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Hrblockfree Index A Accrual foreign taxes, adjustments, You may have to post a bond. Hrblockfree Accrual method of accounting, Accrual method of accounting. Hrblockfree Allocation Carryback/carryover between spouses, Allocations Between Spouses Foreign losses, Foreign Losses Foreign taxes, Allocation of Foreign Taxes U. Hrblockfree S. Hrblockfree losses, U. Hrblockfree S. Hrblockfree Losses Alternative minimum tax, Reminders Amended return, Claim for Refund American Samoa, resident of, Possession Exclusion Assistance (see Tax help) B Bankruptcy, effect of, Effect of bankruptcy or insolvency. Hrblockfree Beneficiary, Partner or S corporation shareholder. Hrblockfree Bond, income tax, You may have to post a bond. Hrblockfree Boycotting countries, Taxes From International Boycott Operations C Capital gains and losses, Capital Gains and Losses Carryback and carryover, Carrybacks and carryovers. Hrblockfree Allocations between spouses, Allocations Between Spouses Claim for refund, Time Limit on Tax Assessment Joint return, Married Couples Joint return–deduction year, Joint Return Filed in a Deduction Year Taxes all credited or deducted, Claim for Refund Time limit on tax assessment, Time Limit on Tax Assessment Choice to take credit or deduction Changing your choice, Making or Changing Your Choice Choice applied to all qualified foreign taxes, Choice Applies to All Qualified Foreign Taxes Claim for refund, Claim for Refund Classes of gross income, Classes of gross income. Hrblockfree Compensation for labor or personal services, Determining the Source of Compensation for Labor or Personal Services Geographical basis, Geographical basis. Hrblockfree Comprehensive example, Comprehensive Example — Filled-In Form 1116 Controlled foreign corporation shareholder, Controlled foreign corporation shareholder. Hrblockfree , Income from controlled foreign corporations. Hrblockfree Covered asset acquisition, Covered Asset Acquisition Credit How to claim, How To Claim the Credit How to figure, How To Figure the Credit Limit on, Limit on the Credit Credit for taxes paid or accrued, Credit for Taxes Paid or Accrued D Deduction for foreign taxes that are not income taxes, Foreign taxes that are not income taxes. Hrblockfree Distributions Lump-sum, Lump-Sum Distribution Dividends Taxes on, Taxes Imposed on Certain Dividends Dual-capacity taxpayers, Dual-capacity taxpayers. Hrblockfree E Economic benefits, Specific economic benefit. Hrblockfree Examples Comprehensive, Comprehensive Example — Filled-In Form 1116 Simple, Simple Example — Filled-In Form 1116 Excess limit, Carryback and Carryover Exchange rates, Foreign Currency and Exchange Rates Excluded income Foreign earned, Foreign Earned Income and Housing Exclusions Taxes on, Taxes on Excluded Income Exemption from foreign tax credit limit, Exemption from foreign tax credit limit. Hrblockfree Export financing interest, Export financing interest. Hrblockfree Extraterritorial income, Extraterritorial Income Exclusion F Financial services income, Financial services income. Hrblockfree Foreign corporation–U. Hrblockfree S. Hrblockfree shareholders, filing requirements, Taxes of U. Hrblockfree S. Hrblockfree Persons Controlling Foreign Corporations and Partnerships Foreign country, Foreign country. Hrblockfree Foreign currency and exchange rates, Foreign Currency and Exchange Rates Foreign income, translating, Translating foreign currency into U. Hrblockfree S. Hrblockfree dollars. Hrblockfree Foreign losses Allocation of, Foreign Losses Recapture of, Recapture of Prior Year Overall Foreign Loss Accounts Foreign mineral income, taxes on, Taxes on Foreign Mineral Income Foreign oil and gas extraction income, taxes on, Taxes on Combined Foreign Oil and Gas Income Foreign partnerships–U. Hrblockfree S. Hrblockfree partners, filing requirement, Taxes of U. Hrblockfree S. Hrblockfree Persons Controlling Foreign Corporations and Partnerships Foreign tax refund, Foreign tax refund. Hrblockfree , Foreign tax refund. Hrblockfree Foreign tax(es) Allocation to income categories, Allocation of Foreign Taxes For which you cannot take a credit, Foreign Taxes for Which You Cannot Take a Credit Imposed on foreign refund, Foreign tax imposed on foreign refund. Hrblockfree Qualifying for credit, What Foreign Taxes Qualify for the Credit? Redetermination, Foreign Tax Redetermination Refund, Foreign tax imposed on foreign refund. Hrblockfree Form 1040X, Claim for Refund 1116, Form 1116, Simple Example — Filled-In Form 1116, Comprehensive Example — Filled-In Form 1116 5471, Taxes of U. Hrblockfree S. Hrblockfree Persons Controlling Foreign Corporations and Partnerships 5713, Form 5713 required. Hrblockfree 8833, Report required. Hrblockfree 8865, Taxes of U. Hrblockfree S. Hrblockfree Persons Controlling Foreign Corporations and Partnerships 8873, Extraterritorial Income Exclusion Free tax services, Free help with your tax return. Hrblockfree Functional currency, Translating foreign currency into U. Hrblockfree S. Hrblockfree dollars. Hrblockfree G General category income, separate limit, General Category Income H Help (see Tax help) High-taxed income, High-taxed income. Hrblockfree I Income from sources in U. Hrblockfree S. Hrblockfree possessions, Determining the source of income from U. Hrblockfree S. Hrblockfree possessions. Hrblockfree Income re-sourced by treaty, separate limit, Certain Income Re-Sourced By Treaty Income tax, Income Tax Income tax bond, You may have to post a bond. Hrblockfree Interest, Penalties and interest. Hrblockfree Interest expense, apportioning, Interest expense. Hrblockfree International boycott, Taxes From International Boycott Operations Itemized deduction, Taxes for Which You Can Only Take an Itemized Deduction J Joint return Carryback and carryover, Married Couples Credit based on foreign tax of both spouses, Joint return. Hrblockfree Filed in a deduction year, Joint Return Filed in a Deduction Year L Levy, Income Tax Limit on credit, Limit on the Credit Losses, foreign, Foreign Losses Allocation of, Foreign Losses Recapture of, Recapture of Prior Year Overall Foreign Loss Accounts Losses, U. Hrblockfree S. Hrblockfree , U. Hrblockfree S. Hrblockfree Losses Allocation of, U. Hrblockfree S. Hrblockfree Losses Lump-sum distributions, Lump-Sum Distribution M Making or changing your choice, Making or Changing Your Choice Married couples Carryback and carryover, Married Couples Joint return, Joint return. Hrblockfree Mineral income, foreign,, Taxes on Foreign Mineral Income Mutual fund distributions, Mutual fund shareholder. Hrblockfree , Passive income. Hrblockfree Mutual fund shareholder, Mutual fund shareholder. Hrblockfree N Nonresident aliens, Nonresident Aliens Notice to the IRS of change in tax, Notice to the Internal Revenue Service (IRS) of Redetermination O Overall foreign loss, Overall foreign loss. Hrblockfree P Partner, Partner or S corporation shareholder. Hrblockfree , Partnership distributive share. Hrblockfree , Foreign Taxes From a Partnership or an S Corporation Passive category income, Passive Category Income Penalties, Failure-to-notify penalty. Hrblockfree , Penalties and interest. Hrblockfree Failure to file Form 5471, 8865, Penalty for not filing Form 5471 or Form 8865. Hrblockfree Failure to file Form 5713, Penalty for failure to file. Hrblockfree Failure to notify, foreign tax change, Failure-to-notify penalty. Hrblockfree Failure to report treaty information, Report required. Hrblockfree Pension, employment, and disability fund payments, Pension, unemployment, and disability fund payments. Hrblockfree Personal property, sales or exchanges of, Determining the Source of Income From the Sales or Exchanges of Certain Personal Property Possession exclusion, Possession Exclusion Publications (see Tax help) Purchase or sale of oil or gas, taxes in connection with, Taxes in Connection With the Purchase or Sale of Oil or Gas Q Qualified business unit, Translating foreign currency into U. Hrblockfree S. Hrblockfree dollars. Hrblockfree Qualified dividends, Capital Gains and Losses R Rate of exchange, Rate of exchange for foreign taxes paid. Hrblockfree Recapture of foreign losses, Recapture of Prior Year Overall Foreign Loss Accounts Records to keep, Records To Keep Redetermination of foreign tax, Foreign Tax Redetermination Refund claims, time limit, Time Limit on Refund Claims Refund, foreign tax, Foreign tax refund. Hrblockfree Reporting requirements (international boycott), Reporting requirements. Hrblockfree Resident aliens, Resident Aliens S S corporation shareholder, Partner or S corporation shareholder. Hrblockfree , Foreign Taxes From a Partnership or an S Corporation Sanctioned countries, Taxes Imposed By Sanctioned Countries (Section 901(j) Income) Section 901(j) income, Section 901(j) Income Section 901(j) sanctioned income, Taxes Imposed By Sanctioned Countries (Section 901(j) Income) Separate limit income, Separate Limit Income General category income, General Category Income Income re-sourced by treaty, Certain Income Re-Sourced By Treaty Lump-sum distribution, Lump-Sum Distribution Passive category income, Passive Category Income Section 901(j) income, Section 901(j) Income Shareholder, Mutual fund shareholder. Hrblockfree Simple example, Simple Example — Filled-In Form 1116 Soak-up taxes, Soak-up taxes. Hrblockfree Social security taxes, Pension, unemployment, and disability fund payments. Hrblockfree Source of compensation for labor or personal services Alternative basis, Alternative basis. Hrblockfree Multi-year compensation, Multi-year compensation. Hrblockfree Time basis, Time basis. Hrblockfree Transportation income, Transportation Income State income taxes, State income taxes. Hrblockfree Subsidy, Subsidy received. Hrblockfree T Tax help, How To Get Tax Help Tax treaties, Tax Treaties Taxable income from sources outside the U. Hrblockfree S. Hrblockfree , determination of, Determining Taxable Income From Sources Outside the United States Taxes Excluded income, Foreign Earned Income and Housing Exclusions In lieu of income taxes, Taxes in Lieu of Income Taxes On dividends, Taxes Imposed on Certain Dividends Paid or accrued, Credit for Taxes Paid or Accrued Withheld on income or gain, Taxes Withheld on Income or Gain (Other Than Dividends) Taxes related to a foreign tax credit splitting event, Taxes Related to a Foreign Tax Credit Splitting Event Time limit Refund claims, Time Limit on Refund Claims Tax assessment, Time Limit on Tax Assessment Translating foreign currency, Translating foreign currency into U. Hrblockfree S. Hrblockfree dollars. Hrblockfree U U. Hrblockfree S. Hrblockfree citizens, U. Hrblockfree S. Hrblockfree Citizens U. Hrblockfree S. Hrblockfree losses Allocation of, U. Hrblockfree S. Hrblockfree Losses U. Hrblockfree S. Hrblockfree possessions, U. Hrblockfree S. Hrblockfree possessions. Hrblockfree Unused foreign tax credits, carryback or carryover, Carrybacks and carryovers. Hrblockfree , Carryback and Carryover W Wages, Wages completely excluded. Hrblockfree When refunds can be claimed, Time Limit on Refund Claims When tax can be assessed, Time Limit on Tax Assessment Who can take the credit, Who Can Take the Credit? Why choose the credit, Why Choose the Credit? Prev Up Home More Online Publications
