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Free taxes h&r block 9. Free taxes h&r block   Rental Income and Expenses Table of Contents Introduction Useful Items - You may want to see: Rental Income Rental ExpensesVacant while listed for sale. Free taxes h&r block Repairs and Improvements Other Expenses Property Changed to Rental Use Renting Part of Property Not Rented for Profit Personal Use of Dwelling Unit (Including Vacation Home)Example. Free taxes h&r block Dividing Expenses Dwelling Unit Used as a Home Reporting Income and Deductions DepreciationChanging your accounting method to deduct unclaimed depreciation. Free taxes h&r block Limits on Rental LossesAt-Risk Rules Passive Activity Limits How To Report Rental Income and ExpensesSchedule E (Form 1040) Introduction This chapter discusses rental income and expenses. Free taxes h&r block It also covers the following topics. Free taxes h&r block Personal use of dwelling unit (including vacation home). Free taxes h&r block Depreciation. Free taxes h&r block Limits on rental losses. Free taxes h&r block How to report your rental income and expenses. Free taxes h&r block If you sell or otherwise dispose of your rental property, see Publication 544, Sales and Other Dispositions of Assets. Free taxes h&r block If you have a loss from damage to, or theft of, rental property, see Publication 547, Casualties, Disasters, and Thefts. Free taxes h&r block If you rent a condominium or a cooperative apartment, some special rules apply to you even though you receive the same tax treatment as other owners of rental property. Free taxes h&r block See Publication 527, Residential Rental Property, for more information. Free taxes h&r block Useful Items - You may want to see: Publication 527 Residential Rental Property 534 Depreciating Property Placed in Service Before 1987 535 Business Expenses 925 Passive Activity and At-Risk Rules 946 How To Depreciate Property Form (and Instructions) 4562 Depreciation and Amortization 6251 Alternative Minimum Tax—Individuals 8582 Passive Activity Loss Limitations Schedule E (Form 1040) Supplemental Income and Loss Rental Income In most cases, you must include in your gross income all amounts you receive as rent. Free taxes h&r block Rental income is any payment you receive for the use or occupation of property. Free taxes h&r block In addition to amounts you receive as normal rent payments, there are other amounts that may be rental income. Free taxes h&r block When to report. Free taxes h&r block   If you are a cash-basis taxpayer, you report rental income on your return for the year you actually or constructively receive it. Free taxes h&r block You are a cash-basis taxpayer if you report income in the year you receive it, regardless of when it was earned. Free taxes h&r block You constructively receive income when it is made available to you, for example, by being credited to your bank account. Free taxes h&r block   For more information about when you constructively receive income, see Accounting Methods in chapter 1. Free taxes h&r block Advance rent. Free taxes h&r block   Advance rent is any amount you receive before the period that it covers. Free taxes h&r block Include advance rent in your rental income in the year you receive it regardless of the period covered or the method of accounting you use. Free taxes h&r block Example. Free taxes h&r block You sign a 10-year lease to rent your property. Free taxes h&r block In the first year, you receive $5,000 for the first year's rent and $5,000 as rent for the last year of the lease. Free taxes h&r block You must include $10,000 in your income in the first year. Free taxes h&r block Canceling a lease. Free taxes h&r block   If your tenant pays you to cancel a lease, the amount you receive is rent. Free taxes h&r block Include the payment in your income in the year you receive it regardless of your method of accounting. Free taxes h&r block Expenses paid by tenant. Free taxes h&r block   If your tenant pays any of your expenses, the payments are rental income. Free taxes h&r block Because you must include this amount in income, you can deduct the expenses if they are deductible rental expenses. Free taxes h&r block See Rental Expenses , later, for more information. Free taxes h&r block Property or services. Free taxes h&r block   If you receive property or services, instead of money, as rent, include the fair market value of the property or services in your rental income. Free taxes h&r block   If the services are provided at an agreed upon or specified price, that price is the fair market value unless there is evidence to the contrary. Free taxes h&r block Security deposits. Free taxes h&r block   Do not include a security deposit in your income when you receive it if you plan to return it to your tenant at the end of the lease. Free taxes h&r block But if you keep part or all of the security deposit during any year because your tenant does not live up to the terms of the lease, include the amount you keep in your income in that year. Free taxes h&r block   If an amount called a security deposit is to be used as a final payment of rent, it is advance rent. Free taxes h&r block Include it in your income when you receive it. Free taxes h&r block Part interest. Free taxes h&r block   If you own a part interest in rental property, you must report your part of the rental income from the property. Free taxes h&r block Rental of property also used as your home. Free taxes h&r block   If you rent property that you also use as your home and you rent it less than 15 days during the tax year, do not include the rent you receive in your income and do not deduct rental expenses. Free taxes h&r block However, you can deduct on Schedule A (Form 1040) the interest, taxes, and casualty and theft losses that are allowed for nonrental property. Free taxes h&r block See Personal Use of Dwelling Unit (Including Vacation Home) , later. Free taxes h&r block Rental Expenses This part discusses expenses of renting property that you ordinarily can deduct from your rental income. Free taxes h&r block It includes information on the expenses you can deduct if you rent part of your property, or if you change your property to rental use. Free taxes h&r block Depreciation , which you can also deduct from your rental income, is discussed later. Free taxes h&r block Personal use of rental property. Free taxes h&r block   If you sometimes use your rental property for personal purposes, you must divide your expenses between rental and personal use. Free taxes h&r block Also, your rental expense deductions may be limited. Free taxes h&r block See Personal Use of Dwelling Unit (Including Vacation Home) , later. Free taxes h&r block Part interest. Free taxes h&r block   If you own a part interest in rental property, you can deduct expenses that you paid according to your percentage of ownership. Free taxes h&r block When to deduct. Free taxes h&r block   If you are a cash-basis taxpayer, you generally deduct your rental expenses in the year you pay them. Free taxes h&r block Depreciation. Free taxes h&r block   You can begin to depreciate rental property when it is ready and available for rent. Free taxes h&r block See Placed-in-Service under When Does Depreciation Begin and End in chapter 2 of Publication 527. Free taxes h&r block Pre-rental expenses. Free taxes h&r block   You can deduct your ordinary and necessary expenses for managing, conserving, or maintaining rental property from the time you make it available for rent. Free taxes h&r block Uncollected rent. Free taxes h&r block   If you are a cash-basis taxpayer, do not deduct uncollected rent. Free taxes h&r block Because you have not included it in your income, it is not deductible. Free taxes h&r block Vacant rental property. Free taxes h&r block   If you hold property for rental purposes, you may be able to deduct your ordinary and necessary expenses (including depreciation) for managing, conserving, or maintaining the property while the property is vacant. Free taxes h&r block However, you cannot deduct any loss of rental income for the period the property is vacant. Free taxes h&r block Vacant while listed for sale. Free taxes h&r block   If you sell property you held for rental purposes, you can deduct the ordinary and necessary expenses for managing, conserving, or maintaining the property until it is sold. Free taxes h&r block If the property is not held out and available for rent while listed for sale, the expenses are not deductible rental expenses. Free taxes h&r block Repairs and Improvements Generally, an expense for repairing or maintaining your rental property may be deducted if you are not required to capitalize the expense. Free taxes h&r block Improvements. Free taxes h&r block   You must capitalize any expense you pay to improve your rental property. Free taxes h&r block An expense is for an improvement if it results in a betterment to your property, restores your property, or adapts your property to a new or different use. Free taxes h&r block Betterments. Free taxes h&r block   Expenses that may result in a betterment to your property include expenses for fixing a pre-existing defect or condition, enlarging or expanding your property, or increasing the capacity, strength, or quality of your property. Free taxes h&r block Restoration. Free taxes h&r block   Expenses that may be for restoration include expenses for replacing a substantial structural part of your property, repairing damage to your property after you properly adjusted the basis of your property as a result of a casualty loss, or rebuilding your property to a like-new condition. Free taxes h&r block Adaptation. Free taxes h&r block   Expenses that may be for adaptation include expenses for altering your property to a use that is not consistent with the intended ordinary use of your property when you began renting the property. Free taxes h&r block Separate the costs of repairs and improvements, and keep accurate records. Free taxes h&r block You will need to know the cost of improvements when you sell or depreciate your property. Free taxes h&r block The expenses you capitalize for improving your property can generally be depreciated as if the improvement were separate property. Free taxes h&r block Other Expenses Other expenses you can deduct from your rental income include advertising, cleaning and maintenance, utilities, fire and liability insurance, taxes, interest, commissions for the collection of rent, ordinary and necessary travel and transportation, and other expenses, discussed next. Free taxes h&r block Insurance premiums paid in advance. Free taxes h&r block   If you pay an insurance premium for more than one year in advance, for each year of coverage you can deduct the part of the premium payment that will apply to that year. Free taxes h&r block You cannot deduct the total premium in the year you pay it. Free taxes h&r block Legal and other professional fees. Free taxes h&r block   You can deduct, as a rental expense, legal and other professional expenses, such as tax return preparation fees you paid to prepare Schedule E (Form 1040), Part I. Free taxes h&r block For example, on your 2013 Schedule E, you can deduct fees paid in 2013 to prepare your 2012 Schedule E, Part I. Free taxes h&r block You can also deduct, as a rental expense, any expense (other than federal taxes and penalties) you paid to resolve a tax underpayment related to your rental activities. Free taxes h&r block Local benefit taxes. Free taxes h&r block   In most cases, you cannot deduct charges for local benefits that increase the value of your property, such as charges for putting in streets, sidewalks, or water and sewer systems. Free taxes h&r block These charges are nondepreciable capital expenditures, and must be added to the basis of your property. Free taxes h&r block However, you can deduct local benefit taxes that are for maintaining, repairing, or paying interest charges for the benefits. Free taxes h&r block Local transportation expenses. Free taxes h&r block    You may be able to deduct your ordinary and necessary local transportation expenses if you incur them to collect rental income or to manage, conserve, or maintain your rental property. Free taxes h&r block However, transportation expenses incurred to travel between your home and a rental property generally