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Free File 2012 Tax Return

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Free File 2012 Tax Return

Free file 2012 tax return 8. Free file 2012 tax return   Dividends and Other Distributions Table of Contents Reminder Introduction Useful Items - You may want to see: General InformationDividends not reported on Form 1099-DIV. Free file 2012 tax return Reporting tax withheld. Free file 2012 tax return Nominees. Free file 2012 tax return Ordinary DividendsQualified Dividends Dividends Used to Buy More Stock Money Market Funds Capital Gain DistributionsBasis adjustment. Free file 2012 tax return Nondividend DistributionsLiquidating Distributions Distributions of Stock and Stock Rights Other DistributionsInformation reporting requirement. Free file 2012 tax return Alternative minimum tax treatment. Free file 2012 tax return How To Report Dividend IncomeInvestment interest deducted. Free file 2012 tax return Reminder Foreign-source income. Free file 2012 tax return  If you are a U. Free file 2012 tax return S. Free file 2012 tax return citizen with dividend income from sources outside the United States (foreign-source income), you must report that income on your tax return unless it is exempt by U. Free file 2012 tax return S. Free file 2012 tax return law. Free file 2012 tax return This is true whether you reside inside or outside the United States and whether or not you receive a Form 1099 from the foreign payer. Free file 2012 tax return Introduction This chapter discusses the tax treatment of: Ordinary dividends, Capital gain distributions, Nondividend distributions, and Other distributions you may receive from a corporation or a mutual fund. Free file 2012 tax return This chapter also explains how to report dividend income on your tax return. Free file 2012 tax return Dividends are distributions of money, stock, or other property paid to you by a corporation or by a mutual fund. Free file 2012 tax return You also may receive dividends through a partnership, an estate, a trust, or an association that is taxed as a corporation. Free file 2012 tax return However, some amounts you receive that are called dividends are actually interest income. Free file 2012 tax return (See Dividends that are actually interest under Taxable Interest in chapter 7. Free file 2012 tax return ) Most distributions are paid in cash (or check). Free file 2012 tax return However, distributions can consist of more stock, stock rights, other property, or services. Free file 2012 tax return Useful Items - You may want to see: Publication 514 Foreign Tax Credit for Individuals 550 Investment Income and Expenses Form (and Instructions) Schedule B (Form 1040A or 1040) Interest and Ordinary Dividends General Information This section discusses general rules for dividend income. Free file 2012 tax return Tax on unearned income of certain children. Free file 2012 tax return   Part of a child's 2013 unearned income may be taxed at the parent's tax rate. Free file 2012 tax return If it is, Form 8615, Tax for Certain Children Who Have Unearned Income, must be completed and attached to the child's tax return. Free file 2012 tax return If not, Form 8615 is not required and the child's income is taxed at his or her own tax rate. Free file 2012 tax return    Some parents can choose to include the child's interest and dividends on the parent's return if certain requirements are met. Free file 2012 tax return Use Form 8814, Parents' Election To Report Child's Interest and Dividends, for this purpose. Free file 2012 tax return   For more information about the tax on unearned income of children and the parents' election, see chapter 31. Free file 2012 tax return Beneficiary of an estate or trust. Free file 2012 tax return    Dividends and other distributions you receive as a beneficiary of an estate or trust are generally taxable income. Free file 2012 tax return You should receive a Schedule K-1 (Form 1041), Beneficiary's Share of Income, Deductions, Credits, etc. Free file 2012 tax return , from the fiduciary. Free file 2012 tax return Your copy of Schedule K-1 (Form 1041) and its instructions will tell you where to report the income on your Form 1040. Free file 2012 tax return Social security number (SSN) or individual taxpayer identification number (ITIN). Free file 2012 tax return    You must give your SSN or ITIN to any person required by federal tax law to make a return, statement, or other document that relates to you. Free file 2012 tax return This includes payers of dividends. Free file 2012 tax return If you do not give your SSN or ITIN to the payer of dividends, you may have to pay a penalty. Free file 2012 tax return For more information on SSNs and ITINs, see Social Security Number (SSN) in chapter 1. Free file 2012 tax return Backup withholding. Free file 2012 tax return   Your dividend income is generally not subject to regular withholding. Free file 2012 tax return However, it may be subject to backup withholding to ensure that income tax is collected on the income. Free file 2012 tax return Under backup withholding, the payer of dividends must withhold, as income tax, on the amount you are paid, applying the appropriate withholding rate. Free file 2012 tax return   Backup withholding may also be required if the IRS has determined that you underreported your interest or dividend income. Free file 2012 tax return For more information, see Backup Withholding in chapter 4. Free file 2012 tax return Stock certificate in two or more names. Free file 2012 tax return   If two or more persons hold stock as joint tenants, tenants by the entirety, or tenants in common, each person's share of any dividends from the stock is determined by local law. Free file 2012 tax return Form 1099-DIV. Free file 2012 tax return   Most corporations and mutual funds use Form 1099-DIV, Dividends and Distributions, to show you the distributions you received from them during the year. Free file 2012 tax return Keep this form with your records. Free file 2012 tax return You do not have to attach it to your tax return. Free file 2012 tax return Dividends not reported on Form 1099-DIV. Free file 2012 tax return   Even if you do not receive Form 1099-DIV, you must still report all your taxable dividend income. Free file 2012 tax return For example, you may receive distributive shares of dividends from partnerships or S corporations. Free file 2012 tax return These dividends are reported to you on Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc. Free file 2012 tax return , and Schedule K-1 (Form 1120S), Shareholder's Share of Income, Deductions, Credits, etc. Free file 2012 tax return Reporting tax withheld. Free file 2012 tax return   If tax is withheld from your dividend income, the payer must give you a Form 1099-DIV that indicates the amount withheld. Free file 2012 tax return Nominees. Free file 2012 tax return   If someone receives distributions as a nominee for you, that person should give you a Form 1099-DIV, which will show distributions received on your behalf. Free file 2012 tax return Form 1099-MISC. Free file 2012 tax return   Certain substitute payments in lieu of dividends or tax-exempt interest received by a broker on your behalf must be reported to you on Form 1099-MISC, Miscellaneous Income, or a similar statement. Free file 2012 tax return See Reporting Substitute Payments under Short Sales in chapter 4 of Publication 550 for more information about reporting these payments. Free file 2012 tax return Incorrect amount shown on a Form 1099. Free file 2012 tax return   If you receive a Form 1099 that shows an incorrect amount (or other incorrect information), you should ask the issuer for a corrected form. Free file 2012 tax return The new Form 1099 you receive will be marked “Corrected. Free file 2012 tax return ” Dividends on stock sold. Free file 2012 tax return   If stock is sold, exchanged, or otherwise disposed of after a dividend is declared but before it is paid, the owner of record (usually the payee shown on the dividend check) must include the dividend in income. Free file 2012 tax return Dividends received in January. Free file 2012 tax return   If a mutual fund (or other regulated investment company) or real estate investment trust (REIT) declares a dividend (including any exempt-interest dividend or capital gain distribution) in October, November, or December, payable to shareholders of record on a date in one of those months but actually pays the dividend during January of the next calendar year, you are considered to have received the dividend on December 31. Free file 2012 tax return You report the dividend in the year it was declared. Free file 2012 tax return Ordinary Dividends Ordinary (taxable) dividends are the most common type of distribution from a corporation or a mutual fund. Free file 2012 tax return They are paid out of earnings and profits and are ordinary income to you. Free file 2012 tax return This means they are not capital gains. Free file 2012 tax return You can assume that any dividend you receive on common or preferred stock is an ordinary dividend unless the paying corporation or mutual fund tells you otherwise. Free file 2012 tax return Ordinary dividends will be shown in box 1a of the Form 1099-DIV you receive. Free file 2012 tax return Qualified Dividends Qualified dividends are the ordinary dividends subject to the same 0%, 15%, or 20% maximum tax rate that applies to net capital gain. Free file 2012 tax return They should be shown in box 1b of the Form 1099-DIV you receive. Free file 2012 tax return The maximum rate of tax on qualified dividends is: 0% on any amount that otherwise would be taxed at a 10% or 15% rate. Free file 2012 tax return 15% on any amount that otherwise would be taxed at rates greater than 15% but less than 39. Free file 2012 tax return 6%. Free file 2012 tax return 20% on any amount that otherwise would be taxed at a 39. Free file 2012 tax return 6% rate. Free file 2012 tax return To qualify for the maximum rate, all of the following requirements must be met. Free file 2012 tax return The dividends must have been paid by a U. Free file 2012 tax return S. Free file 2012 tax return corporation or a qualified foreign corporation. Free file 2012 tax return (See Qualified foreign corporation , later. Free file 2012 tax return ) The dividends are not of the type listed later under Dividends that are not qualified