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Free Income Tax Filing For College Students

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Free Income Tax Filing For College Students

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How to Apply for an EIN

Applying for an EIN is a free service offered by the Internal Revenue Service. Beware of Web sites on the Internet that charge for this free service.

If you are a home-care service recipient who has a previously assigned EIN either as a sole proprietor or as a household employer, do not apply for a new EIN. Use the EIN previously provided. If you can not locate your EIN for any reason, follow the instructions on the Lost or Misplaced Your EIN? Web page.

Apply Online
The Internet EIN application is the preferred method for customers to apply for and obtain an EIN. Once the application is completed, the information is validated during the online session, and an EIN is issued immediately. The online application process is available for all entities whose principal business, office or agency, or legal residence (in the case of an individual), is located in the United States or U.S. Territories. The principal officer, general partner, grantor, owner, trustor etc. must have a valid Taxpayer Identification Number (Social Security Number, Employer Identification Number, or Individual Taxpayer Identification Number) in order to use the online application.

Apply By FAX
Taxpayers can FAX the completed Form SS-4 (PDF) application to their state FAX number (see Where to File - Business Forms and Filing Addresses), after ensuring that the Form SS-4 contains all of the required information. If it is determined that the entity needs a new EIN, one will be assigned using the appropriate procedures for the entity type. If the taxpayer's fax number is provided, a fax will be sent back with the EIN within four (4) business days.

Apply By Mail
The processing timeframe for an EIN application received by mail is four weeks. Ensure that the Form SS-4 (PDF) contains all of the required information. If it is determined that the entity needs a new EIN, one will be assigned using the appropriate procedures for the entity type and mailed to the taxpayer. Find out where to mail Form SS-4 on the "Where to File Your Taxes" (for Form SS-4) page.

Apply by Telephone – International Applicants
International applicants may call 267-941-1099 (not a toll-free number) 6:00 a.m. to 11:00 p.m. (Eastern Time) Monday through Friday to obtain their EIN. The person making the call must be authorized to receive the EIN and answer questions concerning the Form SS-4 (PDF), Application for Employer Identification Number. Complete the Third Party Designee section only if you want to authorize the named individual to receive the entity’s EIN and answer questions about the completion of Form SS-4. The designee’s authority terminates at the time the EIN is assigned and released to the designee. You must complete the signature area for the authorization to be valid.

Other Important Information

Daily Limitation of an Employer Identification Number
Effective May 21, 2012, to ensure fair and equitable treatment for all taxpayers, the Internal Revenue Service will limit Employer Identification Number (EIN) issuance to one per responsible party per day. This limitation is applicable to all requests for EINs whether online or by fax or mail. We apologize for any inconvenience this may cause.

Responsible Party
In order to identify the correct individuals and entities applying for EINs, language changes have been made to the EIN process. Refer to Responsible Parties and Nominees to learn about these important changes before applying for an EIN.

Third Party Authorization
The Third Party Designee section must be completed at the bottom of the Form SS-4. The Form SS-4 must also be signed by the taxpayer for the third party designee authorization to be valid. The Form SS-4 must be mailed or faxed to the appropriate service center. The third party designee's authority terminates at the time the EIN is assigned and released to the designee.