constitute nondeductible commuting costs unless you use your home as your principal place of business. Free taxes h&r block See Publication 587, Business Use of Your Home, for information on determining if your home office qualifies as a principal place of business. Free taxes h&r block   Generally, if you use your personal car, pickup truck, or light van for rental activities, you can deduct the expenses using one of two methods: actual expenses or the standard mileage rate. Free taxes h&r block For 2013, the standard mileage rate for business use is 56. Free taxes h&r block 5 cents per mile. Free taxes h&r block For more information, see chapter 26. Free taxes h&r block    To deduct car expenses under either method, you must keep records that follow the rules in chapter 26. Free taxes h&r block In addition, you must complete Form 4562, Part V, and attach it to your tax return. Free taxes h&r block Rental of equipment. Free taxes h&r block   You can deduct the rent you pay for equipment that you use for rental purposes. Free taxes h&r block However, in some cases, lease contracts are actually purchase contracts. Free taxes h&r block If so, you cannot deduct these payments. Free taxes h&r block You can recover the cost of purchased equipment through depreciation. Free taxes h&r block Rental of property. Free taxes h&r block   You can deduct the rent you pay for property that you use for rental purposes. Free taxes h&r block If you buy a leasehold for rental purposes, you can deduct an equal part of the cost each year over the term of the lease. Free taxes h&r block Travel expenses. Free taxes h&r block   You can deduct the ordinary and necessary expenses of traveling away from home if the primary purpose of the trip is to collect rental income or to manage, conserve, or maintain your rental property. Free taxes h&r block You must properly allocate your expenses between rental and nonrental activities. Free taxes h&r block You cannot deduct the cost of traveling away from home if the primary purpose of the trip was to improve your property. Free taxes h&r block You recover the cost of improvements by taking depreciation. Free taxes h&r block For information on travel expenses, see chapter 26. Free taxes h&r block    To deduct travel expenses, you must keep records that follow the rules in chapter 26. Free taxes h&r block   See Rental Expenses in Publication 527 for more information. Free taxes h&r block Property Changed to Rental Use If you change your home or other property (or a part of it) to rental use at any time other than the beginning of your tax year, you must divide yearly expenses, such as taxes and insurance, between rental use and personal use. Free taxes h&r block You can deduct as rental expenses only the part of the expense that is for the part of the year the property was used or held for rental purposes. Free taxes h&r block You cannot deduct depreciation or insurance for the part of the year the property was held for personal use. Free taxes h&r block However, you can include the home mortgage interest, qualified mortgage insurance premiums, and real estate tax expenses for the part of the year the property was held for personal use as an itemized deduction on Schedule A (Form 1040). Free taxes h&r block Example. Free taxes h&r block Your tax year is the calendar year. Free taxes h&r block You moved from your home in May and started renting it out on June 1. Free taxes h&r block You can deduct as rental expenses seven-twelfths of your yearly expenses, such as taxes and insurance. Free taxes h&r block Starting with June, you can deduct as rental expenses the amounts you pay for items generally billed monthly, such as utilities. Free taxes h&r block Renting Part of Property If you rent part of your property, you must divide certain expenses between the part of the property used for rental purposes and the part of the property used for personal purposes, as though you actually had two separate pieces of property. Free taxes h&r block You can deduct the expenses related to the part of the property used for rental purposes, such as home mortgage interest, qualified mortgage insurance premiums, and real estate taxes, as rental expenses on Schedule E (Form 1040). Free taxes h&r block You can also deduct as rental expenses a portion of other expenses that normally are nondeductible personal expenses, such as expenses for electricity or painting the outside of your house. Free taxes h&r block There is no change in the types of expenses deductible for the personal-use part of your property. Free taxes h&r block Generally, these expenses may be deducted only if you itemize your deductions on Schedule A (Form 1040). Free taxes h&r block You cannot deduct any part of the cost of the first phone line even if your tenants have unlimited use of it. Free taxes h&r block You do not have to divide the expenses that belong only to the rental part of your property. Free taxes h&r block For example, if you paint a room that you rent, or if you pay premiums for liability insurance in connection with renting a room in your home, your entire cost is a rental expense. Free taxes h&r block If you install a second phone line strictly for your tenants' use, all of the cost of the second line is deductible as a rental expense. Free taxes h&r block You can deduct depreciation, discussed later, on the part of the house used for rental purposes as well as on the furniture and equipment you use for rental purposes. Free taxes h&r block How to divide expenses. Free taxes h&r block   If an expense is for both rental use and personal use, such as mortgage interest or heat for the entire house, you must divide the expense between the rental use and the personal use. Free taxes h&r block You can use any reasonable method for dividing the expense. Free taxes h&r block It may be reasonable to divide the cost of some items (for example, water) based on the number of people using them. Free taxes h&r block The two most common methods for dividing an expense are based on (1) the number of rooms in your home, and (2) the square footage of your home. Free taxes h&r block Not Rented for Profit If you do not rent your property to make a profit, you can deduct your rental expenses only up to the amount of your rental income. Free taxes h&r block You cannot deduct a loss or carry forward to the next year any rental expenses that are more than your rental income for the year. Free taxes h&r block For more information about the rules for an activity not engaged in for profit, see Not-for-Profit Activities in chapter 1 of Publication 535. Free taxes h&r block Where to report. Free taxes h&r block   Report your not-for-profit rental income on Form 1040, line 21. Free taxes h&r block For example, you can include your mortgage interest and any qualified mortgage insurance premiums (if you use the property as your main home or second home), real estate taxes, and casualty losses on the appropriate lines of Schedule A (Form 1040) if you itemize your deductions. Free taxes h&r block   If you itemize your deductions, claim your other rental expenses, subject to the rules explained in chapter 1 of Publication 535, as miscellaneous itemized deductions on Form 1040, Schedule A, line 23. Free taxes h&r block You can deduct these expenses only if they, together with certain other miscellaneous itemized deductions, total more than 2% of your adjusted gross income. Free taxes h&r block Personal Use of Dwelling Unit (Including Vacation Home) If you have any personal use of a dwelling unit (including a vacation home) that you rent, you must divide your expenses between rental use and personal use. Free taxes h&r block In general, your rental expenses will be no more than your total expenses multiplied by a fraction; the denominator of which is the total number of days the dwelling unit is used and the numerator of which is the total number of days actually rented at a fair rental price. Free taxes h&r block Only your rental expenses may be deducted on Schedule E (Form 1040). Free taxes h&r block Some of your personal expenses may be deductible if you itemize your deductions on Schedule A (Form 1040). Free taxes h&r block You must also determine if the dwelling unit is considered a home. Free taxes h&r block The amount of rental expenses that you can deduct may be limited if the dwelling unit is considered a home. Free taxes h&r block Whether a dwelling unit is considered a home depends on how many days during the year are considered to be days of personal use. Free taxes h&r block There is a special rule if you used the dwelling unit as a home and you rented it for less than 15 days during the year. Free taxes h&r block Dwelling unit. Free taxes h&r block   A dwelling unit includes a house, apartment, condominium, mobile home, boat, vacation home, or similar property. Free taxes h&r block It also includes all structures or other property belonging to the dwelling unit. Free taxes h&r block A dwelling unit has basic living accommodations, such as sleeping space, a toilet, and cooking facilities. Free taxes h&r block   A dwelling unit does not include property used solely as a hotel, motel, inn, or similar establishment. Free taxes h&r block Property is used solely as a hotel, motel, inn, or similar establishment if it is regularly available for occupancy by paying customers and is not used by an owner as a home during the year. Free taxes h&r block Example. Free taxes h&r block   You rent a room in your home that is always available for short-term occupancy by paying customers. Free taxes h&r block You do not use the room yourself, and you allow only paying customers to use the room. Free taxes h&r block The room is used solely as a hotel, motel, inn, or similar establishment and is not a dwelling unit. Free taxes h&r block Dividing Expenses If you use a dwelling unit for both rental and personal purposes, divide your expenses between the rental use and the personal use based on the number of days used for each purpose. Free taxes h&r block When dividing your expenses, follow these rules. Free taxes h&r block Any day that the unit is rented at a fair rental price is a day of rental use even if you used the unit for personal purposes that day. Free taxes h&r block This rule does not apply when determining whether you used the unit as a home. Free taxes h&r block Any day that the unit is available for rent but not actually rented is not a day of rental use. Free taxes h&r block Example. Free taxes h&r block Your beach cottage was available for rent from June 1 through August 31 (92 days). Free taxes h&r block During that time, except for the first week in August (7 days) when you were unable to find a renter, you rented the cottage at a fair rental price. Free taxes h&r block The person who rented the cottage for July allowed you to use it over the weekend (2 days) without any reduction in or refund of rent. Free taxes h&r block Your family also used the cottage during the last 2 weeks of May (14 days). Free taxes h&r block The cottage was not used at all before May 17 or after August 31. Free taxes h&r block You figure the part of the cottage expenses to treat as rental expenses as follows. Free taxes h&r block The cottage was used for rental a total of 85 days (92 − 7). Free taxes h&r block The days it was available for rent but not rented (7 days) are not days of rental use. Free taxes h&r block The July weekend (2 days) you used it is rental use because you received a fair rental price for the weekend. Free taxes h&r block You used the cottage for personal purposes for 14 days (the last 2 weeks in May). Free taxes h&r block The total use of the cottage was 99 days (14 days personal use + 85 days rental use). Free taxes h&r block Your rental expenses are 85/99 (86%) of the cottage expenses. Free taxes h&r block Note. Free taxes h&r block When determining whether you used the cottage as a home, the July weekend (2 days) you used it is considered personal use even though you received a fair rental price for the weekend. Free taxes h&r block Therefore, you had 16 days of personal use and 83 days of rental use for this purpose. Free taxes h&r block Because you used the cottage for personal purposes more than 14 days and more than 10% of the days of rental use (8 days), you used it as a home. Free taxes h&r block If you have a net loss, you may not be able to deduct all of the rental expenses. Free taxes h&r block See Dwelling Unit Used as a Home, next. Free taxes h&r block Dwelling Unit Used as a Home If you use a dwelling unit for both rental and personal purposes, the tax treatment of the rental expenses you figured earlier under Dividing Expenses and rental income depends on whether you are considered to be using the dwelling unit as a home. Free taxes h&r block You use a dwelling unit as a home during the tax year if you use it for personal purposes more than the greater of: 14 days, or 10% of the total days it is rented to others at a fair rental price. Free taxes h&r block See What is a day of personal use , later. Free taxes h&r block Fair rental price. Free taxes h&r block   A fair rental price for your property generally is the amount of rent that a person who is not related to you would be willing to pay. Free taxes h&r block The rent you charge is not a fair rental price if it is substantially less than the rents charged for other properties that are similar to your property in your area. Free taxes h&r block   If a dwelling unit is used for personal purposes on a day it is rented at a fair rental price, do not count that day as a day of rental use in applying (2) above. Free taxes h&r block Instead, count it as a day of personal use in applying both (1) and (2) above. Free taxes h&r block What is a day of personal use?   