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Irs 1040 Ez Form 2012

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Irs 1040 Ez Form 2012

Irs 1040 ez form 2012 32. Irs 1040 ez form 2012   Child and Dependent Care Credit Table of Contents Reminders Introduction Useful Items - You may want to see: Tests To Claim the CreditQualifying Person Test Earned Income Test Work-Related Expense Test Joint Return Test Provider Identification Test How To Figure the CreditFiguring Total Work-Related Expenses Earned Income Limit Dollar Limit Amount of Credit How To Claim the CreditTax credit not refundable. Irs 1040 ez form 2012 Employment Taxes for Household Employers Reminders Taxpayer identification number needed for each qualifying person. Irs 1040 ez form 2012  You must include on line 2 of Form 2441 the name and taxpayer identification number (generally the social security number) of each qualifying person. Irs 1040 ez form 2012 See Taxpayer identification number under Qualifying Person Test, later. Irs 1040 ez form 2012 You may have to pay employment taxes. Irs 1040 ez form 2012  If you pay someone to come to your home and care for your dependent or spouse, you may be a household employer who has to pay employment taxes. Irs 1040 ez form 2012 Usually, you are not a household employer if the person who cares for your dependent or spouse does so at his or her home or place of business. Irs 1040 ez form 2012 See Employment Taxes for Household Employers , later. Irs 1040 ez form 2012 Introduction This chapter discusses the credit for child and dependent care expenses and covers the following topics. Irs 1040 ez form 2012 Tests you must meet to claim the credit. Irs 1040 ez form 2012 How to figure the credit. Irs 1040 ez form 2012 How to claim the credit. Irs 1040 ez form 2012 Employment taxes you may have to pay as a household employer. Irs 1040 ez form 2012 You may be able to claim the credit if you pay someone to care for your dependent who is under age 13 or for your spouse or dependent who is not able to care for himself or herself. Irs 1040 ez form 2012 The credit can be up to 35% of your expenses. Irs 1040 ez form 2012 To qualify, you must pay these expenses so you can work or look for work. Irs 1040 ez form 2012 This credit should not be confused with the child tax credit discussed in chapter 34. Irs 1040 ez form 2012 Dependent care benefits. Irs 1040 ez form 2012   If you received any dependent care benefits from your employer during the year, you may be able to exclude from your income all or part of them. Irs 1040 ez form 2012 You must complete Form 2441, Part III, before you can figure the amount of your credit. Irs 1040 ez form 2012 See Dependent Care Benefits under How To Figure the Credit, later. Irs 1040 ez form 2012 Useful Items - You may want to see: Publication 501 Exemptions, Standard Deduction, and Filing Information 503 Child and Dependent Care Expenses 926 Household Employer's Tax Guide Form (and Instructions) 2441 Child and Dependent Care Expenses Schedule H (Form 1040) Household Employment Taxes W-7 Application for IRS Individual Taxpayer Identification Number W-10 Dependent Care Provider's Identification and Certification Tests To Claim the Credit To be able to claim the credit for child and dependent care expenses, you must file Form 1040 or Form 1040A, not Form 1040EZ, and meet all the following tests. Irs 1040 ez form 2012 The care must be for one or more qualifying persons who are identified on Form 2441. Irs 1040 ez form 2012 (See Qualifying Person Test . Irs 1040 ez form 2012 ) You (and your spouse if filing jointly) must have earned income during the year. Irs 1040 ez form 2012 (However, see Rule for student-spouse or spouse not able to care for self under Earned Income Test, later. Irs 1040 ez form 2012 ) You must pay child and dependent care expenses so you (and your spouse if filing jointly) can work or look for work. Irs 1040 ez form 2012 (See Work-Related Expense Test , later. Irs 1040 ez form 2012 ) You must make payments for child and dependent care to someone you (and your spouse) cannot claim as a dependent. Irs 1040 ez form 2012 If you make payments to your child, he or she cannot be your dependent and must be age 19 or older by the end of the year. Irs 1040 ez form 2012 You cannot make payments to: Your spouse, or The parent of your qualifying person if your qualifying person is your child and under age 13. Irs 1040 ez form 2012 (See Payments to Relatives or Dependents under Work-Related Expense Test, later. Irs 1040 ez form 2012 ) Your filing status may be single, head of household, or qualifying widow(er) with dependent child. Irs 1040 ez form 2012 If you are married, you must file a joint return, unless an exception applies to you. Irs 1040 ez form 2012 (See Joint Return Test , later. Irs 1040 ez form 2012 ) You must identify the care provider on your tax return. Irs 1040 ez form 2012 (See Provider Identification Test , later. Irs 1040 ez form 2012 ) If you exclude or deduct dependent care benefits provided by a dependent care benefits plan, the total amount you exclude or deduct must be less than the dollar limit for qualifying expenses (generally, $3,000 if one qualifying person was cared for or $6,000 if two or more qualifying persons were cared for). Irs 1040 ez form 2012 (If two or more qualifying persons were cared for, the amount you exclude or deduct will always be less than the dollar limit, since the total amount you can exclude or deduct is limited to $5,000. Irs 1040 ez form 2012 See Reduced Dollar Limit under How To Figure the Credit, later. Irs 1040 ez form 2012 ) These tests are presented in Figure 32-A and are also explained in detail in this chapter. Irs 1040 ez form 2012 Figure 32-A. Irs 1040 ez form 2012 Can You Claim the Credit? Please click here for the text description of the image. Irs 1040 ez form 2012 Figure 32-A Can You Claim the Credit? Qualifying Person Test Your child and dependent care expenses must be for the care of one or more qualifying persons. Irs 1040 ez form 2012 A qualifying person is: Your qualifying child who is your dependent and who was under age 13 when the care was provided (but see Child of divorced or separated parents or parents living apart, later), Your spouse who was not physically or mentally able to care for himself or herself and lived with you for more than half the year, or A person who was not physically or mentally able to care for himself or herself, lived with you for more than half the year, and either: Was your dependent, or Would have been your dependent except that: He or she received gross income of $3,900 or more, He or she filed a joint return, or You, or your spouse if filing jointly, could be claimed as a dependent on someone else's 2013 return. Irs 1040 ez form 2012 Dependent defined. Irs 1040 ez form 2012   A dependent is a person, other than you or your spouse, for whom you can claim an exemption. Irs 1040 ez form 2012 To be your dependent, a person must be your qualifying child (or your qualifying relative). Irs 1040 ez form 2012 Qualifying child. Irs 1040 ez form 2012   To be your qualifying child, a child must live with you for more than half the year and meet other requirements. Irs 1040 ez form 2012 More information. Irs 1040 ez form 2012   For more information about who is a dependent or a qualifying child, see chapter 3. Irs 1040 ez form 2012 Physically or mentally not able to care for oneself. Irs 1040 ez form 2012   Persons who cannot dress, clean, or feed themselves because of physical or mental problems are considered not able to care for themselves. Irs 1040 ez form 2012 Also, persons who must have constant attention to prevent them from injuring themselves or others are considered not able to care for themselves. Irs 1040 ez form 2012 Person qualifying for part of year. Irs 1040 ez form 2012   You determine a person's qualifying status each day. Irs 1040 ez form 2012 For example, if the person for whom you pay child and dependent care expenses no longer qualifies on September 16, count only those expenses through September 15. Irs 1040 ez form 2012 Also see Yearly limit under Dollar Limit, later. Irs 1040 ez form 2012 Birth or death of otherwise qualifying person. Irs 1040 ez form 2012   In determining whether a person is a qualifying person, a person who was born or died in 2013 is treated as having lived with you for more than half of 2013 if your home was the person's home for more than half the time he or she was alive in 2013. Irs 1040 ez form 2012 Taxpayer identification number. Irs 1040 ez form 2012   You must include on your return the name and taxpayer identification number (generally the social security number) of the qualifying person(s). Irs 1040 ez form 2012 If the correct information is not shown, the credit may be reduced or disallowed. Irs 1040 ez form 2012 Individual taxpayer identification number (ITIN) for aliens. Irs 1040 ez form 2012   If your qualifying person is a nonresident or resident alien who does not have and cannot get a social security number (SSN), use that person's ITIN. Irs 1040 ez form 2012 The ITIN is entered wherever an SSN is requested on a tax return. Irs 1040 ez form 2012 To apply for an ITIN, see Form W-7. Irs 1040 ez form 2012   An ITIN is for tax use only. Irs 1040 ez form 2012 It does not entitle the holder to social security benefits or change the holder's employment or immigration status under U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 law. Irs 1040 ez form 2012 Adoption taxpayer identification number (ATIN). Irs 1040 ez form 2012   If your qualifying person is a child who was placed in your home for adoption and for whom you do not have an SSN, you must get an ATIN for the child. Irs 1040 ez form 2012 File Form W-7A, Application for Taxpayer Identification Number for Pending U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 Adoptions. Irs 1040 ez form 2012 Child of divorced or separated parents or parents living apart. Irs 1040 ez form 2012   Even if you cannot claim your child as a dependent, he or she is treated as your qualifying person if: The child was under age 13 or was not physically or mentally able to care for himself or herself, The child received over half of his or her support during the calendar year from one or both parents who are divorced or legally separated under a decree of divorce or separate maintenance, are separated under a written separation agreement, or lived apart at all times during the last 6 months of the calendar year, The child was in the custody of one or both parents for more than half the year, and You were the child's custodial parent. Irs 1040 ez form 2012   The custodial parent is the parent with whom the child lived for the greater number of nights in 2013. Irs 1040 ez form 2012 If the child was with each parent for an equal number of nights, the custodial parent is the parent with the higher adjusted gross income. Irs 1040 ez form 2012 For details and an exception for a parent who works at night, see Pub. Irs 1040 ez form 2012 501. Irs 1040 ez form 2012   The noncustodial parent cannot treat the child as a qualifying person even if that parent is entitled to claim the child as a dependent under the special rules for a child of divorced or separated parents. Irs 1040 ez form 2012 Earned Income Test To claim the credit, you (and your spouse if filing jointly) must have earned income during the year. Irs 1040 ez form 2012 Earned income. Irs 1040 ez form 2012   Earned income includes wages, salaries, tips, other taxable employee compensation, and net earnings from self-employment. Irs 1040 ez form 2012 A net loss from self-employment reduces earned income. Irs 1040 ez form 2012 Earned income also includes strike benefits and any disability pay you report as wages. Irs 1040 ez form 2012   Generally, only taxable compensation is included. Irs 1040 ez form 2012 However, you can elect to include nontaxable combat pay in earned income. Irs 1040 ez form 2012 If you are filing a joint return and both you and your spouse received nontaxable combat pay, you can each make your own election. Irs 1040 ez form 2012 (In other words, if one of you makes the election, the other one can also make it but does not have to. Irs 1040 ez form 2012 ) You should figure your credit both ways and make the election if it gives you a greater tax