dividends . Free file 2012 tax return You meet the holding period (discussed next). Free file 2012 tax return Holding period. Free file 2012 tax return   You must have held the stock for more than 60 days during the 121-day period that begins 60 days before the ex-dividend date. Free file 2012 tax return The ex-dividend date is the first date following the declaration of a dividend on which the buyer of a stock is not entitled to receive the next dividend payment. Free file 2012 tax return Instead, the seller will get the dividend. Free file 2012 tax return   When counting the number of days you held the stock, include the day you disposed of the stock, but not the day you acquired it. Free file 2012 tax return See the examples later. Free file 2012 tax return Exception for preferred stock. Free file 2012 tax return   In the case of preferred stock, you must have held the stock more than 90 days during the 181-day period that begins 90 days before the ex-dividend date if the dividends are due to periods totaling more than 366 days. Free file 2012 tax return If the preferred dividends are due to periods totaling less than 367 days, the holding period in the previous paragraph applies. Free file 2012 tax return Example 1. Free file 2012 tax return You bought 5,000 shares of XYZ Corp. Free file 2012 tax return common stock on July 9, 2013. Free file 2012 tax return XYZ Corp. Free file 2012 tax return paid a cash dividend of 10 cents per share. Free file 2012 tax return The ex-dividend date was July 16, 2013. Free file 2012 tax return Your Form 1099-DIV from XYZ Corp. Free file 2012 tax return shows $500 in box 1a (ordinary dividends) and in box 1b (qualified dividends). Free file 2012 tax return However, you sold the 5,000 shares on August 12, 2013. Free file 2012 tax return You held your shares of XYZ Corp. Free file 2012 tax return for only 34 days of the 121-day period (from July 10, 2013, through August 12, 2013). Free file 2012 tax return The 121-day period began on May 17, 2013 (60 days before the ex-dividend date), and ended on September 14, 2013. Free file 2012 tax return You have no qualified dividends from XYZ Corp. Free file 2012 tax return because you held the XYZ stock for less than 61 days. Free file 2012 tax return Example 2. Free file 2012 tax return Assume the same facts as in Example 1 except that you bought the stock on July 15, 2013 (the day before the ex-dividend date), and you sold the stock on September 16, 2013. Free file 2012 tax return You held the stock for 63 days (from July 16, 2013, through September 16, 2013). Free file 2012 tax return The $500 of qualified dividends shown in box 1b of your Form 1099-DIV are all qualified dividends because you held the stock for 61 days of the 121-day period (from July 16, 2013, through September 14, 2013). Free file 2012 tax return Example 3. Free file 2012 tax return You bought 10,000 shares of ABC Mutual Fund common stock on July 9, 2013. Free file 2012 tax return ABC Mutual Fund paid a cash dividend of 10 cents a share. Free file 2012 tax return The ex-dividend date was July 16, 2013. Free file 2012 tax return The ABC Mutual Fund advises you that the portion of the dividend eligible to be treated as qualified dividends equals 2 cents per share. Free file 2012 tax return Your Form 1099-DIV from ABC Mutual Fund shows total ordinary dividends of $1,000 and qualified dividends of $200. Free file 2012 tax return However, you sold the 10,000 shares on August 12, 2013. Free file 2012 tax return You have no qualified dividends from ABC Mutual Fund because you held the ABC Mutual Fund stock for less than 61 days. Free file 2012 tax return Holding period reduced where risk of loss is diminished. Free file 2012 tax return   When determining whether you met the minimum holding period discussed earlier, you cannot count any day during which you meet any of the following conditions. Free file 2012 tax return You had an option to sell, were under a contractual obligation to sell, or had made (and not closed) a short sale of substantially identical stock or securities. Free file 2012 tax return You were grantor (writer) of an option to buy substantially identical stock or securities. Free file 2012 tax return Your risk of loss is diminished by holding one or more other positions in substantially similar or related property. Free file 2012 tax return   For information about how to apply condition (3), see Regulations section 1. Free file 2012 tax return 246-5. Free file 2012 tax return Qualified foreign corporation. Free file 2012 tax return   A foreign corporation is a qualified foreign corporation if it meets any of the following conditions. Free file 2012 tax return The corporation is incorporated in a U. Free file 2012 tax return S. Free file 2012 tax return possession. Free file 2012 tax return The corporation is eligible for the benefits of a comprehensive income tax treaty with the United States that the Treasury Department determines is satisfactory for this purpose and that includes an exchange of information program. Free file 2012 tax return For a list of those treaties, see Table 8-1. Free file 2012 tax return The corporation does not meet (1) or (2) above, but the stock for which the dividend is paid is readily tradable on an established securities market in the United States. Free file 2012 tax return See Readily tradable stock , later. Free file 2012 tax return Exception. Free file 2012 tax return   A corporation is not a qualified foreign corporation if it is a passive foreign investment company during its tax year in which the dividends are paid or during its previous tax year. Free file 2012 tax return Readily tradable stock. Free file 2012 tax return   Any stock (such as common, ordinary, or preferred) or an American depositary receipt in respect of that stock is considered to satisfy requirement (3) under Qualified foreign corporation , if it is listed on a national securities exchange that is registered under section 6 of the Securities Exchange Act of 1934 or on the Nasdaq Stock Market. Free file 2012 tax return For a list of the exchanges that meet these requirements, see www. Free file 2012 tax return sec. Free file 2012 tax return gov/divisions/marketreg/mrexchanges. Free file 2012 tax return shtml. Free file 2012 tax return Dividends that are not qualified dividends. Free file 2012 tax return   The following dividends are not qualified dividends. Free file 2012 tax return They are not qualified dividends even if they are shown in box 1b of Form 1099-DIV. Free file 2012 tax return Capital gain distributions. Free file 2012 tax return Dividends paid on deposits with mutual savings banks, cooperative banks, credit unions, U. Free file 2012 tax return S. Free file 2012 tax return building and loan associations, U. Free file 2012 tax return S. Free file 2012 tax return savings and loan associations, federal savings and loan associations, and similar financial institutions. Free file 2012 tax return (Report these amounts as interest income. Free file 2012 tax return ) Dividends from a corporation that is a tax-exempt organization or farmer's cooperative during the corporation's tax year in which the dividends were paid or during the corporation's previous tax year. Free file 2012 tax return Dividends paid by a corporation on employer securities held on the date of record by an employee stock ownership plan (ESOP) maintained by that corporation. Free file 2012 tax return Dividends on any share of stock to the extent you are obligated (whether under a short sale or otherwise) to make related payments for positions in substantially similar or related property. Free file 2012 tax return Payments in lieu of dividends, but only if you know or have reason to know the payments are not qualified dividends. Free file 2012 tax return Payments shown in Form 1099-DIV, box 1b, from a foreign corporation to the extent you know or have reason to know the payments are not qualified dividends. Free file 2012 tax return Table 8-1. Free file 2012 tax return Income Tax Treaties Income tax treaties the United States has with the following countries satisfy requirement (2) under Qualified foreign corporation. Free file 2012 tax return Australia Indonesia Romania Austria Ireland Russian Bangladesh Israel Federation Barbados Italy Slovak Belgium Jamaica Republic Bulgaria Japan Slovenia Canada Kazakhstan South Africa China Korea Spain Cyprus Latvia Sri Lanka Czech Lithuania Sweden Republic Luxembourg Switzerland Denmark Malta Thailand Egypt Mexico Trinidad and Estonia Morocco Tobago Finland Netherlands Tunisia France New Zealand Turkey Germany Norway Ukraine Greece Pakistan United Hungary Philippines Kingdom Iceland Poland Venezuela India Portugal     Dividends Used to Buy More Stock The corporation in which you own stock may have a dividend reinvestment plan. Free file 2012 tax return This plan lets you choose to use your dividends to buy (through an agent) more shares of stock in the corporation instead of receiving the dividends in cash. Free file 2012 tax return Most mutual funds also permit shareholders to automatically reinvest distributions in more shares in the fund, instead of receiving cash. Free file 2012 tax return If you use your dividends to buy more stock at a price equal to its fair market value, you still must report the dividends as income. Free file 2012 tax return If you are a member of a dividend reinvestment plan that lets you buy more stock at a price less than its fair market value, you must report as dividend income the fair market value of the additional stock on the dividend payment date. Free file 2012 tax return You also must report as dividend income any service charge subtracted from your cash dividends before the dividends are used to buy the additional stock. Free file 2012 tax return But you may be able to deduct the service charge. Free file 2012 tax return See chapter 28 for more information about deducting expenses of producing income. Free file 2012 tax return In some dividend reinvestment plans, you can invest more cash to buy shares of stock at a price less than fair market value. Free file 2012 tax return If you choose to do this, you must report as dividend income the difference between the cash you invest and the fair market value of the stock you buy. Free file 2012 tax return When figuring this amount, use the fair market value of the stock on the dividend payment date. Free file 2012 tax return Money Market