online THEN, at the end of 2013, the child is considered to be. Free federal and state tax filing online . Free federal and state tax filing online . Free federal and state tax filing online January 1, 1996 18* January 1, 1995 19** January 1, 1990 24*** *This child is not under age 18. Free federal and state tax filing online The child meets condition 3 only if the child did not have earned income that was more than half of the child's support. Free federal and state tax filing online  **This child meets condition 3 only if the child was a full-time student who did not have earned income that was more than half of the child's support. Free federal and state tax filing online  ***Do not use Form 8615 for this child. Free federal and state tax filing online Figure 2. Free federal and state tax filing online Do You Have To Use Form 8615 To Figure Your Child's Tax? Please click here for the text description of the image. Free federal and state tax filing online Figure 2. Free federal and state tax filing online Do You Have To Use Form 8615 To Figure Your Child's Tax? Providing Parental Information (Form 8615, Lines A–C) On Form 8615, lines A and B, enter the parent's name and social security number. Free federal and state tax filing online (If the parents filed a joint return, enter the name and social security number listed first on the joint return. Free federal and state tax filing online ) On line C, check the box for the parent's filing status. Free federal and state tax filing online See Which Parent's Return To Use, earlier, for information on which parent's return information must be used on Form 8615. Free federal and state tax filing online Parent with different tax year. Free federal and state tax filing online   If the parent and the child do not have the same tax year, complete Form 8615 using the information on the parent's return for the tax year that ends in the child's tax year. Free federal and state tax filing online Example. Free federal and state tax filing online Kimberly must use her mother's tax and taxable income to complete her Form 8615 for calendar year 2013 (January 1 – December 31). Free federal and state tax filing online Kimberly's mother files her tax return on a fiscal year basis (July 1 – June 30). Free federal and state tax filing online Kimberly must use the information on her mother's return for the tax year ending June 30, 2013, to complete her 2013 Form 8615. Free federal and state tax filing online Parent's return information not known timely. Free federal and state tax filing online   If the information needed from the parent's return is not known by the time the child's return is due (usually April 15), you can file the return using estimates. Free federal and state tax filing online   You can use any reasonable estimate. Free federal and state tax filing online This includes using information from last year's return. Free federal and state tax filing online If you use an estimated amount on Form 8615, enter “Estimated” on the line next to the amount. Free federal and state tax filing online   When you get the correct information, file an amended return on Form 1040X, Amended U. Free federal and state tax filing online S. Free federal and state tax filing online Individual Income Tax Return. Free federal and state tax filing online Extension of time to file. Free federal and state tax filing online   Instead of using estimates, you can get an automatic 6-month extension of time to file if, by the date your return is due, you file Form 4868, Application for Automatic Extension of Time To File U. Free federal and state tax filing online S. Free federal and state tax filing online Individual Income Tax Return. Free federal and state tax filing online See the instructions for Form 4868 for details. Free federal and state tax filing online    An extension of time to file is not an extension of time to pay. Free federal and state tax filing online You must make an accurate estimate of the tax for 2013. Free federal and state tax filing online If you do not pay the full amount due by the regular due date, the child will owe interest and may also be charged penalties. Free federal and state tax filing online See Form 4868 and its instructions. Free federal and state tax filing online Parent's return information not available. Free federal and state tax filing online   If a child cannot get the required information about his or her parent's tax return, the child (or the child's legal representative) can request the necessary information from the Internal Revenue Service (IRS). Free federal and state tax filing online How to request. Free federal and state tax filing online   After the end of the tax year, send a signed, written request for the information to the Internal Revenue Service Center where the parent's return will be filed. Free federal and state tax filing online (The IRS cannot process a request received before the end of the tax year. Free federal and state tax filing online )    You should also consider getting an extension of time to file the child's return, because there may be a delay