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Hrblockfree Publication 516 - Main Content Table of Contents U. Hrblockfree S. Hrblockfree Tax ReturnFiling Information Foreign Bank Accounts U. Hrblockfree S. Hrblockfree Government Payments Foreign Earned Income Exclusion Tax Treaty Benefits Allowances, Differentials, and Special Pay Other Income Deductions and Credits — Business Expenses Deductions and Credits — Nonbusiness Expenses Foreign Taxes Local (Foreign) Tax ReturnTax Treaty Benefits Other Agreements Double Withholding How To Get Tax HelpLow Income Taxpayer Clinics (LITCs). Hrblockfree U. Hrblockfree S. Hrblockfree Tax Return Filing Information If you are a U. Hrblockfree S. Hrblockfree citizen or green card holder living or traveling outside the United States, you are generally required to file income tax returns in the same way as those residing in the United States. Hrblockfree However, the special rules explained in the following discussions may apply to you. Hrblockfree See also Tax Treaty Benefits, later. Hrblockfree When To File and Pay Most individual tax returns cover a calendar year, January through December. Hrblockfree The regular due date for these tax returns is April 15 of the following year. Hrblockfree If April 15 falls on a Saturday, Sunday, or legal holiday, your tax return is considered timely filed if it is filed by the next business day that is not a Saturday, Sunday, or legal holiday. Hrblockfree If you get an extension, you are allowed additional time to file and, in some circumstances, pay your tax. Hrblockfree You must pay interest on any tax not paid by the regular due date. Hrblockfree Your return is considered filed on time if it is mailed from and officially postmarked in a foreign country on or before the due date (including extensions), or given to a designated international private delivery service before midnight of the last date prescribed for filing. Hrblockfree See your tax form instructions for a list of private delivery services that have been designated by the IRS to meet this “timely mailing as timely filing/paying” rule for tax returns and payments. Hrblockfree If your return is filed late, the postmark or delivery service date does not determine the date of filing. Hrblockfree In that case, your return is considered filed when it is received by the IRS. Hrblockfree Extensions You may be able to get an extension of time to file your return and pay your tax. Hrblockfree Automatic 2-month extension. Hrblockfree You can get an automatic 2-month extension (to June 15, for a calendar year return) to file your return and pay your tax if you are a U. Hrblockfree S. Hrblockfree citizen or resident and, on the regular due date of your return, you are living outside the United States and Puerto Rico and your main place of business or post of duty is outside the United States and Puerto Rico. Hrblockfree To get this extension, you must attach a statement to your return explaining how you qualified. Hrblockfree You will owe interest on any tax not paid by the regular due date of your return. Hrblockfree Married taxpayers. Hrblockfree If you file a joint return, either you or your spouse can qualify for the automatic extension. Hrblockfree If you and your spouse file separate returns, the extension applies only to the spouse who qualifies. Hrblockfree Additional extension. Hrblockfree You can apply for an additional extension of time to file your return by filing Form 4868. Hrblockfree You must file Form 4868 by the due date for your income tax return. Hrblockfree Generally, you must file it by April 15. Hrblockfree However, if you qualify for the automatic 2-month extension, you generally must file Form 4868 by June 15. Hrblockfree Check the box on line 8 of Form 4868. Hrblockfree Payment of tax. Hrblockfree You should estimate and pay any additional tax you owe when you file Form 4868 to avoid being charged a late-payment penalty. Hrblockfree The late-payment penalty applies if, through withholding, etc. Hrblockfree , you paid less than 90% of your actual tax liability by the original due date of your income tax return. Hrblockfree Even if the late-payment penalty does not apply, you will be charged interest on any unpaid tax liability from the original due date of the return until the tax is paid. Hrblockfree Electronic filing. Hrblockfree You can file for the additional extension by phone, using your home computer, or through a tax professional. Hrblockfree See Form 4868 for more information. Hrblockfree Limit on additional extensions. Hrblockfree You generally cannot get a total extension of more than 6 months. Hrblockfree However, if you are outside the United States and meet certain tests, you may be able to get a longer extension. Hrblockfree For more information, see Publication 54. Hrblockfree Foreign Bank Accounts You must file Form TD F 90-22. Hrblockfree 1 if at any time during the year you had an interest in, or signature or other authority over, a bank account, securities account, or other financial account in a foreign country. Hrblockfree This applies if the combined assets in the account(s) were more than $10,000. Hrblockfree Do not include accounts in a U. Hrblockfree S. Hrblockfree military banking facility operated by a U. Hrblockfree S. Hrblockfree financial institution. Hrblockfree File the completed form by June 30 of the following year with the Department of the Treasury at the address shown on that form. Hrblockfree Do not attach it to Form 1040. Hrblockfree If you are required to file Form TD F 90-22. Hrblockfree 1 but do not do so, you may have to pay a penalty of up to $10,000 (more if the failure to file is willful). Hrblockfree You also may be required to file Form 8938 with your U. Hrblockfree S. Hrblockfree income tax return to report your interest in foreign bank accounts and other specified foreign financial assets. Hrblockfree For taxpayers living abroad, you generally do not have to file Form 8938 unless the total value of your specified foreign financial assets is more than $200,000 ($400,000 if married filing jointly) on the last day of the tax year or more than $300,000 ($600,000 if married filing jointly) at any time during the tax year. Hrblockfree For more information, see Form 8938 and its instructions. Hrblockfree U. Hrblockfree S. Hrblockfree Government Payments Wages earned for performing services outside the United States is foreign income, regardless of your employer. Hrblockfree If you are a U. Hrblockfree S. Hrblockfree citizen or resident alien, you must report all income from worldwide sources on your tax return unless it is exempt by U. Hrblockfree S. Hrblockfree law. Hrblockfree This applies to earned income (such as wages) as well as unearned income (such as interest, dividends, and capital gains). Hrblockfree If you are a nonresident alien, your income from sources outside the United States is not subject to U. Hrblockfree S. Hrblockfree tax. Hrblockfree Foreign Earned Income Exclusion Employees of the U. Hrblockfree S. Hrblockfree Government are not entitled to the foreign earned income exclusion or the foreign housing exclusion/deduction under section 911 because “foreign earned income ”does not include amounts paid by the U. Hrblockfree S. Hrblockfree Government as an employee. Hrblockfree But see Other Employment, later. Hrblockfree Special Situations In the following two situations, your pay is from the U. Hrblockfree S. Hrblockfree Government and does not qualify for the foreign earned income exclusion. Hrblockfree U. Hrblockfree S. Hrblockfree agency reimbursed by foreign country. Hrblockfree If you are a U. Hrblockfree S. Hrblockfree Government employee paid by a U. Hrblockfree S. Hrblockfree agency to perform services in a foreign country, your pay is from the U. Hrblockfree S. Hrblockfree Government and does not qualify the foreign earned income exclusion or the foreign housing exclusion/deduction. Hrblockfree This is true even if the U. Hrblockfree S. Hrblockfree agency is reimbursed by the foreign government. Hrblockfree Employees of post exchanges, etc. Hrblockfree If you are an employee of an Armed Forces post exchange, officers' and enlisted personnel club, Embassy commissary, or similar instrumentality of the U. Hrblockfree S. Hrblockfree Government, the earnings you receive are paid by the U. Hrblockfree S. Hrblockfree Government. Hrblockfree This is true whether they are paid from appropriated or nonappropriated funds. Hrblockfree These earnings are not eligible for the foreign earned income exclusion or the foreign housing