Funds Report amounts you receive from money market funds as dividend income. Free file 2012 tax return Money market funds are a type of mutual fund and should not be confused with bank money market accounts that pay interest. Free file 2012 tax return Capital Gain Distributions Capital gain distributions (also called capital gain dividends) are paid to you or credited to your account by mutual funds (or other regulated investment companies) and real estate investment trusts (REITs). Free file 2012 tax return They will be shown in box 2a of the Form 1099-DIV you receive from the mutual fund or REIT. Free file 2012 tax return Report capital gain distributions as long-term capital gains, regardless of how long you owned your shares in the mutual fund or REIT. Free file 2012 tax return Undistributed capital gains of mutual funds and REITs. Free file 2012 tax return    Some mutual funds and REITs keep their long-term capital gains and pay tax on them. Free file 2012 tax return You must treat your share of these gains as distributions, even though you did not actually receive them. Free file 2012 tax return However, they are not included on Form 1099-DIV. Free file 2012 tax return Instead, they are reported to you in box 1a of Form 2439. Free file 2012 tax return   Report undistributed capital gains (box 1a of Form 2439) as long-term capital gains on Schedule D (Form 1040), column (h), line 11. Free file 2012 tax return   The tax paid on these gains by the mutual fund or REIT is shown in box 2 of Form 2439. Free file 2012 tax return You take credit for this tax by including it on Form 1040, line 71, and checking box a on that line. Free file 2012 tax return Attach Copy B of Form 2439 to your return, and keep Copy C for your records. Free file 2012 tax return Basis adjustment. Free file 2012 tax return   Increase your basis in your mutual fund, or your interest in a REIT, by the difference between the gain you report and the credit you claim for the tax paid. Free file 2012 tax return Additional information. Free file 2012 tax return   For more information on the treatment of distributions from mutual funds, see Publication 550. Free file 2012 tax return Nondividend Distributions A nondividend distribution is a distribution that is not paid out of the earnings and profits of a corporation or a mutual fund. Free file 2012 tax return You should receive a Form 1099-DIV or other statement showing the nondividend distribution. Free file 2012 tax return On Form 1099-DIV, a nondividend distribution will be shown in box 3. Free file 2012 tax return If you do not receive such a statement, you report the distribution as an ordinary dividend. Free file 2012 tax return Basis adjustment. Free file 2012 tax return   A nondividend distribution reduces the basis of your stock. Free file 2012 tax return It is not taxed until your basis in the stock is fully recovered. Free file 2012 tax return This nontaxable portion is also called a return of capital; it is a return of your investment in the stock of the company. Free file 2012 tax return If you buy stock in a corporation in different lots at different times, and you cannot definitely identify the shares subject to the nondividend distribution, reduce the basis of your earliest purchases first. Free file 2012 tax return   When the basis of your stock has been reduced to zero, report any additional nondividend distribution you receive as a capital gain. Free file 2012 tax return Whether you report it as a long-term or short-term capital gain depends on how long you have held the stock. Free file 2012 tax return See Holding Period in chapter 14. Free file 2012 tax return Example. Free file 2012 tax return You bought stock in 2000 for $100. Free file 2012 tax return In 2003, you received a nondividend distribution of $80. Free file 2012 tax return You did not include this amount in your income, but you reduced the basis of your stock to $20. Free file 2012 tax return You received a nondividend distribution of $30 in 2013. Free file 2012 tax return The first $20 of this amount reduced your basis to zero. Free file 2012 tax return You report the other $10 as a long-term capital gain for 2013. Free file 2012 tax return You must report as a long-term capital gain any nondividend distribution you receive on this stock in later years. Free file 2012 tax return Liquidating Distributions Liquidating distributions, sometimes called liquidating dividends, are distributions you receive during a partial or complete liquidation of a corporation. Free file 2012 tax return These distributions are, at least in part, one form of a return of capital. Free file 2012 tax return They may be paid in one or more installments. Free file 2012 tax return You will receive Form 1099-DIV from the corporation showing you the amount of the liquidating distribution in box 8 or 9. Free file 2012 tax return For more information on liquidating distributions, see chapter 1 of Publication 550. Free file 2012 tax return Distributions of Stock and Stock Rights Distributions by a corporation of its own stock are commonly known as stock dividends. Free file 2012 tax return Stock rights (also known as “stock options”) are distributions by a corporation of rights to acquire the corporation's stock. Free file 2012 tax return Generally, stock dividends and stock rights are not taxable to you, and you do not report them on your return. Free file 2012 tax return Taxable stock dividends and stock rights. Free file 2012 tax return   Distributions of stock dividends and stock rights are taxable to you if any of the following apply. Free file 2012 tax return You or any other shareholder have the choice to receive cash or other property instead of stock or stock rights. Free file 2012 tax return The distribution gives cash or other property to some shareholders and an increase in the percentage interest in the corporation's assets or earnings and profits to other shareholders. Free file 2012 tax return The distribution is in convertible preferred stock and has the same result as in (2). Free file 2012 tax return The distribution gives preferred stock to some common stock shareholders and common stock to other common stock shareholders. Free file 2012 tax return The distribution is on preferred stock. Free file 2012 tax return (The distribution, however, is not taxable if it is an increase in the conversion ratio of convertible preferred stock made solely to take into account a stock dividend, stock split, or similar event that would otherwise result in reducing the conversion right. Free file 2012 tax return )   The term “stock” includes rights to acquire stock, and the term “shareholder” includes a holder of rights or of convertible securities. Free file 2012 tax return If you receive taxable stock dividends or stock rights, include their fair market value at the time of distribution in your income. Free file 2012 tax return Preferred stock redeemable at a premium. Free file 2012 tax return   If you hold preferred stock having a redemption price higher than its issue price, the difference (the redemption premium) generally is taxable as a constructive distribution of additional stock on the preferred stock. Free file 2012 tax return For more information, see chapter 1 of Publication 550. Free file 2012 tax return Basis. Free file 2012 tax return   Your basis in stock or stock rights received in a taxable distribution is their fair market value when distributed. Free file 2012 tax return If you receive stock or stock rights that are not taxable to you, see Stocks and Bonds under Basis of Investment Property in chapter 4 of Publication 550 for information on how to figure their basis. Free file 2012 tax return Fractional shares. Free file 2012 tax return    You may not own enough stock in a corporation to receive a full share of stock if the corporation declares a stock dividend. Free file 2012 tax return However, with the approval of the shareholders, the corporation may set up a plan in which fractional shares are not issued but instead are sold, and the cash proceeds are given to the shareholders. Free file 2012 tax return Any cash you receive for fractional shares under such a plan is treated as an amount realized on the sale of the fractional shares. Free file 2012 tax return Report this transaction on Form 8949, Sales and Other Dispositions of Capital Assets. Free file 2012 tax return Enter your gain or loss, the difference between the cash you receive and the basis of the fractional shares sold, in column (h) of Schedule D (Form 1040) in Part I or Part II, whichever is appropriate. Free file 2012 tax return    Report these transactions on Form 8949 with the correct box checked. Free file 2012 tax return   For more information on Form 8949 and Schedule D (Form 1040), see chapter 4 of Publication 550. Free file 2012 tax return Also see the Instructions for Form 8949 and the Instructions for Schedule D (Form 1040). Free file 2012 tax return Example. Free file 2012 tax return You own one share of common stock that you bought on January 3, 2004, for $100. Free file 2012 tax return The corporation declared a common stock dividend of 5% on June 29, 2013. Free file 2012 tax return The fair market value of the stock at the time the stock dividend was declared was $200. Free file 2012 tax return You were paid $10 for the fractional-share stock dividend under a plan described in the discussion above. Free file 2012 tax return You figure your gain or loss as follows: Fair market value of old stock $200. Free file 2012 tax return 00 Fair market value of stock dividend (cash received) +10. Free file 2012 tax return 00 Fair market value of old stock and stock dividend $210. Free file 2012 tax return 00 Basis (cost) of old stock after the stock dividend (($200 ÷ $210) × $100) $95. Free file 2012 tax return 24 Basis (cost) of stock dividend (($10 ÷ $210) × $100) + 4. Free file 2012 tax return 76 Total $100. Free file 2012 tax return 00 Cash received $10. Free file 2012 tax return 00 Basis (cost) of stock dividend − 4. Free file 2012 tax return 76 Gain $5. Free file 2012 tax return 24 Because you had held the share of stock for more than 1 year at the time the stock dividend was declared, your gain on the stock dividend is a long-term capital gain. Free file 2012 tax return Scrip dividends. Free file 2012 tax return   A corporation that declares a stock dividend may issue you a scrip certificate that entitles you to a fractional