Page Last Reviewed or Updated: 03-Jan-2014

The Free Income Tax Filing For College Students

Free income tax filing for college students 2. Free income tax filing for college students   Possession Source Income Table of Contents Types of IncomeCompensation for Labor or Personal Services Investment Income Sales or Other Dispositions of Property Scholarships, Fellowships, Grants, Prizes, and Awards Effectively Connected Income In order to determine where to file your return and which form(s) you need to complete, you must determine the source of each item of income you received during the tax year. Free income tax filing for college students Income you received from sources within, or that was effectively connected with the conduct of a trade or business within, the relevant possession must be identified separately from U. Free income tax filing for college students S. Free income tax filing for college students or foreign source income. Free income tax filing for college students This chapter discusses the rules for determining if the source of your income is from: American Samoa, The Commonwealth of the Northern Mariana Islands (CNMI), The Commonwealth of Puerto Rico (Puerto Rico), Guam, or The U. Free income tax filing for college students S. Free income tax filing for college students Virgin Islands (USVI). Free income tax filing for college students Generally, the same rules that apply for determining U. Free income tax filing for college students S. Free income tax filing for college students source income also apply for determining possession source income. Free income tax filing for college students However, there are some important exceptions to these rules. Free income tax filing for college students Both the general rules and the exceptions are discussed in this chapter. Free income tax filing for college students U. Free income tax filing for college students S. Free income tax filing for college students income rule. Free income tax filing for college students   This rule states that income is not possession source income if, under the rules of Internal Revenue Code sections 861–865, it is treated as income: From sources within the United States, or Effectively connected with the conduct of a trade or business within the United States. Free income tax filing for college students Table 2-1 shows the general rules for determining whether income is from sources within the United States. Free income tax filing for college students Table 2-1. Free income tax filing for college students General Rules for Determining U. Free income tax filing for college students S. Free income tax filing for college students Source of Income Item of Income Factor Determining Source Salaries, wages, and other compensation for labor or personal services Where labor or services performed Pensions Contributions: Where services were performed that earned the pension Investment earnings: Where pension trust is located Interest Residence of payer Dividends Where corporation created or organized Rents Location of property Royalties:   Natural resources Location of property Patents, copyrights, etc. Free income tax filing for college students Where property is used Sale of business inventory—purchased Where sold Sale of business inventory—produced Allocation if produced and sold in different locations Sale of real property Location of property Sale of personal property Seller's tax home (but see Special Rules for Gains From Dispositions of Certain Property , later, for exceptions) Sale of natural resources Allocation based on fair market value of product at export terminal. Free income tax filing for college students For more information, see Regulations section 1. Free income tax filing for college students 863-1(b). Free income tax filing for college students Types of Income This section looks at the most common types of income received by individuals, and the rules for determining the source of the income. Free income tax filing for college students Generally, the same rules shown in Table 2-1 are used to determine if you have possession source income. Free income tax filing for college students Compensation for Labor or Personal Services Income from labor or personal services includes wages, salaries, commissions, fees, per diem allowances, employee allowances and bonuses, and fringe benefits. Free income tax filing for college students It also includes income earned by sole proprietors and general partners from providing personal services in the course of their trade or business. Free income tax filing for college students Services performed wholly within a relevant possession. Free income tax filing for college students   Generally, all pay you receive for services performed in a relevant possession is considered to be from sources within that possession. Free income tax filing for college students However, there is an exception for income earned as a member of the U. Free income tax filing for college students S. Free income tax filing for college students Armed Forces or a civilian spouse. Free income tax filing for college students U. Free income tax filing for college students S. Free income tax filing for college students Armed Forces. Free income tax filing for college students   If you are a bona fide resident of a relevant possession, your military service pay will be sourced in that possession even if you perform the services in the United States or another possession. Free income tax filing for college students However, if you are not a bona fide resident of a possession, your military service pay will be income from the  United States even if you perform services in a possession. Free income tax filing for college students Civilian spouse of active duty member of the U. Free income tax filing for college students S. Free income tax filing for college students Armed Forces. Free