A day of personal use of a dwelling unit is any day that the unit is used by any of the following persons. Free taxes h&r block You or any other person who has an interest in the unit, unless you rent it to another owner as his or her main home under a shared equity financing agreement (defined later). Free taxes h&r block However, see Days used as a main home before or after renting , later. Free taxes h&r block A member of your family or a member of the family of any other person who owns an interest in the unit, unless the family member uses the dwelling unit as his or her main home and pays a fair rental price. Free taxes h&r block Family includes only your spouse, brothers and sisters, half-brothers and half-sisters, ancestors (parents, grandparents, etc. Free taxes h&r block ), and lineal descendants (children, grandchildren, etc. Free taxes h&r block ). Free taxes h&r block Anyone under an arrangement that lets you use some other dwelling unit. Free taxes h&r block Anyone at less than a fair rental price. Free taxes h&r block Main home. Free taxes h&r block   If the other person or member of the family in (1) or (2) above has more than one home, his or her main home is ordinarily the one he or she lived in most of the time. Free taxes h&r block Shared equity financing agreement. Free taxes h&r block   This is an agreement under which two or more persons acquire undivided interests for more than 50 years in an entire dwelling unit, including the land, and one or more of the co-owners is entitled to occupy the unit as his or her main home upon payment of rent to the other co-owner or owners. Free taxes h&r block Donation of use of property. Free taxes h&r block   You use a dwelling unit for personal purposes if: You donate the use of the unit to a charitable organization, The organization sells the use of the unit at a fund-raising event, and The “purchaser” uses the unit. Free taxes h&r block Examples. Free taxes h&r block   The following examples show how to determine days of personal use. Free taxes h&r block Example 1. Free taxes h&r block You and your neighbor are co-owners of a condominium at the beach. Free taxes h&r block Last year, you rented the unit to vacationers whenever possible. Free taxes h&r block The unit was not used as a main home by anyone. Free taxes h&r block Your neighbor used the unit for 2 weeks last year; you did not use it at all. Free taxes h&r block Because your neighbor has an interest in the unit, both of you are considered to have used the unit for personal purposes during those 2 weeks. Free taxes h&r block Example 2. Free taxes h&r block You and your neighbors are co-owners of a house under a shared equity financing agreement. Free taxes h&r block Your neighbors live in the house and pay you a fair rental price. Free taxes h&r block Even though your neighbors have an interest in the house, the days your neighbors live there are not counted as days of personal use by you. Free taxes h&r block This is because your neighbors rent the house as their main home under a shared equity financing agreement. Free taxes h&r block Example 3. Free taxes h&r block You own a rental property that you rent to your son. Free taxes h&r block Your son does not own any interest in this property. Free taxes h&r block He uses it as his main home and pays you a fair rental price. Free taxes h&r block Your son's use of the property is not personal use by you because your son is using it as his main home, he owns no interest in the property, and he is paying you a fair rental price. Free taxes h&r block Example 4. Free taxes h&r block You rent your beach house to Joshua. Free taxes h&r block Joshua rents his cabin in the mountains to you. Free taxes h&r block You each pay a fair rental price. Free taxes h&r block You are using your house for personal purposes on the days that Joshua uses it because your house is used by Joshua under an arrangement that allows you to use his house. Free taxes h&r block Days used for repairs and maintenance. Free taxes h&r block   Any day that you spend working substantially full time repairing and maintaining (not improving) your property is not counted as a day of personal use. Free taxes h&r block Do not count such a day as a day of personal use even if family members use the property for recreational purposes on the same day. Free taxes h&r block Days used as a main home before or after renting. Free taxes h&r block   For purposes of determining whether a dwelling unit was used as a home, you may not have to count days you used the property as your main home before or after renting it or offering it for rent as days of personal use. Free taxes h&r block Do not count them as days of personal use if: You rented or tried to rent the property for 12 or more consecutive months. Free taxes h&r block You rented or tried to rent the property for a period of less than 12 consecutive months and the period ended because you sold or exchanged the property. Free taxes h&r block However, this special rule does not apply when dividing expenses between rental and personal use. Free taxes h&r block Examples. Free taxes h&r block   The following examples show how to determine whether you used your rental property as a home. Free taxes h&r block Example 1. Free taxes h&r block You converted the basement of your home into an apartment with a bedroom, a bathroom, and a small kitchen. Free taxes h&r block You rented the basement apartment at a fair rental price to college students during the regular school year. Free taxes h&r block You rented to them on a 9-month lease (273 days). Free taxes h&r block You figured 10% of the total days rented to others at a fair rental price is 27 days. Free taxes h&r block During June (30 days), your brothers stayed with you and lived in the basement apartment rent free. Free taxes h&r block Your basement apartment was used as a home because you used it for personal purposes for 30 days. Free taxes h&r block Rent-free use by your brothers is considered personal use. Free taxes h&r block Your personal use (30 days) is more than the greater of 14 days or 10% of the total days it was rented (27 days). Free taxes h&r block Example 2. Free taxes h&r block You rented the guest bedroom in your home at a fair rental price during the local college's homecoming, commencement, and football weekends (a total of 27 days). Free taxes h&r block Your sister-in-law stayed in the room, rent free, for the last 3 weeks (21 days) in July. Free taxes h&r block You figured 10% of the total days rented to others at a fair rental price is 3 days. Free taxes h&r block The room was used as a home because you used it for personal purposes for 21 days. Free taxes h&r block That is more than the greater of 14 days or 10% of the 27 days it was rented (3 days). Free taxes h&r block Example 3. Free taxes h&r block You own a condominium apartment in a resort area. Free taxes h&r block You rented it at a fair rental price for a total of 170 days during the year. Free taxes h&r block For 12 of those days, the tenant was not able to use the apartment and allowed you to use it even though you did not refund any of the rent. Free taxes h&r block Your family actually used the apartment for 10 of those days. Free taxes h&r block Therefore, the apartment is treated as having been rented for 160 (170 − 10) days. Free taxes h&r block You figured 10% of the total days rented to others at a fair rental price is 16 days. Free taxes h&r block Your family also used the apartment for 7 other days during the year. Free taxes h&r block You used the apartment as a home because you used it for personal purposes for 17 days. Free taxes h&r block That is more than the greater of 14 days or 10% of the 160 days it was rented (16 days). Free taxes h&r block Minimal rental use. Free taxes h&r block   If you use the dwelling unit as a home and you rent it less than 15 days during the year, that period is not treated as rental activity. Free taxes h&r block See Used as a home but rented less than 15 days , later, for more information. Free taxes h&r block Limit on deductions. Free taxes h&r block   Renting a dwelling unit that is considered a home is not a passive activity. Free taxes h&r block Instead, if your rental expenses are more than your rental income, some or all of the excess expenses cannot be used to offset income from other sources. Free taxes h&r block The excess expenses that cannot be used to offset income from other sources are carried forward to the next year and treated as rental expenses for the same property. Free taxes h&r block Any expenses carried forward to the next year will be subject to any limits that apply for that year. Free taxes h&r block This limitation will apply to expenses carried forward to another year even if you do not use the property as your home for that subsequent year. Free taxes h&r block   To figure your deductible rental expenses for this year and any carryover to next year, use Worksheet 9-1. Free taxes h&r block Reporting Income and Deductions Property not used for personal purposes. Free taxes h&r block   If you do not use a dwelling unit for personal purposes, see How To Report Rental Income and Expenses , later, for how to report your rental income and expenses. Free taxes h&r block Property used for personal purposes. Free taxes h&r block   If you do use a dwelling unit for personal purposes, then how you report your rental income and expenses depends on whether you used the dwelling unit as a home. Free taxes h&r block Not used as a home. Free taxes h&r block   If you use a dwelling unit for personal purposes, but not as a home, report all the rental income in your income. Free taxes h&r block Since you used the dwelling unit for personal purposes, you must divide your expenses between the rental use and the personal use as described earlier in Dividing Expenses . Free taxes h&r block The expenses for personal use are not deductible as rental expenses. Free taxes h&r block   Your deductible rental expenses can be more than your gross rental income; however, see Limits on Rental Losses , later. Free taxes h&r block Used as a home but rented less than 15 days. Free taxes h&r block   If you use a dwelling unit as a home and you rent it less than 15 days during the year, its primary function is not considered to be rental and it should not be reported on Schedule E (Form 1040). Free taxes h&r block You are not required to report the rental income and rental expenses from this activity. Free taxes h&r block The expenses, including qualified mortgage interest, property taxes, and any qualified casualty loss will be reported as normally allowed on Schedule A (Form 1040). Free taxes h&r block See the Instructions for Schedule A (Form 1040) for more information on deducting these expenses. Free taxes h&r block Used as a home and rented 15 days or more. Free taxes h&r block   If you use a dwelling unit as a home and rent it 15 days or more during the year, include