share. Free file 2012 tax return The certificate is generally nontaxable when you receive it. Free file 2012 tax return If you choose to have the corporation sell the certificate for you and give you the proceeds, your gain or loss is the difference between the proceeds and the portion of your basis in the corporation's stock allocated to the certificate. Free file 2012 tax return   However, if you receive a scrip certificate that you can choose to redeem for cash instead of stock, the certificate is taxable when you receive it. Free file 2012 tax return You must include its fair market value in income on the date you receive it. Free file 2012 tax return Other Distributions You may receive any of the following distributions during the year. Free file 2012 tax return Exempt-interest dividends. Free file 2012 tax return   Exempt-interest dividends you receive from a mutual fund or other regulated investment company, including those received from a qualified fund of funds in any tax year beginning after December 22, 2010, are not included in your taxable income. Free file 2012 tax return Exempt-interest dividends should be shown in box 10 of Form 1099-DIV. Free file 2012 tax return Information reporting requirement. Free file 2012 tax return   Although exempt-interest dividends are not taxable, you must show them on your tax return if you have to file a return. Free file 2012 tax return This is an information reporting requirement and does not change the exempt-interest dividends to taxable income. Free file 2012 tax return Alternative minimum tax treatment. Free file 2012 tax return   Exempt-interest dividends paid from specified private activity bonds may be subject to the alternative minimum tax. Free file 2012 tax return See Alternative Minimum Tax (AMT) in chapter 30 for more information. Free file 2012 tax return Dividends on insurance policies. Free file 2012 tax return    Insurance policy dividends the insurer keeps and uses to pay your premiums are not taxable. Free file 2012 tax return However, you must report as taxable interest income the interest that is paid or credited on dividends left with the insurance company. Free file 2012 tax return    If dividends on an insurance contract (other than a modified endowment contract) are distributed to you, they are a partial return of the premiums you paid. Free file 2012 tax return Do not include them in your gross income until they are more than the total of all net premiums you paid for the contract. Free file 2012 tax return Report any taxable distributions on insurance policies on Form 1040, line 21. Free file 2012 tax return Dividends on veterans' insurance. Free file 2012 tax return   Dividends you receive on veterans' insurance policies are not taxable. Free file 2012 tax return In addition, interest on dividends left with the Department of Veterans Affairs is not taxable. Free file 2012 tax return Patronage dividends. Free file 2012 tax return   Generally, patronage dividends you receive in money from a cooperative organization are included in your income. Free file 2012 tax return   Do not include in your income patronage dividends you receive on: Property bought for your personal use, or Capital assets or depreciable property bought for use in your business. Free file 2012 tax return But you must reduce the basis (cost) of the items bought. Free file 2012 tax return If the dividend is more than the adjusted basis of the assets, you must report the excess as income. Free file 2012 tax return   These rules are the same whether the cooperative paying the dividend is a taxable or tax-exempt cooperative. Free file 2012 tax return Alaska Permanent Fund dividends. Free file 2012 tax return    Do not report these amounts as dividends. Free file 2012 tax return Instead, report these amounts on Form 1040, line 21; Form 1040A, line 13; or Form 1040EZ, line 3. Free file 2012 tax return How To Report Dividend Income Generally, you can use either Form 1040 or Form 1040A to report your dividend income. Free file 2012 tax return Report the total of your ordinary dividends on line 9a of Form 1040 or Form 1040A. Free file 2012 tax return Report qualified dividends on line 9b of Form 1040 or Form 1040A. Free file 2012 tax return If you receive capital gain distributions, you may be able to use Form 1040A or you may have to use Form 1040. Free file 2012 tax return See Exceptions to filing Form 8949 and Schedule D (Form 1040) in chapter 16. Free file 2012 tax return If you receive nondividend distributions required to be reported as capital gains, you must use Form 1040. Free file 2012 tax return You cannot use Form 1040EZ if you receive any dividend income. Free file 2012 tax return Form 1099-DIV. Free file 2012 tax return   If you owned stock on which you received $10 or more in dividends and other distributions, you should receive a Form 1099-DIV. Free file 2012 tax return Even if you do not receive Form 1099-DIV, you must report all your dividend income. Free file 2012 tax return   See Form 1099-DIV for more information on how to report dividend income. Free file 2012 tax return Form 1040A or 1040. Free file 2012 tax return    You must complete Schedule B (Form 1040A or 1040), Part II, and attach it to your Form 1040A or 1040, if: Your ordinary dividends (Form 1099-DIV, box 1a) are more than $1,500, or You received, as a nominee, dividends that actually belong to someone else. Free file 2012 tax return If your ordinary dividends are more than $1,500, you must also complete Schedule B (Form 1040A or 1040), Part III. Free file 2012 tax return   List on Schedule B (Form 1040A or 1040), Part II, line 5, each payer's name and the ordinary dividends you received. Free file 2012 tax return If your securities are held by a brokerage firm (in “street name”), list the name of the brokerage firm shown on Form 1099-DIV as the payer. Free file 2012 tax return If your stock is held by a nominee who is the owner of record, and the nominee credited or paid you dividends on the stock, show the name of the nominee and the dividends you received or for which you were credited. Free file 2012 tax return   Enter on line 6 the total of the amounts listed on line 5. Free file 2012 tax return Also enter this total on line 9a of Form 1040A or 1040. Free file 2012 tax return Qualified dividends. Free file 2012 tax return   Report qualified dividends (Form 1099-DIV, box 1b) on line 9b of Form 1040 or Form 1040A. Free file 2012 tax return The amount in box 1b is already included in box 1a. Free file 2012 tax return Do not add the amount in box 1b to, or substract it from, the amount in box 1a. Free file 2012 tax return   Do not include any of the following on line 9b. Free file 2012 tax return Qualified dividends you received as a nominee. Free file 2012 tax return See Nominees under How to Report Dividend Income in chapter 1 of Publication 550. Free file 2012 tax return Dividends on stock for which you did not meet the holding period. Free file 2012 tax return See Holding period , earlier under Qualified Dividends. Free file 2012 tax return Dividends on any share of stock to the extent you are obligated (whether under a short sale or otherwise) to make related payments for positions in substantially similar or related property. Free file 2012 tax return Payments in lieu of dividends, but only if you know or have reason to know the payments are not qualified dividends. Free file 2012 tax return Payments shown in Form 1099-DIV, box 1b, from a foreign corporation to the extent you know or have reason to know the payments are not qualified dividends. Free file 2012 tax return   If you have qualified dividends, you must figure your tax by completing the Qualified Dividends and Capital Gain Tax Worksheet in the Form 1040 or 1040A instructions or the Schedule D Tax Worksheet in the Schedule D (Form 1040) instructions, whichever applies. Free file 2012 tax return Enter qualified dividends on line 2 of the worksheet. Free file 2012 tax return Investment interest deducted. Free file 2012 tax return   If you claim a deduction for investment interest, you may have to reduce the amount of your qualified dividends that are eligible for the 0%, 15%, or 20% tax rate. Free file 2012 tax return Reduce it by the qualified dividends you choose to include in investment income when figuring the limit on your investment interest deduction. Free file 2012 tax return This is done on the Qualified Dividends and Capital Gain Tax Worksheet or the Schedule D Tax Worksheet. Free file 2012 tax return For more information about the limit on investment interest, see Investment expenses in chapter 23. Free file 2012 tax return Expenses related to dividend income. Free file 2012 tax return   You may be able to deduct expenses related to dividend income if you itemize your deductions on Schedule A (Form 1040). Free file 2012 tax return See chapter 28 for general information about deducting expenses of producing income. Free file 2012 tax return More information. Free file 2012 tax return    For more information about how to report dividend income, see chapter 1 of Publication 550 or the instructions for the form you must file. Free file 2012 tax return Prev  Up  Next   Home   More Online Publications
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Current scams and phishing sites posing as the IRS

Aug. 20, 2010:
There is a fraud risk you need to be aware of. It is related to the Electronic Federal Tax Payment System.

The IRS recently became aware of a fraudulent scheme targeting EFTPS users, the scheme uses an e-mail that claims your tax payment was rejected and directs you to a website for additional information. The website contains malware that will attempt to infect your computer.

If you receive a message claiming to be from the IRS or EFTPS, please:

  1. Do not reply to the sender, access links on the site or submit any information to them.
  2. Forward the message as-is immediately to us at phishing@irs.gov.
  3. How to report and identify phishing, e-mail scams and bogus IRS websites.
  4. If you receive a suspicious e-mail or discover a website posing as the IRS, please forward the e-mail or URL information to the IRS at phishing@irs.gov.
  5. EFTPS is a tax payment system provided free by the U.S. Department of Treasury. Pay federal taxes electronically via the Internet or phone 24/7. Visit EFTPS to enroll.


Remember
The IRS does not initiate taxpayer communications through e-mail.