benefit. Irs 1040 ez form 2012 Members of certain religious faiths opposed to social security. Irs 1040 ez form 2012   Certain income earned by persons who are members of certain religious faiths that are opposed to participation in Social Security Act programs and have an IRS-approved form that exempts certain income from social security and Medicare taxes may not be considered earned income for this purpose. Irs 1040 ez form 2012 See Earned Income Test in Publication 503. Irs 1040 ez form 2012 Not earned income. Irs 1040 ez form 2012   Earned income does not include: Pensions and annuities, Social security and railroad retirement benefits, Workers' compensation, Interest and dividends, Unemployment compensation, Scholarship or fellowship grants, except for those reported on a Form W-2 and paid to you for teaching or other services, Nontaxable workfare payments, Child support payments received by you, Income of nonresident aliens that is not effectively connected with a U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 trade or business, or Any amount received for work while an inmate in a penal institution. Irs 1040 ez form 2012 Rule for student-spouse or spouse not able to care for self. Irs 1040 ez form 2012   Your spouse is treated as having earned income for any month that he or she is: A full-time student, or Physically or mentally not able to care for himself or herself. Irs 1040 ez form 2012 (Your spouse also must live with you for more than half the year. Irs 1040 ez form 2012 )   If you are filing a joint return, this rule also applies to you. Irs 1040 ez form 2012 You can be treated as having earned income for any month you are a full-time student or not able to care for yourself. Irs 1040 ez form 2012   Figure the earned income of the nonworking spouse described under (1) or (2) above as explained under Earned Income Limit , later. Irs 1040 ez form 2012   This rule applies to only one spouse for any one month. Irs 1040 ez form 2012 If, in the same month, both you and your spouse do not work and are either full-time students or not physically or mentally able to care for yourselves, only one of you can be treated as having earned income in that month. Irs 1040 ez form 2012 Full-time student. Irs 1040 ez form 2012   You are a full-time student if you are enrolled at a school for the number of hours or classes that the school considers full time. Irs 1040 ez form 2012 You must have been a full-time student for some part of each of 5 calendar months during the year. Irs 1040 ez form 2012 (The months need not be consecutive. Irs 1040 ez form 2012 ) School. Irs 1040 ez form 2012   The term “school” includes high schools, colleges, universities, and technical, trade, and mechanical schools. Irs 1040 ez form 2012 A school does not include an on-the-job training course, correspondence school, or school offering courses only through the Internet. Irs 1040 ez form 2012 Work-Related Expense Test Child and dependent care expenses must be work-related to qualify for the credit. Irs 1040 ez form 2012 Expenses are considered work-related only if both of the following are true. Irs 1040 ez form 2012 They allow you (and your spouse if filing jointly) to work or look for work. Irs 1040 ez form 2012 They are for a qualifying person's care. Irs 1040 ez form 2012 Working or Looking for Work To be work-related, your expenses must allow you to work or look for work. Irs 1040 ez form 2012 If you are married, generally both you and your spouse must work or look for work. Irs 1040 ez form 2012 One spouse is treated as working during any month he or she is a full-time student or is not physically or mentally able to care for himself or herself. Irs 1040 ez form 2012 Your work can be for others or in your own business or partnership. Irs 1040 ez form 2012 It can be either full time or part time. Irs 1040 ez form 2012 Work also includes actively looking for work. Irs 1040 ez form 2012 However, if you do not find a job and have no earned income for the year, you cannot take this credit. Irs 1040 ez form 2012 See Earned Income Test , earlier. Irs 1040 ez form 2012 An expense is not considered work-related merely because you had it while you were working. Irs 1040 ez form 2012 The purpose of the expense must be to allow you to work. Irs 1040 ez form 2012 Whether your expenses allow you to work or look for work depends on the facts. Irs 1040 ez form 2012 Example 1. Irs 1040 ez form 2012 The cost of a babysitter while you and your spouse go out to eat is not normally a work-related expense. Irs 1040 ez form 2012 Example 2. Irs 1040 ez form 2012 You work during the day. Irs 1040 ez form 2012 Your spouse works at night and sleeps during the day. Irs 1040 ez form 2012 You pay for care of your 5-year-old child during the hours when you are working and your spouse is sleeping. Irs 1040 ez form 2012 Your expenses are considered work-related. Irs 1040 ez form 2012 Volunteer work. Irs 1040 ez form 2012    For this purpose, you are not considered to be working if you do unpaid volunteer work or volunteer work for a nominal salary. Irs 1040 ez form 2012 Work for part of year. Irs 1040 ez form 2012   If you work or actively look for work during only part of the period covered by the expenses, then you must figure your expenses for each day. Irs 1040 ez form 2012 For example, if you work all year and pay care expenses of $250 a month ($3,000 for the year), all the expenses are work-related. Irs 1040 ez form 2012 However, if you work or look for work for only 2 months and 15 days during the year and pay expenses of $250 a month, your work-related expenses are limited to $625 (2½ months × $250). Irs 1040 ez form 2012 Temporary absence from work. Irs 1040 ez form 2012   You do not have to figure your expenses for each day during a short, temporary absence from work, such as for vacation or a minor illness, if you have to pay for care anyway. Irs 1040 ez form 2012 Instead, you can figure your credit including the expenses you paid for the period of absence. Irs 1040 ez form 2012   An absence of 2 weeks or less is a short, temporary absence. Irs 1040 ez form 2012 An absence of more than 2 weeks may be considered a short, temporary absence, depending on the circumstances. Irs 1040 ez form 2012 Example. Irs 1040 ez form 2012 You pay a nanny to care for your 2-year-old son and 4-year-old daughter so you can work. Irs 1040 ez form 2012 You become ill and miss 4 months of work but receive sick pay. Irs 1040 ez form 2012 You continue to pay the nanny to care for the children while you are ill. Irs 1040 ez form 2012 Your absence is not a short, temporary absence, and your expenses are not considered work-related. Irs 1040 ez form 2012 Part-time work. Irs 1040 ez form 2012   If you work part-time, you generally must figure your expenses for each day. Irs 1040 ez form 2012 However, if you have to pay for care weekly, monthly, or in another way that includes both days worked and days not worked, you can figure your credit including the expenses you paid for days you did not work. Irs 1040 ez form 2012 Any day when you work at least 1 hour is a day of work. Irs 1040 ez form 2012 Example 1. Irs 1040 ez form 2012 You work 3 days a week. Irs 1040 ez form 2012 While you work, your 6-year-old child attends a dependent care center, which complies with all state and local regulations. Irs 1040 ez form 2012 You can pay the center $150 for any 3 days a week or $250 for 5 days a week. Irs 1040 ez form 2012 Your child attends the center 5 days a week. Irs 1040 ez form 2012 Your work-related expenses are limited to $150 a week. Irs 1040 ez form 2012 Example 2. Irs 1040 ez form 2012 The facts are the same as in Example 1 except the center does not offer a 3-day option. Irs 1040 ez form 2012 The entire $250 weekly fee may be a work-related expense. Irs 1040 ez form 2012 Care of a Qualifying Person To be work-related, your expenses must be to provide care for a qualifying person. Irs 1040 ez form 2012 You do not have to choose the least expensive way of providing care. Irs 1040 ez form 2012 The cost of a paid care provider may be an expense for the care of a qualifying person even if another care provider is available at no cost. Irs 1040 ez form 2012 Expenses are for the care of a qualifying person only if their main purpose is the person's well-being and protection. Irs 1040 ez form 2012 Expenses for household services qualify if part of the services is for the care of qualifying persons. Irs 1040 ez form 2012 See Household services , later. Irs 1040 ez form 2012 Expenses not for care. Irs 1040 ez form 2012   Expenses for care do not include amounts you pay for food, lodging, clothing, education, and entertainment. Irs 1040 ez form 2012 However, you can include small amounts paid for these items if they are incidental to and cannot be separated from the cost of caring for the qualifying person. Irs 1040 ez form 2012   Child support payments are not for care and do not qualify for the credit. Irs 1040 ez form 2012 Education. Irs 1040 ez form 2012   Expenses for a child in nursery school, preschool, or similar programs for children below the level of kindergarten are expenses for care. Irs 1040 ez form 2012 Expenses to attend kindergarten or a higher grade are not expenses for care. Irs 1040 ez form 2012 Do not use these expenses to figure your credit. Irs 1040 ez form 2012   However, expenses for before- or after-school care of a child in kindergarten or a higher grade may be expenses for care. Irs 1040 ez form 2012   Summer school and tutoring programs are not for care. Irs 1040 ez form 2012 Example 1. Irs 1040 ez form 2012 You take your 3-year-old child to a nursery school that provides lunch and educational activities as a part of its preschool childcare service. Irs 1040 ez form 2012 The lunch and educational activities are incidental to the childcare, and their cost cannot be separated from the cost of care. Irs 1040 ez form 2012 You can count the total cost when you figure the credit. Irs 1040 ez form 2012 Example 2. Irs 1040 ez form 2012 You place your 10-year-old child in a boarding school so you can work full time. Irs 1040 ez form 2012 Only the part of the boarding school expense that is for the care of your child is a work-related expense. Irs 1040 ez form 2012 You can count that part of the expense in figuring your credit if it can be separated from the cost of education. Irs 1040 ez form 2012 You cannot count any part of the amount you pay the school for your child's education. Irs 1040 ez form 2012 Care outside your home. Irs 1040 ez form 2012   You can count the cost of care provided outside your home if the care is for your dependent under age 13 or any other qualifying person who regularly spends at least 8 hours each day in your home. Irs 1040 ez form 2012 Dependent care center. Irs 1040 ez form 2012   You can count care provided outside your home by a dependent care center only if the center complies with all state and local regulations that apply to these centers. Irs 1040 ez form 2012   A dependent care center is a place that provides care for more than six persons (other than persons who live there) and receives a fee, payment, or grant for providing services for any of those persons, even if the center is not run for profit. Irs 1040 ez form 2012 Camp. Irs 1040 ez form 2012   The cost of sending your child to an overnight camp is not considered a work-related expense. Irs 1040 ez form 2012 The cost of sending your child to a day camp may be a work-related expense, even if the camp specializes in a particular activity, such as computers or soccer. Irs 1040 ez form 2012 Transportation. Irs 1040 ez form 2012   If a care provider takes a qualifying person to or from a place where care is provided, that transportation is for the care of the qualifying person. Irs 1040 ez form 2012 This includes transportation by bus, subway, taxi, or private car. Irs 1040 ez form 2012 However, transportation not provided by a care provider is not for the care of a qualifying person. Irs 1040 ez form 2012 Also, if you pay the transportation cost for the care provider to come to your home, that expense is not for care of a qualifying person. Irs 1040 ez form 2012 Fees and deposits. Irs 1040 ez form 2012   Fees you paid to an agency to get the services of a care provider, deposits you paid to an agency or