exclusion/deduction. Hrblockfree Tax Treaty Benefits Most income tax treaties contain an article relating to remuneration from government services. Hrblockfree Even if you are working in a foreign country with which the United States has an income tax treaty in force and the treaty article that applies to government services says that your government pay is taxable only in the foreign country, the treaty will likely contain a “saving clause”, which provides that the United States may tax its citizens and its residents as if the treaty had not come into effect. Hrblockfree In some treaties, the government service article is an exception to the saving clause, but often only for individuals who are not U. Hrblockfree S. Hrblockfree citizens or green card holders. Hrblockfree Consequently, if you are a U. Hrblockfree S. Hrblockfree citizen or green card holder, you will generally not be entitled to reduce your U. Hrblockfree S. Hrblockfree tax on your government pay. Hrblockfree If you are neither a U. Hrblockfree S. Hrblockfree citizen nor green card holder, and you are treated as a resident of the treaty country under the treaty residence article (after application of the so-called “tie-breaker” rule), then you may be entitled to benefits under the government service article. Hrblockfree Review the treaty text carefully. Hrblockfree U. Hrblockfree S. Hrblockfree citizens must always file Form 1040. Hrblockfree Non-U. Hrblockfree S. Hrblockfree citizens who are treated as a resident of a treaty country under the treaty residence article (after application of the so-called “tie-breaker” rule) may file Form 1040NR and attach Form 8833. Hrblockfree If you pay or accrue taxes to the foreign country on your pay, you may be able to relieve double taxation with a foreign tax credit. Hrblockfree Most income tax treaties contain an article providing relief from double taxation. Hrblockfree Many treaties contain special foreign tax credit rules for U. Hrblockfree S. Hrblockfree citizens who are residents of a treaty country. Hrblockfree For more information on the mechanics of the foreign tax credit, see Foreign Taxes, later. Hrblockfree Allowances, Differentials, and Special Pay Most payments received by U. Hrblockfree S. Hrblockfree Government civilian employees for working abroad, including pay differentials, are taxable. Hrblockfree However, certain foreign areas allowances, cost of living allowances, and travel allowances are tax free. Hrblockfree The following discussions explain the tax treatment of allowances, differentials, and other special pay you receive for employment abroad. Hrblockfree Pay differentials. Hrblockfree Pay differentials you receive as financial incentives for employment abroad are taxable. Hrblockfree Your employer should have included these differentials as wages on your Form W-2, Wage and Tax Statement. Hrblockfree Generally, pay differentials are given for employment under adverse conditions (such as severe climate) or because the post of duty is located in a hazardous or isolated area that may be outside the United States. Hrblockfree The area does not have to be a qualified hazardous duty area as discussed in Publication 3. Hrblockfree Pay differentials include: Post differentials, Special incentive differentials, and Danger pay. Hrblockfree Foreign areas allowances. Hrblockfree Certain foreign areas allowances are tax free. Hrblockfree Your employer should not have included these allowances as wages on your Form W-2. Hrblockfree Tax-free foreign areas allowances are allowances (other than post differentials) received under the following laws. Hrblockfree Title I, chapter 9, of the Foreign Service Act of 1980. Hrblockfree Section 4 of the Central Intelligence Agency Act of 1949, as amended. Hrblockfree Title II of the Overseas Differentials and Allowances Act. Hrblockfree Subsection (e) or (f) of the first section of the Administrative Expenses Act of 1946, as amended, or section 22 of that Act. Hrblockfree These allowances cover such expenses as: Certain repairs to a leased home, Education of dependents in special situations, Motor vehicle shipment, Separate maintenance for dependents, Temporary quarters, Transportation for medical treatment, and Travel, moving, and storage. Hrblockfree Allowances received by foreign service employees for representation expenses are also tax free under the above provisions. Hrblockfree Cost-of-living allowances. Hrblockfree If you are stationed outside the continental United States or in Alaska, your gross income does not include cost-of-living allowances (other than amounts received under Title II of the Overseas Differentials and Allowances Act) granted by regulations approved by the President of the United States. Hrblockfree The cost-of-living portion of any other allowance (for example, a living and quarters allowance) is not included even if the underlying allowance is included in gross income. Hrblockfree Cost-of-living allowances are not included on your Form W-2. Hrblockfree Federal court employees. Hrblockfree If you are a federal court employee, the preceding paragraph also applies to you. Hrblockfree The cost-of-living allowance must be granted by rules similar to regulations approved by the President. Hrblockfree American Institute in Taiwan. Hrblockfree If you are an employee of the American Institute in Taiwan, allowances you receive are exempt from U. Hrblockfree S. Hrblockfree tax if they are equivalent to tax-exempt allowances received by civilian employees of the U. Hrblockfree S. Hrblockfree Government. Hrblockfree Federal reemployment payments after serving with an international organization. Hrblockfree If you are a federal employee who is reemployed by a federal agency after serving with an international organization, you must include in income any reemployment payments you receive. Hrblockfree These payments are equal to the difference between the pay, allowances, post differential, and other monetary benefits paid by the international organization and the pay and other benefits that would have been paid by the federal agency had you been detailed to the international agency. Hrblockfree Allowances or reimbursements for travel and transportation expenses. Hrblockfree See How To Report Business Expenses, later, for a discussion on whether a reimbursement or allowance for travel or transportation is included in your income. Hrblockfree Lodging furnished to a principal representative of the United States. Hrblockfree If you are a principal representative of the United States stationed in a foreign country, you do not have to include in income the value of lodging (including utilities) provided to you as an official residence. Hrblockfree However, amounts paid by the U. Hrblockfree S. Hrblockfree government for your usual costs of operating and maintaining your household are taxable. Hrblockfree If amounts are withheld from your pay to cover these expenses, you cannot exclude or deduct those amounts from your income. Hrblockfree Peace Corps. Hrblockfree If you are a Peace Corps volunteer or volunteer leader, some allowances you receive are taxable and others are not. Hrblockfree Taxable allowances. Hrblockfree The following allowances must be included on your Form W-2 and reported on your return as wages. Hrblockfree If you are a volunteer leader, allowances paid to your spouse and minor children while you are training in the United States. Hrblockfree The part of living allowances designated by the Director of the Peace Corps as basic compensation. Hrblockfree This is the part for personal items such as domestic help, laundry and clothing maintenance, entertainment and recreation, transportation, and other miscellaneous expenses. Hrblockfree Leave allowances. Hrblockfree Readjustment allowances or “termination payments. Hrblockfree ” Taxable allowances are considered received by you when credited to your account. Hrblockfree Example. Hrblockfree Gary Carpenter, a Peace Corps volunteer, gets $175 a month during his period of service, to be paid to him in a lump sum at the end of his tour of duty. Hrblockfree Although the allowance is not available to him until the end of his service, Gary must include it in his income on a monthly basis as it is credited to his account. Hrblockfree Nontaxable allowances. Hrblockfree These generally include travel allowances and the part of living allowances for housing, utilities, food, clothing, and household supplies. Hrblockfree These allowances should not be included on your Form W-2. Hrblockfree These allowances are tax free whether paid by the U. Hrblockfree S. Hrblockfree Government or the foreign country in which you are stationed. Hrblockfree Other Income Other employment. Hrblockfree If, in addition to your U. Hrblockfree S. Hrblockfree government pay, you receive income from a private employer or self-employment, you may qualify to claim the foreign earned income exclusion and the foreign housing exclusion and deduction under section 911 based on this other income provided you meet either the bona fide residence test or the physical presence test. Hrblockfree In addition, if your spouse is a U. Hrblockfree S. Hrblockfree citizen or resident alien who earns income in a foreign country that is paid by a private employer or is from self-employment, he or she may also qualify for the exclusion or the deduction. Hrblockfree For more information, see Publication 54. Hrblockfree The tax treaty rules relating to income from personal services generally apply to income from private employment. Hrblockfree As discussed above, the saving clause applies to you if you are a U. Hrblockfree S. Hrblockfree citizen or if you are a resident of the United States under the treaty residence article (after application of the so-called “tie-breaker” rule). Hrblockfree Sale of personal property. Hrblockfree If you have a gain from the sale of your personal property (such as an automobile or a home