Page Last Reviewed or Updated: 24-Mar-2014

The Free File 2012 Tax Return

Free file 2012 tax return 1. Free file 2012 tax return   Filing Information Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: Filing RequirementsWhen To File and Pay Foreign Currency Does My Return Have To Be On Paper? Where To File Nonresident Alien Spouse Treated as a ResidentSocial Security Number (SSN) How To Make the Choice Suspending the Choice Ending the Choice Estimated Tax Other Forms You May Have To File Topics - This chapter discusses: Whether you have to file a return, When to file your return and pay any tax due, How to treat foreign currency, How to file electronically, Where to file your return, When you can treat your nonresident alien spouse as a resident, and When you may have to make estimated tax payments. Free file 2012 tax return Useful Items - You may want to see: Publication 3 Armed Forces' Tax Guide 501 Exemptions, Standard Deduction, and Filing Information 505 Tax Withholding and Estimated Tax 519 U. Free file 2012 tax return S. Free file 2012 tax return Tax Guide for Aliens 970 Tax Benefits for Education Form (and Instructions) 1040-ES Estimated Tax for Individuals 1040X Amended U. Free file 2012 tax return S. Free file 2012 tax return Individual Income Tax Return 2350 Application for Extension of Time To File U. Free file 2012 tax return S. Free file 2012 tax return Income Tax Return 2555 Foreign Earned Income 2555-EZ Foreign Earned Income Exclusion 4868 Application for Automatic Extension of Time To File U. Free file 2012 tax return S. Free file 2012 tax return Individual Income Tax Return 8822 Change of Address See chapter 7 for information about getting these publications and forms. Free file 2012 tax return Filing Requirements If you are a U. Free file 2012 tax return S. Free file 2012 tax return citizen or resident alien, the rules for filing income, estate, and gift tax returns and for paying estimated tax are generally the same whether you are in the United States or abroad. Free file 2012 tax return Your income, filing status, and age generally determine whether you must file an income tax return. Free file 2012 tax return Generally, you must file a return for 2013 if your gross income from worldwide sources is at least the amount shown for your filing status in the following table. Free file 2012 tax return Filing Status*   Amount Single $10,000 65 or older $11,500 Head of household $12,850 65 or older $14,350 Qualifying widow(er) $16,100 65 or older $17,300 Married filing jointly $20,000 Not living with spouse at end of year $3,900 One spouse 65 or older $21,200 Both spouses 65 or older $22,400 Married filing separately $3,900 *If you are the dependent of another taxpayer, see the instructions for Form 1040 for more information on whether you must file a return. Free file 2012 tax return Gross income. Free file 2012 tax return   This includes all income you receive in the form of money, goods, property, and services that is not exempt from tax. Free file 2012 tax return   For purposes of determining whether you must file a return, gross income includes any income that you can exclude as foreign earned income or as a foreign housing amount. Free file 2012 tax return If you are self-employed, your gross income includes the amount on Part I, line 7 of Schedule C (Form 1040), Profit or Loss From Business, or line 1 of Schedule C-EZ (Form 1040), Net Profit From Business. Free file 2012 tax return Self-employed individuals. Free file 2012 tax return   If your net earnings from self-employment are $400 or more, you must file a return even if your gross income is below the amount listed for your filing status in the table shown earlier. Free file 2012 tax return Net earnings from self-employment are defined in Publication 334, Tax Guide for Small Business. Free file 2012 tax return 65 or older. Free file 2012 tax return   You are considered to be age 65 on the day before your 65th birthday. Free file 2012 tax return For example, if your 65th birthday is on January 1, 2014, you are considered 65 for 2013. Free file 2012 tax return Residents of U. Free file 2012 tax return S. Free file 2012 tax return possessions. Free file 2012 tax return   If you are (or were) a bona fide resident of a U. Free file 2012 tax return S. Free file 2012 tax return possession, you may be required to file Form 8898, Statement for Individuals Who Begin or End Bona Fide Residence in a U. Free file 2012 tax return S. Free file 2012 tax return Possession. Free file 2012 tax return See the instructions for the form for more information. Free file 2012 tax return When To File and Pay If you file on a calendar year basis, the due date for filing your return is April 15 of the following year. Free file 2012 tax return If you file on a fiscal year basis (a year ending on the last day of any month except December), the due date is 3 months and 15 days after the close of your fiscal year. Free file 2012 tax return In general, the tax shown on your return should be paid by the due date of the return, without regard to any extension of time for filing the return. Free file 2012 tax return When the due date for doing any act for tax purposes—filing a return, paying taxes, etc. Free file 2012 tax return — falls on a Saturday, Sunday, or legal holiday, the due date is delayed until the next business day. Free file 2012 tax return A tax return delivered by the U. Free file 2012 tax return S. Free file 2012 tax return mail or a designated delivery service that is postmarked or dated by the delivery service on or before the due date is considered to have been filed on or before that date. Free file 2012 tax return See your Form 1040 or Form 1040A instructions for a list of designated delivery services. Free file 2012 tax return Foreign wire transfers. Free file 2012 tax return   If you have a U. Free file 2012 tax return S. Free file 2012 tax return bank account, you can use: EFTPS (Electronic Federal Tax Payment System), or Federal Tax Application (same-day wire transfer). Free file 2012 tax return If you do not have a U. Free file 2012 tax return S. Free file 2012 tax return bank account, ask if your financial institution has a U. Free file 2012 tax return S. Free file 2012 tax return affiliate that can help you make same-day wire transfers. Free file 2012 tax return   For more information, visit www. Free file 2012 tax return eftps. Free file 2012 tax return gov. Free file 2012 tax return Extensions You can get an extension of time to file your return. Free file 2012 tax return In some circumstances, you also can get an extension of time to file and pay any tax due. Free file 2012 tax return However, if you pay the tax due after the regular due date, interest will be charged from the regular due date until the date the tax is paid. Free file 2012 tax return This publication discusses four extensions: an automatic 2-month extension, an automatic 6-month extension, an additional extension for taxpayers out of the country, and an extension of time to meet tests. Free file 2012 tax return If you served in a combat zone or qualified hazardous duty area, see Publication 3 for a discussion of extensions of deadlines. Free file 2012 tax return Automatic 2-month extension. Free file 2012 tax return   You are allowed an automatic 2-month extension to file your return and pay federal income tax if you are a U. Free file 2012 tax return S. Free file 2012 tax return citizen or resident alien, and on the regular due date of your return: You are living outside the United States and Puerto Rico and your main place of business or post of duty is outside the United States and Puerto Rico, or You are in military or naval service on duty outside the United States and Puerto Rico. Free file 2012 tax return   If you use a calendar year, the regular due date of your return is April 15. Free file 2012 tax return Even if you are allowed an extension, you will have to pay interest on any tax not paid by the regular due date of your return. Free file 2012 tax return Married taxpayers. Free file 2012 tax return   If you file a joint return, either you or your spouse can qualify for the automatic extension. Free file 2012 tax return If you and your spouse file separate returns, this automatic extension applies only to the spouse who qualifies for it. Free file 2012 tax return How to get the extension. Free file 2012 tax return   To use this automatic 2-month extension, you must attach a statement to your return explaining which of the two situations listed earlier qualified you for the extension. Free file 2012 tax return Automatic 6-month extension. Free file 2012 tax return   If you are not able to file your return by the due date, you generally can get an automatic 6-month extension of time to file (but not of time to pay). Free file 2012 tax return To get this automatic extension, you must file a paper Form 4868 or use IRS e-file (electronic filing). Free file 2012 tax return For more information about filing electronically, see E-file options , later. Free file 2012 tax return   The form must show your properly estimated tax liability based on the information available to you. Free file 2012 tax return    You may not be eligible. Free file 2012 tax return You cannot use the automatic 6-month extension of time to file if: You want the IRS to figure your tax, or You are under a court order to file by the regular due date. Free file 2012 tax return E-file options. Free file 2012 tax return    You can use e-file to get an extension of time to file. Free file 2012 tax return You can either file Form 4868 electronically or you can pay part or all of your estimate of tax due using a credit or debit card. Free file 2012 tax return   First, complete Form 4868 to use as a worksheet. Free file 2012 tax return If you think you may owe tax when you file your return, use Part II of the form to estimate your balance due. Free file 2012 tax return    Then, do one of the following. Free file 2012 tax return E-file Form 4868. Free file 2012 tax return You can use a tax software package with your personal computer or a tax professional to file Form 4868 electronically. Free file 2012 tax return You will need to provide certain information from your tax return for 2012. Free file 2012 tax return If you wish to make a payment by electronic funds withdrawal, see the instructions for Form 4868. Free file 2012 tax return If you e-file Form 4868, do not also send a paper Form 4868. Free file 2012 tax return E-file and pay by credit or debit card. Free file 2012 tax return You can get an extension by paying part or all of your estimate of tax due by using a credit or debit card. Free file 2012 tax return You can do this by phone or over the Internet. Free file 2012 tax return If you do this, you do not file Form 4868. Free file 2012 tax return For more information, see the instructions for your tax return. Free file 2012 tax return When to file. Free file 2012 tax return   Generally, you must request the 6-month extension by the regular due date of your return. Free file 2012 tax return Previous 2-month extension. Free file 2012 tax return   If you cannot file your return within the automatic 2-month extension period, you generally can get an additional 4 months to file your return, for a total of 6 months. Free file 2012 tax return The 2-month period and the 6-month period start at the same time. Free file 2012 tax return You have to request the additional 4 months by the new due date allowed by the 2-month extension. Free file 2012 tax return   The additional 4 months of time to file (unlike the original 2-month extension) is not an extension of time to pay. Free file 2012 tax return You must make an accurate estimate of your tax based on the information available to you. Free file 2012 tax return If you find you cannot pay the full amount due with Form 4868, you can still get the extension. Free file 2012 tax return You will owe interest on the unpaid amount from the original due date of the return. Free file 2012 tax return   You also may be charged a penalty for paying the tax late unless you have reasonable cause for not paying your tax when due. Free file 2012 tax return Penalties for paying the tax late are assessed from the original due date of your return, unless you qualify