preschool, application fees, and other indirect expenses are work-related expenses if you have to pay them to get care, even though they are not directly for care. Irs 1040 ez form 2012 However, a forfeited deposit is not for the care of a qualifying person if care is not provided. Irs 1040 ez form 2012 Example 1. Irs 1040 ez form 2012 You paid a fee to an agency to get the services of the nanny who cares for your 2-year-old daughter while you work. Irs 1040 ez form 2012 The fee you paid is a work-related expense. Irs 1040 ez form 2012 Example 2. Irs 1040 ez form 2012 You placed a deposit with a preschool to reserve a place for your 3-year-old child. Irs 1040 ez form 2012 You later sent your child to a different preschool and forfeited the deposit. Irs 1040 ez form 2012 The forfeited deposit is not for care and so is not a work-related expense. Irs 1040 ez form 2012 Household services. Irs 1040 ez form 2012   Expenses you pay for household services meet the work-related expense test if they are at least partly for the well-being and protection of a qualifying person. Irs 1040 ez form 2012   Household services are ordinary and usual services done in and around your home that are necessary to run your home. Irs 1040 ez form 2012 They include the services of a housekeeper, maid, or cook. Irs 1040 ez form 2012 However, they do not include the services of a chauffeur, bartender, or gardener. Irs 1040 ez form 2012 See Household Services in Publication 503 for more information. Irs 1040 ez form 2012   In this chapter, the term housekeeper refers to any household employee whose services include the care of a qualifying person. Irs 1040 ez form 2012 Taxes paid on wages. Irs 1040 ez form 2012   The taxes you pay on wages for qualifying child and dependent care services are work-related expenses. Irs 1040 ez form 2012 See Employment Taxes for Household Employers , later. Irs 1040 ez form 2012 Payments to Relatives or Dependents You can count work-related payments you make to relatives who are not your dependents, even if they live in your home. Irs 1040 ez form 2012 However, do not count any amounts you pay to: A dependent for whom you (or your spouse if filing jointly) can claim an exemption, Your child who was under age 19 at the end of the year, even if he or she is not your dependent, A person who was your spouse any time during the year, or The parent of your qualifying person if your qualifying person is your child and under age 13. Irs 1040 ez form 2012 Joint Return Test Generally, married couples must file a joint return to take the credit. Irs 1040 ez form 2012 However, if you are legally separated or living apart from your spouse, you may be able to file a separate return and still take the credit. Irs 1040 ez form 2012 Legally separated. Irs 1040 ez form 2012   You are not considered married if you are legally separated from your spouse under a decree of divorce or separate maintenance. Irs 1040 ez form 2012 You may be eligible to take the credit on your return using head of household filing status. Irs 1040 ez form 2012 Married and living apart. Irs 1040 ez form 2012   You are not considered married and are eligible to take the credit if all the following apply. Irs 1040 ez form 2012 You file a return apart from your spouse. Irs 1040 ez form 2012 Your home is the home of a qualifying person for more than half the year. Irs 1040 ez form 2012 You pay more than half the cost of keeping up your home for the year. Irs 1040 ez form 2012 Your spouse does not live in your home for the last 6 months of the year. Irs 1040 ez form 2012 Costs of keeping up a home. Irs 1040 ez form 2012   The costs of keeping up a home normally include property taxes, mortgage interest, rent, utility charges, home repairs, insurance on the home, and food eaten at home. Irs 1040 ez form 2012   The costs of keeping up a home do not include payments for clothing, education, medical treatment, vacations, life insurance, transportation, or mortgage principal. Irs 1040 ez form 2012   They also do not include the purchase, permanent improvement, or replacement of property. Irs 1040 ez form 2012 For example, you cannot include the cost of replacing a water heater. Irs 1040 ez form 2012 However, you can include the cost of repairing a water heater. Irs 1040 ez form 2012 Death of spouse. Irs 1040 ez form 2012   If your spouse died during the year and you do not remarry before the end of the year, you generally must file a joint return to take the credit. Irs 1040 ez form 2012 If you do remarry before the end of the year, the credit can be claimed on your deceased spouse's return. Irs 1040 ez form 2012 Provider Identification Test You must identify all persons or organizations that provide care for your child or dependent. Irs 1040 ez form 2012 Use Form 2441, Part I, to show the information. Irs 1040 ez form 2012 If you do not have any care providers and you are filing Form 2441 only to report taxable income in Part III, enter “none” in line 1, column (a). Irs 1040 ez form 2012 Information needed. Irs 1040 ez form 2012   To identify the care provider, you must give the provider's: Name, Address, and Taxpayer identification number. Irs 1040 ez form 2012   If the care provider is an individual, the taxpayer identification number is his or her social security number or individual taxpayer identification number. Irs 1040 ez form 2012 If the care provider is an organization, then it is the employer identification number (EIN). Irs 1040 ez form 2012   You do not have to show the taxpayer identification number if the care provider is a tax-exempt organization (such as a church or school). Irs 1040 ez form 2012 In this case, enter “Tax-Exempt” in the space where Form 2441 asks for the number. Irs 1040 ez form 2012   If you cannot provide all of the information or if the information is incorrect, you must be able to show that you used due diligence (discussed later) in trying to furnish the necessary information. Irs 1040 ez form 2012 Getting the information. Irs 1040 ez form 2012   You can use Form W-10 to request the required information from the care provider. Irs 1040 ez form 2012 If you do not use Form W-10, you can get the information from one of the other sources listed in the instructions for Form W-10 including: A copy of the provider's social security card, A copy of the provider's completed Form W-4 if he or she is your household employee, A copy of the statement furnished by your employer if the provider is your employer's dependent care plan, or A letter or invoice from the provider if it shows the information. Irs 1040 ez form 2012    You should keep this information with your tax records. Irs 1040 ez form 2012 Do not send Form W-10 (or other document containing this information) to the Internal Revenue Service. Irs 1040 ez form 2012 Due diligence. Irs 1040 ez form 2012   If the care provider information you give is incorrect or incomplete, your credit may not be allowed. Irs 1040 ez form 2012 However, if you can show that you used due diligence in trying to supply the information, you can still claim the credit. Irs 1040 ez form 2012   You can show due diligence by getting and keeping the provider's completed Form W-10 or one of the other sources of information just listed. Irs 1040 ez form 2012 Care providers can be penalized if they do not provide this information to you or if they provide incorrect information. Irs 1040 ez form 2012 Provider refusal. Irs 1040 ez form 2012   If the provider refuses to give you their identifying information, you should report on Form 2441 whatever information you have (such as the name and address). Irs 1040 ez form 2012 Enter “See Attached Statement” in the columns calling for the information you do not have. Irs 1040 ez form 2012 Then attach a statement explaining that you requested the information from the care provider, but the provider did not give you the information. Irs 1040 ez form 2012 Be sure to write your name and social security number on this statement. Irs 1040 ez form 2012 The statement will show that you used due diligence in trying to furnish the necessary information. Irs 1040 ez form 2012 U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 citizens and resident aliens living abroad. Irs 1040 ez form 2012   If you are living abroad, your care provider may not have, and may not be required to get, a U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 taxpayer identification number (for example, an SSN or EIN). Irs 1040 ez form 2012 If so, enter “LAFCP” (Living Abroad Foreign Care Provider) in the space for the care provider's taxpayer identification number. Irs 1040 ez form 2012 How To Figure the Credit Your credit is a percentage of your work-related expenses. Irs 1040 ez form 2012 Your expenses are subject to the earned income limit and the dollar limit. Irs 1040 ez form 2012 The percentage is based on your adjusted gross income. Irs 1040 ez form 2012 Figuring Total Work-Related Expenses To figure the credit for 2013 work-related expenses, count only those you paid by December 31, 2013. Irs 1040 ez form 2012 Expenses prepaid in an earlier year. Irs 1040 ez form 2012   If you pay for services before they are provided, you can count the prepaid expenses only in the year the care is received. Irs 1040 ez form 2012 Claim the expenses for the later year as if they were actually paid in that later year. Irs 1040 ez form 2012 Expenses not paid until the following year. Irs 1040 ez form 2012   Do not count 2012 expenses that you paid in 2013 as work-related expenses for 2013. Irs 1040 ez form 2012 You may be able to claim an additional credit for them on your 2013 return, but you must figure it separately. Irs 1040 ez form 2012 See Payments for prior year's expenses under Amount of Credit in Publication 503. Irs 1040 ez form 2012    If you had expenses in 2013 that you did not pay until 2014, you cannot count them when figuring your 2013 credit. Irs 1040 ez form 2012 You may be able to claim a credit for them on your 2014 return. Irs 1040 ez form 2012 Expenses reimbursed. Irs 1040 ez form 2012   If a state social services agency pays you a nontaxable amount to reimburse you for some of your child and dependent care expenses, you cannot count the expenses that are reimbursed as work-related expenses. Irs 1040 ez form 2012 Example. Irs 1040 ez form 2012 You paid work-related expenses of $3,000. Irs 1040 ez form 2012 You are reimbursed $2,000 by a state social services agency. Irs 1040 ez form 2012 You can use only $1,000 to figure your credit. Irs 1040 ez form 2012 Medical expenses. Irs 1040 ez form 2012   Some expenses for the care of qualifying persons who are not able to care for themselves may qualify as work-related expenses and also as medical expenses. Irs 1040 ez form 2012 You can use them either way, but you cannot use the same expenses to claim both a credit and a medical expense deduction. Irs 1040 ez form 2012   If you use these expenses to figure the credit and they are more than the earned income limit or the dollar limit, discussed later, you can add the excess to your medical expenses. Irs 1040 ez form 2012 However, if you use your total expenses to figure your medical expense deduction, you cannot use any part of them to figure your credit. Irs 1040 ez form 2012    Amounts excluded from your income under your employer's dependent care benefits plan cannot be used to claim a medical expense deduction. Irs 1040 ez form 2012 Dependent Care Benefits If you receive dependent care benefits, your dollar limit for purposes of the credit may be reduced. Irs 1040 ez form 2012 See Reduced Dollar Limit , later. Irs 1040 ez form 2012 But, even if you cannot take the credit, you may be able to take an exclusion or deduction for the dependent care benefits. Irs 1040 ez form 2012 Dependent care benefits. Irs 1040 ez form 2012   Dependent care benefits include: Amounts your employer paid directly to either you or your care provider for the care of your qualifying person while you work, The fair market value of care in a daycare facility provided or sponsored by your employer, and Pre-tax contributions you made under a dependent care flexible spending arrangement. Irs 1040 ez form 2012 Your salary may have been reduced to pay for these benefits. Irs 1040 ez form 2012 If you received benefits as an employee, they should be shown in box 