appliance), whether directly or through a favorable exchange rate in converting the proceeds to U. Hrblockfree S. Hrblockfree dollars, the excess of the amount received in U. Hrblockfree S. Hrblockfree dollars over the cost or other basis of the property is a capital gain. Hrblockfree Capital gains are reported on Schedule D (Form 1040), Capital Gains and Losses. Hrblockfree However, losses from sales of your personal property, whether directly or through an unfavorable exchange rate, are not deductible. Hrblockfree Sale of your home. Hrblockfree All or part of the gain on the sale of your main home, within or outside the United States, may be taxable. Hrblockfree Losses are not deductible. Hrblockfree You may be able to exclude from income any gain up to $250,000 ($500,000 on a joint return). Hrblockfree Generally, you must have owned and used the home as your main residence for two of the five years preceding the date of sale. Hrblockfree You can choose to have the 5-year test period for ownership and use suspended during any period you or your spouse is serving on qualified official extended duty as a member of the Foreign Service of the United States, as an employee of the intelligence community, or as an employee or volunteer of the Peace Corps. Hrblockfree For detailed information on selling your home, see Publication 523. Hrblockfree Deductions and Credits — Business Expenses You may deduct certain expenses such as travel expenses, transportation expenses, and other expenses connected to your employment. Hrblockfree Travel Expenses Subject to certain limits, you can deduct your unreimbursed ordinary and necessary expenses of traveling away from home in connection with the performance of your official duties. Hrblockfree These expenses include such items as travel costs, meals, lodging, baggage charges, local transportation costs (such as taxi fares), tips, and dry cleaning and laundry fees. Hrblockfree Your home for tax purposes (tax home) is your regular post of duty regardless of where you maintain your family home. Hrblockfree Your tax home is not limited to the Embassy, consulate, or duty station. Hrblockfree It includes the entire city or general area in which your principal place of employment is located. Hrblockfree Traveling away from home. Hrblockfree You are traveling away from home if you meet both of the following requirements. Hrblockfree Your duties require you to be away from the general area of your tax home substantially longer than an ordinary day's work. Hrblockfree You need to get sleep or rest to meet the demands of your work while away from home. Hrblockfree This requirement is not satisfied by merely napping in your car. Hrblockfree You do not have to be away from your tax home for a whole day or from dusk to dawn as long as your relief from duty is long enough to get necessary sleep or rest. Hrblockfree Temporary assignment. Hrblockfree If your assignment or job away from your tax home is temporary, your tax home does not change. Hrblockfree You are considered to be away from home for the whole period, and your travel expenses are deductible. Hrblockfree Generally, a temporary assignment in a single location is one that is realistically expected to last (and does in fact last) for one year or less. Hrblockfree However, if your assignment or job is indefinite, the location of the assignment or job becomes your new tax home and you cannot deduct your travel expenses while there. Hrblockfree An assignment or job in a single location is considered indefinite if it is realistically expected to last for more than one year, whether or not it actually lasts for more than one year. Hrblockfree You must determine whether your assignment is temporary or indefinite when you start work. Hrblockfree If you expect employment to last for one year or less, it is temporary unless there are facts and circumstances that indicate otherwise. Hrblockfree Employment that is initially temporary may become indefinite due to changed circumstances. Hrblockfree A series of assignments to the same location, all for short periods but that together cover a long period, may be considered an indefinite assignment. Hrblockfree Exception for federal crime investigations or prosecutions. Hrblockfree If you are a federal employee participating in a federal crime investigation or prosecution, you may be able to deduct travel expenses even if you are away from your tax home for more than one year. Hrblockfree This exception to the one-year rule applies if the Attorney General certifies that you are traveling for the federal government in a temporary duty status to prosecute, or provide support services for the investigation or prosecution of, a federal crime. Hrblockfree Limit on meals and entertainment. Hrblockfree You can generally deduct only 50% of the cost of your unreimbursed business-related meals and entertainment. Hrblockfree However, the limit does not apply to expenses reimbursed under a U. Hrblockfree S. Hrblockfree Government expense allowance arrangement. Hrblockfree Individuals subject to hours of service limits. Hrblockfree You can deduct 80% of your unreimbursed business-related meal expenses if the meals take place during or incident to any period subject to the Department of Transportation's hours of service limits. Hrblockfree Individuals subject to the Department of Transportation's “hours of service” limits include the following. Hrblockfree Certain air transportation workers (such as pilots, crew, dispatchers, mechanics, and control tower operators) who are under Federal Aviation Administration regulations. Hrblockfree Interstate truck operators and bus drivers who are under Department of Transportation regulations. Hrblockfree Certain railroad employees (such as engineers, conductors, train crews, dispatchers, and control operations personnel) who are under Federal Railroad Administration regulations. Hrblockfree Certain merchant mariners who are under Coast Guard regulations. Hrblockfree Primary purpose of trip must be for business. Hrblockfree If your trip was entirely for business, your unreimbursed travel expenses are generally deductible. Hrblockfree However, if you spend some of your time on nonbusiness activities, part of your expenses may not be deductible. Hrblockfree If your trip was mainly personal, you cannot deduct your travel expenses to and from your destination. Hrblockfree This applies even if you engage in business activities while there. Hrblockfree However, you can deduct any expenses while at your destination that are directly related to your business. Hrblockfree Expenses paid for others. Hrblockfree You generally cannot deduct travel expenses of your spouse, dependents, or other individuals who go with you on a trip. Hrblockfree Home leave. Hrblockfree The Foreign Service Act requires U. Hrblockfree S. Hrblockfree citizens who are members of the foreign service to take a leave of absence after completing 3 years of continuous service abroad. Hrblockfree This period is called “home leave” and can be used to take care of certain personal matters such as medical and dental checkups, buying a new wardrobe, and visiting relatives. Hrblockfree The amounts paid for your travel, meals, and lodging while on home leave are deductible as travel or business expenses subject to the rules and limits discussed earlier. Hrblockfree You must be able to verify these amounts in order to claim them. Hrblockfree Amounts paid on behalf of your family while on home leave are personal living expenses and are not deductible. Hrblockfree More information. Hrblockfree See chapter 1 of Publication 463 for more information on travel expenses. Hrblockfree Transportation Expenses You can deduct allowable transportation expenses that are directly related to your official duties. Hrblockfree Transportation expenses include the cost of transportation by air, rail, bus, or taxi, and the cost of driving and maintaining your car. Hrblockfree They do not include expenses you have when traveling away from home overnight. Hrblockfree Those expenses are deductible as travel expenses and are discussed earlier. Hrblockfree Commuting. Hrblockfree You cannot deduct your transportation costs of going between your home and your regular business location. Hrblockfree These costs are personal commuting expenses. Hrblockfree If you have one or more regular business locations but must work at a temporary location, you can deduct the costs of commuting to that temporary place of work. Hrblockfree If you work at two or more places in the same day, you can deduct your expenses of getting from one place of work to the other. Hrblockfree More information. Hrblockfree For more information on transportation expenses, see chapter 4 of Publication 463. Hrblockfree Other Employee Business Expenses You may be able to deduct other unreimbursed expenses that are connected with your employment. Hrblockfree Membership dues. Hrblockfree You can deduct membership dues you pay to professional societies that relate to your business or profession. Hrblockfree Subscriptions. Hrblockfree You can deduct subscriptions to professional publications that relate to your business or profession. Hrblockfree Educational expenses. Hrblockfree Generally, educational expenses are considered to be personal expenses and are not deductible. Hrblockfree However, under some circumstances, educational expenses are deductible as business expenses. Hrblockfree You can deduct educational expenses as business expenses if the education: Maintains or improves skills needed in your present position, or Meets the express requirements of your agency to keep your present position, salary, or status. Hrblockfree You cannot deduct educational expenses as business expenses if the education: Is needed to enable you to meet minimum educational requirements for qualification in your present position, Is a part of a program of study that can qualify you for a new position, or