for the automatic 2-month extension. Free file 2012 tax return In that situation, penalties for paying late are assessed from the extended due date of the payment (June 15 for calendar year taxpayers). Free file 2012 tax return Additional extension of time for taxpayers out of the country. Free file 2012 tax return   In addition to the 6-month extension, taxpayers who are out of the country can request a discretionary 2-month additional extension of time to file their returns (to December 15 for calendar year taxpayers). Free file 2012 tax return   To request this extension, you must send the Internal Revenue Service a letter explaining the reasons why you need the additional 2 months. Free file 2012 tax return Send the letter by the extended due date (October 15 for calendar year taxpayers) to the following address: Department of the Treasury Internal Revenue Service Center Austin, TX 73301-0045   You will not receive any notification from the Internal Revenue Service unless your request is denied. Free file 2012 tax return   The discretionary 2-month additional extension is not available to taxpayers who have an approved extension of time to file on Form 2350, discussed next. Free file 2012 tax return Extension of time to meet tests. Free file 2012 tax return   You generally cannot get an extension of more than 6 months. Free file 2012 tax return However, if you are outside the United States and meet certain requirements, you may be able to get a longer extension. Free file 2012 tax return   You can get an extension of more than 6 months to file your tax return if you need the time to meet either the bona fide residence test or the physical presence test to qualify for either the foreign earned income exclusion or the foreign housing exclusion or deduction. Free file 2012 tax return The tests, the exclusions, and the deduction are explained in chapter 4. Free file 2012 tax return   You should request an extension if all three of the following apply. Free file 2012 tax return You are a U. Free file 2012 tax return S. Free file 2012 tax return citizen or resident alien. Free file 2012 tax return You expect to meet either the bona fide residence test or the physical presence test, but not until after your tax return is due. Free file 2012 tax return Your tax home is in a foreign country (or countries) throughout your period of bona fide residence or physical presence, whichever applies. Free file 2012 tax return   If you are granted an extension, it generally will be to 30 days beyond the date on which you can reasonably expect to qualify for an exclusion or deduction under either the bona fide residence test or the physical presence test. Free file 2012 tax return However, if you have moving expenses that are for services performed in 2 years, you may be granted an extension until after the end of the second year. Free file 2012 tax return How to get an extension. Free file 2012 tax return   To obtain an extension, file Form 2350 either by giving it to a local IRS representative or other IRS employee or by mailing it to the: Department of the Treasury Internal Revenue Service Center Austin, TX 73301-0045   You must file Form 2350 by the due date for filing your return. Free file 2012 tax return Generally, if both your tax home and your abode are outside the United States and Puerto Rico on the regular due date of your return and you file on a calendar year basis, the due date for filing your return is June 15. Free file 2012 tax return What if tests are not met. Free file 2012 tax return   If you obtain an extension and unforeseen events make it impossible for you to meet either the bona fide residence test or the physical presence test, you should file your income tax return as soon as possible because you must pay interest on any tax due after the regular due date of the return (even though an extension was granted). Free file 2012 tax return    You should make any request for an extension early, so that if it is denied you still can file your return on time. Free file 2012 tax return Otherwise, if you file late and additional tax is due, you may be subject to a penalty. Free file 2012 tax return Return filed before test is met. Free file 2012 tax return   If you file a return before you meet the bona fide residence test or the physical presence test, you must include all income from both U. Free file 2012 tax return S. Free file 2012 tax return and foreign sources and pay the tax on that income. Free file 2012 tax return If you later meet either of the tests, you can claim the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction on Form 1040X. Free file 2012 tax return Foreign Currency You must express the amounts you report on your U. Free file 2012 tax return S. Free file 2012 tax return tax return in U. Free file 2012 tax return S. Free file 2012 tax return dollars. Free file 2012 tax return If you receive all or part of your income or pay some or all of your expenses in foreign currency, you must translate the foreign currency into U. Free file 2012 tax return S. Free file 2012 tax return dollars. Free file 2012 tax return How you do this depends on your functional currency. Free file 2012 tax return Your functional currency generally is the U. Free file 2012 tax return S. Free file 2012 tax return dollar unless you are required to use the currency of a foreign country. Free file 2012 tax return You must make all federal income tax determinations in your functional currency. Free file 2012 tax return The U. Free file 2012 tax return S. Free file 2012 tax return dollar is the functional currency for all taxpayers except some qualified business units (QBUs). Free file 2012 tax return A QBU is a separate and clearly identified unit of a trade or business that maintains separate books and records. Free file 2012 tax return Even if you have a QBU, your functional currency is the dollar if any of the following apply. Free file 2012 tax return You conduct the business in U. Free file 2012 tax return S. Free file 2012 tax return dollars. Free file 2012 tax return The principal place of business is located in the United States. Free file 2012 tax return You choose to or are required to use the U. Free file 2012 tax return S. Free file 2012 tax return dollar as your functional currency. Free file 2012 tax return The business books and records are not kept in the currency of the economic environment in which a significant part of the business activities is conducted. Free file 2012 tax return Make all income tax determinations in your functional currency. Free file 2012 tax return If your functional currency is the U. Free file 2012 tax return S. Free file 2012 tax return dollar, you must immediately translate into U. Free file 2012 tax return S. Free file 2012 tax return dollars all items of income, expense, etc. Free file 2012 tax return (including taxes), that you receive, pay, or accrue in a foreign currency and that will affect computation of your income tax. Free file 2012 tax return Use the exchange rate prevailing when you receive, pay, or accrue the item. Free file 2012 tax return If there is more than one exchange rate, use the one that most properly reflects your income. Free file 2012 tax return You can generally get exchange rates from banks and U. Free file 2012 tax return S. Free file 2012 tax return Embassies. Free file 2012 tax return If your functional currency is not the U. Free file 2012 tax return S. Free file 2012 tax return dollar, make all income tax determinations in your functional currency. Free file 2012 tax return At the end of the year, translate the results, such as income or loss, into U. Free file 2012 tax return S. Free file 2012 tax return dollars to report on your income tax return. Free file 2012 tax return Blocked Income You generally must report your foreign income in terms of U. Free file 2012 tax return S. Free file 2012 tax return dollars and, with one exception (see Fulbright Grant, later), you must pay taxes due on it in U. Free file 2012 tax return S. Free file 2012 tax return dollars. Free file 2012 tax return If, because of restrictions in a foreign country, your income is not readily convertible into U. Free file 2012 tax return S. Free file 2012 tax return dollars or into other money or property that is readily convertible into U. Free file 2012 tax return S. Free file 2012 tax return dollars, your income is “blocked” or “deferrable” income. Free file 2012 tax return You can report this income in one of two ways: Report the income and pay your federal income tax with U. Free file 2012 tax return S. Free file 2012 tax return dollars that you have in the United States or in some other country, or Postpone the reporting of the income until it becomes unblocked. Free file 2012 tax return If you choose to postpone the reporting of the income, you must file an information return with your tax return. Free file 2012 tax return For this information return, you should use another Form 1040 labeled “Report of Deferrable Foreign Income, pursuant to Rev. Free file 2012 tax return Rul. Free file 2012 tax return 74-351. Free file 2012 tax return ” You must declare on the information return that you will include the deferrable income in your taxable income for the year that it becomes unblocked. Free file 2012 tax return You also must state that you waive any right to claim that the deferrable income was includible in your income for any earlier year. Free file 2012 tax return You must report your income on your information return using the foreign currency in which you received that income. Free file 2012 tax return If you have blocked income from more than one foreign country, include a separate information return for each country. Free file 2012 tax return Income becomes unblocked and reportable for tax purposes when it becomes convertible, or when it is converted, into U. Free file 2012 tax return S. Free file 2012 tax return dollars or into other money or property that is convertible into U. Free file 2012 tax return S. Free file 2012 tax return currency. Free file 2012 tax return Also, if you use blocked income for your personal expenses or dispose of it by gift, bequest, or devise, you must treat it as unblocked and reportable. Free file 2012 tax return If you have received blocked income on which you have not paid tax, you should check to see whether that income is still blocked. Free file 2012 tax return If it is not, you should take immediate steps to pay tax on it, file a declaration or amended declaration of estimated tax, and include the income on your tax return for the year in which the income became unblocked. Free file 2012 tax return If you choose to postpone reporting blocked income and in a later tax year you wish to begin including it in gross income although it is still blocked, you must obtain the permission of the IRS to do so. Free file 2012 tax return To apply for permission, file Form 3115, Application for Change in Accounting Method. Free file 2012 tax return You also must request permission from the IRS on Form 3115 if you have not chosen to defer the reporting of blocked income in the past, but now wish to begin reporting blocked income under the deferred method. Free file 2012 tax return See the instructions for Form 3115 for information on changing your accounting method. Free file 2012 tax return Fulbright Grant All income must be reported in U. Free file 2012 tax return S. Free file 2012 tax return dollars. Free file 2012 tax return In most cases, the tax also must be paid in U. Free file 2012 tax return S. Free file 2012 tax return dollars. Free file 2012 tax return If, however, at least 70% of your Fulbright grant has been paid in nonconvertible foreign currency (blocked income), you can use the currency of the host country to pay the part of the U. Free file 2012 tax return S. Free file 2012 tax return tax that is based on the blocked income. Free file 2012 tax return Paying U. Free file 2012 tax return S. Free file 2012 tax return tax in foreign currency. Free file 2012 tax return   To qualify for this method of payment, you must prepare a statement that shows the following information. Free file 2012 tax return You were a Fulbright grantee and were paid in nonconvertible foreign currency. Free file 2012 tax return The total