10 of your Form W-2. Irs 1040 ez form 2012 See Statement for employee , later. Irs 1040 ez form 2012 Benefits you received as a partner should be shown in box 13 of your Schedule K-1 (Form 1065) with code O. Irs 1040 ez form 2012 Enter the amount of these benefits on Form 2441, Part III, line 12. Irs 1040 ez form 2012 Exclusion or deduction. Irs 1040 ez form 2012   If your employer provides dependent care benefits under a qualified plan, you may be able to exclude these benefits from your income. Irs 1040 ez form 2012 Your employer can tell you whether your benefit plan qualifies. Irs 1040 ez form 2012 To claim the exclusion, you must complete Part III of Form 2441. Irs 1040 ez form 2012 You cannot use Form 1040EZ. Irs 1040 ez form 2012   If you are self-employed and receive benefits from a qualified dependent care benefit plan, you are treated as both employer and employee. Irs 1040 ez form 2012 Therefore, you would not get an exclusion from wages. Irs 1040 ez form 2012 Instead, you would get a deduction on Form 1040, Schedule C, line 14; Schedule E, line 19 or 28; or Schedule F, line 15. Irs 1040 ez form 2012 To claim the deduction, you must use Form 2441. Irs 1040 ez form 2012   The amount you can exclude or deduct is limited to the smallest of: The total amount of dependent care benefits you received during the year, The total amount of qualified expenses you incurred during the year, Your earned income, Your spouse's earned income, or $5,000 ($2,500 if married filing separately). Irs 1040 ez form 2012 The definition of earned income for the exclusion or deduction is the same as the definition used when figuring the credit except that earned income for the exclusion or deduction does not include any dependent care benefits you receive. Irs 1040 ez form 2012 See Earned Income Limit, later. Irs 1040 ez form 2012    You can choose to include your nontaxable combat pay in earned income when figuring your exclusion or deduction, even if you choose not to include it in earned income for the earned income credit or the credit for child and dependent care expenses. Irs 1040 ez form 2012 Statement for employee. Irs 1040 ez form 2012   Your employer must give you a Form W-2 (or similar statement) showing in box 10 the total amount of dependent care benefits provided to you during the year under a qualified plan. Irs 1040 ez form 2012 Your employer will also include any dependent care benefits over $5,000 in your wages shown on your Form W-2 in box 1. Irs 1040 ez form 2012 Effect of exclusion on credit. Irs 1040 ez form 2012   If you exclude dependent care benefits from your income, the amount of the excluded benefits: Is not included in your work-related expenses, and Reduces the dollar limit, discussed later. Irs 1040 ez form 2012 Earned Income Limit The amount of work-related expenses you use to figure your credit cannot be more than: Your earned income for the year if you are single at the end of the year, or The smaller of your or your spouse's earned income for the year if you are married at the end of the year. Irs 1040 ez form 2012 Earned income is defined under Earned Income Test , earlier. Irs 1040 ez form 2012 For purposes of item (2), use your spouse's earned income for the entire year, even if you were married for only part of the year. Irs 1040 ez form 2012 Separated spouse. Irs 1040 ez form 2012   If you are legally separated or married and living apart from your spouse (as described under Joint Return Test , earlier), you are not considered married for purposes of the earned income limit. Irs 1040 ez form 2012 Use only your income in figuring the earned income limit. Irs 1040 ez form 2012 Surviving spouse. Irs 1040 ez form 2012   If your spouse died during the year and you file a joint return as a surviving spouse, you may, but are not required to, take into account the earned income of your spouse who died during the year. Irs 1040 ez form 2012 Community property laws. Irs 1040 ez form 2012   You should disregard community property laws when you figure earned income for this credit. Irs 1040 ez form 2012 You or your spouse is a student or not able to care for self. Irs 1040 ez form 2012   Your spouse who is either a full-time student or not able to care for himself or herself is treated as having earned income. Irs 1040 ez form 2012 His or her earned income for each month is considered to be at least $250 if there is one qualifying person in your home, or at least $500 if there are two or more. Irs 1040 ez form 2012 Spouse works. Irs 1040 ez form 2012   If your spouse works during that month, use the higher of $250 (or $500) or his or her actual earned income for that month. Irs 1040 ez form 2012 Spouse qualifies for part of month. Irs 1040 ez form 2012    If your spouse is a full-time student or not able to care for himself or herself for only part of a month, the full $250 (or $500) still applies for that month. Irs 1040 ez form 2012 You are a student or not able to care for self. Irs 1040 ez form 2012   These rules also apply if you are a student or not able to care for yourself and you are filing a joint return. Irs 1040 ez form 2012 For each month or part of a month you are a student or not able to care for yourself, your earned income is considered to be at least $250 (or $500). Irs 1040 ez form 2012 If you also work during that month, use the higher of $250 (or $500) or your actual earned income for that month. Irs 1040 ez form 2012 Both spouses qualify. Irs 1040 ez form 2012   If, in the same month, both you and your spouse are either full-time students or not able to care for yourselves, only one spouse can be considered to have this earned income of $250 (or $500) for that month. Irs 1040 ez form 2012 Dollar Limit There is a dollar limit on the amount of your work-related expenses you can use to figure the credit. Irs 1040 ez form 2012 This limit is $3,000 for one qualifying person, or $6,000 for two or more qualifying persons. Irs 1040 ez form 2012 If you paid work-related expenses for the care of two or more qualifying persons, the applicable dollar limit is $6,000. Irs 1040 ez form 2012 This $6,000 limit does not need to be divided equally among them. Irs 1040 ez form 2012 For example, if your work-related expenses for the care of one qualifying person are $3,200 and your work-related expenses for another qualifying person are $2,800, you can use the total, $6,000, when figuring the credit. Irs 1040 ez form 2012 Yearly limit. Irs 1040 ez form 2012   The dollar limit is a yearly limit. Irs 1040 ez form 2012 The amount of the dollar limit remains the same no matter how long, during the year, you have a qualifying person in your household. Irs 1040 ez form 2012 Use the $3,000 limit if you paid work-related expenses for the care of one qualifying person at any time during the year. Irs 1040 ez form 2012 Use $6,000 if you paid work-related expenses for the care of more than one qualifying person at any time during the year. Irs 1040 ez form 2012 Reduced Dollar Limit If you received dependent care benefits that you exclude or deduct from your income, you must subtract that amount from the dollar limit that applies to you. Irs 1040 ez form 2012 Your reduced dollar limit is figured on Form 2441, Part III. Irs 1040 ez form 2012 See Dependent Care Benefits , earlier, for information on excluding or deducting these benefits. Irs 1040 ez form 2012 Example 1. Irs 1040 ez form 2012 George is a widower with one child and earns $24,000 a year. Irs 1040 ez form 2012 He pays work-related expenses of $2,900 for the care of his 4-year-old child and qualifies to claim the credit for child and dependent care expenses. Irs 1040 ez form 2012 His employer pays an additional $1,000 under a dependent care benefit plan. Irs 1040 ez form 2012 This $1,000 is excluded from George's income. Irs 1040 ez form 2012 Although the dollar limit for his work-related expenses is $3,000 (one qualifying person), George figures his credit on only $2,000 of the $2,900 work-related expenses he paid. Irs 1040 ez form 2012 This is because his dollar limit is reduced as shown next. Irs 1040 ez form 2012   George's Reduced Dollar Limit 1) Maximum allowable expenses for one qualifying person $3,000 2) Minus: Dependent care benefits George excludes from income −1,000 3) Reduced dollar limit on expenses George can use for the credit $2,000 Example 2. Irs 1040 ez form 2012 Randall is married and both he and his wife are employed. Irs 1040 ez form 2012 Each has earned income in excess of $6,000. Irs 1040 ez form 2012 They have two children, Anne and Andy, ages 2 and 4, who attend a daycare facility licensed and regulated by the state. Irs 1040 ez form 2012 Randall's work-related expenses are $6,000 for the year. Irs 1040 ez form 2012 Randall's employer has a dependent care assistance program as part of its cafeteria plan, which allows employees to make pre-tax contributions to a dependent care flexible spending arrangement. Irs 1040 ez form 2012 Randall has elected to take the maximum $5,000 exclusion from his salary to cover dependent care expenses through this program. Irs 1040 ez form 2012 Although the dollar limit for his work- related expenses is $6,000 (two or more qualifying persons), Randall figures his credit on only $1,000 of the $6,000 work-related expense paid. Irs 1040 ez form 2012 This is because his dollar limit is reduced as shown next. Irs 1040 ez form 2012   Randall's Reduced Dollar Limit 1) Maximum allowable expenses for two qualifying persons $6,000 2) Minus: Dependent care benefits Randall selects from employer's cafeteria plan and excludes from income −5,000 3) Reduced dollar limit on expenses Randall can use for the credit $1,000 Amount of Credit To determine the amount of your credit, multiply your work-related expenses (after applying the earned income and dollar limits) by a percentage. Irs 1040 ez form 2012 This percentage depends on your adjusted gross income shown on Form 1040, line 38, or Form 1040A, line 22. Irs 1040 ez form 2012 The following table shows the percentage to use based on adjusted gross income. Irs 1040 ez form 2012   IF your adjusted gross income is: THEN the percentage is:       Over   But not over         $0   $15,000   35%       15,000   17,000   34%       17,000   19,000   33%       19,000   21,000   32%       21,000   23,000   31%       23,000   25,000   30%       25,000   27,000   29%       27,000   29,000   28%       29,000   31,000   27%       31,000   33,000   26%       33,000   35,000   25%       35,000   37,000   24%       37,000   39,000   23%       39,000   41,000   22%       41,000   43,000   21%       43,000   No limit   20%   How To Claim the Credit To claim the credit, you can file Form 1040 or Form 1040A. Irs 1040 ez form 2012 You cannot claim the credit on Form 1040EZ. Irs 1040 ez form 2012 Form 1040 or 1040A. Irs 1040 ez form 2012   You must complete Form 2441 and attach it to your Form 1040 or 1040A. Irs 1040 ez form 2012 Enter the credit on Form 1040, line 48, or Form 1040A, line 29. Irs 1040 ez form 2012 Limit on credit. Irs 1040 ez form 2012   The amount of credit you can claim is generally limited to the amount of your tax. Irs 1040 ez form 2012 For more information, see the Instructions for Form 2441. Irs 1040 ez form 2012 Tax credit not refundable. Irs 1040 ez form 2012   You cannot get a refund for any part of the credit that is more than this limit. Irs 1040 ez form 2012 Recordkeeping. Irs 1040 ez form 2012 You should keep records of your work-related expenses. Irs 1040 ez form 2012 Also, if your dependent or spouse is not able to care for himself or herself, your records should show both the nature and the length of the disability. Irs 1040 ez form 2012 Other records you should keep to support your claim for the credit are described earlier under Provider Identification Test . Irs 1040 ez form 2012 Employment Taxes for Household Employers If you pay someone to come to your home and care for your dependent or spouse, you may be a household employer. Irs 1040 ez form 2012 If you are a household employer, you will need an employer identification number (EIN) and you may have to pay employment taxes. Irs 1040 ez form 2012 If the individuals who work in your home are self-employed, you are not liable for any of the taxes discussed in this section. Irs 1040 ez form 2012 Self-employed persons who are in business