in getting the requested information. Free federal and state tax filing online   The request must contain all of the following. Free federal and state tax filing online A statement that you are making the request to comply with section 1(g) of the Internal Revenue Code and that you have tried to get the information from the parent. Free federal and state tax filing online Proof of the child's age (for example, a copy of the child's birth certificate). Free federal and state tax filing online Evidence the child has more than $2,000 of unearned income (for example, a copy of the child's prior year tax return or copies of Forms 1099 for the current year). Free federal and state tax filing online The name, address, social security number (if known), and filing status (if known) of the parent whose information is to be shown on Form 8615. Free federal and state tax filing online    A child's legal representative making the request should include a copy of his or her Power of Attorney, such as Form 2848, or proof of legal guardianship. Free federal and state tax filing online Step 1. Free federal and state tax filing online Figuring the Child's Net Unearned Income (Form 8615, Part I) The first step in figuring a child's tax using Form 8615 is to figure the child's net unearned income. Free federal and state tax filing online To do that, use Form 8615, Part I. Free federal and state tax filing online Line 1 (Unearned Income) If the child had no earned income, enter on this line the adjusted gross income shown on the child's return. Free federal and state tax filing online Adjusted gross income is shown on Form 1040, line 38; Form 1040A, line 22; or Form 1040NR, line 37. Free federal and state tax filing online Form 1040EZ and Form 1040NR-EZ cannot be used if Form 8615 must be filed. Free federal and state tax filing online If the child had earned income, figure the amount to enter on Form 8615, line 1, by using the worksheet in the instructions for the form. Free federal and state tax filing online However, use the following worksheet if: the child has excluded any foreign earned income, deducted a loss from self-employment, or has a net operating loss from another year. Free federal and state tax filing online Alternate Worksheet for Form 8615, Line 1 A. Free federal and state tax filing online Enter the amount from the child's Form 1040, line 22, or Form 1040NR, line 23   B. Free federal and state tax filing online Enter the total of any net loss  from self-employment, any net operating loss deduction, any foreign earned income exclusion, and any foreign housing exclusion from the child's Form 1040 or Form 1040NR. Free federal and state tax filing online Enter this total as a positive number (greater than zero)   C. Free federal and state tax filing online Add line A and line B and  enter the total   D. Free federal and state tax filing online Enter the child's earned income plus any amount from the child's Form 1040, line 30, or the child's Form 1040NR, line 30     Generally, the child's earned income is the total of the amounts reported on Form 1040, lines 7, 12, and 18 (if line 12 or 18 is a loss, use zero) or Form 1040NR, lines 8, 13, and 19 (if line 13 or 19 is a loss, use zero)   E. Free federal and state tax filing online Subtract line D from line C. Free federal and state tax filing online Enter the result here and on Form 8615, line 1   Unearned income defined. Free federal and state tax filing online   Unearned income is generally all income other than salaries, wages, and other amounts received as pay for work actually performed. Free federal and state tax filing online It includes taxable interest, dividends, capital gains (including capital gain distributions), the taxable part of social security and pension payments, certain distributions from trusts, and unemployment compensation. Free federal and state tax filing online Unearned income includes amounts produced by assets the child obtained with earned income (such as interest on a savings account into which the child deposited wages). Free federal and state tax filing online Nontaxable income. Free federal and state tax filing online   For this purpose, unearned income includes only amounts the child must include in gross income. Free federal and state tax filing online Nontaxable unearned income, such as tax-exempt interest and the nontaxable part of social security and pension payments, is not included. Free federal and state tax filing online Capital loss. Free federal and state tax filing online   A child's capital losses are taken into account in figuring the child's unearned income. Free federal and state tax filing online Capital losses are first applied against capital gains. Free federal and state tax filing online If the capital losses are more than the capital gains, the difference (up to $3,000) is subtracted from the child's interest, dividends, and other unearned income. Free federal and state tax filing online Any difference over $3,000 is carried to the next year. Free federal and state tax filing online Income from property received as a gift. Free federal