income tax filing for college students   If you are a bona fide resident of a U. Free income tax filing for college students S. Free income tax filing for college students possession and choose to keep that possession as your tax residence under MSRRA when relocating with your servicemember spouse under military orders, the source of income for your labor or personal services is considered to be that possession. Free income tax filing for college students Likewise, if your tax residence is in one of the 50 states or the District of Columbia before relocating and you choose to keep it as your tax residence, the source of income for services performed in any of the U. Free income tax filing for college students S. Free income tax filing for college students possessions is considered to be the United States and, specifically, your state of residence or the District of Columbia. Free income tax filing for college students Services performed partly inside and partly outside a relevant possession. Free income tax filing for college students   If you are an employee and receive compensation for labor or personal services performed both inside and outside the relevant possession, special rules apply in determining the source of the compensation. Free income tax filing for college students Compensation (other than certain fringe benefits) is sourced on a time basis. Free income tax filing for college students Certain fringe benefits (such as housing and education) are sourced on a geographical basis. Free income tax filing for college students   Or, you may be permitted to use an alternative basis to determine the source of compensation. Free income tax filing for college students See Alternative basis , later. Free income tax filing for college students   If you are self-employed, determine the source of your income for labor or personal services from self-employment on the basis that most correctly reflects the proper source of that income under the facts and circumstances of your particular case. Free income tax filing for college students In many cases, the facts and circumstances will call for an apportionment on a time basis as explained next. Free income tax filing for college students Time basis. Free income tax filing for college students   Use a time basis to figure your compensation for labor or personal services from the relevant possession (other than the fringe benefits discussed later). Free income tax filing for college students Do this by multiplying your total compensation (other than the fringe benefits discussed later) by the following fraction:   Number of days you performed  services in the relevant  possession during the year     Total number of days you  performed services during the year           You can use a unit of time less than a day in the above fraction, if appropriate. Free income tax filing for college students The time period for which the income is made does not have to be a year. Free income tax filing for college students Instead, you can use another distinct, separate, and continuous time period if you can establish to the satisfaction of the IRS that this other period is more appropriate. Free income tax filing for college students Example. Free income tax filing for college students In 2013, you worked in your employer's office in the United States for 60 days and in the Puerto Rico office for 180 days, earning a total of $80,000 for the year. Free income tax filing for college students Your Puerto Rico source income is $60,000, figured as follows. Free income tax filing for college students       180 days 240 days × $80,000 = $60,000                 Multi-year compensation. Free income tax filing for college students   The source of multi-year compensation is generally determined on a time basis over the period to which the compensation is attributable. Free income tax filing for college students Multi-year compensation is compensation that is included in your income in 1 tax year but is attributable to a period that includes 2 or more tax years. Free income tax filing for college students You determine the period to which the income is attributable based on the facts and circumstances of your case. Free income tax filing for college students For more information on multi-year compensation, see Treasury Decision (T. Free income tax filing for college students D. Free income tax filing for college students ) 9212 and Regulations section 1. Free income tax filing for college students 861-4, 2005-35 I. Free income tax filing for college students R. Free income tax filing for college students B. Free income tax filing for college students 429, available at www. Free income tax filing for college students irs. Free income tax filing for college students gov/irb/2005-35_IRB/ar14. Free income tax filing for college students html. Free income tax filing for college students Certain fringe benefits sourced on a geographical basis. Free income tax filing for college students   If you received any of the following fringe benefits as compensation for labor or services performed as an employee partly inside and partly outside a relevant possession, you must source that income on a geographical basis. Free income tax filing for college students Housing. Free income tax filing for college students Education. Free income tax filing for college students Local transportation. Free income tax filing for college students Tax reimbursement. Free income tax filing for college students Hazardous or hardship duty pay. Free income tax filing for college students Moving expense reimbursement. Free income tax filing for college students For information on determining the source of the fringe benefits listed above, see Regulations section 1. Free income tax filing for college students 861-4. Free income tax filing for college students Alternative basis. Free income tax