grant you received during the year and the amount you received in nonconvertible foreign currency. Free file 2012 tax return At least 70% of the grant was paid in nonconvertible foreign currency. Free file 2012 tax return The statement must be certified by the U. Free file 2012 tax return S. Free file 2012 tax return educational foundation or commission paying the grant or other person having control of grant payments to you. Free file 2012 tax return   You should prepare at least two copies of this statement. Free file 2012 tax return Attach one copy to your Form 1040 and keep the other copy for identification purposes when you make a tax deposit of nonconvertible foreign currency. Free file 2012 tax return Figuring actual tax. Free file 2012 tax return   When you prepare your income tax return, you may owe tax or the entire liability may have been satisfied with your estimated tax payments. Free file 2012 tax return If you owe tax, figure the part due to (and payable in) the nonconvertible foreign currency by using the following formula. Free file 2012 tax return   Adjusted gross income that is blocked income × Total U. Free file 2012 tax return S. Free file 2012 tax return tax = Tax on blocked income     Total adjusted  gross income     You must attach all of the following to the return. Free file 2012 tax return A copy of the certified statement discussed earlier. Free file 2012 tax return A detailed statement showing the allocation of tax attributable to amounts received in foreign currency and the rates of exchange used in determining your tax liability in U. Free file 2012 tax return S. Free file 2012 tax return dollars. Free file 2012 tax return The original deposit receipt for any balance of tax due that you paid in nonconvertible foreign currency. Free file 2012 tax return Figuring estimated tax on nonconvertible foreign currency. Free file 2012 tax return   If you are liable for estimated tax (discussed later), figure the amount you can pay to the IRS in nonconvertible foreign currency using the following formula. Free file 2012 tax return   Adjusted gross income that is blocked income × Total estimated U. Free file 2012 tax return S. Free file 2012 tax return tax = Estimated tax on blocked income     Total adjusted  gross income     If you must pay your host country income tax on your grant, subtract any estimated foreign tax credit that applies to your grant from the estimated tax on the blocked income. Free file 2012 tax return Deposit of foreign currency with disbursing officer. Free file 2012 tax return   Once you have determined the amount of the actual tax or estimated tax that you can pay in nonconvertible foreign currency, deposit that amount with the disbursing officer of the Department of State in the foreign country in which the foundation or commission paying the grant is located. Free file 2012 tax return Estimated tax installments. Free file 2012 tax return   You can either deposit the full estimated tax amount before the first installment due date or make four equal payments before the installment due dates. Free file 2012 tax return See Estimated Tax , later. Free file 2012 tax return Deposit receipt. Free file 2012 tax return   Upon accepting the foreign currency, the disbursing officer will give you a receipt in duplicate. Free file 2012 tax return The original of this receipt (showing the amount of foreign currency deposited and its equivalent in U. Free file 2012 tax return S. Free file 2012 tax return dollars) should be attached to your Form 1040 or payment voucher from Form 1040-ES. Free file 2012 tax return Keep the copy for your records. Free file 2012 tax return Does My Return Have To Be On Paper? IRS e-file (electronic filing) is the fastest, easiest, and most convenient way to file your income tax return electronically. Free file 2012 tax return IRS e-file offers accurate, safe, and fast alternatives to filing on paper. Free file 2012 tax return IRS computers quickly and automatically check for errors or other missing information. Free file 2012 tax return Even returns with a foreign address can be e-filed! How to e-file. Free file 2012 tax return   There are three ways you can e-file. Free file 2012 tax return Use your personal computer. Free file 2012 tax return Use a volunteer. Free file 2012 tax return Many programs offering free tax help can e-file your return. Free file 2012 tax return Use a tax professional. Free file 2012 tax return Most tax professionals can e-file your return. Free file 2012 tax return These methods are explained in detail in the instructions for your tax return. Free file 2012 tax return Where To File If any of the following situations apply to you, do not file your return with the service center listed for your home state. Free file 2012 tax return You claim the foreign earned income exclusion. Free file 2012 tax return You claim the foreign housing exclusion or deduction. Free file 2012 tax return You live in a foreign country. Free file 2012 tax return Instead, use one of the following special addresses. Free file 2012 tax return If you are not enclosing a check or money order, file your return with the: Department of the Treasury Internal Revenue Service Center Austin, TX 73301-0215 USA If you are enclosing a check or money order, file your return with: Internal Revenue Service Center P. Free file 2012 tax return O. Free file 2012 tax return Box 1303 Charlotte, NC 28201-1303 USA If you do not know where your legal residence is and you do not have a principal place of business in the United States, you can file with the appropriate address listed above. Free file 2012 tax return However, you should not file with the addresses listed above if you are a bona fide resident of the U. Free file 2012 tax return S. Free file 2012 tax return Virgin Islands, Guam, or the Commonwealth of the Northern Mariana Islands during your entire tax year. Free file 2012 tax return Resident of U. Free file 2012 tax return S. Free file 2012 tax return Virgin Islands (USVI). Free file 2012 tax return   If you are a bona fide resident of the USVI during your entire tax year, you generally are not required to file a U. Free file 2012 tax return S. Free file 2012 tax return return. Free file 2012 tax return However, you must file a return with the USVI. Free file 2012 tax return    Send your return to the:     Virgin Islands Bureau of Internal Revenue 6115 Estate Smith Bay Suite 225 St. Free file 2012 tax return Thomas, Virgin Islands 00802 Non-USVI resident with USVI income. Free file 2012 tax return   If you are a U. Free file 2012 tax return S. Free file 2012 tax return citizen or resident alien and you have income from sources in the USVI or income effectively connected with the conduct of a trade or business in the USVI, and you are not a bona fide resident of the USVI during your entire tax year, you must file identical tax returns with the United States and the USVI. Free file 2012 tax return File the original return with the United States and file a signed copy of the U. Free file 2012 tax return S. Free file 2012 tax return return (including all attachments, forms, and schedules) with the Virgin Islands Bureau of Internal Revenue. Free file 2012 tax return   You must complete Form 8689, Allocation of Individual Income Tax to the U. Free file 2012 tax return S. Free file 2012 tax return Virgin Islands, and attach a copy to both your U. Free file 2012 tax return S. Free file 2012 tax return return and your USVI return. Free file 2012 tax return You should file your U. Free file 2012 tax return S. Free file 2012 tax return return with the address listed under Where To File. Free file 2012 tax return   See Publication 570, Tax Guide for Individuals With Income From U. Free file 2012 tax return S. Free file 2012 tax return Possessions, for information about filing Virgin Islands returns. Free file 2012 tax return Resident of Guam. Free file 2012 tax return   If you are a bona fide resident of Guam during your entire tax year, you should file a return with Guam. Free file 2012 tax return    Send your return to the:     Department of Revenue and Taxation Government of Guam P. Free file 2012 tax return O. Free file 2012 tax return Box 23607 GMF, GU 96921   However, if you have income from sources within Guam and you are a U. Free file 2012 tax return S. Free file 2012 tax return citizen or resident alien, but not a bona fide resident of Guam during the entire tax year, you should file a return with the United States. Free file 2012 tax return Send your return to the address listed under Where To File. Free file 2012 tax return   See Publication 570 for information about filing Guam returns. Free file 2012 tax return Resident of the Commonwealth of the Northern Mariana Islands. Free file 2012 tax return   If you are a bona fide resident of the Commonwealth of the Northern Mariana Islands (CNMI) during your entire tax year, you should file a return with the Northern Mariana Islands. Free file 2012 tax return    Send your return to the:      Division of Revenue and Taxation Commonwealth of the Northern Mariana Islands P. Free file 2012 tax return O. Free file 2012 tax return Box 5234, CHRB Saipan, MP 96950   However, if you have income from sources within the CNMI and you are a U. Free file 2012 tax return S. Free file 2012 tax return citizen or resident alien, but not a bona fide resident of the CNMI during the entire tax year, you should file a return with the United States. Free file 2012 tax return Send your return to the address listed under Where To File. Free file 2012 tax return   See Publication 570 for information about filing Northern Mariana Islands returns. Free file 2012 tax return Nonresident Alien Spouse Treated as a Resident If, at the end of your tax year, you are married and one spouse is a U. Free file 2012 tax return S. Free file 2012 tax return citizen or a resident alien and the other is a nonresident alien, you can choose to treat the nonresident as a U. Free file 2012 tax return S. Free file 2012 tax return resident. Free file 2012 tax return This includes situations in which one of you is a nonresident alien at the beginning of the tax year and a resident alien at the end of the year and the other is a nonresident alien at the end of the year. Free file 2012 tax return If you make this choice, the following two rules apply. Free file 2012 tax return You and your spouse are treated, for income tax purposes, as residents for all tax years that the choice is in effect. Free file 2012 tax return You must file a joint income tax return for the year you make the choice. Free file 2012 tax return This means that neither of you can claim under any tax treaty not to be a U. Free file 2012 tax return S. Free file 2012 tax return resident for a tax year for which the choice is in effect. Free file 2012 tax return You can file joint or separate returns in years after the year in which you make the choice. Free file 2012 tax return Example 1. Free file 2012 tax return Pat Smith, a U. Free file 2012 tax return S. Free file 2012 tax return citizen, is married to Norman, a nonresident alien. Free file 2012 tax return Pat and Norman make the choice to treat Norman as a resident alien by attaching a statement to their joint return. Free file 2012 tax return Pat and Norman must report their worldwide income for the year they make the choice and for all later years unless the choice is ended or suspended. Free file 2012 tax return Although Pat and Norman must file a joint return for the year they make the choice, they can file either joint or separate returns for later years. Free file 2012 tax return Example 2. Free file 2012 tax return When Bob and Sharon Williams got married, both were nonresident aliens. Free file 2012 tax return In June of last year, Bob became a resident alien and remained a resident for the rest of the year. Free file 2012 tax return Bob and Sharon both choose to be treated as resident aliens by attaching a statement to their joint return for last year. Free file 2012 tax return Bob and Sharon must report their worldwide income for last year and all later years unless the choice is ended or suspended. Free file 2012 tax return Bob and Sharon must file a joint return for last year, but they can file either joint or separate returns