and state tax filing online   A child's unearned income includes all income produced by property belonging to the child. Free federal and state tax filing online This is true even if the property was transferred to the child, regardless of when the property was transferred or purchased or who transferred it. Free federal and state tax filing online   A child's unearned income includes income produced by property given as a gift to the child. Free federal and state tax filing online This includes gifts to the child from grandparents or any other person and gifts made under the Uniform Gift to Minors Act. Free federal and state tax filing online Example. Free federal and state tax filing online Amanda Black, age 13, received the following income. Free federal and state tax filing online Dividends—$800 Wages—$2,100 Taxable interest—$1,200 Tax-exempt interest—$100 Capital gains—$300 Capital losses—($200) The dividends were qualified dividends on stock given to her by her grandparents. Free federal and state tax filing online Amanda's unearned income is $2,100. Free federal and state tax filing online This is the total of the dividends ($800), taxable interest ($1,200), and capital gains reduced by capital losses ($300 − $200 = $100). Free federal and state tax filing online Her wages are earned (not unearned) income because they are received for work actually performed. Free federal and state tax filing online Her tax-exempt interest is not included because it is nontaxable. Free federal and state tax filing online Trust income. Free federal and state tax filing online   If a child is the beneficiary of a trust, distributions of taxable interest, dividends, capital gains, and other unearned income from the trust are unearned income to the child. Free federal and state tax filing online   However, taxable distributions from a qualified disability trust are considered earned income for the purposes of completing Form 8615. Free federal and state tax filing online See the Form 8615 instructions for details. Free federal and state tax filing online Adjustment to income. Free federal and state tax filing online   In figuring the amount to enter on line 1, the child's unearned income is reduced by any penalty on the early withdrawal of savings. Free federal and state tax filing online Line 2 (Deductions) If the child does not itemize deductions on Schedule A (Form 1040 or Form 1040NR), enter $2,000 on line 2. Free federal and state tax filing online If the child itemizes deductions, enter on line 2 the larger of: $1,000 plus the portion of the child's itemized deductions on Schedule A (Form 1040), line 29 (or Schedule A (Form 1040NR), line 15), that are directly connected with the production of the unearned income entered on line 1, or $2,000. Free federal and state tax filing online Directly connected. Free federal and state tax filing online   Itemized deductions are directly connected with the production of unearned income if they are for expenses paid to produce or collect taxable income or to manage, conserve, or maintain property held for producing income. Free federal and state tax filing online These expenses include custodian fees and service charges, service fees to collect taxable interest and dividends, and certain investment counsel fees. Free federal and state tax filing online    These expenses are added to certain other miscellaneous itemized deductions on Schedule A (Form 1040). Free federal and state tax filing online Only the amount greater than 2% of the child's adjusted gross income can be deducted. Free federal and state tax filing online See Publication 529, Miscellaneous Deductions, for more information. Free federal and state tax filing online Example 1. Free federal and state tax filing online Roger, age 12, has unearned income of $8,000, no other income, no adjustments to income, and itemized deductions of $300 (net of the 2%-of-adjusted-gross-income limit) that are directly connected with his unearned income. Free federal and state tax filing online His adjusted gross income is $8,000, which is entered on Form 1040, line 38, and on Form 8615, line 1. Free federal and state tax filing online Roger enters $2,000 on line 2 because that is more than the total of $1,000 plus his directly-connected itemized deductions of $300. Free federal and state tax filing online Example 2. Free federal and state tax filing online Eleanor, age 8, has unearned income of $16,000 and an early withdrawal penalty of $100. Free federal and state tax filing online She has no other income. Free federal and state tax filing online She has itemized deductions of $1,050 (net of the 2%-of-adjusted-gross-income limit) that are directly connected with the production of her unearned income. Free federal and state tax filing online Her adjusted gross income, entered on line 1, is $15,900 ($16,000 − $100). Free federal and state tax filing online The amount on line 2 is $2,050. Free federal and state tax filing online This is the larger of: $1,000 plus the $1,050 of directly connected itemized deductions, or $2,000. Free federal and state tax