filing for college students   You can determine the source of your compensation under an alternative basis if you establish to the satisfaction of the IRS that, under the facts and circumstances of your case, the alternative basis more properly determines the source of your income than the time or geographical basis. Free income tax filing for college students If you use an alternative basis, you must keep (and have available for inspection) records to document why the alternative basis more properly determines the source of your income. Free income tax filing for college students De minimis exception. Free income tax filing for college students   There is an exception to the rule for determining the source of income earned in a possession. Free income tax filing for college students Generally, you will not have income from a possession if during a tax year you: Are a U. Free income tax filing for college students S. Free income tax filing for college students citizen or resident, Are not a bona fide resident of that possession, Are not employed by or under contract with an individual, partnership, or corporation that is engaged in a trade or business in that possession, Temporarily perform services in that possession for 90 days or less, and Earned $3,000 or less from such services. Free income tax filing for college students This exception began with income earned during your 2008 tax year. Free income tax filing for college students Pensions. Free income tax filing for college students   Generally, pension income has two components: contributions to the pension plan and the earnings accrued from investing those contributions. Free income tax filing for college students The contribution portion is sourced according to where services were performed that earned the pension. Free income tax filing for college students The investment earnings portion is sourced according to the location of the pension trust. Free income tax filing for college students Example. Free income tax filing for college students You are a U. Free income tax filing for college students S. Free income tax filing for college students citizen who worked in Puerto Rico for a U. Free income tax filing for college students S. Free income tax filing for college students company. Free income tax filing for college students All services were performed in Puerto Rico. Free income tax filing for college students Upon retirement you remained in Puerto Rico and began receiving your pension from the U. Free income tax filing for college students S. Free income tax filing for college students pension trust of your employer. Free income tax filing for college students Distributions from the U. Free income tax filing for college students S. Free income tax filing for college students pension trust must be allocated between (1) contributions, which are Puerto Rico source income, and (2) investment earnings, which are U. Free income tax filing for college students S. Free income tax filing for college students source income. Free income tax filing for college students Investment Income This category includes such income as interest, dividends, rents, and royalties. Free income tax filing for college students Interest income. Free income tax filing for college students   The source of interest income is generally determined by the residence of the payer. Free income tax filing for college students Interest paid by corporations created or organized in a relevant possession (possession corporation) or by individuals who are bona fide residents of a relevant possession is considered income from sources within that possession. Free income tax filing for college students   However, there is an exception to this rule if you are a bona fide resident of a relevant possession, receive interest from a corporation created or organized in that possession, and are a shareholder of that corporation who owns, directly or indirectly, at least 10% of the total voting stock of the corporation. Free income tax filing for college students See Regulations section 1. Free income tax filing for college students 937-2(i) for more information. Free income tax filing for college students Dividends. Free income tax filing for college students   Generally, dividends paid by a corporation created or organized in a relevant possession will be considered income from sources within that possession. Free income tax filing for college students There are additional rules for bona fide residents of a relevant possession who receive dividend income from possession corporations, and who own, directly or indirectly, at least 10% of the voting stock of the corporation. Free income tax filing for college students For more information, see Regulations section 1. Free income tax filing for college students 937-2(g). Free income tax filing for college students Rental income. Free income tax filing for college students   Rents from property located in a relevant possession are treated as income from sources within that possession. Free income tax filing for college students Royalties. Free income tax filing for college students   Royalties from natural resources located in a relevant possession are considered income from sources within that possession. Free income tax filing for college students   Also considered possession source income are royalties received for the use of, or for the privilege of using, in a relevant possession, patents, copyrights, secret processes and formulas, goodwill, trademarks, trade brands, franchises, and other like property. Free income tax filing for college students Sales or Other Dispositions of Property The source rules for sales or other dispositions of property are varied. Free income tax filing for college students The most common situations are discussed below. Free income tax filing for college students Real property. Free income