Is for travel as a form of education. Hrblockfree These rules apply even if the education is required by your agency or it maintains or improves skills required in your work. Hrblockfree See Publication 970, Tax Benefits for Education, for more information on educational expenses. Hrblockfree Educational expenses that are not work related, such as costs of sending children to college, are personal expenses that you cannot deduct. Hrblockfree However, you may be eligible for other tax benefits such as the American opportunity and lifetime learning credits; contributions to a Coverdell education savings account or qualified tuition program; deduction for student loan interest; and exclusion from income of certain savings bond interest. Hrblockfree These benefits are explained in Publication 970. Hrblockfree Foreign service representation expenses. Hrblockfree If you are an employee of the U. Hrblockfree S. Hrblockfree Foreign Service and your position requires you to establish and maintain favorable relations in foreign countries, you may receive a nontaxable allowance for representation expenses. Hrblockfree If your expenses are more than the allowance you receive, you can deduct the excess expenses as an itemized deduction on Schedule A (Form 1040) if you meet one of the following conditions. Hrblockfree You have a certificate from the Secretary of State attesting that the expenses were incurred for the benefit of the United States, and would be reimbursable under appropriate legislation if the agency had sufficient funds for these reimbursements. Hrblockfree The expenses, while specifically not reimbursable under State Department regulations, were ordinary and necessary business expenses incurred in the performance of your official duties. Hrblockfree To deduct any expenses for travel, entertainment, and gifts, including those certified by the Secretary of State, you must meet the rules for recordkeeping and accounting to your employer. Hrblockfree These rules are explained in Publication 463. Hrblockfree Representation expenses. Hrblockfree These are expenses that further the interest of the United States abroad. Hrblockfree They include certain entertainment, gifts, costs of official functions, and rental of ceremonial dress. Hrblockfree They generally do not include costs of passenger vehicles (such as cars or aircraft), printing or engraving, membership fees, or amounts a principal representative must pay personally to cover the usual costs of operating and maintaining an official residence. Hrblockfree Chapters 300 and 400 of the Standardized Regulations (Government Civilians, Foreign Area) provide more detail on what expenses are allowable as representation expenses. Hrblockfree These regulations are available on the Internet at www. Hrblockfree state. Hrblockfree gov/m/a/als. Hrblockfree Look under “Standardized Regulations (DSSR)” and click on “DSSR Table of Contents. Hrblockfree ” Publication 463 and Publication 529, Miscellaneous Deductions, provide more detail on what expenses are allowable as ordinary and necessary business expenses. Hrblockfree Impairment-related work expenses. Hrblockfree If you are an employee with a physical or mental disability, you can deduct attendant-care services at your place of work and other expenses in connection with work that are necessary for you to be able to work. Hrblockfree Attendant care includes a reader for a blind person and a helper for a person with a physical disability. Hrblockfree These expenses are reported on Form 2106 or 2106-EZ and carried to Schedule A (Form 1040). Hrblockfree They are not subject to the 2%-of-adjusted- gross-income limit on miscellaneous itemized deductions. Hrblockfree Loss on conversion of U. Hrblockfree S. Hrblockfree dollars into foreign currency. Hrblockfree The conversion of U. Hrblockfree S. Hrblockfree dollars into foreign currency at an official rate of exchange that is not as favorable as the free market rate does not result in a deductible loss. Hrblockfree Recordkeeping Rules If you claim a deduction for unreimbursed business expenses, you must keep timely and adequate records of all your business expenses. Hrblockfree For example, you must keep records and supporting evidence to prove the following elements about deductions for travel expenses (including meals and lodging while away from home). Hrblockfree The amount of each separate expense for travel away from home, such as the cost of your transportation, lodging, or meals. Hrblockfree You may total your incidental expenses if you list them in reasonable categories such as daily meals, gasoline and oil, and taxi fares. Hrblockfree For each trip away from home, the dates you left and returned and the number of days spent on business. Hrblockfree The destination or area of your travel, described by the name of the city, town, or similar designation. Hrblockfree The business reason for your travel or the business benefit gained or expected to be gained from your travel. Hrblockfree How to record your expenses. Hrblockfree Records for proof of your expenses should be kept in an account book, diary, statement of expense, or similar record. Hrblockfree They should be supported by other records, such as receipts or canceled checks, in sufficient detail to establish the elements for these expenses. Hrblockfree You do not need to duplicate information in an account book or diary that is shown on a receipt as long as your records and receipts complement each other in an orderly manner. Hrblockfree Each expense should be recorded separately in your records. Hrblockfree However, some items can be totaled in reasonable categories. Hrblockfree You can make one daily entry for categories such as taxi fares, telephone calls, meals while away from home, gas and oil, and other incidental costs of travel. Hrblockfree You may record tips separately or with the cost of the service. Hrblockfree Documentary evidence generally is required to support all lodging expenses while traveling away from home. Hrblockfree It is also required for any other expense of $75 or more, except transportation charges if the evidence is not readily available. Hrblockfree Documentary evidence is a receipt, paid bill, or similar proof sufficient to support an expense. Hrblockfree It ordinarily will be considered adequate if it shows the amount, date, place, and essential business character of the expense. Hrblockfree A canceled check by itself does not prove a business cost. Hrblockfree You must have other evidence to show that the check was used for a business purpose. Hrblockfree Your records must be timely. Hrblockfree Record the elements for the expense in your account book or other record at or near the time of the expense. Hrblockfree A timely-kept record has more value than statements prepared later when, generally, there is a lack of accurate recall. Hrblockfree Confidential information. Hrblockfree You do not need to put confidential information relating to an element of a deductible expense (such as the place, business purpose, or business relationship) in your account book, diary, or other record. Hrblockfree However, you do have to record the information elsewhere at or near the time of the expense and have it available to fully prove that element of the expense. Hrblockfree How To Report Business Expenses As a U. Hrblockfree S. Hrblockfree Government employee, your business expense reimbursements are generally paid under an accountable plan and are not included in your wages on your Form W-2. Hrblockfree If your expenses are not more than the reimbursements, you do not need to show your expenses or reimbursements on your return. Hrblockfree However, if you do not account to your employer for a travel advance or if you do not return any excess advance within a reasonable period of time, the advance (or excess) will be included in your wages on your Form W-2. Hrblockfree If you are entitled to a reimbursement from your employer but you do not claim it, you cannot deduct the expenses to which that unclaimed reimbursement applies. Hrblockfree Form 2106 or Form 2106-EZ. Hrblockfree You must complete Form 2106 or 2106-EZ to deduct your expenses. Hrblockfree Also, if your actual expenses are more than your reimbursements, you can complete Form 2106 or 2106-EZ to deduct your excess expenses. Hrblockfree Generally, you must include all of your expenses and reimbursements on Form 2106 or 2106-EZ and carry your allowable expense to Schedule A (Form 1040). Hrblockfree Your allowable expense is then generally subject to the 2%-of-adjusted-gross-income limit. Hrblockfree Form 2106-EZ. Hrblockfree You may be able to use Form 2106-EZ instead of the more complex Form 2106 for reporting unreimbursed employee business expenses. Hrblockfree You can use Form 2106-EZ if you meet both of the following conditions. Hrblockfree You are not reimbursed by your employer for any expenses. Hrblockfree (Amounts your employer included in your wages on your Form W-2 are not considered reimbursements. Hrblockfree ) If you claim car expenses, you use the standard mileage rate. Hrblockfree Deductions and Credits — Nonbusiness Expenses In addition to deductible business expenses, you may be entitled to deduct certain other expenses. Hrblockfree Moving Expenses If you changed job locations or started a new job, you may be able to deduct the reasonable expenses of moving yourself, your family, and your household goods and personal effects to your new home. Hrblockfree However, you cannot deduct any expenses for which you received a tax-free allowance as a U. Hrblockfree S. Hrblockfree Government employee. Hrblockfree To deduct moving expenses, your move must be closely related to the start of work and you must meet the distance test and the time test. Hrblockfree Closely related to the start of work. Hrblockfree The move must be closely related, both in time and in place, to the start of work at the new location. Hrblockfree