for themselves are not household employees. Irs 1040 ez form 2012 Usually, you are not a household employer if the person who cares for your dependent or spouse does so at his or her home or place of business. Irs 1040 ez form 2012 If you use a placement agency that exercises control over what work is done and how it will be done by a babysitter or companion who works in your home, the worker is not your employee. Irs 1040 ez form 2012 This control could include providing rules of conduct and appearance and requiring regular reports. Irs 1040 ez form 2012 In this case, you do not have to pay employment taxes. Irs 1040 ez form 2012 But, if an agency merely gives you a list of sitters and you hire one from that list, and pay the sitter directly, the sitter may be your employee. Irs 1040 ez form 2012 If you have a household employee, you may be subject to: Social security and Medicare taxes, Federal unemployment tax, and Federal income tax withholding. Irs 1040 ez form 2012 Social security and Medicare taxes are generally withheld from the employee's pay and matched by the employer. Irs 1040 ez form 2012 Federal unemployment (FUTA) tax is paid by the employer only and provides for payments of unemployment compensation to workers who have lost their jobs. Irs 1040 ez form 2012 Federal income tax is withheld from the employee's total pay if the employee asks you to do so and you agree. Irs 1040 ez form 2012 For more information on a household employer's tax responsibilities, see Publication 926 and Schedule H (Form 1040) and its instructions. Irs 1040 ez form 2012 State employment tax. Irs 1040 ez form 2012   You may also have to pay state unemployment tax. Irs 1040 ez form 2012 Contact your state unemployment tax office for information. Irs 1040 ez form 2012 You should also find out whether you need to pay or collect other state employment taxes or carry workers' compensation insurance. Irs 1040 ez form 2012 For a list of state unemployment tax agencies, visit the U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 Department of Labor's website. Irs 1040 ez form 2012 A link to that website is in Publication 926, or you can find it with an online search. Irs 1040 ez form 2012 Prev  Up  Next   Home   More Online Publications
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The Irs 1040 Ez Form 2012

Irs 1040 ez form 2012 4. Irs 1040 ez form 2012   How Income of Aliens Is Taxed Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Resident Aliens Nonresident AliensTrade or Business in the United States Effectively Connected Income The 30% Tax Income From Real Property Transportation Tax Interrupted Period of Residence Expatriation TaxExpatriation Before June 4, 2004 Expatriation After June 3, 2004, and Before June 17, 2008 Expatriation After June 16, 2008 Introduction Resident and nonresident aliens are taxed in different ways. Irs 1040 ez form 2012 Resident aliens are generally taxed in the same way as U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 citizens. Irs 1040 ez form 2012 Nonresident aliens are taxed based on the source of their income and whether or not their income is effectively connected with a U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 trade or business. Irs 1040 ez form 2012 The following discussions will help you determine if income you receive during the tax year is effectively connected with a U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 trade or business and how it is taxed. Irs 1040 ez form 2012 Topics - This chapter discusses: Income that is effectively connected with a U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 trade or business. Irs 1040 ez form 2012 Income that is not effectively connected with a U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 trade or business. Irs 1040 ez form 2012 Interrupted period of residence. Irs 1040 ez form 2012 Expatriation tax. Irs 1040 ez form 2012 Useful Items - You may want to see: Publication 544 Sales and Other Dispositions of Assets 1212 List of Original Issue Discount Instruments Form (and Instructions) 6251 Alternative Minimum Tax—Individuals Schedule D (Form 1040) Capital Gains and Losses See chapter 12 for information about getting these publications and forms. Irs 1040 ez form 2012 Resident Aliens Resident aliens are generally taxed in the same way as U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 citizens. Irs 1040 ez form 2012 This means that their worldwide income is subject to U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 tax and must be reported on their U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 tax return. Irs 1040 ez form 2012 Income of resident aliens is subject to the graduated tax rates that apply to U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 citizens. Irs 1040 ez form 2012 Resident aliens use the Tax Table or Tax Computation Worksheets located in the Form 1040 instructions, which apply to U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 citizens. Irs 1040 ez form 2012 Nonresident Aliens A nonresident alien's income that is subject to U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 income tax must be divided into two categories: Income that is effectively connected with a trade or business in the United States, and Income that is not effectively connected with a trade or business in the United States (discussed under The 30% Tax, later). Irs 1040 ez form 2012 The difference between these two categories is that effectively connected income, after allowable deductions, is taxed at graduated rates. Irs 1040 ez form 2012 These are the same rates that apply to U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 citizens and residents. Irs 1040 ez form 2012 Income that is not effectively connected is taxed at a flat 30% (or lower treaty) rate. Irs 1040 ez form 2012 If you were formerly a U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 citizen or resident alien, these rules may not apply. Irs 1040 ez form 2012 See Expatriation Tax, later, in this chapter. Irs 1040 ez form 2012 Trade or Business in the United States Generally, you must be engaged in a trade or business during the tax year to be able to treat income received in that year as effectively connected with that trade or business. Irs 1040 ez form 2012 Whether you are engaged in a trade or business in the United States depends on the nature of your activities. Irs 1040 ez form 2012 The discussions that follow will help you determine whether you are engaged in a trade or business in the United States. Irs 1040 ez form 2012 Personal Services If you perform personal services in the United States at any time during the tax year, you usually are considered engaged in a trade or business in the United States. Irs 1040 ez form 2012 Certain compensation paid to a nonresident alien by a foreign employer is not included in gross income. Irs 1040 ez form 2012 For more information, see Services Performed for Foreign Employer in chapter 3. Irs 1040 ez form 2012 Other Trade or Business Activities Other examples of being engaged in a trade or business in the United States follow. Irs 1040 ez form 2012 Students and trainees. Irs 1040 ez form 2012   You are considered engaged in a trade or business in the United States if you are temporarily present in the United States as a nonimmigrant under an “F,” “J,” “M,” or “Q” visa. Irs 1040 ez form 2012 A nonresident alien temporarily present in the United States under a “J” visa includes a nonresident alien individual admitted to the United States as an exchange visitor under the Mutual Educational and Cultural Exchange Act of 1961. Irs 1040 ez form 2012 The taxable part of any scholarship or fellowship grant that is U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 source income is treated as effectively connected with a trade or business in the United States. Irs 1040 ez form 2012 Business operations. Irs 1040 ez form 2012   If you own and operate a business in the United States selling services, products, or merchandise, you are, with certain exceptions, engaged in a trade or business in the United States. Irs 1040 ez form 2012 Partnerships. Irs 1040 ez form 2012   If you are a member of a partnership that at any time during the tax year is engaged in a trade or business in the United States, you are considered to be engaged in a trade or business in the United States. Irs 1040 ez form 2012 Beneficiary of an estate or trust. Irs 1040 ez form 2012   If you are the beneficiary of an estate or trust that is engaged in a trade or business in the United States, you are treated as being engaged in the same trade or business. Irs 1040 ez form 2012 Trading in stocks, securities, and commodities. Irs 1040 ez form 2012   If your only U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 business activity is trading in stocks, securities, or commodities (including hedging transactions) through a U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 resident broker or other agent, you are not engaged in a trade or business in the United States. Irs 1040 ez form 2012   For transactions in stocks or securities, this applies to any nonresident alien, including a dealer or broker in stocks and securities. Irs 1040 ez form 2012   For transactions in commodities, this applies to commodities that are usually traded on an organized commodity exchange and to transactions that are usually carried out at such an exchange. Irs 1040 ez form 2012   This discussion does not apply if you have a U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 office or other fixed place of business at any time during the tax year through which, or by the direction of which, you carry out your transactions in stocks, securities, or commodities. Irs 1040 ez form 2012 Trading for a nonresident alien's own account. Irs 1040 ez form 2012   You are not engaged in a trade or business in the United States if trading for your own account in stocks, securities, or commodities is your only U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 business activity. Irs 1040 ez form 2012 This applies even if the trading takes place while you are present in the United States or is done by your employee or your broker or other agent. Irs 1040 ez form 2012   This does not apply to trading for your own account if you are a dealer in stocks, securities, or commodities. Irs 1040 ez form 2012 This does not necessarily mean, however, that as a dealer you are considered to be engaged in a trade or business in the United States. Irs 1040 ez form 2012 Determine that based on the facts and circumstances in each case or under the rules given above in Trading in stocks, securities, and commodities . Irs 1040 ez form 2012 Effectively Connected Income If you are engaged in a U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 trade or business, all income, gain, or loss for the tax year that you get from sources within the United States (other than certain investment income) is treated as effectively connected income. Irs 1040 ez form 2012 This applies whether or not there is any connection between the income and the trade or business being carried on in the United States during the tax year. Irs 1040 ez form 2012 Two tests, described next under Investment Income, determine whether certain items of investment income (such as interest, dividends, and royalties) are treated as effectively connected with that business. Irs 1040 ez form 2012 In limited circumstances, some kinds of foreign source income may be treated as effectively connected with a trade or business in the United States. Irs 1040 ez form 2012 For a discussion of these rules, see Foreign Income , later. Irs 1040 ez form 2012 Investment Income Investment income from U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 sources that may or may not be treated as effectively connected with a U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 trade or business generally falls into the following three categories. Irs 1040 ez form 2012 Fixed or determinable income (interest, dividends, rents, royalties, premiums, annuities, etc. Irs 1040 ez form 2012 ). Irs 1040 ez form 2012 Gains (some of which are considered capital gains) from the sale or exchange of the following types of property. Irs 1040 ez form 2012 Timber, coal, or domestic iron ore with a retained economic interest. Irs 1040 