tax filing for college students   Real property includes land and buildings, and generally anything built on, growing on, or attached to land. Free income tax filing for college students The location of the property generally determines the source of income from the sale. Free income tax filing for college students For example, if you are a bona fide resident of Guam and sell your home that is located in Guam, the gain on the sale is sourced in Guam. Free income tax filing for college students If, however, the home you sold was located in the United States, the gain is U. Free income tax filing for college students S. Free income tax filing for college students source income. Free income tax filing for college students Personal property. Free income tax filing for college students   The term “personal property” refers to property (such as machinery, equipment, or furniture) that is not real property. Free income tax filing for college students Generally, gain (or loss) from the sale or other disposition is sourced according to the seller's tax home. Free income tax filing for college students If personal property is sold by a bona fide resident of a relevant possession, the gain (or loss) from the sale is treated as sourced within that possession. Free income tax filing for college students   This rule does not apply to the sale of inventory, intangible property, depreciable personal property, or property sold through a foreign office or fixed place of business. Free income tax filing for college students The rules applying to sales of inventory are discussed below. Free income tax filing for college students For information on sales of the other types of property mentioned, see Internal Revenue Code section 865. Free income tax filing for college students Inventory. Free income tax filing for college students   Your inventory is personal property that is stock in trade or that is held primarily for sale to customers in the ordinary course of your trade or business. Free income tax filing for college students The source of income from the sale of inventory depends on whether the inventory was purchased or produced. Free income tax filing for college students Purchased. Free income tax filing for college students   Income from the sale of inventory that you purchased is sourced where you sell the property. Free income tax filing for college students Generally, this is where title to the property passes to the buyer. Free income tax filing for college students Produced. Free income tax filing for college students   Income from the sale of inventory that you produced in a relevant possession and sold outside that possession (or vice versa) is sourced based on an allocation. Free income tax filing for college students For information on making the allocation, see Regulations section 1. Free income tax filing for college students 863-3(f). Free income tax filing for college students Special Rules for Gains From Dispositions of Certain Property There are special rules for gains from dispositions of certain investment property (for example, stocks, bonds, debt instruments, diamonds, and gold) owned by a U. Free income tax filing for college students S. Free income tax filing for college students citizen or resident alien prior to becoming a bona fide resident of a possession. Free income tax filing for college students You are subject to these special rules if you meet both of the following conditions. Free income tax filing for college students For the tax year for which the source of the gain must be determined, you are a bona fide resident of the relevant possession. Free income tax filing for college students For any of the 10 years preceding that year, you were a citizen or resident alien of the United States (other than a bona fide resident of the relevant possession). Free income tax filing for college students If you meet these conditions, gains from the disposition of this property will not be treated as income from sources within the relevant possession for purposes of the Internal Revenue Code. Free income tax filing for college students Accordingly, bona fide residents of American Samoa and Puerto Rico, for example, may not exclude the gain on their U. Free income tax filing for college students S. Free income tax filing for college students tax return. Free income tax filing for college students (See chapter 3 for additional filing information. Free income tax filing for college students ) With respect to the CNMI, Guam, and the USVI, the gain from the disposition of this property will not meet the requirements for certain tax rules that may allow bona fide residents of those possessions to reduce or obtain a rebate of taxes on income from sources within the relevant possessions. Free income tax filing for college students These rules apply to dispositions after April 11, 2005. Free income tax filing for college students For details, see Regulations section 1. Free income tax filing for college students 937-2(f)(1) and Examples 1 and 2 of section 1. Free income tax filing for college students 937-2(k). Free income tax filing for college students Example 1. Free income tax filing for college students In 2007, Cheryl Jones, a U. Free income tax filing for college students S. Free income tax filing for college students citizen, lived in the United States and paid $1,000 for 100 shares of stock in the Rose Corporation, a U. Free income tax filing for college students S. Free income tax filing for college students corporation listed on the New York Stock Exchange. Free income tax filing for college students On March 1, 2010, she moved to Puerto Rico and changed her tax home to Puerto Rico on the same date. Free income tax filing for college students Cheryl satisfied the presence test in 2010 and, under the year-of-move exception, she was considered a bona fide resident of