In general, you must have incurred your moving expenses within one year from the time you first report to your new job or business. Hrblockfree A move generally is not considered closely related in place to the start of work if the distance from your new home to the new job location is more than the distance from your former home to the new job location. Hrblockfree A move that does not meet this requirement may qualify if you can show that you must live at the new home as a condition of employment, or you will spend less time or money commuting from the new home to the new job. Hrblockfree Distance test. Hrblockfree Your new main job location must be at least 50 miles farther from your former home than your old main job location was. Hrblockfree If you did not have an old job location, your new job location must be at least 50 miles from your former home. Hrblockfree Time test. Hrblockfree If you are an employee, you must work full time for at least 39 weeks during the first 12 months after you arrive in the general area of your new job location. Hrblockfree Deductible moving expenses. Hrblockfree Moving expenses that can be deducted include the reasonable costs of: Moving household goods and personal effects (including packing, crating, in-transit storage, and insurance) of both you and members of your household, and Transportation and lodging for yourself and members of your household for one trip from your former home to your new home (including costs of getting passports). Hrblockfree The cost of your meals is not a deductible moving expense. Hrblockfree The costs of moving household goods include the reasonable expenses of moving household goods and personal effects to and from storage. Hrblockfree For a foreign move, the costs also include expenses of storing the goods and effects for part or all of the period that your new job location abroad continues to be your main job location. Hrblockfree Expenses must be reasonable. Hrblockfree You can deduct only those expenses that are reasonable for the circumstances of your move. Hrblockfree For example, the costs of traveling from your former home to your new one should be by the shortest, most direct route available by conventional transportation. Hrblockfree Members of your household. Hrblockfree A member of your household includes anyone who has both your former home and new home as his or her home. Hrblockfree It does not include a tenant or employee unless you can claim that person as a dependent. Hrblockfree Retirees. Hrblockfree You can deduct the costs of moving to the United States when you permanently retire if both your former main job location and former home were outside the United States and its possessions. Hrblockfree You do not have to meet the time test described earlier. Hrblockfree Survivors. Hrblockfree You can deduct moving expenses for a move to the United States if you are the spouse or dependent of a person whose main job location at the time of death was outside the United States and its possessions. Hrblockfree The move must begin within 6 months after the decedent's death. Hrblockfree It must be from the decedent's former home outside the United States, and that home must also have been your home. Hrblockfree You do not have to meet the time test described earlier. Hrblockfree How to report moving expenses. Hrblockfree Use Form 3903 to report your moving expenses and figure your allowable deduction. Hrblockfree Claim the deduction as an adjustment to income on Form 1040. Hrblockfree (You cannot deduct moving expenses on Form 1040A or Form 1040EZ. Hrblockfree ) Reimbursements. Hrblockfree Generally, you must include reimbursements of, or payments for, nondeductible moving expenses in gross income for the year paid. Hrblockfree You also must include in gross income reimbursements paid to you under a nonaccountable plan. Hrblockfree However, there is an exception for the tax-free foreign areas allowances described earlier under Allowances, Differentials, and Special Pay. Hrblockfree Additional information. Hrblockfree For additional information about moving expenses, see Publication 521. Hrblockfree Other Itemized Deductions You may be able to claim other itemized deductions not connected to your employment. Hrblockfree Contributions. Hrblockfree You can deduct contributions to qualified organizations created or organized in or under the laws of the United States or its possessions. Hrblockfree You cannot deduct contributions you make directly to foreign organizations (except for certain Canadian, Israeli, and Mexican charities), churches, and governments. Hrblockfree For more information, see Publication 526, Charitable Contributions. Hrblockfree Real estate tax and home mortgage interest. Hrblockfree If you receive a tax-free housing allowance, your itemized deductions for real estate taxes and home mortgage interest are limited. Hrblockfree You must reduce the amount of each deduction that would otherwise be allowable by the amount of each expense that is related to the tax-free allowance. Hrblockfree Example. Hrblockfree Adam is an IRS employee working overseas who receives a $6,300 tax-free housing and utility allowance. Hrblockfree During the year, Adam used the allowance, with other funds, to provide a home for himself. Hrblockfree His expenses for this home totaled $8,400 and consisted of mortgage principal ($500), insurance ($400), real estate taxes ($1,400), mortgage interest ($4,000), and utility costs ($2,100). Hrblockfree Adam did not have any other expenses related to providing a home for himself. Hrblockfree Adam must reduce his deductions for home mortgage interest and real estate taxes. Hrblockfree He figures a reasonable way to reduce them is to multiply them by a fraction: its numerator is $6,300 (the total housing and utility allowance) and its denominator is $8,400 (the total of all payments to which the housing and utility allowance applies). Hrblockfree The result is 3/4. Hrblockfree Adam reduces his otherwise allowable home mortgage interest deduction by $3,000 (the $4,000 he paid ×3/4) and his otherwise allowable real estate tax deduction by $1,050 (the $1,400 he paid × 3/4). Hrblockfree He can deduct $1,000 of his mortgage interest ($4,000 − $3,000) and $350 of his real estate taxes ($1,400 − $1,050) when he itemizes his deductions. Hrblockfree Exception to the reduction. Hrblockfree If you receive a tax-free housing allowance as a member of the military or the clergy, you do not have to reduce your deductions for real estate tax and home mortgage interest expenses you are otherwise entitled to deduct. Hrblockfree Required statement. Hrblockfree If you receive a tax-free housing allowance and have real estate tax or home mortgage interest expenses, attach a statement to your tax return. Hrblockfree The statement must contain all of the following information. Hrblockfree The amount of each type of tax-free income you received, such as a tax-free housing allowance or tax-free representation allowance. Hrblockfree The amount of otherwise deductible expenses attributable to each type of tax-free income. Hrblockfree The amount attributable to each type of tax-free income that was not directly attributable to that type of tax-free income. Hrblockfree An explanation of how you determined the amounts not directly attributable to each type of tax-free income. Hrblockfree The statement must also indicate that none of the amounts deducted on your return are in any way attributable to tax-free income. Hrblockfree Foreign Taxes If you pay or accrue taxes to a foreign government, you generally can choose to either claim them as a credit against your U. Hrblockfree S. Hrblockfree income tax liability or deduct them as an itemized deduction when figuring your taxable income. Hrblockfree Do not include the foreign taxes paid or accrued as withheld income taxes in the Payments section of Form 1040. Hrblockfree Foreign tax credit. Hrblockfree Your foreign tax credit is subject to a limit based on your taxable income from foreign sources. Hrblockfree If you choose to figure a credit against your U. Hrblockfree S. Hrblockfree tax liability for the foreign taxes, you generally must complete Form 1116 and attach it to your U. Hrblockfree S. Hrblockfree income tax return. Hrblockfree You cannot claim a credit for foreign taxes paid on amounts excluded from gross income under the foreign earned income or housing exclusions. Hrblockfree If all your foreign income is exempt from U. Hrblockfree S. Hrblockfree tax, you will not be able to claim a foreign tax credit. Hrblockfree If, because of the limit on the credit, you cannot use the full amount of qualified foreign taxes paid or accrued in the tax year, you are allowed to carry the excess back 1 year and then forward 10 years. Hrblockfree Exemption from limit. Hrblockfree You can elect to not be subject to the foreign tax limit if you meet all the following conditions. Hrblockfree Your only foreign income is passive income, such as interest, dividends, and royalties. Hrblockfree The total of all your foreign taxes is not more than $300 ($600 for joint tax returns). Hrblockfree The foreign income and taxes are reported to you on a payee statement, such as Form 1099-DIV, Dividends and Distributions, or 1099-INT, Interest Income. Hrblockfree If you make the election, you can claim a foreign tax credit without filing Form 1116. Hrblockfree However, you cannot carry back or carry over any unused foreign tax to or from this year. Hrblockfree See the instructions for the appropriate line in the Tax and Credits section of Form 1040. Hrblockfree Foreign tax deduction. Hrblockfree If you choose to deduct all foreign income taxes on your U. Hrblockfree S. Hrblockfree income tax return, itemize the deduction on Schedule A (Form 1040). Hrblockfree You cannot deduct foreign taxes paid on income you exclude under the foreign earned income or housing exclusions. Hrblockfree