filing online Line 3 Subtract line 2 from line 1 and enter the result on this line. Free federal and state tax filing online If zero or less, do not complete the rest of the form. Free federal and state tax filing online However, you must still attach Form 8615 to the child's tax return. Free federal and state tax filing online Figure the tax on the child's taxable income in the normal manner. Free federal and state tax filing online Line 4 (Child's Taxable Income) Enter on line 4 the child's taxable income from Form 1040, line 43; Form 1040A, line 27; or Form 1040NR, line 41. Free federal and state tax filing online Child files Form 2555 or 2555-EZ. Free federal and state tax filing online   If the child files Form 2555 or 2555-EZ to claim the foreign earned income exclusion, housing exclusion, or housing deduction, the Foreign Earned Income Tax Worksheet (in the Form 1040 instructions) is used to figure the child's tax. Free federal and state tax filing online Enter the amount from line 3 of the Foreign Earned Income Tax Worksheet as the child's taxable income on Form 8615, line 4. Free federal and state tax filing online Line 5 (Net Unearned Income) A child's net unearned income cannot be more than his or her taxable income. Free federal and state tax filing online Enter on Form 8615, line 5, the smaller of line 3 or line 4. Free federal and state tax filing online This is the child's net unearned income. Free federal and state tax filing online If zero or less, do not complete the rest of the form. Free federal and state tax filing online However, you must still attach Form 8615 to the child's tax return. Free federal and state tax filing online Figure the tax on the child's taxable income in the normal manner. Free federal and state tax filing online Step 2. Free federal and state tax filing online Figuring a Tentative Tax at the Parent's Tax Rate (Form 8615, Part II) The next step in completing Form 8615 is to figure a tentative tax on the child's net unearned income at the parent's tax rate. Free federal and state tax filing online The tentative tax at the parent's tax rate is the difference between the tax on the parent's taxable income figured with the child's net unearned income (plus the net unearned income of any other child whose Form 8615 includes the tax return information of that parent) and the tax figured without it. Free federal and state tax filing online When figuring the tentative tax at the parent's tax rate on Form 8615, do not refigure any of the exclusions, deductions, or credits on the parent's return because of the child's net unearned income. Free federal and state tax filing online For example, do not refigure the medical expense deduction. Free federal and state tax filing online Figure the tentative tax on Form 8615, lines 6 through 13. Free federal and state tax filing online Line 6 (Parent's Taxable Income) Enter on line 6 the amount from the parent's Form 1040, line 43; Form 1040A, line 27; Form 1040EZ, line 6; Form 1040NR, line 41; or Form 1040NR-EZ, line 14. Free federal and state tax filing online If the parent's taxable income is zero or less, enter zero on line 6. Free federal and state tax filing online Parent files Form 2555 or 2555-EZ. Free federal and state tax filing online   If the parent files Form 2555 or 2555-EZ to claim the foreign earned income exclusion, housing exclusion, or housing deduction, the Foreign Earned Income Tax Worksheet in the Form 1040 instructions is used to figure the parent's tax. Free federal and state tax filing online Enter the amount from line 3 of the Foreign Earned Income Tax Worksheet as the parent's taxable income, on line 6 of Form 8615. Free federal and state tax filing online Line 7 (Net Unearned Income of Other Children) If the tax return information of the parent is also used on any other child's Form 8615, enter on line 7 the total of the amounts from line 5 of all the other children's Forms 8615. Free federal and state tax filing online Do not include the amount from line 5 of the Form 8615 being completed. Free federal and state tax filing online (The term “other child” means any other child whose Form 8615 uses the tax information of the parent identified on Lines A and B of Form 8615. Free federal and state tax filing online ) Example. Free federal and state tax filing online Paul and Jane Persimmon have three children, Sharon, Jerry, and Mike, who must attach Form 8615 to their tax returns. Free federal and state tax filing online The children's net unearned income amounts on line 5 of their Forms 8615 are: Sharon—$800 Jerry—$600 Mike—$1,000 Line 7 of Sharon's Form 8615 will show $1,600, the total of the amounts on line 5 of Jerry's and Mike's Forms 8615. Free federal and state tax filing online Line 7 of Jerry's Form 8615 will show $1,800 ($800 + $1,000). Free federal and state tax filing online Line 7 of Mike's Form 8615 will show $1,400 ($800 + $600). Free federal and state tax filing online Other children's information not available. Free federal and state tax filing online   If the net unearned income of the other children is not available