for later years. Free file 2012 tax return If you do not choose to treat your nonresident alien spouse as a U. Free file 2012 tax return S. Free file 2012 tax return resident, you may be able to use head of household filing status. Free file 2012 tax return To use this status, you must pay more than half the cost of maintaining a household for certain dependents or relatives other than your nonresident alien spouse. Free file 2012 tax return For more information, see Publication 501. Free file 2012 tax return Social Security Number (SSN) If you choose to treat your nonresident alien spouse as a U. Free file 2012 tax return S. Free file 2012 tax return resident, your spouse must have either an SSN or an individual taxpayer identification number (ITIN). Free file 2012 tax return To get an SSN for a nonresident alien spouse, apply at an office of the U. Free file 2012 tax return S. Free file 2012 tax return Social Security Administration (SSA) or U. Free file 2012 tax return S. Free file 2012 tax return consulate. Free file 2012 tax return You must complete Form SS-5, Application for a Social Security Card, available at www. Free file 2012 tax return socialsecurity. Free file 2012 tax return gov or by calling 1-800-772-1213. Free file 2012 tax return You must also provide original or certified copies of documents to verify that spouse's age, identity, and citizenship. Free file 2012 tax return If the nonresident alien spouse is not eligible to get an SSN, he or she can file Form W-7, Application for IRS Individual Taxpayer Identification Number, with the IRS to apply for an ITIN. Free file 2012 tax return How To Make the Choice Attach a statement, signed by both spouses, to your joint return for the first tax year for which the choice applies. Free file 2012 tax return It should contain the following: A declaration that one spouse was a nonresident alien and the other spouse a U. Free file 2012 tax return S. Free file 2012 tax return citizen or resident alien on the last day of your tax year and that you choose to be treated as U. Free file 2012 tax return S. Free file 2012 tax return residents for the entire tax year, and The name, address, and social security number (or individual taxpayer identification number) of each spouse. Free file 2012 tax return (If one spouse died, include the name and address of the person making the choice for the deceased spouse. Free file 2012 tax return ) You generally make this choice when you file your joint return. Free file 2012 tax return However, you also can make the choice by filing a joint amended return on Form 1040X. Free file 2012 tax return Attach Form 1040, 1040A, or 1040EZ and print “Amended” across the top of the amended return. Free file 2012 tax return If you make the choice with an amended return, you and your spouse also must amend any returns that you may have filed after the year for which you made the choice. Free file 2012 tax return You generally must file the amended joint return within 3 years from the date you filed your original U. Free file 2012 tax return S. Free file 2012 tax return income tax return or 2 years from the date you paid your income tax for that year, whichever is later. Free file 2012 tax return Table 1–1. Free file 2012 tax return Ending the Choice To Treat Nonresident Alien Spouse as a Resident Revocation   Either spouse can revoke the choice for any tax year. Free file 2012 tax return   • The revocation must be made by the due date for filing the tax return for that tax year. Free file 2012 tax return   • The spouse who revokes the choice must attach a signed statement declaring that the choice is being revoked. Free file 2012 tax return The statement revoking the choice must include the following:     • The name, address, and social security number (or taxpayer identification number) of each spouse. Free file 2012 tax return     • The name and address of any person who is revoking the choice for a deceased spouse. Free file 2012 tax return     • A list of any states, foreign countries, and possessions that have community property laws in which either spouse is domiciled or where real property is located from which either spouse receives income. Free file 2012 tax return   • If the spouse revoking the choice does not have to file a return and does not file a claim for refund, send the statement to the Internal Revenue Service Center where the last joint return was filed. Free file 2012 tax return Death   The death of either spouse ends the choice, beginning with the first tax year following the year in which the spouse died. Free file 2012 tax return   • If the surviving spouse is a U. Free file 2012 tax return S. Free file 2012 tax return citizen or resident alien and is entitled to the joint tax rates as a surviving spouse, the choice will not end until the close of the last year for which these joint rates may be used. Free file 2012 tax return   • If both spouses die in the same tax year, the choice ends on the first day after the close of the tax year in which the spouses died. Free file 2012 tax return Divorce or  Legal separation   A divorce or legal separation ends the choice as of the beginning of the tax year in which the legal separation occurs. Free file 2012 tax return Inadequate records   The Internal Revenue Service can end the choice for any tax year that either spouse has failed to keep adequate books, records, and other information necessary to determine the correct income tax liability, or to provide adequate access to those records. Free file 2012 tax return Suspending the Choice The choice to be treated as a resident alien does not apply to any later tax year if neither of you is a U. Free file 2012 tax return S. Free file 2012 tax return citizen or resident alien at any time during the later tax year. Free file 2012 tax return Example. Free file 2012 tax return Dick Brown was a resident alien on December 31, 2010, and married to Judy, a nonresident alien. Free file 2012 tax return They chose to treat Judy as a resident alien and filed a joint 2010 income tax return. Free file 2012 tax return On January 10, 2012, Dick became a nonresident alien. Free file 2012 tax return Judy had remained a nonresident alien. Free file 2012 tax return Because Dick was a resident alien during part of 2012, Dick and Judy can file joint or separate returns for that year. Free file 2012 tax return Neither Dick nor Judy was a resident alien at any time during 2013 and their choice is suspended for that year. Free file 2012 tax return For 2013, both are treated as nonresident aliens. Free file 2012 tax return If Dick becomes a resident alien again in 2014, their choice is no longer suspended and both are treated as resident aliens. Free file 2012 tax return Ending the Choice Once made, the choice to be treated as a resident applies to all later years unless suspended (as explained earlier) or ended in one of the ways shown in Table 1-1. Free file 2012 tax return If the choice is ended for any of the reasons listed in Table 1-1, neither spouse can make a choice in any later tax year. Free file 2012 tax return Estimated Tax The requirements for determining who must pay estimated tax are the same for a U. Free file 2012 tax return S. Free file 2012 tax return citizen or resident abroad as for a taxpayer in the United States. Free file 2012 tax return For current instructions on making estimated tax payments, see Form 1040-ES. Free file 2012 tax return If you had a tax liability for 2013, you may have to pay estimated tax for 2014. Free file 2012 tax return Generally, you must make estimated tax payments for 2014 if you expect to owe at least $1,000 in tax for 2014 after subtracting your withholding and credits and you expect your withholding and credits to be less than the smaller of: 90% of the tax to be shown on your 2014 tax return, or 100% of the tax shown on your 2013 tax return. Free file 2012 tax return (The return must cover all 12 months. Free file 2012 tax return ) If less than two-thirds of your gross income for 2013 and 2014 is from farming or fishing and your adjusted gross income for 2013 is more than $150,000 ($75,000 if you are married and file separately), substitute 110% for 100% in (2). Free file 2012 tax return See Publication 505 for more information. Free file 2012 tax return The first installment of estimated tax is due on April 15, 2014. Free file 2012 tax return Foreign earned income exclusion. Free file 2012 tax return   When figuring your estimated gross income, subtract amounts you expect to exclude under the foreign earned income exclusion and the foreign housing exclusion. Free file 2012 tax return In addition, you can reduce your income by your estimated foreign housing deduction. Free file 2012 tax return However, you must estimate tax on your nonexcluded income using the tax rates that will apply had you not excluded the income. Free file 2012 tax return If the actual amount of the exclusion or deduction is less than you estimate, you may have to pay a penalty for underpayment of estimated tax. Free file 2012 tax return   For more information about figuring your estimated tax, see Publication 505. Free file 2012 tax return Other Forms You May Have To File FinCEN Form 114 (replaces Form TD F 90-22. Free file 2012 tax return 1). Free file 2012 tax return   Beginning October 1, 2013, Form 114, Report of Foreign Bank and Financial Accounts (FBAR), must be filed instead of Form TD F 90-22. Free file 2012 tax return 1. Free file 2012 tax return Form 114 is filed electronically with the Financial Crimes Enforcement Network (FinCEN). Free file 2012 tax return See the filing instructions at www. Free file 2012 tax return bsaefiling. Free file 2012 tax return fincen. Free file 2012 tax return treas. Free file 2012 tax return gov/main. Free file 2012 tax return html. Free file 2012 tax return   You must file Form 114 if you had any financial interest in, or signature or other authority over a bank, securities, or other financial account in a foreign country. Free file 2012 tax return You do not need to file the report if the assets are with a U. Free file 2012 tax return S. Free file 2012 tax return military banking facility operated by a financial institution or if the combined assets in the account(s) are $10,000 or less during the entire year. Free file 2012 tax return   More information about the filing of Form 114 can be found in the instructions for the form. Free file 2012 tax return FinCEN Form 105. Free file 2012 tax return   You must file Form 105, Report of International Transportation of Currency or Monetary Instruments, if you physically transport, mail, ship, or cause to be physically transported, mailed, or shipped into or out of the United States, currency or other monetary instruments totaling more than $10,000 at one time. Free file 2012 tax return Certain recipients of currency or monetary instruments also must file Form 105. Free file 2012 tax return   More information about the filing of Form 105 can be found in the instructions on the back of the form. Free file 2012 tax return Form 8938. Free file 2012 tax return   You must file Form 8938 to report the ownership of specified foreign financial assets if the total value of those assets exceeds an applicable threshold amount (the “reporting threshold ”). Free file 2012 tax return The reporting threshold varies depending on whether you live in the United States, are married, or file a joint income tax return with your spouse. Free file 2012 tax return Specified foreign financial assets include any financial account maintained by a foreign financial institution and, to the extent held for investment, any stock, securities, or any other interest in a foreign entity and any financial instrument or contract with an issuer or counterparty that is not a U. Free file 2012 tax return S. Free file 2012 tax return person. Free file 2012 tax return   You may have to pay penalties if you are required to file Form 8938 and fail to do so, or if you have an understatement of tax due to any transaction involving an undisclosed foreign financial asset. Free file 2012 tax return   More information about the filing of Form 8938 can be found in the separate instructions for Form 8938. Free file 2012 tax return Prev  Up  Next   Home   More Online Publications