Example. Hrblockfree Dennis and Christina are married and live and work in Country X. Hrblockfree Dennis works for the U. Hrblockfree S. Hrblockfree Government and Christina is employed by a private company. Hrblockfree They pay income tax to Country X on Christina's income only. Hrblockfree Dennis and Christina file a joint tax return and exclude all of Christina's income. Hrblockfree They cannot claim a foreign tax credit or take a deduction for the taxes paid to Country X. Hrblockfree Deduction for other foreign taxes. Hrblockfree The deduction for foreign taxes other than foreign income taxes is not related to the foreign tax credit. Hrblockfree You can take deductions for these miscellaneous foreign taxes and also claim the foreign tax credit for income taxes paid to a foreign country. Hrblockfree You can deduct real property taxes you pay that are imposed on you by a foreign country. Hrblockfree You take this deduction on Schedule A (Form 1040). Hrblockfree You cannot deduct other foreign taxes, such as personal property taxes, unless you incurred the expenses in a trade or business or in the production of income. Hrblockfree More information. Hrblockfree The foreign tax credit and deduction, their limits, and carryback and carryover provisions are discussed in detail in Publication 514. Hrblockfree Local (Foreign) Tax Return As a U. Hrblockfree S. Hrblockfree Government employee, you are expected to observe and fulfill all tax obligations imposed by the host country government. Hrblockfree Check with local tax authorities to determine whether you are considered a tax resident of your host country, whether you are required to file a host country tax return and whether you owe taxes to the host country. Hrblockfree Tax Treaty Benefits As discussed earlier, most income tax treaties contain an article relating to remuneration from government services. Hrblockfree Review the treaty text carefully to determine whether your U. Hrblockfree S. Hrblockfree Government remuneration is taxable in the host country. Hrblockfree You will first have to determine whether you are a resident of your host country under the treaty residence article (after application of the so-called “tie-breaker” rule). Hrblockfree If you or your spouse receives income from a private employer or self-employment, review the tax treaty rules relating to income from personal services to determine whether that income is taxable in the host country. Hrblockfree If you pay or accrue taxes to both the host country and the United States, you may be able to relieve double taxation with a foreign tax credit. Hrblockfree Most income tax treaties contain an article providing relief from double taxation. Hrblockfree Many treaties contain special foreign tax credit rules for U. Hrblockfree S. Hrblockfree citizens who are residents of a treaty country. Hrblockfree For more information about the foreign tax credit, see Foreign Taxes, earlier. Hrblockfree Other Agreements The United States may be a party to agreements other than income tax treaties that may affect your tax obligations to the host country. Hrblockfree For example, consular employees may be exempt from host country tax under the Vienna Convention on Consular Relations or bilateral consular agreements. Hrblockfree Similarly, certain diplomatic staff may be exempt from host country tax under the Vienna Convention on Diplomatic Relations. Hrblockfree Check with the appropriate U. Hrblockfree S. Hrblockfree Embassy for more information. Hrblockfree Double Withholding If your U. Hrblockfree S. Hrblockfree government pay is subject to withholding in both the United States and the foreign country, you may reduce the amount of U. Hrblockfree S. Hrblockfree tax that is withheld from your pay if you expect to be entitled to a foreign tax credit on your U. Hrblockfree S. Hrblockfree income tax return on this income. Hrblockfree Complete Worksheet 1-6 in Publication 505, Tax Withholding and Estimated Tax, to determine how to revise Form W-4, Employee’s Withholding Allowance Certificate. Hrblockfree How To Get Tax Help You can get help with unresolved tax issues, order free publications and forms, ask tax questions, and get information from the IRS in several ways. Hrblockfree By selecting the method that is best for you, you will have quick and easy access to tax help. Hrblockfree Free help with your tax return. Hrblockfree Free help in preparing your return is available nationwide from IRS-certified volunteers. Hrblockfree The Volunteer Income Tax Assistance (VITA) program is designed to help low-moderate income, elderly, disabled, and limited English proficient taxpayers. Hrblockfree The Tax Counseling for the Elderly (TCE) program is designed to assist taxpayers age 60 and older with their tax returns. Hrblockfree Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. Hrblockfree Some VITA and TCE sites provide taxpayers the opportunity to prepare their return with the assistance of an IRS-certified volunteer. Hrblockfree To find the nearest VITA or TCE site, visit IRS. Hrblockfree gov or call 1-800-906-9887 or 1-800-829-1040. Hrblockfree As part of the TCE program, AARP offers the Tax-Aide counseling program. Hrblockfree To find the nearest AARP Tax-Aide site, visit AARP's website at www. Hrblockfree aarp. Hrblockfree org/money/taxaide or call 1-888-227-7669. Hrblockfree For more information on these programs, go to IRS. Hrblockfree gov and enter “VITA” in the search box. Hrblockfree Internet. Hrblockfree You can access the IRS website at IRS. Hrblockfree gov 24 hours a day, 7 days a week to: E-file your return. Hrblockfree Find out about commercial tax preparation and e-file services available free to eligible taxpayers. Hrblockfree Check the status of your 2012 refund. Hrblockfree Go to IRS. Hrblockfree gov and click on Where’s My Refund. Hrblockfree Information about your return will generally be available within 24 hours after the IRS receives your e-filed return, or 4 weeks after you mail your paper return. Hrblockfree If you filed Form 8379 with your return, wait 14 weeks (11 weeks if you filed electronically). Hrblockfree Have your 2012 tax return handy so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund. Hrblockfree Where's My Refund? has a new look this year! The tool will include a tracker that displays progress through three stages: (1) return received, (2) refund approved, and (3) refund sent. Hrblockfree Where's My Refund? will provide an actual personalized refund date as soon as the IRS processes your tax return and approves your refund. Hrblockfree So in a change from previous filing seasons, you won't get an estimated refund date right away. Hrblockfree Where's My Refund? includes information for the most recent return filed in the current year and does not include information about amended returns. Hrblockfree You can obtain a free transcript online at IRS. Hrblockfree gov by clicking on Order a Return or Account Transcript under “Tools. Hrblockfree ” For a transcript by phone, call 1-800-908-9946 and follow the prompts in the recorded message. Hrblockfree You will be prompted to provide your SSN or Individual Taxpayer Identification Number (ITIN), date of birth, street address and ZIP code. Hrblockfree Download forms, including talking tax forms, instructions, and publications. Hrblockfree Order IRS products. Hrblockfree Research your tax questions. Hrblockfree Search publications by topic or keyword. Hrblockfree Use the Internal Revenue Code, regulations, or other official guidance. Hrblockfree View Internal Revenue Bulletins (IRBs) published in the last few years. Hrblockfree Figure your withholding allowances using the IRS Withholding Calculator at www. Hrblockfree irs. Hrblockfree gov/individuals. Hrblockfree Determine if Form 6251 (Alternative Minimum Tax— Individuals), must be filed by using our Alternative Minimum Tax (AMT) Assistant available at IRS. Hrblockfree gov by typing Alternative Minimum Tax Assistant in the search box. Hrblockfree Sign up to receive local and national tax news by email. Hrblockfree Get information on starting and operating a small business. Hrblockfree Phone. Hrblockfree Many services are available by phone. Hrblockfree Ordering forms, instructions, and publications. Hrblockfree Call 1-800-TAX-FORM (1-800-829-3676) to order current-year forms, instructions, and publications, and prior-year forms and instructions (limited to 5 years). Hrblockfree You should receive your order within 10 days. Hrblockfree Asking tax questions. Hrblockfree Call the IRS with your tax questions at 1-800-829-1040. Hrblockfree Solving problems. Hrblockfree You can get face-to-face help solving tax problems most business days in IRS Taxpayer Assistance Centers (TAC). Hrblockfree An employee can explain IRS letters, request adjustments to your account, or help you set up a payment plan. Hrblockfree Call your local Taxpayer Assistance Center for an appointment. Hrblockfree To find the number, go to www. Hrblockfree irs. Hrblockfree gov/localcontacts or look in the phone book under United States Government, Internal Revenue Service. Hrblockfree TTY/TDD equipment. Hrblockfree If you have access to TTY/TDD equipment, call 1-800-829-4059 to ask tax questions or to order forms and publications. Hrblockfree The TTY/TDD telephone number is for individuals who are deaf, hard of hearing, or have a speech disability. Hrblockfree These individuals can also access the IRS through relay services such as the Federal Relay Service at www. Hrblockfree gsa. Hrblockfree gov/fedrelay. Hrblockfree TeleTax topics. Hrblockfree Call 1-800-829-4477 to listen to pre-recorded messages covering various tax topics. Hrblockfree Checking the status of your 2012 refund. Hrblockfree To check the status of your 2012 refund, call 1-800-829-1954 or 1-800-829-4477 (automated Where's My Refund? information 24 hours a day, 7 days a week). Hrblockfree Information about your return will generally