when the return is due, either file the return using estimates or get an extension of time to file. Free federal and state tax filing online Estimates and extensions are discussed earlier under Providing Parental Information (Form 8615, Lines A–C) . Free federal and state tax filing online Line 8 (Parent's Taxable Income Plus Children's Net Unearned Income) Enter on this line the total of lines 5, 6, and 7. Free federal and state tax filing online You must determine the amount of net capital gain and qualified dividends included on this line before completing Form 8615, line 9. Free federal and state tax filing online Net capital gain. Free federal and state tax filing online   Net capital gain is the smaller of the gain, if any, on Schedule D (Form 1040), line 15, or the gain, if any, on Schedule D, line 16. Free federal and state tax filing online If Schedule D is not required, it is the amount on Form 1040, line 13; Form 1040A, line 10; or Form 1040NR, line 14. Free federal and state tax filing online Qualified dividends. Free federal and state tax filing online   Qualified dividends are those dividends reported on line 9b of Form 1040 or Form 1040A, or line 10b of Form 1040NR. Free federal and state tax filing online Net capital gain and qualified dividends on line 8. Free federal and state tax filing online   If neither the child, nor the parent, nor any other child has net capital gain, the net capital gain on line 8 is zero. Free federal and state tax filing online   If neither the child, nor the parent, nor any other child has qualified dividends, the amount of qualified dividends on line 8 is zero. Free federal and state tax filing online   If the child, parent, or any other child has net capital gain, figure the amount of net capital gain included on line 8 by adding together the net capital gain amounts included on lines 5, 6, and 7 of Form 8615. Free federal and state tax filing online   If the child, parent, or any other child has qualified dividends, figure the amount of qualified dividends included on line 8 by adding together the qualified dividend amounts included on lines 5, 6, and 7. Free federal and state tax filing online   Use the instructions for Form 8615, line 8, including the appropriate Line 5 Worksheet, to find these amounts. Free federal and state tax filing online See the instructions for Form 8615 for more details. Free federal and state tax filing online Note. Free federal and state tax filing online The amount of any net capital gain or qualified dividends is not separately reported on line 8. Free federal and state tax filing online It is  needed, however, when figuring the tax on line 9. Free federal and state tax filing online Line 9 (Tax on Parent's Taxable Income Plus Children's Net Unearned Income) Figure the tax on the amount on line 8 using the Tax Table, the Tax Computation Worksheet, the Qualified Dividends and Capital Gain Tax Worksheet (in the Form 1040, 1040A, or 1040NR instructions), the Schedule D Tax Worksheet (in the Schedule D instructions), or Schedule J (Form 1040), as follows. Free federal and state tax filing online If line 8 does not include any net capital gain or qualified dividends, use the Tax Table or Tax Computation Worksheet to figure this tax. Free federal and state tax filing online But if Schedule J, Income Averaging for Farmers and Fishermen, is used to figure the tax on the parent's return, use it to figure this tax. Free federal and state tax filing online If line 8 includes any net capital gain or qualified dividends, use the Qualified Dividends and Capital Gain Tax Worksheet to figure this tax. Free federal and state tax filing online For details, see the instructions for Form 8615, line 9. Free federal and state tax filing online However, if the child, parent, or any other child has 28% rate gain or unrecaptured section 1250 gain, use the Schedule D Tax Worksheet. Free federal and state tax filing online But if Schedule J is used to figure the tax on the parent's return, use it to figure this tax. Free federal and state tax filing online Child files Form 2555 or 2555-EZ. Free federal and state tax filing online   If line 8 includes any net capital gain or qualified dividends and the child, or any other child filing Form 8615, also files Form 2555 or 2555-EZ, use Using the Schedule D Tax Worksheet for line 9 tax, next, to figure the line 9 tax. Free federal and state tax filing online Using the Schedule D Tax Worksheet for line 9 tax. Free federal and state tax filing online    Use the Schedule D Tax Worksheet (in the Schedule D instructions) to figure the line 9 tax on Form 8615 if the child, parent, or any other child has unrecaptured section 1250 gain or 28% rate gain. Free federal and state tax filing online If you must use the Schedule D Tax Worksheet, first complete any Schedule D and any actual Schedule D Tax Worksheet required for the child, parent, or any other child. Free federal and state tax filing online Then figure the line 9 tax using another Schedule D Tax Worksheet. Free federal and state tax filing online (Do not attach this Schedule D Tax