all your rental income in your income. Free taxes h&r block Since you used the dwelling unit for personal purposes, you must divide your expenses between the rental use and the personal use as described earlier in Dividing Expenses . Free taxes h&r block The expenses for personal use are not deductible as rental expenses. Free taxes h&r block   If you had a net profit from renting the dwelling unit for the year (that is, if your rental income is more than the total of your rental expenses, including depreciation), deduct all of your rental expenses. Free taxes h&r block You do not need to use Worksheet 9-1. Free taxes h&r block   However, if you had a net loss from renting the dwelling unit for the year, your deduction for certain rental expenses is limited. Free taxes h&r block To figure your deductible rental expenses and any carryover to next year, use Worksheet 9-1. Free taxes h&r block Depreciation You recover the cost of income-producing property through yearly tax deductions. Free taxes h&r block You do this by depreciating the property; that is, by deducting some of the cost each year on your tax return. Free taxes h&r block Three factors determine how much depreciation you can deduct each year: (1) your basis in the property, (2) the recovery period for the property, and (3) the depreciation method used. Free taxes h&r block You cannot simply deduct your mortgage or principal payments, or the cost of furniture, fixtures, and equipment, as an expense. Free taxes h&r block You can deduct depreciation only on the part of your property used for rental purposes. Free taxes h&r block Depreciation reduces your basis for figuring gain or loss on a later sale or exchange. Free taxes h&r block You may have to use Form 4562 to figure and report your depreciation. Free taxes h&r block See How To Report Rental Income and Expenses , later. Free taxes h&r block Alternative minimum tax (AMT). Free taxes h&r block    If you use accelerated depreciation, you may be subject to the AMT. Free taxes h&r block Accelerated depreciation allows you to deduct more depreciation earlier in the recovery period than you could deduct using a straight line method (same deduction each year). Free taxes h&r block Claiming the correct amount of depreciation. Free taxes h&r block   You should claim the correct amount of depreciation each tax year. Free taxes h&r block If you did not claim all the depreciation you were entitled to deduct, you must still reduce your basis in the property by the full amount of depreciation that you could have deducted. Free taxes h&r block   If you deducted an incorrect amount of depreciation for property in any year, you may be able to make a correction by filing Form 1040X, Amended U. Free taxes h&r block S Individual Income Tax Return. Free taxes h&r block If you are not allowed to make the correction on an amended return, you can change your accounting method to claim the correct amount of depreciation. Free taxes h&r block See Claiming the correct amount of depreciation in chapter 2 of Publication 527 for more information. Free taxes h&r block Changing your accounting method to deduct unclaimed depreciation. Free taxes h&r block   To change your accounting method, you generally must file Form 3115, Application for Change in Accounting Method, to get the consent of the IRS. Free taxes h&r block In some instances, that consent is automatic. Free taxes h&r block For more information, see chapter 1 of Publication 946. Free taxes h&r block Land. Free taxes h&r block   You cannot depreciate the cost of land because land generally does not wear out, become obsolete, or get used up. Free taxes h&r block The costs of clearing, grading, planting, and landscaping are usually all part of the cost of land and cannot be depreciated. Free taxes h&r block More information. Free taxes h&r block   See Publication 527 for more information about depreciating rental property and see Publication 946 for more information about depreciation. Free taxes h&r block Limits on Rental Losses If you have a loss from your rental real estate activity, two sets of rules may limit the amount of loss you can deduct. Free taxes h&r block You must consider these rules in the order shown below. Free taxes h&r block At-risk rules. Free taxes h&r block These rules are applied first if there is investment in your rental real estate activity for which you are not at risk. Free taxes h&r block This applies only if the real property was placed in service after 1986. Free taxes h&r block Passive activity limits. Free taxes h&r block Generally, rental real estate activities are considered passive activities and losses are not deductible unless you have income from other passive activities to offset them. Free taxes h&r block However, there are exceptions. Free taxes h&r block At-Risk Rules You may be subject to the at-risk rules if you have: A loss from an activity carried on as a trade or business or for the production of income, and Amounts invested in the activity for which you are not fully at risk. Free taxes h&r block Losses from holding real property (other than mineral property) placed in service before 1987 are not subject to the at-risk rules. Free taxes h&r block In most cases, any loss from an activity subject to the at-risk rules is allowed only to the extent of the total amount you have at risk in the activity at the end of the tax year. Free taxes h&r block You are considered at risk in an activity to the extent of cash and the adjusted basis of other property you contributed to the activity and certain amounts borrowed for use in the activity. Free taxes h&r block See Publication 925 for more information. Free taxes h&r block Passive Activity Limits In most cases, all rental real estate activities (except those of certain real estate professionals, discussed later) are passive activities. Free taxes h&r block For this purpose, a rental activity is an activity from which you receive income mainly for the use of tangible property, rather than for services. Free taxes h&r block Limits on passive activity deductions and credits. Free taxes h&r block    Deductions or losses from passive activities are limited. Free taxes h&r block You generally cannot offset income, other than passive income, with losses from passive activities. Free taxes h&r block Nor can you offset taxes on income, other than passive income, with credits resulting from passive activities. Free taxes h&r block Any excess loss or credit is carried forward to the next tax year. Free taxes h&r block   For a detailed discussion of these rules, see Publication 925. Free taxes h&r block    You may have to complete Form 8582 to figure the amount of any passive activity loss for the current tax year for all activities and the amount of the passive activity loss allowed on your tax return. Free taxes h&r block Real estate professionals. Free taxes h&r block   Rental activities in which you materially participated during the year are not passive activities if, for that year, you were a real estate professional. Free taxes h&r block For a detailed discussion of the requirements, see Publication 527. Free taxes h&r block For a detailed discussion of material participation, see Publication 925. Free taxes h&r block Exception for Personal Use of Dwelling Unit If you used the rental property as a home during the year, any income, deductions, gain, or loss allocable to such use shall not be taken into account for purposes of the passive activity loss limitation. Free taxes h&r block Instead, follow the rules explained in Personal Use of Dwelling Unit (Including Vacation Home), earlier. Free taxes h&r block Exception for Rental Real Estate Activities With Active Participation If you or your spouse actively participated in a passive rental real estate activity, you may be able to deduct up to $25,000 of loss from the activity from your nonpassive income. Free taxes h&r block This special allowance is an exception to the general rule disallowing losses in excess of income from passive activities. Free taxes h&r block Similarly, you may be able to offset credits from the activity against the tax on up to $25,000 of nonpassive income after taking into account any losses allowed under this exception. Free taxes h&r block Active participation. Free taxes h&r block   You actively participated in a rental real estate activity if you (and your spouse) owned at least 10% of the rental property and you made management decisions or arranged for others to provide services (such as repairs) in a significant and bona fide sense. Free taxes h&r block Management decisions that may count as active participation include approving new tenants, deciding on rental terms, approving expenditures, and similar decisions. Free taxes h&r block Maximum special allowance. Free taxes h&r block   The maximum special allowance is: $25,000 for single individuals and married individuals filing a joint return for the tax year, $12,500 for married individuals who file separate returns for the tax year and lived apart from their spouses at all times during the tax year, and $25,000 for a qualifying estate reduced by the special allowance for which the surviving spouse qualified. Free taxes h&r block   If your modified adjusted gross income (MAGI) is $100,000 or less ($50,000 or less if married filing separately), you can deduct your loss up to the amount specified above. Free taxes h&r block If your MAGI is more than $100,000 (more than $50,000 if married filing separately), your special allowance is limited to 50% of the difference between $150,000 ($75,000 if married filing separately) and your MAGI. Free taxes h&r block   Generally, if your MAGI is $150,000 or more ($75,000 or more if you are married filing separately), there is no special allowance. Free taxes h&r block More information. Free taxes h&r block   See Publication 925 for more information on the passive loss limits, including information on the treatment of unused disallowed passive losses and credits and the treatment of gains and losses realized on the disposition of a passive activity. Free taxes h&r block How To Report Rental Income and Expenses The basic form for reporting residential rental income and expenses is Schedule E (Form 1040). Free taxes h&r block However, do not use that schedule to report a not-for-profit activity. Free taxes h&r block See Not Rented for Profit, earlier. Free taxes h&r block Providing substantial services. Free taxes h&r block   If you provide substantial services that are primarily for your tenant's convenience, such as regular cleaning, changing linen, or maid service, report your rental income and expenses on Schedule C (Form 1040), Profit or Loss From Business, or Schedule C-EZ (Form 1040), Net Profit From Business (Sole Proprietorship). Free taxes h&r block Substantial services do not include the furnishing of heat and light, cleaning of public areas, trash collection, etc. Free taxes h&r block For information, see Publication 334, Tax Guide for Small Business. Free taxes h&r block You also may have to pay self-employment tax on your rental income using Schedule SE (Form 1040), Self-Employment Tax. Free taxes h&r block   Use Form 1065, U. Free taxes h&r block S. Free taxes h&r block Return of Partnership Income, if your rental activity is a partnership (including a partnership with your spouse unless it is a qualified joint venture). Free taxes h&r block Qualified joint venture. Free taxes h&r block   If you and your spouse each materially participate as the only members of a jointly owned and operated real estate business, and you file a joint return for the tax year, you can make a joint election to be treated as a qualified joint venture instead of a partnership. Free taxes h&r block This election, in most cases, will not increase the total tax owed on the joint return, but it does give each of you credit for social security earnings on which retirement benefits are based and for Medicare coverage if your rental income is subject to self-employment tax. Free taxes h&r block For more information, see Publication 527. Free taxes h&r block Form 1098, Mortgage Interest Statement. Free taxes h&r block    If you paid $600 or more of mortgage interest on your rental property to any one person, you should receive a Form 1098, or similar statement showing the interest you paid for the year. Free taxes h&r