be available within 24 hours after the IRS receives your e-filed return, or 4 weeks after you mail your paper return. Hrblockfree If you filed Form 8379 with your return, wait 14 weeks (11 weeks if you filed electronically). Hrblockfree Have your 2012 tax return handy so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund. Hrblockfree Where's My Refund? will provide an actual personalized refund date as soon as the IRS processes your tax return and approves your refund. Hrblockfree Where's My Refund? includes information for the most recent return filed in the current year and does not include information about amended returns. Hrblockfree Outside the U. Hrblockfree S. Hrblockfree If you are outside the United States, taxpayer assistance is available at the following U. Hrblockfree S Embassies or consulate. Hrblockfree Beijing, China (86) (10) 8531-3983 Frankfurt, Germany (49) (69) 7535-3834 London, England (44) (20) 7894-0476 Paris, France (33) (1) 4312-2555 Please contact the office for times when assistance will be available. Hrblockfree If you cannot get to one of these offices, taxpayer assistance is available at (267) 941-1000 (not a toll free call). Hrblockfree If you are in a U. Hrblockfree S. Hrblockfree territory (American Samoa, Guam, Northern Mariana Islands, Puerto Rico, and U. Hrblockfree S. Hrblockfree Virgin Islands) and have a tax question, you can call 1-800-829-1040. Hrblockfree Evaluating the quality of our telephone services. Hrblockfree To ensure IRS representatives give accurate, courteous, and professional answers, we use several methods to evaluate the quality of our telephone services. Hrblockfree One method is for a second IRS representative to listen in on or record random telephone calls. Hrblockfree Another is to ask some callers to complete a short survey at the end of the call. Hrblockfree Walk-in. Hrblockfree Some products and services are available on a walk-in basis. Hrblockfree Products. Hrblockfree You can walk in to some post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. Hrblockfree Some IRS offices, libraries, and city and county government offices have a collection of products available to photocopy from reproducible proofs. Hrblockfree Also, some IRS offices and libraries have the Internal Revenue Code, regulations, Internal Revenue Bulletins, and Cumulative Bulletins available for research purposes. Hrblockfree Services. Hrblockfree You can walk in to your local TAC most business days for personal, face-to-face tax help. Hrblockfree An employee can explain IRS letters, request adjustments to your tax account, or help you set up a payment plan. Hrblockfree If you need to resolve a tax problem, have questions about how the tax law applies to your individual tax return, or you are more comfortable talking with someone in person, visit your local TAC where you can talk with an IRS representative face-to-face. Hrblockfree No appointment is necessary—just walk in. Hrblockfree Before visiting, check www. Hrblockfree irs. Hrblockfree gov/localcontacts for hours of operation and services provided. Hrblockfree If you have an ongoing, complex tax account problem or a special need, such as a disability, an appointment can be requested by calling your local TAC. Hrblockfree You can leave a message and a representative will call you back within 2 business days. Hrblockfree All other issues will be handled without an appointment. Hrblockfree To call your local TAC, go to www. Hrblockfree irs. Hrblockfree gov/localcontacts or look in the phone book under United States Government, Internal Revenue Service. Hrblockfree Outside the U. Hrblockfree S. Hrblockfree If you are outside the United States during the filing period (January to mid-June), you can get the necessary federal tax forms and publications from most U. Hrblockfree S. Hrblockfree Embassies and consulates. Hrblockfree Mail. Hrblockfree You can send your order for forms, instructions, and publications to the address below. Hrblockfree You should receive a response within 10 days after your request is received. Hrblockfree Internal Revenue Service 1201 N. Hrblockfree Mitsubishi Motorway Bloomington, IL 61705-6613 Outside the U. Hrblockfree S. Hrblockfree If you are outside the United States, you can get tax assistance by writing to the address below. Hrblockfree Internal Revenue Service International Accounts Philadelphia, PA 19255-0725 Taxpayer Advocate Service. Hrblockfree The Taxpayer Advocate Service (TAS) is your voice at the IRS. Hrblockfree Its job is to ensure that every taxpayer is treated fairly, and that you know and understand your rights. Hrblockfree TAS offers free help to guide you through the often-confusing process of resolving tax problems that you haven’t been able to solve on your own. Hrblockfree Remember, the worst thing you can do is nothing at all. Hrblockfree TAS can help if you can’t resolve your problem with the IRS and: Your problem is causing financial difficulties for you, your family, or your business. Hrblockfree You face (or your business is facing) an immediate threat of adverse action. Hrblockfree You have tried repeatedly to contact the IRS but no one has responded, or the IRS has not responded to you by the date promised. Hrblockfree If you qualify for help, they will do everything they can to get your problem resolved. Hrblockfree You will be assigned to one advocate who will be with you at every turn. Hrblockfree TAS has offices in every state, the District of Columbia, and Puerto Rico. Hrblockfree Although TAS is independent within the IRS, their advocates know how to work with the IRS to get your problems resolved. Hrblockfree And its services are always free. Hrblockfree As a taxpayer, you have rights that the IRS must abide by in its dealings with you. Hrblockfree The TAS tax toolkit at www. Hrblockfree TaxpayerAdvocate. Hrblockfree irs. Hrblockfree gov can help you understand these rights. Hrblockfree If you think TAS might be able to help you, call your local advocate, whose number is in your phone book and on our website at www. Hrblockfree irs. Hrblockfree gov/advocate. Hrblockfree You can also call the toll-free number at 1-877-777-4778. Hrblockfree Deaf and hard of hearing individuals who have access to TTY/TDD equipment can call 1-800-829-4059. Hrblockfree These individuals can also access the IRS through relay services such as the Federal Relay Service at www. Hrblockfree gsa. Hrblockfree gov/fedrelay. Hrblockfree TAS also handles large-scale or systemic problems that affect many taxpayers. Hrblockfree If you know of one of these broad issues, please report it through the Systemic Advocacy Management System at www. Hrblockfree irs. Hrblockfree gov/advocate. Hrblockfree Outside the U. Hrblockfree S. Hrblockfree If you live outside of the United States, you can call the Taxpayer Advocate at (787) 522-8601 in English or (787) 522-8600 in Spanish. Hrblockfree You can contact the Taxpayer Advocate at: Internal Revenue Service Taxpayer Advocate Service City View Plaza, 48 Carr 165, Suite 2000 Guaynabo, P. Hrblockfree R. Hrblockfree 00968-8000 Low Income Taxpayer Clinics (LITCs). Hrblockfree Low Income Taxpayer Clinics (LITCs) are independent from the IRS. Hrblockfree Some clinics serve individuals whose income is below a certain level and who need to resolve a tax problem. Hrblockfree These clinics provide professional representation before the IRS or in court on audits, appeals, tax collection disputes, and other issues for free or for a small fee. Hrblockfree Some clinics can provide information about taxpayer rights and responsibilities in many different languages for individuals who speak English as a second language. Hrblockfree For more information and to find a clinic near you, see the LITC page on www. Hrblockfree irs. Hrblockfree gov/advocate or IRS Publication 4134, Low Income Taxpayer Clinic List. Hrblockfree This publication is also available by calling 1-800-TAX-FORM (1-800-829-3676) or at your local IRS office. Hrblockfree Free tax services. Hrblockfree Publication 910, IRS Guide to Free Tax Services, is your guide to IRS services and resources. Hrblockfree Learn about free tax information from the IRS, including publications, services, and education and assistance programs. Hrblockfree The publication also has an index of over 100 TeleTax topics (recorded tax information) you can listen to on the telephone. Hrblockfree The majority of the information and services listed in this publication are available to you free of charge. Hrblockfree If there is a fee associated with a resource or service, it is listed in the publication. Hrblockfree Accessible versions of IRS published products are available on request in a variety of alternative formats for people with disabilities. Hrblockfree DVD for tax products. Hrblockfree You can order Publication 1796, IRS Tax Products DVD, and obtain: Current-year forms, instructions, and publications. Hrblockfree Prior-year forms, instructions, and publications. Hrblockfree Tax Map: an electronic research tool and finding aid. Hrblockfree Tax law frequently asked questions. Hrblockfree Tax Topics from the IRS telephone response system. Hrblockfree Internal Revenue Code—Title 26 of the U. Hrblockfree S. Hrblockfree Code. Hrblockfree Links to other Internet-based tax research materials. Hrblockfree Fill-in, print, and save features for most tax forms. Hrblockfree Internal Revenue Bulletins. Hrblockfree Toll-free and email technical support. Hrblockfree Two releases during the year. Hrblockfree – The first release will ship the beginning of January 2013. Hrblockfree – The final release will ship the beginning of March 2013. Hrblockfree Purchase the DVD from National Technical Information Service (NTIS) at www. Hrblockfree irs. Hrblockfree gov/cdorders for $30 (no handling fee) or call 1-877-233-6767 toll free to buy the DVD for $30 (plus a $6 handling fee). Hrblockfree Prev Up Next Home More Online Publications