Puerto Rico for the rest of 2010. Free income tax filing for college students On March 1, 2010, the closing value of Cheryl's stock in the Rose Corporation was $2,000. Free income tax filing for college students On January 5, 2013, while still a bona fide resident of Puerto Rico, Cheryl sold all her Rose Corporation stock for $7,000. Free income tax filing for college students Under the earlier rules, none of Cheryl's $6,000 gain will be treated as income from sources within Puerto Rico. Free income tax filing for college students The source rules discussed in the preceding paragraphs supplement, and may apply in conjunction with, an existing special rule. Free income tax filing for college students This existing special rule applies if you are a U. Free income tax filing for college students S. Free income tax filing for college students citizen or resident alien who becomes a bona fide resident of American Samoa, the CNMI, or Guam, and who has gain from the disposition of certain U. Free income tax filing for college students S. Free income tax filing for college students assets during the 10-year period beginning when you became a bona fide resident. Free income tax filing for college students The gain is U. Free income tax filing for college students S. Free income tax filing for college students source income that generally is subject to U. Free income tax filing for college students S. Free income tax filing for college students tax if the property is either (1) located in the United States; (2) stock issued by a U. Free income tax filing for college students S. Free income tax filing for college students corporation or a debt obligation of a U. Free income tax filing for college students S. Free income tax filing for college students person or of the United States, a state (or political subdivision), or the District of Columbia; or (3) property that has a basis in whole or in part by reference to property described in (1) or (2). Free income tax filing for college students See chapter 3 for filing information. Free income tax filing for college students Special election. Free income tax filing for college students   For dispositions after April 11, 2005, you can choose to treat the part of gain (or loss) attributable to the time you held the property while a bona fide resident of the relevant possession (the possession holding period) as gain (or loss) from sources within that possession. Free income tax filing for college students Make the election by reporting the gain attributable to the possession holding period on your income tax return for the year of disposition. Free income tax filing for college students This election overrides both of the special rules discussed earlier. Free income tax filing for college students   There are two methods for figuring the gain for the possession holding period, one for marketable securities and another for other types of investment property. Free income tax filing for college students Marketable securities. Free income tax filing for college students   Marketable securities are those actively traded on an established financial market, such as stock in a publicly held corporation. Free income tax filing for college students Under the special election, allocate the gain (or loss) by figuring the appreciation separately for your possession and U. Free income tax filing for college students S. Free income tax filing for college students holding periods. Free income tax filing for college students   Your possession holding period begins on the first day you do not have a tax home outside the relevant possession. Free income tax filing for college students The gain (or loss) attributable to the possession holding period is the difference in fair market value of the security at the close of the market on the first and last days of this holding period. Free income tax filing for college students This is your gain (or loss) that is treated as being from sources within the relevant possession. Free income tax filing for college students If you were a bona fide resident of the relevant possession for more than one continuous period, combine the gains (or losses) from each possession holding period. Free income tax filing for college students Example 2. Free income tax filing for college students Assume the same facts as in Example 1, except that Cheryl makes the special election to allocate the gain between her U. Free income tax filing for college students S. Free income tax filing for college students and possession holding periods. Free income tax filing for college students Cheryl's possession holding period began March 1, 2010, the date her tax home changed to Puerto Rico. Free income tax filing for college students Therefore, the portion of gain attributable to her possession holding period is $5,000 ($7,000 sale price – $2,000 closing value on first day of the possession holding period). Free income tax filing for college students By reporting $5,000 of her $6,000 gain as Puerto Rico source income on her 2013 Puerto Rico tax return (and the remainder as non-Puerto Rico source income), Cheryl elects to treat that amount as Puerto Rico source income. Free income tax filing for college students Other personal property. Free income tax filing for college students   For personal property other than marketable securities, use a time-based allocation. Free income tax filing for college students Figure the gain (or loss) attributable to the possession holding period by multiplying your total gain (or loss) by the following fraction. Free income tax filing for college students      Number of days in the  possession holding period     Total number of days  in your holding period         The result is your gain (or loss) that is treated as being from sources within the relevant possession. Free income tax filing for college students Example 