block If you and at least one other person (other than your spouse if you file a joint return) were liable for, and paid interest on the mortgage, and the other person received the Form 1098, report your share of the interest on Schedule E (Form 1040), line 13. Free taxes h&r block Attach a statement to your return showing the name and address of the other person. Free taxes h&r block In the left margin of Schedule E, next to line 13, enter “See attached. Free taxes h&r block ” Schedule E (Form 1040) If you rent buildings, rooms, or apartments, and provide basic services such as heat and light, trash collection, etc. Free taxes h&r block , you normally report your rental income and expenses on Schedule E, Part I. Free taxes h&r block List your total income, expenses, and depreciation for each rental property. Free taxes h&r block Be sure to enter the number of fair rental and personal use days on line 2. Free taxes h&r block If you have more than three rental or royalty properties, complete and attach as many Schedules E as are needed to list the properties. Free taxes h&r block Complete lines 1 and 2 for each property. Free taxes h&r block However, fill in lines 23a through 26 on only one Schedule E. Free taxes h&r block On Schedule E, page 1, line 18, enter the depreciation you are claiming for each property. Free taxes h&r block To find out if you need to attach Form 4562, see Form 4562, in chapter 3 of Publication 527. Free taxes h&r block If you have a loss from your rental real estate activity, you also may need to complete one or both of the following forms. Free taxes h&r block Form 6198, At-Risk Limitations. Free taxes h&r block See At-Risk Rules , earlier. Free taxes h&r block Also see Publication 925. Free taxes h&r block Form 8582, Passive Activity Loss Limitations. Free taxes h&r block See Passive Activity Limits , earlier. Free taxes h&r block Page 2 of Schedule E is used to report income or loss from partnerships, S corporations, estates, trusts, and real estate mortgage investment conduits. Free taxes h&r block If you need to use page 2 of Schedule E, be sure to use page 2 of the same Schedule E you used to enter your rental activity on page 1. Free taxes h&r block Also, include the amount from line 26 (Part I) in the “Total income or (loss)” on line 41 (Part V). Free taxes h&r block Worksheet 9-1. Free taxes h&r block Worksheet for Figuring Rental Deductions for a Dwelling Unit Used as a Home Use this worksheet only if you answer “yes” to all of the following questions. Free taxes h&r block Did you use the dwelling unit as a home this year? (See Dwelling Unit Used as a Home . Free taxes h&r block ) Did you rent the dwelling unit at a fair rental price 15 days or more this year? Is the total of your rental expenses and depreciation more than your rental income? PART I. Free taxes h&r block Rental Use Percentage A. Free taxes h&r block Total days available for rent at fair rental price A. Free taxes h&r block       B. Free taxes h&r block Total days available for rent (line A) but not rented B. Free taxes h&r block       C. Free taxes h&r block Total days of rental use. Free taxes h&r block Subtract line B from line A C. Free taxes h&r block       D. Free taxes h&r block Total days of personal use (including days rented at less than fair rental price) D. Free taxes h&r block       E. Free taxes h&r block Total days of rental and personal use. Free taxes h&r block Add lines C and D E. Free taxes h&r block       F. Free taxes h&r block Percentage of expenses allowed for rental. Free taxes h&r block Divide line C by line E     F. Free taxes h&r block   PART II. Free taxes h&r block Allowable Rental Expenses 1. Free taxes h&r block Enter rents received 1. Free taxes h&r block   2a. Free taxes h&r block Enter the rental portion of deductible home mortgage interest and qualified mortgage insurance premiums (see instructions) 2a. Free taxes h&r block       b. Free taxes h&r block Enter the rental portion of real estate taxes b. Free taxes h&r block       c. Free taxes h&r block Enter the rental portion of deductible casualty and theft losses (see instructions) c. Free taxes h&r block       d. Free taxes h&r block Enter direct rental expenses (see instructions) d. Free taxes h&r block       e. Free taxes h&r block Fully deductible rental expenses. Free taxes h&r block Add lines 2a–2d. Free taxes h&r block Enter here and  on the appropriate lines on Schedule E (see instructions) 2e. Free taxes h&r block   3. Free taxes h&r block Subtract line 2e from line 1. Free taxes h&r block If zero or less, enter -0- 3. Free taxes h&r block   4a. Free taxes h&r block Enter the rental portion of expenses directly related to operating or maintaining  the dwelling unit (such as repairs, insurance, and utilities) 4a. Free taxes h&r block       b. Free taxes h&r block Enter the rental portion of excess mortgage interest and qualified mortgage insurance premiums (see instructions) b. Free taxes h&r block       c. Free taxes h&r block Carryover of operating expenses from 2012 worksheet c. Free taxes h&r block       d. Free taxes h&r block Add lines 4a–4c d. Free taxes h&r block       e. Free taxes h&r block Allowable expenses. Free taxes h&r block Enter the smaller of line 3 or line 4d (see instructions) 4e. Free taxes h&r block   5. Free taxes h&r block Subtract line 4e from line 3. Free taxes h&r block If zero or less, enter -0- 5. Free taxes h&r block   6a. Free taxes h&r block Enter the rental portion of excess casualty and theft losses (see instructions) 6a. Free taxes h&r block       b. Free taxes h&r block Enter the rental portion of depreciation of the dwelling unit b. Free taxes h&r block       c. Free taxes h&r block Carryover of excess casualty losses and depreciation from 2012 worksheet c. Free taxes h&r block       d. Free taxes h&r block Add lines 6a–6c d. Free taxes h&r block       e. Free taxes h&r block Allowable excess casualty and theft losses and depreciation. Free taxes h&r block Enter the smaller of  line 5 or line 6d (see instructions) 6e. Free taxes h&r block   PART III. Free taxes h&r block Carryover of Unallowed Expenses to Next Year 7a. Free taxes h&r block Operating expenses to be carried over to next year. Free taxes h&r block Subtract line 4e from line 4d 7a. Free taxes h&r block   b. Free taxes h&r block Excess casualty and theft losses and depreciation to be carried over to next year. Free taxes h&r block  Subtract line 6e from line 6d b. Free taxes h&r block   Worksheet 9-1 Instructions. Free taxes h&r block Worksheet for Figuring Rental Deductions for a Dwelling Unit Used as a Home Caution. Free taxes h&r block Use the percentage determined in Part I, line F, to figure the rental portions to enter on lines 2a–2c, 4a–4b, and 6a–6b of  Part II. Free taxes h&r block Line 2a. Free taxes h&r block Figure the mortgage interest on the dwelling unit that you could deduct on Schedule A as if you had not rented the unit. Free taxes h&r block Do not include interest on a loan that did not benefit the dwelling unit. Free taxes h&r block For example, do not include interest on a home equity loan used to pay off credit cards or other personal loans, buy a car, or pay college tuition. Free taxes h&r block Include interest on a loan used to buy, build, or improve the dwelling unit, or to refinance such a loan. Free taxes h&r block Include the rental portion of this interest in the total you enter on line 2a of the worksheet. Free taxes h&r block   Figure the qualified mortgage insurance premiums on the dwelling unit that you could deduct on line 13 of Schedule A as if you had not rented the unit. Free taxes h&r block See the Schedule A instructions. Free taxes h&r block However, figure your adjusted gross income (Form 1040, line 38) without your rental income and expenses from the dwelling unit. Free taxes h&r block See Line 4b to deduct the part of the qualified mortgage insurance premiums not allowed because of the adjusted gross income limit. Free taxes h&r block Include the rental portion of the amount from Schedule A, line 13, in the total you enter on line 2a of the worksheet. Free taxes h&r block   Note. Free taxes h&r block Do not file this Schedule A or use it to figure the amount to deduct on line 13 of that schedule. Free taxes h&r block Instead, figure the personal portion on a separate Schedule A. Free taxes h&r block If you have deducted mortgage interest or qualified mortgage insurance premiums on the dwelling unit on other forms, such as Schedule C or F, remember to reduce your Schedule A deduction by that amount. Free taxes h&r block           Line 2c. Free taxes h&r block Figure the casualty and theft losses related to the dwelling unit that you could deduct on Schedule A as if you had not rented the dwelling unit. Free taxes h&r block To do this, complete Section A of Form 4684, Casualties and Thefts, treating the losses as personal losses. Free taxes h&r block If any of the loss is due to a federally declared disaster, see the Instructions for Form 4684. Free taxes h&r block On Form 4684, line 17, enter 10% of your adjusted gross income figured without your rental income and expenses from the dwelling unit. Free taxes h&r block Enter the rental portion of the result from Form 4684, line 18, on line 2c of this worksheet. Free taxes h&r block   Note. Free taxes h&r block Do not file this Form 4684 or use it to figure your personal losses on Schedule A. Free taxes h&r block Instead, figure the personal portion on a separate Form 4684. Free taxes h&r block           Line 2d. Free taxes h&r block Enter the total of your rental expenses that are directly related only to the rental activity. Free taxes h&r block These include interest on loans used for rental activities other than to buy, build, or improve the dwelling unit. Free taxes h&r block Also include rental agency fees, advertising, office supplies, and depreciation on office equipment used in your rental activity. Free taxes h&r block           Line 2e. Free taxes h&r block You can deduct the amounts on lines 2a, 2b, 2c, and 2d as rental expenses on Schedule E even if your rental expenses are more than your rental income. Free taxes h&r block Enter the amounts on lines 2a, 2b, 2c, and 2d on the appropriate lines of Schedule E. Free taxes h&r block           Line 4b. Free taxes h&r block On line 2a, you entered the rental portion of the mortgage interest and qualified mortgage insurance premiums you could deduct on Schedule A if you had not rented the dwelling unit. Free taxes h&r block If you had additional mortgage interest and qualified mortgage insurance premiums that would not be deductible on Schedule A because of limits imposed on them, enter on line 4b of this worksheet the rental portion of those excess amounts. Free taxes h&r block Do not include interest on a loan that did not benefit the dwelling unit (as explained in the line 2a instructions). Free taxes h&r block           Line 4e. Free taxes h&r block You can deduct the amounts on lines 4a, 4b, and 4c as rental expenses on Schedule E only to the extent they are not more than the amount on line 4e. Free taxes h&r block *           Line 6a. Free taxes h&r block To find the rental portion of excess casualty and theft losses, use the Form 4684 you prepared for line 2c of this worksheet. Free taxes h&r block   A. Free taxes h&r block Enter the amount from Form 4684, line 10       B. Free taxes h&r block Enter the rental portion of line A       C. Free taxes h&r block Enter the amount from line 2c of this worksheet       D. Free taxes h&r block Subtract line C from line B. Free taxes h&r block Enter the result here and on line 6a of this worksheet               Line 6e. Free taxes h&r block You can deduct the amounts on lines 6a, 6b, and 6c as rental expenses on Schedule E only to the extent they are not more than the amount on line 6e. Free taxes h&r block * *Allocating the limited deduction. Free taxes h&r block If you cannot deduct all of the amount on line 4d or 6d this year, you can allocate the allowable deduction in any way you wish among the expenses included on line 4d or 6d. Free taxes h&r block Enter the amount you allocate to each expense on the appropriate line of Schedule E, Part I. Free taxes h&r block Prev  Up  Next   Home   More Online Publications
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Understanding IRS Guidance - A Brief Primer