ez form 2012 Patents, copyrights, and similar property on which you receive contingent payments after October 4, 1966. Irs 1040 ez form 2012 Patents transferred before October 5, 1966. Irs 1040 ez form 2012 Original issue discount obligations. Irs 1040 ez form 2012 Capital gains (and losses). Irs 1040 ez form 2012 Use the two tests, described next, to determine whether an item of U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 source income falling in one of the three categories above and received during the tax year is effectively connected with your U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 trade or business. Irs 1040 ez form 2012 If the tests indicate that the item of income is effectively connected, you must include it with your other effectively connected income. Irs 1040 ez form 2012 If the item of income is not effectively connected, include it with all other income discussed under The 30% Tax later, in this chapter. Irs 1040 ez form 2012 Asset-use test. Irs 1040 ez form 2012   This test usually applies to income that is not directly produced by trade or business activities. Irs 1040 ez form 2012 Under this test, if an item of income is from assets (property) used in, or held for use in, the trade or business in the United States, it is considered effectively connected. Irs 1040 ez form 2012   An asset is used in, or held for use in, the trade or business in the United States if the asset is: Held for the principal purpose of promoting the conduct of a trade or business in the United States, Acquired and held in the ordinary course of the trade or business conducted in the United States (for example, an account receivable or note receivable arising from that trade or business), or Otherwise held to meet the present needs of the trade or business in the United States and not its anticipated future needs. Irs 1040 ez form 2012 Generally, stock of a corporation is not treated as an asset used in, or held for use in, a trade or business in the United States. Irs 1040 ez form 2012 Business-activities test. Irs 1040 ez form 2012   This test usually applies when income, gain, or loss comes directly from the active conduct of the trade or business. Irs 1040 ez form 2012 The business-activities test is most important when: Dividends or interest are received by a dealer in stocks or securities, Royalties are received in the trade or business of licensing patents or similar property, or Service fees are earned by a servicing business. Irs 1040 ez form 2012 Under this test, if the conduct of the U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 trade or business was a material factor in producing the income, the income is considered effectively connected. Irs 1040 ez form 2012 Personal Service Income You usually are engaged in a U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 trade or business when you perform personal services in the United States. Irs 1040 ez form 2012 Personal service income you receive in a tax year in which you are engaged in a U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 trade or business is effectively connected with a U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 trade or business. Irs 1040 ez form 2012 Income received in a year other than the year you performed the services is also effectively connected if it would have been effectively connected if received in the year you performed the services. Irs 1040 ez form 2012 Personal service income includes wages, salaries, commissions, fees, per diem allowances, and employee allowances and bonuses. Irs 1040 ez form 2012 The income may be paid to you in the form of cash, services, or property. Irs 1040 ez form 2012 If you are engaged in a U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 trade or business only because you perform personal services in the United States during the tax year, income and gains from assets, and gains and losses from the sale or exchange of capital assets are generally not effectively connected with your trade or business. Irs 1040 ez form 2012 However, if there is a direct economic relationship between your holding of the asset and your trade or business of performing personal services, the income, gain, or loss is effectively connected. Irs 1040 ez form 2012 Pensions. Irs 1040 ez form 2012   If you were a nonresident alien engaged in a U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 trade or business after 1986 because you performed personal services in the United States, and you later receive a pension or retirement pay attributable to these services, such payments are effectively connected income in each year you receive them. Irs 1040 ez form 2012 This is true whether or not you are engaged in a U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 trade or business in the year you receive the retirement pay. Irs 1040 ez form 2012 Transportation Income Transportation income (defined in chapter 2) is effectively connected if you meet both of the following conditions. Irs 1040 ez form 2012 You had a fixed place of business in the United States involved in earning the income. Irs 1040 ez form 2012 At least 90% of your U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 source transportation income is attributable to regularly scheduled transportation. Irs 1040 ez form 2012 “Fixed place of business” generally means a place, site, structure, or other similar facility through which you engage in a trade or business. Irs 1040 ez form 2012 “Regularly scheduled transportation” means that a ship or aircraft follows a published schedule with repeated sailings or flights at regular intervals between the same points for voyages or flights that begin or end in the United States. Irs 1040 ez form 2012 This definition applies to both scheduled and chartered air transportation. Irs 1040 ez form 2012 If you do not meet the two conditions above, the income is not effectively connected and is taxed at a 4% rate. Irs 1040 ez form 2012 See Transportation Tax, later, in this chapter. Irs 1040 ez form 2012 Business Profits and Losses and Sales Transactions All profits or losses from U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 sources that are from the operation of a business in the United States are effectively connected with a trade or business in the United States. Irs 1040 ez form 2012 For example, profit from the sale in the United States of inventory property purchased either in this country or in a foreign country is effectively connected trade or business income. Irs 1040 ez form 2012 A share of U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 source profits or losses of a partnership that is engaged in a trade or business in the United States is also effectively connected with a trade or business in the United States. Irs 1040 ez form 2012 Real Property Gain or Loss Gains and losses from the sale or exchange of U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 real property interests (whether or not they are capital assets) are taxed as if you are engaged in a trade or business in the United States. Irs 1040 ez form 2012 You must treat the gain or loss as effectively connected with that trade or business. Irs 1040 ez form 2012 U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 real property interest. Irs 1040 ez form 2012   This is any interest in real property located in the United States or the U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 Virgin Islands or any interest (other than as a creditor) in a domestic corporation that is a U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 real property holding corporation. Irs 1040 ez form 2012 Real property includes the following. Irs 1040 ez form 2012 Land and unsevered natural products of the land, such as growing crops and timber, and mines, wells, and other natural deposits. Irs 1040 ez form 2012 Improvements on land, including buildings, other permanent structures, and their structural components. Irs 1040 ez form 2012 Personal property associated with the use of real property, such as equipment used in farming, mining, forestry, or construction or property used in lodging facilities or rented office space, unless the personal property is: Disposed of more than one year before or after the disposition of the real property, or Separately sold to persons unrelated either to the seller or to the buyer of the real property. Irs 1040 ez form 2012 U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 real property holding corporation. Irs 1040 ez form 2012   A corporation is a U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 real property holding corporation if the fair market value of the corporation's U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 real property interests are at least 50% of the total fair market value of: The corporation's U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 real property interests, plus The corporation's interests in real property located outside the United States, plus The corporation's other assets that are used in, or held for use in, a trade or business. Irs 1040 ez form 2012   Gain or loss on the sale of the stock in any domestic corporation is taxed as if you are engaged in a U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 trade or business unless you establish that the corporation is not a U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 real property holding corporation. Irs 1040 ez form 2012   A U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 real property interest does not include a class of stock of a corporation that is regularly traded on an established securities market, unless you hold more than 5% of the fair market value of that class of stock. Irs 1040 ez form 2012 An interest in a foreign corporation owning U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 real property generally is not a U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 real property interest unless the corporation chooses to be treated as a domestic corporation. Irs 1040 ez form 2012 Qualified investment entities. Irs 1040 ez form 2012   Special rules apply to qualified investment entities (QIEs). Irs 1040 ez form 2012 A QIE is any real estate investment trust (REIT) or any regulated investment company (RIC) that is a U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 real property holding corporation. Irs 1040 ez form 2012    Generally, any distribution from a QIE to a shareholder that is attributable to gain from the sale or exchange of a U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 real property interest is treated as a U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 real property gain by the shareholder receiving the distribution. Irs 1040 ez form 2012 A distribution by a QIE on stock regularly traded on an established securities market in the United States is not treated as gain from the sale or exchange of a U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 real property interest if you did not own more than 5% of that stock at any time during the 1-year period ending on the date of the distribution. Irs 1040 ez form 2012 A distribution that you do not treat as gain from the sale or exchange of a U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 real property interest is included in your gross income as a regular dividend. Irs 1040 ez form 2012 Note. Irs 1040 ez form 2012 Beginning January 1, 2014 (unless extended by legislation), a RIC that is a U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 real property holding corporation will only be treated as a QIE for certain distributions from the RIC that are directly or indirectly attributable to distributions received by the RIC from a REIT. Irs 1040 ez form 2012 Domestically controlled QIE. Irs 1040 ez form 2012   The sale of an interest in a domestically controlled QIE is not the sale of a U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 real property interest. Irs 1040 ez form 2012 The entity is domestically controlled if at all times during the testing period less than 50% in value of its stock was held, directly or indirectly, by foreign persons. Irs 1040 ez form 2012 The testing period is the shorter of (a) the 5-year period ending on the date of disposition, or (b) the period during which the entity was in existence. Irs 1040 ez form 2012 Wash