3. Free income tax filing for college students In addition to the stock in Rose Corporation, Cheryl acquired a 5% interest in the Alder Partnership on January 1, 2009. Free income tax filing for college students On March 1, 2010, when she established bona fide residency in Puerto Rico, her partnership interest was not considered a marketable security. Free income tax filing for college students On September 16, 2013, while still a bona fide resident of Puerto Rico, Cheryl sold her interest in Alder Partnership for a $100,000 gain. Free income tax filing for college students She had owned the interest for a total of 1,720 days. Free income tax filing for college students Cheryl's possession holding period (from March 1, 2010, through September 16, 2013) is 1,296 days. Free income tax filing for college students The portion of her gain attributable to Puerto Rico is $75,349 ($100,000 x (1,296 Puerto Rico days ÷ 1,720 total days)). Free income tax filing for college students By reporting $75,349 of her $100,000 gain as Puerto Rico source income on her 2013 Puerto Rico tax return (and the remainder as non-Puerto Rico source income), Cheryl elects to treat that amount as Puerto Rico source income. Free income tax filing for college students Scholarships, Fellowships, Grants, Prizes, and Awards The source of these types of income is generally the residence of the payer, regardless of who actually disburses the funds. Free income tax filing for college students Therefore, in order to be possession source income, the payer must be a resident of the relevant possession, such as an individual who is a bona fide resident or a corporation created or organized in that possession. Free income tax filing for college students These rules do not apply to amounts paid as salary or other compensation for services. Free income tax filing for college students See Compensation for Labor or Personal Services, earlier in this chapter, for the source rules that apply. Free income tax filing for college students Effectively Connected Income In limited circumstances, some kinds of income from sources outside the relevant possession must be treated as effectively connected with a trade or business in that possession. Free income tax filing for college students These circumstances are listed below. Free income tax filing for college students You have an office or other fixed place of business in the relevant possession to which the income can be attributed. Free income tax filing for college students That office or place of business is a material factor in producing the income. Free income tax filing for college students The income is produced in the ordinary course of the trade or business carried on through that office or other fixed place of business. Free income tax filing for college students An office or other fixed place of business is a material factor if it significantly contributes to, and is an essential economic element in, the earning of the income. Free income tax filing for college students The three kinds of income from sources outside the relevant possession to which these rules apply are the following. Free income tax filing for college students Rents and royalties for the use of, or for the privilege of using, intangible personal property located outside the relevant possession or from any interest in such property. Free income tax filing for college students Included are rents or royalties for the use of, or for the privilege of using, outside the relevant possession, patents, copyrights, secret processes and formulas, goodwill, trademarks, trade brands, franchises, and similar properties if the rents or royalties are from the active conduct of a trade or business in the relevant possession. Free income tax filing for college students Dividends or interest from the active conduct of a banking, financing, or similar business in the relevant possession. Free income tax filing for college students Income, gain, or loss from the sale or exchange outside the relevant possession, through the office or other fixed place of business in the relevant possession, of: Stock in trade, Property that would be included in inventory if on hand at the end of the tax year, or Property held primarily for sale to customers in the ordinary course of business. Free income tax filing for college students Item (3) will not apply if you sold the property for use, consumption, or disposition outside the relevant possession and an office or other fixed place of business in a foreign country was a material factor in the sale. Free income tax filing for college students Example. Free income tax filing for college students Marcy Jackson is a bona fide resident of American Samoa. Free income tax filing for college students Her business, which she conducts from an office in American Samoa, is developing and selling specialized computer software. Free income tax filing for college students A software purchaser will frequently pay Marcy an additional amount to install the software on the purchaser's operating system and to ensure that the software is functioning properly. Free income tax filing for college students Marcy installs the software at the purchaser's place of business, which may be in American Samoa, in the United States, or in another country. Free income tax filing for college students The income from selling the software is effectively connected with the conduct of Marcy's business in American Samoa, even though the product's destination may be outside the possession. Free income tax filing for college students However, the compensation she receives for installing the software (personal services) outside of American Samoa is not effectively connected with the conduct of her business in the possession—the income is sourced where she performs the services. 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