For anyone not familiar with the inner workings of tax administration, the array of IRS guidance may seem, well, a little puzzling at first glance. To take a little of the mystery away, here's a brief look at seven of the most common forms of guidance.

In its role in administering the tax laws enacted by the Congress, the IRS must take the specifics of these laws and translate them into detailed regulations, rules and procedures. The Office of Chief Counsel fills this crucial role by producing several different kinds of documents and publications that provide guidance to taxpayers, firms and charitable groups.

Regulation

A regulation is issued by the Internal Revenue Service and Treasury Department to provide guidance for new legislation or to address issues that arise with respect to existing Internal Revenue Code sections. Regulations interpret and give directions on complying with the law. Regulations are published in the Federal Register. Generally, regulations are first published in proposed form in a Notice of Proposed Rulemaking (NPRM). After public input is fully considered through written comments and even a public hearing, a final regulation or a temporary regulation is published as a Treasury Decision (TD), again, in the Federal Register.

Revenue Ruling

A revenue ruling is an official interpretation by the IRS of the Internal Revenue Code, related statutes, tax treaties and regulations. It is the conclusion of the IRS on how the law is applied to a specific set of facts. Revenue rulings are published in the Internal Revenue Bulletin for the information of and guidance to taxpayers, IRS personnel and tax professionals. For example, a revenue ruling may hold that taxpayers can deduct certain automobile expenses.

Revenue Procedure

A revenue procedure is an official statement of a procedure that affects the rights or duties of taxpayers or other members of the public under the Internal Revenue Code, related statutes, tax treaties and regulations and that should be a matter of public knowledge. It is also published in the Internal Revenue Bulletin. While a revenue ruling generally states an IRS position, a revenue procedure provides return filing or other instructions concerning an IRS position. For example, a revenue procedure might specify how those entitled to deduct certain automobile expenses should compute them by applying a certain mileage rate in lieu of calculating actual operating expenses.

Private Letter Ruling

A private letter ruling, or PLR, is a written statement issued to a taxpayer that interprets and applies tax laws to the taxpayer's specific set of facts. A PLR is issued to establish with certainty the federal tax consequences of a particular transaction before the transaction is consummated or before the taxpayer's return is filed. A PLR is issued in response to a written request submitted by a taxpayer and is binding on the IRS if the taxpayer fully and accurately described the proposed transaction in the request and carries out the transaction as described. A PLR may not be relied on as precedent by other taxpayers or IRS personnel. PLRs are generally made public after all information has been removed that could identify the taxpayer to whom it was issued.

Technical Advice Memorandum

A technical advice memorandum, or TAM, is guidance furnished by the Office of Chief Counsel upon the request of an IRS director or an area director, appeals, in response to technical or procedural questions that develop during a proceeding. A request for a TAM generally stems from an examination of a taxpayer's return, a consideration of a taxpayer's claim for a refund or credit, or any other matter involving a specific taxpayer under the jurisdiction of the territory manager or the area director, appeals. Technical Advice Memoranda are issued only on closed transactions and provide the interpretation of proper application of tax laws, tax treaties, regulations, revenue rulings or other precedents. The advice rendered represents a final determination of the position of the IRS, but only with respect to the specific issue in the specific case in which the advice is issued. Technical Advice Memoranda are generally made public after all information has been removed that could identify the taxpayer whose circumstances triggered a specific memorandum.

Notice

A notice is a public pronouncement that may contain guidance that involves substantive interpretations of the Internal Revenue Code or other provisions of the law. For example, notices can be used to relate what regulations will say in situations where the regulations may not be published in the immediate future.
 

Announcement

An announcement is a public pronouncement that has only immediate or short-term value. For example, announcements can be used to summarize the law or regulations without making any substantive interpretation; to state what regulations will say when they are certain to be published in the immediate future; or to notify taxpayers of the existence of an approaching deadline.