Worksheet to the child's return. Free federal and state tax filing online )   Complete this Schedule D Tax Worksheet as follows. Free federal and state tax filing online On line 1, enter the amount from Form 8615, line 8. Free federal and state tax filing online On line 2, enter the qualified dividends included on Form 8615, line 8. Free federal and state tax filing online (See the earlier discussion for line 8. Free federal and state tax filing online ) On line 3, enter the total of the amounts, if any, on line 4g of all Forms 4952 filed by the child, parent, or any other child. Free federal and state tax filing online On line 4, enter the total of the amounts, if any, on line 4e of all Forms 4952 filed by the child, parent, or any other child. Free federal and state tax filing online If applicable, include instead the smaller amount entered on the dotted line next to line 4e. Free federal and state tax filing online On lines 5 and 6, follow the worksheet instructions. Free federal and state tax filing online On line 7, enter the net capital gain included on Form 8615, line 8. Free federal and state tax filing online (See the earlier discussion for line 8. Free federal and state tax filing online ) On lines 8 through 10, follow the worksheet instructions. Free federal and state tax filing online On line 11, enter zero if neither the child, nor the parent, nor any other child has unrecaptured section 1250 gain (Schedule D, line 19) or 28% rate gain (Schedule D, line 18). Free federal and state tax filing online Otherwise, enter the amount of unrecaptured section 1250 gain and 28% rate gain included in the net capital gain on line 8 of Form 8615. Free federal and state tax filing online Figure these amounts as explained later under Figuring unrecaptured section 1250 gain (line 11) and Figuring 28% rate gain (line 11). Free federal and state tax filing online If the Foreign Earned Income Tax Worksheet was used to figure the parent's tax or the tax of any child, go to step 10 below. Free federal and state tax filing online Otherwise, skip steps 10, 11, and 12 below, and go to step 13. Free federal and state tax filing online Determine whether there is a line 8 capital gain excess as follows. Free federal and state tax filing online Add the amounts on line 2 of all Foreign Earned Income Tax Worksheets completed by the parent or any child for whom Form 8615 is filed. Free federal and state tax filing online (But for each child do not add more than the excess, if any, of the amount on line 5 of the child's Form 8615 over the child's taxable income on Form 1040, line 43; Form 1040A, line 27; or Form 1040NR, line 41. Free federal and state tax filing online ) Subtract (a) from the amount on line 1 of this Schedule D Tax Worksheet. Free federal and state tax filing online Subtract (b) from the amount on line 10 of this Schedule D Tax Worksheet. Free federal and state tax filing online If the result is more than zero, that amount is the line 8 capital gain excess. Free federal and state tax filing online If the result is zero or less, there is no line 8 capital gain excess. Free federal and state tax filing online If there is no line 8 capital gain excess, skip step 12 below and go to step 13. Free federal and state tax filing online If there is a line 8 capital gain excess, complete a second Schedule D Tax Worksheet as instructed above and in step 13, but in its entirety and with the following additional modifications. Free federal and state tax filing online (These modifications are to be made only for purposes of filling out this additional Schedule D Tax Worksheet. Free federal and state tax filing online ) Reduce the amount you would otherwise enter on line 9 (but not below zero) by the line 8 capital gain excess. Free federal and state tax filing online Reduce the amount you would otherwise enter on line 6 (but not below zero) by any of the line 8 capital gain excess not used in (a) above. Free federal and state tax filing online If the child, parent, or any other child has 28% rate gain, reduce the amount you would otherwise enter on line 8 of Worksheet 1 for Line 11 of the Schedule D Tax Worksheet – 28% Rate Gain (Line 9 Tax), shown later, (but not below zero) by the line 8 capital gain excess, and refigure the amount on line 11 of this Schedule D Tax Worksheet. Free federal and state tax filing online If the child, parent, or any other child has unrecaptured section 1250 gain, reduce the amount you would otherwise enter on line 8 of Worksheet 2 for Line 11 of the Schedule D Tax Worksheet – Unrecaptured Section 1250 Gain (Line 9 Tax) (but not below zero) by the line 8 capital gain excess not used in 12(c), and refigure the amount on line 11 of this Schedule D Tax Worksheet. Free federal and state tax filing online Complete lines 12 through 45 following the worksheet instructions. Free federal and state tax filing online Use the parent's filing status to complete lines 15, 42, and 44. Free federal and state tax filing online Enter the amount from line 45 of this Schedule D Tax Worksheet on Form 8615, line 9, and check the box on that line