sale. Irs 1040 ez form 2012    If you dispose of an interest in a domestically controlled QIE in an applicable wash sale transaction, special rules apply. Irs 1040 ez form 2012 An applicable wash sale transaction is one in which you: Dispose of an interest in the domestically controlled QIE during the 30-day period before the ex-dividend date of a distribution that you would (but for the disposition) have treated as gain from the sale or exchange of a U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 real property interest, and Acquire, or enter into a contract or option to acquire, a substantially identical interest in that entity during the 61-day period that began on the first day of the 30-day period. Irs 1040 ez form 2012 If this occurs, you are treated as having gain from the sale or exchange of a U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 real property interest in an amount equal to the distribution made after June 15, 2006, that would have been treated as such gain. Irs 1040 ez form 2012 This also applies to any substitute dividend payment. Irs 1040 ez form 2012   A transaction is not treated as an applicable wash sale transaction if: You actually receive the distribution from the domestically controlled QIE related to the interest disposed of, or acquired, in the transaction, or You dispose of any class of stock in a QIE that is regularly traded on an established securities market in the United States but only if you did not own more than 5% of that class of stock at any time during the 1-year period ending on the date of the distribution. Irs 1040 ez form 2012 Alternative minimum tax. Irs 1040 ez form 2012   There may be a minimum tax on your net gain from the disposition of U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 real property interests. Irs 1040 ez form 2012 Figure the amount of this tax, if any, on Form 6251. Irs 1040 ez form 2012 Withholding of tax. Irs 1040 ez form 2012   If you dispose of a U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 real property interest, the buyer may have to withhold tax. Irs 1040 ez form 2012 See the discussion of Tax Withheld on Real Property Sales in chapter 8. Irs 1040 ez form 2012 Foreign Income You must treat three kinds of foreign source income as effectively connected with a trade or business in the United States if: You have an office or other fixed place of business in the United States to which the income can be attributed, That office or place of business is a material factor in producing the income, and The income is produced in the ordinary course of the trade or business carried on through that office or other fixed place of business. Irs 1040 ez form 2012 An office or other fixed place of business is a material factor if it significantly contributes to, and is an essential economic element in, the earning of the income. Irs 1040 ez form 2012 The three kinds of foreign source income are listed below. Irs 1040 ez form 2012 Rents and royalties for the use of, or for the privilege of using, intangible personal property located outside the United States or from any interest in such property. Irs 1040 ez form 2012 Included are rents or royalties for the use, or for the privilege of using, outside the United States, patents, copyrights, secret processes and formulas, goodwill, trademarks, trade brands, franchises, and similar properties if the rents or royalties are from the active conduct of a trade or business in the United States. Irs 1040 ez form 2012 Dividends, interest, or amounts received for the provision of a guarantee of indebtedness issued after September 27, 2010, from the active conduct of a banking, financing, or similar business in the United States. Irs 1040 ez form 2012 A substitute dividend or interest payment received under a securities lending transaction or a sale-repurchase transaction is treated the same as the amounts received on the transferred security. Irs 1040 ez form 2012 Income, gain, or loss from the sale outside the United States, through the U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 office or other fixed place of business, of: Stock in trade, Property that would be included in inventory if on hand at the end of the tax year, or Property held primarily for sale to customers in the ordinary course of business. Irs 1040 ez form 2012 Item (3) will not apply if you sold the property for use, consumption, or disposition outside the United States and an office or other fixed place of business in a foreign country was a material factor in the sale. Irs 1040 ez form 2012 Any foreign source income that is equivalent to any item of income described above is treated as effectively connected with a U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 trade or business. Irs 1040 ez form 2012 For example, foreign source interest and dividend equivalents are treated as U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 effectively connected income if the income is derived by a foreign person in the active conduct of a banking, financing, or similar business within the United States. Irs 1040 ez form 2012 Tax on Effectively Connected Income Income you receive during the tax year that is effectively connected with your trade or business in the United States is, after allowable deductions, taxed at the rates that apply to U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 citizens and residents. Irs 1040 ez form 2012 Generally, you can receive effectively connected income only if you are a nonresident alien engaged in trade or business in the United States during the tax year. Irs 1040 ez form 2012 However, income you receive from the sale or exchange of property, the performance of services, or any other transaction in another tax year is treated as effectively connected in that year if it would have been effectively connected in the year the transaction took place or you performed the services. Irs 1040 ez form 2012 Example. Irs 1040 ez form 2012 Ted Richards, a nonresident alien, entered the United States in August 2012, to perform personal services in the U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 office of his overseas employer. Irs 1040 ez form 2012 He worked in the U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 office until December 25, 2012, but did not leave this country until January 11, 2013. Irs 1040 ez form 2012 On January 8, 2013, he received his final paycheck for services performed in the United States during 2012. Irs 1040 ez form 2012 All of Ted's income during his stay here is U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 source income. Irs 1040 ez form 2012 During 2012, Ted was engaged in the trade or business of performing personal services in the United States. Irs 1040 ez form 2012 Therefore, all amounts paid to him in 2012 for services performed in the United States during 2012 are effectively connected with that trade or business during 2012. Irs 1040 ez form 2012 The salary payment Ted received in January 2013 is U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 source income to him in 2013. Irs 1040 ez form 2012 It is effectively connected with a trade or business in the United States because he was engaged in a trade or business in the United States during 2012 when he performed the services that earned the income. Irs 1040 ez form 2012 Real property income. Irs 1040 ez form 2012   You may be able to choose to treat all income from real property as effectively connected. Irs 1040 ez form 2012 See Income From Real Property , later, in this chapter. Irs 1040 ez form 2012 The 30% Tax Tax at a 30% (or lower treaty) rate applies to certain items of income or gains from U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 sources but only if the items are not effectively connected with your U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 trade or business. Irs 1040 ez form 2012 Fixed or Determinable Income The 30% (or lower treaty) rate applies to the gross amount of U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 source fixed or determinable annual or periodic gains, profits, or income. Irs 1040 ez form 2012 Income is fixed when it is paid in amounts known ahead of time. Irs 1040 ez form 2012 Income is determinable whenever there is a basis for figuring the amount to be paid. Irs 1040 ez form 2012 Income can be periodic if it is paid from time to time. Irs 1040 ez form 2012 It does not have to be paid annually or at regular intervals. Irs 1040 ez form 2012 Income can be determinable or periodic even if the length of time during which the payments are made is increased or decreased. Irs 1040 ez form 2012 Items specifically included as fixed or determinable income are interest (other than original issue discount), dividends, dividend equivalent payments (defined in chapter 2), rents, premiums, annuities, salaries, wages, and other compensation. Irs 1040 ez form 2012 A substitute dividend or interest payment received under a securities lending transaction or a sale-repurchase transaction is treated the same as the amounts received on the transferred security. Irs 1040 ez form 2012 Other items of income, such as royalties, also may be subject to the 30% tax. Irs 1040 ez form 2012 Some fixed or determinable income may be exempt from U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 tax. Irs 1040 ez form 2012 See chapter 3 if you are not sure whether the income is taxable. Irs 1040 ez form 2012 Original issue discount (OID). Irs 1040 ez form 2012   If you sold, exchanged, or received a payment on a bond or other debt instrument that was issued at a discount after March 31, 1972, all or part of the original issue discount (OID) (other than portfolio interest) may be subject to the 30% tax. Irs 1040 ez form 2012 The amount of OID is the difference between the stated redemption price at maturity and the issue price of the debt instrument. Irs 1040 ez form 2012 The 30% tax applies in the following circumstances. Irs 1040 ez form 2012 You received a payment on a debt instrument. Irs 1040 ez form 2012 In this case, the amount of OID subject to tax is the OID that accrued while you held the debt instrument minus the OID previously taken into account. Irs 1040 ez form 2012 But the tax on the OID cannot be more than the payment minus the tax on the interest payment on the debt instrument. Irs 1040 ez form 2012 You sold or exchanged the debt instrument. Irs 1040 ez form 2012 The amount of OID subject to tax is the OID that accrued while you held the debt instrument minus the amount already taxed in (1) above. Irs 1040 ez form 2012   Report on your return the amount of OID shown on Form 1042-S, Foreign Person's U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 Source Income Subject to Withholding, if you bought the debt instrument at original issue. Irs 1040 ez form 2012 However, you must recompute your proper share of OID shown on Form 1042-S if any of the following apply. Irs 1040 ez form 2012 You bought the debt instrument at a premium or paid an acquisition premium. Irs 1040 ez form 2012 The debt instrument is a stripped bond or a stripped coupon (including zero coupon instruments backed by U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 Treasury securities). Irs 1040 ez form 2012 The debt instrument is a contingent payment or inflation-indexed debt instrument. Irs 1040 ez form 2012 For the definition of premium and acquisition premium and instructions on how to recompute OID, get Publication 1212. Irs 1040 ez form 2012   If you held a bond or other debt instrument that was issued at a discount before April 1, 1972, contact the IRS for further information. Irs 1040 ez form 2012 See chapter 12. Irs 1040 ez form 2012 Gambling Winnings In general, nonresident aliens are subject to the 30% tax on the gross proceeds from gambling won in the United States if that income is not effectively connected with a U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 trade or business and is not exempted by treaty. Irs 1040 ez form 2012 However, no tax is imposed on nonbusiness gambling income a nonresident alien wins playing blackjack, baccarat, craps, roulette, or big-6 wheel in the United States. Irs 1040 ez form 2012 Nonresident aliens are taxed at graduated rates on net gambling income won in the United States that is effectively connected with a