Page Last Reviewed or Updated: 12-Feb-2014

The Free Taxes H&r Block

Free taxes h&r block 9. Free taxes h&r block   Tax Treaty Benefits Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Treaty Income Some Typical Tax Treaty BenefitsPersonal Services Teachers, Professors, and Researchers Employees of Foreign Governments Students, Apprentices, and Trainees Capital Gains Resident Aliens Reporting Treaty Benefits Claimed Introduction A nonresident alien (and certain resident aliens) from a country with which the United States has an income tax treaty may qualify for certain benefits. Free taxes h&r block Most treaties require that the nonresident alien be a resident of the treaty country to qualify. Free taxes h&r block However, some treaties require that the nonresident alien be a national or a citizen of the treaty country. Free taxes h&r block See Table 9-1 for a list of tax treaty countries. Free taxes h&r block You can generally arrange to have withholding tax reduced or eliminated on wages and other income that are eligible for tax treaty benefits. Free taxes h&r block See Income Entitled to Tax Treaty Benefits in chapter 8. Free taxes h&r block Topics - This chapter discusses: Typical tax treaty benefits, How to obtain copies of tax treaties, and How to claim tax treaty benefits on your tax return. Free taxes h&r block Useful Items - You may want to see: Publication 901 U. Free taxes h&r block S. Free taxes h&r block Tax Treaties Form (and Instructions) 1040NR U. Free taxes h&r block S. Free taxes h&r block Nonresident Alien Income Tax Return 1040NR-EZ U. Free taxes h&r block S. Free taxes h&r block Income Tax Return for Certain Nonresident Aliens With No Dependents 8833 Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b) See chapter 12 for information about getting these publications and forms. Free taxes h&r block Treaty Income A nonresident alien's treaty income is the gross income on which the tax is limited by a tax treaty. Free taxes h&r block Treaty income includes, for example, dividends from sources in the United States that are subject to tax at a tax treaty rate not to exceed 15%. Free taxes h&r block Nontreaty income is the gross income of a nonresident alien on which the tax is not limited by a tax treaty. Free taxes h&r block Figure the tax on treaty income on each separate item of income at the reduced rate that applies to that item under the treaty. Free taxes h&r block To determine tax on nontreaty income, figure the tax at either the flat 30% rate or the graduated rate, depending upon whether or not the income is effectively connected with your trade or business in the United States. Free taxes h&r block Your tax liability is the sum of the tax on treaty income plus the tax on nontreaty income, but cannot be more than the tax liability figured as if the tax treaty had not come into effect. Free taxes h&r block Example. Free taxes h&r block Arthur Banks is a nonresident alien who is single and a resident of a foreign country that has a tax treaty with the United States. Free taxes h&r block He received gross income of $25,850 during the tax year from sources within the United States, consisting of the following items: Dividends on which the tax is limited to a 15% rate by the tax treaty $1,400 Compensation for personal services on which the tax is not limited by the tax treaty 24,450 Total gross income $25,850 Arthur was engaged in business in the United States during the tax year. Free taxes h&r block His dividends are not effectively connected with that business. Free taxes h&r block He has no deductions other than his own personal exemption. Free taxes h&r block His tax liability, figured as though the tax treaty had not come into effect, is $3,060 determined as follows: Total compensation $24,450 Less: Personal exemption 3,900 Taxable income $20,550 Tax determined by graduated rate (Tax Table column for single taxpayers) $2,640 Plus: Tax on gross dividends ($1,400 × 30%) 420 Tax determined as though treaty had not come into effect $3,060 Arthur's tax liability, figured by taking into account the reduced rate on dividend income as provided by the tax treaty, is $2,850 determined as follows: Tax determined by graduated rate (same as figured above) $2,640 Plus: Tax on gross dividends ($1,400 × 15%) 210 Tax on compensation and dividends $2,850 His tax liability, therefore, is limited to $2,850, the tax liability figured using the tax treaty rate on the dividends. Free taxes h&r block Some Typical Tax Treaty Benefits The following paragraphs briefly explain the exemptions that are available under tax treaties for personal services income, remittances, scholarships, fellowships, and capital gain income. Free taxes h&r block The conditions for claiming the exemptions vary under each tax treaty. Free taxes h&r block For more information about the conditions under a particular tax treaty, see Publication 901. Free taxes h&r block Or, you may download the complete text of most U. Free taxes h&r block S. Free taxes h&r block tax treaties at IRS. Free taxes h&r block gov. Free taxes h&r block Technical explanations for many of those treaties are also available at that site. Free taxes h&r block Tax treaty benefits also cover income such as dividends, interest, rentals, royalties, pensions, and annuities. Free taxes h&r block These types of income may be exempt from U. Free taxes h&r block S. Free taxes h&r block tax or may be subject to a reduced rate of tax. Free taxes h&r block For more information, see Publication 901 or the applicable tax treaty. Free taxes h&r block Personal Services Nonresident aliens from treaty countries who are in the United States for a short stay and also meet certain other requirements may be exempt from tax on their compensation received for personal services performed in the United States. Free taxes h&r block Many tax treaties require that the nonresident alien claiming this exemption be present in the United States for a total of not more than 183 days during the tax year. Free taxes h&r block Other tax treaties specify different periods of maximum presence in the United States, such as 180 days or 90 days. Free taxes h&r block Spending part of a day in the United States counts as a day of presence. Free taxes h&r block Tax treaties may also require that: The compensation cannot be more than a specific amount (frequently $3,000), and The individual have a foreign employer; that is, an individual, corporation, or entity of a foreign country. Free taxes h&r block Note. Free taxes h&r block Under most treaties, income received as an employee (generally designated as dependent personal services) and income received as a self-employed person (generally designated as independent personal services or business income) are treated differently. Free taxes h&r block Teachers, Professors, and Researchers Under many income tax treaties, nonresident alien teachers or professors who temporarily visit the United States for the primary purpose of teaching at a university or other accredited educational institution are not subject to U. Free taxes h&r block S. Free taxes h&r block income tax on compensation received for teaching for the first 2 or 3 years after their arrival in the United States. Free taxes h&r block Many treaties also provide an exemption for engaging in research. Free taxes h&r block Generally, the teacher or professor must be in the United States primarily to teach, lecture, instruct, or engage in research. Free taxes h&r block A substantial part of that person's time must be devoted to those duties. Free taxes h&r block The normal duties of a teacher or professor include not only formal classroom work involving regularly scheduled lectures, demonstrations, or other student-participation activities, but also the less formal method of presenting ideas in seminars or other informal groups and in joint efforts in the laboratory. Free taxes h&r block If you entered the United States as a nonresident alien, but are now a resident alien, the treaty exemption may still apply. Free taxes h&r block See Students, Apprentices, Trainees, Teachers, Professors, and Researchers Who Became Resident Aliens later under Resident Aliens. Free taxes h&r block Employees of Foreign Governments All treaties have provisions for the exemption of income earned by certain employees of foreign governments. Free taxes h&r block However, a difference exists among treaties as to who qualifies for this benefit. Free taxes h&r block Under many treaties, aliens admitted to the United States for permanent residence do not qualify. Free taxes h&r block Under most treaties, aliens who are not nationals or subjects of the foreign country do not qualify. Free taxes h&r block Employees of foreign governments should read the pertinent treaty carefully to determine whether they qualify for benefits. Free taxes h&r block Chapter 10 of this publication also has information for employees of foreign governments. Free taxes h&r block Students, Apprentices, and Trainees Under some income tax treaties, students, apprentices, and trainees are exempt from tax on remittances received from abroad for study and maintenance. Free taxes h&r block Also, under some treaties, scholarship and fellowship grants, and a limited amount of compensation received by students, apprentices, and trainees may be exempt from tax. Free taxes h&r block If you entered the United States as a nonresident alien, but are now a resident alien, the treaty exemption may still apply. Free taxes h&r block See Students, Apprentices, Trainees, Teachers, Professors, and Researchers Who Became Resident Aliens , later, under Resident Aliens. Free taxes h&r block Capital Gains Most treaties provide for the exemption of gains from the sale or exchange of personal property. Free taxes h&r block Generally, gains from the sale or exchange of real property located in the United States are taxable. Free taxes h&r block Resident Aliens Resident aliens may qualify for tax treaty benefits in the situations discussed below. Free taxes h&r block U. Free taxes h&r block S. Free taxes h&r block Residency Under Tax Treaty “Tie-Breaker” Rule In certain circumstances, individuals who are treated as residents of the United States under an income tax treaty (after application of the so-called “tie-breaker” rule) will be entitled to treaty benefits. Free taxes h&r block (The “tie-breaker” rule is explained in chapter 1 under Effect of Tax Treaties. Free taxes h&r block ) If this applies to you, you generally will not need to file a Form 8833 for the income for which treaty benefits are claimed. Free taxes h&r block This is because the income will typically be of a category for which disclosure on a Form 8833 is waived. Free taxes h&r block See Reporting Treaty Benefits Claimed . Free taxes h&r block In most cases, you also will not need to report the income on your Form 1040 because the income will be exempt from U. Free taxes h&r block S. Free taxes h&r block tax under the treaty. Free taxes h&r block However, if the income has been reported as taxable income on a Form W-2, Form 1042-S, Form 1099, or other information return, you should report it on the appropriate line of Form 1040 (for example, line 7 in the case of wages or salaries). Free taxes h&r block Enter the amount for which treaty benefits are claimed in parentheses on Form 1040, line 21. Free taxes h&r block Next to the amount write “Exempt income,” the name of the treaty country, and the treaty article that provides the exemption. Free taxes h&r block On Form 1040, subtract this amount from your income to arrive at total income on Form 1040, line 22. Free taxes h&r block Also follow the above procedure for income that is subject to a reduced rate of tax, instead of an exemption, under the treaty. Free taxes h&r block Attach a statement to Form 1040 showing a computation of the tax at the reduced rate, the name of the treaty country, and the treaty article that provides for the reduced tax rate. Free taxes h&r block Include this tax on Form 1040, line 61. Free taxes h&r block On the dotted line next to line 61, write “Tax from attached statement” and the amount of the tax. Free taxes h&r block Example. Free taxes h&r block Jacques Dubois, who is a resident of the United States under Article 4 of the U. Free taxes h&r block S. Free taxes h&r block -France income tax treaty, receives French social security benefits. Free taxes h&r block Under Article 18(1) of the treaty, French social security benefits are not taxable by the United States. Free taxes h&r block Mr. Free taxes h&r block Dubois is not required to file a Form 8833 for his French social security benefits or report the benefits on Form 1040. Free taxes h&r block Special Rule for Canadian and German Social Security Benefits Under income tax treaties with Canada and Germany, if a U. Free taxes h&r block S. Free taxes h&r block resident receives social security benefits from Canada or Germany, those benefits are treated for U. Free taxes h&r block S. Free taxes h&r block income tax purposes as if they were received under the social security legislation of the United States. Free taxes h&r block If you receive social security benefits from Canada or Germany, include them on line 1 of your Social Security Benefits Worksheet for purposes of determining the taxable amount to be reported on Form 1040, line 20b or Form 1040A, line 14b. Free taxes h&r block You are not required to file a Form 8833 for those benefits. Free taxes h&r block Students, Apprentices, Trainees, Teachers, Professors, and Researchers Who Became Resident Aliens Generally, you must be a nonresident alien student, apprentice, trainee, teacher, professor, or researcher in order to claim a tax treaty exemption for remittances from abroad for study and maintenance in the United States, for scholarship, fellowship, and research grants, and for wages or other personal service compensation. Free taxes h&r block Once you become a resident alien, you generally can no longer claim a tax treaty exemption for this income. Free taxes h&r block However, if you entered the United States as a nonresident alien, but you are now a resident alien for U. Free taxes h&r block S. Free taxes h&r block tax purposes, the treaty exemption will continue to apply if the tax treaty's saving clause (explained later) provides an exception for it and you otherwise meet the requirements for the treaty exemption (including any time limit, explained later). Free taxes h&r block This is true even if you are a nonresident alien electing to file a joint return as explained in chapter 1. Free taxes h&r block Some exceptions to the saving clause apply to all resident aliens (for example, under the U. Free taxes h&r block S. Free taxes h&r block -People's Republic of China treaty); others apply only to resident aliens who are not lawful permanent residents of the United States (green card holders). Free taxes h&r block If you qualify under an exception to the treaty's saving clause, you can avoid income tax withholding by giving the payor a Form W-9 with the statement required by the Form W-9 instructions. Free taxes h&r block Saving clause. Free taxes h&r block   Most tax treaties have a saving clause. Free taxes h&r block A saving clause preserves or “saves” the right of each country to tax its own residents as if no tax treaty were in effect. Free taxes h&r block Thus, once you become a resident alien of the United States, you generally lose any tax treaty benefits that relate to your income. Free taxes h&r block However, many tax treaties have exceptions to the saving clause, which may allow you to continue to claim certain treaty benefits when you become a resident alien. Free taxes h&r block Read the treaty to find out if it has a saving clause and an exception to it. Free taxes h&r block Time limit for claiming treaty exemptions. Free taxes h&r block   Many treaties limit the number of years you can claim a treaty exemption. Free taxes h&r block For students, apprentices, and trainees, the limit is usually 4–5 years; for teachers, professors, and researchers, the limit is usually 2–3 years. Free taxes h&r block Once you reach this limit, you can no longer claim the treaty exemption. Free taxes h&r block See the treaty or Publication 901 for the time limits that apply. Free taxes h&r block How to report income on your tax return. Free taxes h&r block   In most cases, you also will not need to report the income on your Form 1040 because the income will be exempt from U. Free taxes h&r block S. Free taxes h&r block tax under the treaty. Free taxes h&r block However, if the income has been reported as taxable income on a Form W-2, Form 1042-S, Form 1099, or other information return, you should report it on the appropriate line of Form 1040 (for example, line 7 in the case of wages, salaries, scholarships, or fellowships). Free taxes h&r block Enter the amount for which treaty benefits are claimed in parentheses on Form 1040, line 21. Free taxes h&r block Next to the amount write “Exempt income,” the name of the treaty country, and the treaty article that provides the exemption. Free taxes h&r block On Form 1040, subtract this amount from your income to arrive at total income on Form 1040, line 22. Free taxes h&r block Example. Free taxes h&r block Mr. Free taxes h&r block Yu, a citizen of the People's Republic of China, entered the United States as a nonresident alien student on January 1, 2009. Free taxes h&r block He remained a nonresident alien through 2013 and was able to exclude his scholarship from U. Free taxes h&r block S. Free taxes h&r block tax in those years under Article 20 of the U. Free taxes h&r block S. Free taxes h&r block -People's Republic of China income tax treaty. Free taxes h&r block On January 1, 2014, he became a resident alien under the substantial presence test because his stay in the United States exceeded 5 years. Free taxes h&r block Even though Mr. Free taxes h&r block Yu is now a resident alien, the provisions of Article 20 still apply because of the exception to the saving clause in paragraph 2 of the Protocol to the U. Free taxes h&r block S. Free taxes h&r block -People's Republic of China treaty dated April 30, 1984. Free taxes h&r block Mr. Free taxes h&r block Yu should submit Form W-9 and the required statement to the payor. Free taxes h&r block Reporting Treaty Benefits Claimed If you claim treaty benefits that override or modify any provision of the Internal Revenue Code, and by claiming these benefits your tax is, or might be, reduced, you must attach a fully completed Form 8833 to your tax return. Free taxes h&r block See below, for the situations where you are not required to file Form 8833. Free taxes h&r block You must file a U. Free taxes h&r block S. Free taxes h&r block tax return and Form 8833 if you claim the following treaty benefits. Free taxes h&r block You claim a reduction or modification in the taxation of gain or loss from the disposition of a U. Free taxes h&r block S. Free taxes h&r block real property interest based on a treaty. Free taxes h&r block You claim a credit for a specific foreign tax for which foreign tax credit would not be allowed by the Internal Revenue Code. Free taxes h&r block You receive payments or income items totaling more than $100,000 and you determine your country of residence under a treaty and not under the rules for residency discussed in chapter 1. Free taxes h&r block These are the more common situations for which Form 8833 is required. Free taxes h&r block Exceptions. Free taxes h&r block   You do not have to file Form 8833 for any of the following situations. Free taxes h&r block You claim a reduced rate of withholding tax under a treaty on interest, dividends, rent, royalties, or other fixed or determinable annual or periodic income ordinarily subject to the 30% rate. Free taxes h&r block You claim a treaty reduces or modifies the taxation of income from dependent personal services, pensions, annuities, social security and other public pensions, or income of artists, athletes, students, trainees, or teachers. Free taxes h&r block This includes taxable scholarship and fellowship grants. Free taxes h&r block You claim a reduction or modification of taxation of income under an International Social Security Agreement or a Diplomatic or Consular Agreement. Free taxes h&r block You are a partner in a partnership or a beneficiary of an estate or trust and the partnership, estate, or trust reports the required information on its return. Free taxes h&r block The payments or items of income that are otherwise required to be disclosed total no more than $10,000. Free taxes h&r block You are claiming treaty benefits for amounts that are: Reported to you on Form 1042-S and Received by you: As a related party from a reporting corporation within the meaning of Internal Revenue Code section 6038A (relating to information returns on Form 5472 filed by U. Free taxes h&r block S. Free taxes h&r block corporations that are 25-percent owned by a foreign person), or As a beneficial owner that is a direct account holder of a U. Free taxes h&r block S. Free taxes h&r block financial institution or qualified intermediary, or a direct partner, beneficiary, or owner of a withholding foreign partnership or trust, from that U. Free taxes h&r block S. Free taxes h&r block financial institution, qualified intermediary, or withholding foreign partnership or trust. Free taxes h&r block The exception described in (6) above does not apply to any amounts for which a treaty-based return disclosure is specifically required by the Form 8833 instructions. Free taxes h&r block Penalty for failure to provide required information on Form 8833. Free taxes h&r block   If you are required to report the treaty benefits but do not, you may be subject to a penalty of $1,000 for each failure. Free taxes h&r block Additional information. Free taxes h&r block   For additional information, see section 301. Free taxes h&r block 6114-1(c) of the Income Tax Regulations. Free taxes h&r block Table 9-1. Free taxes h&r block Table of Tax Treaties (Updated through December 31, 2013) Country Official Text  Symbol1 General  Effective Date Citation Applicable Treasury Explanations  or Treasury Decision (T. Free taxes h&r block D. Free taxes h&r block ) Australia TIAS 10773 Dec. Free taxes h&r block 1, 1983 1986-2 C. Free taxes h&r block B. Free taxes h&r block 220 1986-2 C. Free taxes h&r block B. Free taxes h&r block 246 Protocol TIAS Jan. Free taxes h&r block 1, 2004     Austria TIAS Jan. Free taxes h&r block 1, 1999     Bangladesh TIAS Jan. Free taxes h&r block 1, 2007     Barbados TIAS 11090 Jan. Free taxes h&r block 1, 1984 1991-2 C. Free taxes h&r block B. Free taxes h&r block 436 1991-2 C. Free taxes h&r block B. Free taxes h&r block 466 Protocol TIAS Jan. Free taxes h&r block 1, 1994     Protocol TIAS Jan. Free taxes h&r block 1, 2005     Belgium TIAS Jan. Free taxes h&r block 1, 2008     Bulgaria TIAS Jan. Free taxes h&r block 1, 2009     Canada2 TIAS 11087 Jan. Free taxes h&r block 1, 1985 1986-2 C. Free taxes h&r block B. Free taxes h&r block 258 1987-2 C. Free taxes h&r block B. Free taxes h&r block 298 Protocol TIAS Jan. Free taxes h&r block 1, 1996     Protocol TIAS Dec. Free taxes h&r block 16, 1997     Protocol TIAS Jan. Free taxes h&r block 1, 2009     China, People's Republic of TIAS 12065 Jan. Free taxes h&r block 1, 1987 1988-1 C. Free taxes h&r block B. Free taxes h&r block 414 1988-1 C. Free taxes h&r block B. Free taxes h&r block 447 Commonwealth of Independent States3 TIAS 8225 Jan. Free taxes h&r block 1, 1976 1976-2 C. Free taxes h&r block B. Free taxes h&r block 463 1976-2 C. Free taxes h&r block B. Free taxes h&r block 475 Cyprus TIAS 10965 Jan. Free taxes h&r block 1, 1986 1989-2 C. Free taxes h&r block B. Free taxes h&r block 280 1989-2 C. Free taxes h&r block B. Free taxes h&r block 314 Czech Republic TIAS Jan. Free taxes h&r block 1, 1993     Denmark TIAS Jan. Free taxes h&r block 1, 2001     Protocol TIAS Jan. Free taxes h&r block 1, 2008     Egypt TIAS 10149 Jan. Free taxes h&r block 1, 1982 1982-1 C. Free taxes h&r block B. Free taxes h&r block 219 1982-1 C. Free taxes h&r block B. Free taxes h&r block 243 Estonia TIAS Jan. Free taxes h&r block 1, 2000     Finland TIAS 12101 Jan. Free taxes h&r block 1, 1991     Protocol TIAS Jan. Free taxes h&r block 1, 2008     France TIAS Jan. Free taxes h&r block 1, 1996     Protocol TIAS Jan. Free taxes h&r block 1, 2007     Protocol TIAS Jan. Free taxes h&r block 1, 2010     Germany TIAS Jan. Free taxes h&r block 1, 1990     Protocol TIAS Jan. Free taxes h&r block 1, 2008     Greece TIAS 2902 Jan. Free taxes h&r block 1, 1953 1958-2 C. Free taxes h&r block B. Free taxes h&r block 1054 T. Free taxes h&r block D. Free taxes h&r block 6109, 1954-2 C. Free taxes h&r block B. Free taxes h&r block 638 Hungary TIAS 9560 Jan. Free taxes h&r block 1, 1980 1980-1 C. Free taxes h&r block B. Free taxes h&r block 333 1980-1 C. Free taxes h&r block B. Free taxes h&r block 354 Iceland TIAS Jan. Free taxes h&r block 1, 2009     India TIAS Jan. Free taxes h&r block 1, 1991     Indonesia TIAS 11593 Jan. Free taxes h&r block 1, 1990     Ireland TIAS Jan. Free taxes h&r block 1, 1998     Israel TIAS Jan. Free taxes h&r block 1, 1995     Italy TIAS Jan. Free taxes h&r block 1, 2010     Jamaica TIAS 10207 Jan. Free taxes h&r block 1, 1982 1982-1 C. Free taxes h&r block B. Free taxes h&r block 257 1982-1 C. Free taxes h&r block B. Free taxes h&r block 291 Japan TIAS Jan. Free taxes h&r block 1, 2005     Kazakhstan TIAS Jan. Free taxes h&r block 1, 1996     Korea, South TIAS 9506 Jan. Free taxes h&r block 1, 1980 1979-2 C. Free taxes h&r block B. Free taxes h&r block 435 1979-2 C. Free taxes h&r block B. Free taxes h&r block 458 Latvia TIAS Jan. Free taxes h&r block 1, 2000     Lithuania TIAS Jan. Free taxes h&r block 1, 2000     Luxembourg TIAS Jan. Free taxes h&r block 1, 2001     Malta TIAS Jan. Free taxes h&r block 1, 2011     Mexico TIAS Jan. Free taxes h&r block 1, 1994 1994-2 C. Free taxes h&r block B. Free taxes h&r block 424 1994-2 C. Free taxes h&r block B. Free taxes h&r block 489 Protocol TIAS Oct. Free taxes h&r block 26, 1995     Protocol TIAS Jan. Free taxes h&r block 1, 2004     Morocco TIAS 10195 Jan. Free taxes h&r block 1, 1981 1982-2 C. Free taxes h&r block B. Free taxes h&r block 405 1982-2 C. Free taxes h&r block B. Free taxes h&r block 427 Netherlands TIAS Jan. Free taxes h&r block 1, 1994     Protocol TIAS Jan. Free taxes h&r block 1, 2005     New Zealand TIAS 10772 Nov. Free taxes h&r block 2, 1983 1990-2 C. Free taxes h&r block B. Free taxes h&r block 274 1990-2 C. Free taxes h&r block B. Free taxes h&r block 303 Protocol TIAS Jan. Free taxes h&r block 1, 2011     Norway TIAS 7474 Jan. Free taxes h&r block 1, 1971 1973-1 C. Free taxes h&r block B. Free taxes h&r block 669 1973-1 C. Free taxes h&r block B. Free taxes h&r block 693 Protocol TIAS 10205 Jan. Free taxes h&r block 1, 1982 1982-2 C. Free taxes h&r block B. Free taxes h&r block 440 1982-2 C. Free taxes h&r block B. Free taxes h&r block 454 Pakistan TIAS 4232 Jan. Free taxes h&r block 1, 1959 1960-2 C. Free taxes h&r block B. Free taxes h&r block 646 T. Free taxes h&r block D. Free taxes h&r block 6431, 1960-1 C. Free taxes h&r block B. Free taxes h&r block 755 Philippines TIAS 10417 Jan. Free taxes h&r block 1, 1983 1984-2 C. Free taxes h&r block B. Free taxes h&r block 384 1984-2 C. Free taxes h&r block B. Free taxes h&r block 412 Poland TIAS 8486 Jan. Free taxes h&r block 1, 1974 1977-1 C. Free taxes h&r block B. Free taxes h&r block 416 1977-1 C. Free taxes h&r block B. Free taxes h&r block 427 Portugal TIAS Jan. Free taxes h&r block 1, 1996     Romania TIAS 8228 Jan. Free taxes h&r block 1, 1974 1976-2 C. Free taxes h&r block B. Free taxes h&r block 492 1976-2 C. Free taxes h&r block B. Free taxes h&r block 504 Russia TIAS Jan. Free taxes h&r block 1, 1994     Slovak Republic TIAS Jan. Free taxes h&r block 1, 1993     Slovenia TIAS Jan. Free taxes h&r block 1, 2002     South Africa TIAS Jan. Free taxes h&r block 1, 1998     Spain TIAS Jan. Free taxes h&r block 1, 1991     Sri Lanka TIAS Jan. Free taxes h&r block 1, 2004     Sweden TIAS Jan. Free taxes h&r block 1, 1996     Protocol TIAS Jan. Free taxes h&r block 1, 2007     Switzerland TIAS Jan. Free taxes h&r block 1, 1998     Thailand TIAS Jan. Free taxes h&r block 1, 1998     Trinidad and Tobago TIAS 7047 Jan. Free taxes h&r block 1, 1970 1971-2 C. Free taxes h&r block B. Free taxes h&r block 479   Tunisia TIAS Jan. Free taxes h&r block 1, 1990     Turkey TIAS Jan. Free taxes h&r block 1, 1998     Ukraine TIAS Jan. Free taxes h&r block 1, 2001     United Kingdom TIAS Jan. Free taxes h&r block 1, 2004     Venezuela TIAS Jan. Free taxes h&r block 1, 2000     1(TIAS) Treaties and Other International Act Series 2Information on the treaty can be found in Publication 597, Information on the United States-Canada Income Tax Treaty. Free taxes h&r block 3The U. Free taxes h&r block S. Free taxes h&r block -U. Free taxes h&r block S. Free taxes h&r block S. Free taxes h&r block R. Free taxes h&r block income tax treaty applies to the countries of Armenia, Azerbaijan, Belarus, Georgia, Kyrgyzstan, Moldova, Tajikistan, Turkmenistan, and Uzbekistan. Free taxes h&r block Prev  Up  Next   Home   More Online Publications