U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 trade or business. Irs 1040 ez form 2012 Social Security Benefits A nonresident alien must include 85% of any U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 social security benefit (and the social security equivalent part of a tier 1 railroad retirement benefit) in U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 source fixed or determinable annual or periodic income. Irs 1040 ez form 2012 Social security benefits include monthly retirement, survivor, and disability benefits. Irs 1040 ez form 2012 This income is exempt under some tax treaties. Irs 1040 ez form 2012 See Table 1 in Publication 901, U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 Tax Treaties, for a list of tax treaties that exempt U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 social security benefits from U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 tax. Irs 1040 ez form 2012 Sales or Exchanges of Capital Assets These rules apply only to those capital gains and losses from sources in the United States that are not effectively connected with a trade or business in the United States. Irs 1040 ez form 2012 They apply even if you are engaged in a trade or business in the United States. Irs 1040 ez form 2012 These rules do not apply to the sale or exchange of a U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 real property interest or to the sale of any property that is effectively connected with a trade or business in the United States. Irs 1040 ez form 2012 See Real Property Gain or Loss , earlier, under Effectively Connected Income. Irs 1040 ez form 2012 A capital asset is everything you own except: Inventory. Irs 1040 ez form 2012 Business accounts or notes receivable. Irs 1040 ez form 2012 Depreciable property used in a trade or business. Irs 1040 ez form 2012 Real property used in a trade or business. Irs 1040 ez form 2012 Supplies regularly used in a trade or business. Irs 1040 ez form 2012 Certain copyrights, literary or musical or artistic compositions, letters or memoranda, or similar property. Irs 1040 ez form 2012 Certain U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 government publications. Irs 1040 ez form 2012 Certain commodities derivative financial instruments held by a commodities derivatives dealer. Irs 1040 ez form 2012 Hedging transactions. Irs 1040 ez form 2012 A capital gain is a gain on the sale or exchange of a capital asset. Irs 1040 ez form 2012 A capital loss is a loss on the sale or exchange of a capital asset. Irs 1040 ez form 2012 If the sale is in foreign currency, for the purpose of determining gain, the cost and selling price of the property should be expressed in U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 currency at the rate of exchange prevailing as of the date of the purchase and date of the sale, respectively. Irs 1040 ez form 2012 You may want to read Publication 544. Irs 1040 ez form 2012 However, use Publication 544 only to determine what is a sale or exchange of a capital asset, or what is treated as such. Irs 1040 ez form 2012 Specific tax treatment that applies to U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 citizens or residents generally does not apply to you. Irs 1040 ez form 2012 The following gains are subject to the 30% (or lower treaty) rate without regard to the 183-day rule, discussed later. Irs 1040 ez form 2012 Gains on the disposal of timber, coal, or domestic iron ore with a retained economic interest. Irs 1040 ez form 2012 Gains on contingent payments received from the sale or exchange of patents, copyrights, and similar property after October 4, 1966. Irs 1040 ez form 2012 Gains on certain transfers of all substantial rights to, or an undivided interest in, patents if the transfers were made before October 5, 1966. Irs 1040 ez form 2012 Gains on the sale or exchange of original issue discount obligations. Irs 1040 ez form 2012 Gains in (1) are not subject to the 30% (or lower treaty) rate if you choose to treat the gains as effectively connected with a U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 trade or business. Irs 1040 ez form 2012 See Income From Real Property , later. Irs 1040 ez form 2012 183-day rule. Irs 1040 ez form 2012   If you were in the United States for 183 days or more during the tax year, your net gain from sales or exchanges of capital assets is taxed at a 30% (or lower treaty) rate. Irs 1040 ez form 2012 For purposes of the 30% (or lower treaty) rate, net gain is the excess of your capital gains from U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 sources over your capital losses from U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 sources. Irs 1040 ez form 2012 This rule applies even if any of the transactions occurred while you were not in the United States. Irs 1040 ez form 2012   To determine your net gain, consider the amount of your gains and losses that would be recognized and taken into account only if, and to the extent that, they would be recognized and taken into account if you were in a U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 trade or business during the year and the gains and losses were effectively connected with that trade or business during the tax year. Irs 1040 ez form 2012   In arriving at your net gain, do not take the following into consideration. Irs 1040 ez form 2012 The four types of gains listed earlier. Irs 1040 ez form 2012 The deduction for a capital loss carryover. Irs 1040 ez form 2012 Capital losses in excess of capital gains. Irs 1040 ez form 2012 Exclusion for gain from the sale or exchange of qualified small business stock (section 1202 exclusion). Irs 1040 ez form 2012 Losses from the sale or exchange of property held for personal use. Irs 1040 ez form 2012 However, losses resulting from casualties or thefts may be deductible on Schedule A (Form 1040NR). Irs 1040 ez form 2012 See Itemized Deductions in chapter 5. Irs 1040 ez form 2012   If you are not engaged in a trade or business in the United States and have not established a tax year for a prior period, your tax year will be the calendar year for purposes of the 183-day rule. Irs 1040 ez form 2012 Also, you must file your tax return on a calendar-year basis. Irs 1040 ez form 2012   If you were in the United States for less than 183 days during the tax year, capital gains (other than gains listed earlier) are tax exempt unless they are effectively connected with a trade or business in the United States during your tax year. Irs 1040 ez form 2012 Reporting. Irs 1040 ez form 2012   Report your gains and losses from the sales or exchanges of capital assets that are not effectively connected with a trade or business in the United States on page 4 of Form 1040NR. Irs 1040 ez form 2012 Report gains and losses from sales or exchanges of capital assets (including real property) that are effectively connected with a trade or business in the United States on a separate Schedule D (Form 1040), Form 4797, or both. Irs 1040 ez form 2012 Attach them to Form 1040NR. Irs 1040 ez form 2012 Income From Real Property If you have income from real property located in the United States that you own or have an interest in and hold for the production of income, you can choose to treat all income from that property as income effectively connected with a trade or business in the United States. Irs 1040 ez form 2012 The choice applies to all income from real property located in the United States and held for the production of income and to all income from any interest in such property. Irs 1040 ez form 2012 This includes income from rents, royalties from mines, oil or gas wells, or other natural resources. Irs 1040 ez form 2012 It also includes gains from the sale or exchange of timber, coal, or domestic iron ore with a retained economic interest. Irs 1040 ez form 2012 You can make this choice only for real property income that is not otherwise effectively connected with your U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 trade or business. Irs 1040 ez form 2012 If you make the choice, you can claim deductions attributable to the real property income and only your net income from real property is taxed. Irs 1040 ez form 2012 This choice does not treat a nonresident alien, who is not otherwise engaged in a U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 trade or business, as being engaged in a trade or business in the United States during the year. Irs 1040 ez form 2012 Example. Irs 1040 ez form 2012 You are a nonresident alien and are not engaged in a U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 trade or business. Irs 1040 ez form 2012 You own a single-family house in the United States that you rent out. Irs 1040 ez form 2012 Your rental income for the year is $10,000. Irs 1040 ez form 2012 This is your only U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 source income. Irs 1040 ez form 2012 As discussed earlier under The 30% Tax, the rental income is subject to a tax at a 30% (or lower treaty) rate. Irs 1040 ez form 2012 You received a Form 1042-S showing that your tenants properly withheld this tax from the rental income. Irs 1040 ez form 2012 You do not have to file a U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 tax return (Form 1040NR) because your U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 tax liability is satisfied by the withholding of tax. Irs 1040 ez form 2012 If you make the choice discussed earlier, you can offset the $10,000 income by certain rental expenses. Irs 1040 ez form 2012 (See Publication 527, Residential Rental Property, for information on rental expenses. Irs 1040 ez form 2012 ) Any resulting net income is taxed at graduated rates. Irs 1040 ez form 2012 If you make this choice, report the rental income and expenses on Schedule E (Form 1040) and attach the schedule to Form 1040NR. Irs 1040 ez form 2012 For the first year you make the choice, also attach the statement discussed next. Irs 1040 ez form 2012 Making the choice. Irs 1040 ez form 2012   Make the initial choice by attaching a statement to your return, or amended return, for the year of the choice. Irs 1040 ez form 2012 Include the following in your statement. Irs 1040 ez form 2012 That you are making the choice. Irs 1040 ez form 2012 Whether the choice is under Internal Revenue Code section 871(d) (explained earlier) or a tax treaty. Irs 1040 ez form 2012 A complete list of all your real property, or any interest in real property, located in the United States. Irs 1040 ez form 2012 Give the legal identification of U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 timber, coal, or iron ore in which you have an interest. Irs 1040 ez form 2012 The extent of your ownership in the property. Irs 1040 ez form 2012 The location of the property. Irs 1040 ez form 2012 A description of any major improvements to the property. Irs 1040 ez form 2012 The dates you owned the property. Irs 1040 ez form 2012 Your income from the property. Irs 1040 ez form 2012 Details of any previous choices and revocations of the real property income choice. Irs 1040 ez form 2012   This choice stays in effect for all later tax years unless you revoke it. Irs 1040 ez form 2012 Revoking the choice. Irs 1040 ez form 2012   You can revoke the choice without IRS approval by filing Form 1040X, Amended U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 Individual Income Tax Return, for the year you made the choice and for later tax years. Irs 1040 ez form 2012 You must file Form 1040X within 3 years from the date your return was filed or 2 years from the time the tax was paid, whichever is later. Irs 1040 ez form 2012 If this time period has expired for the year of choice, you cannot revoke the choice for that year. Irs 1040 ez form 2012 However, you may revoke the choice for later tax years only if you have IRS approval. Irs 1040 ez form 2012 For information on how to get IRS approval, see Regulation section 1. Irs 1040 ez form 2012 871-10(d)(2). Irs 1040 ez form 2012 Transportation Tax A 4% tax rate applies to transportation income that is not effectively connected because it does not meet the two conditions listed earlier under Transportation Income . Irs 1040 ez form 2012 If you receive transportation income subject to the 4% tax, you should figure the tax and show it on line 57 of Form 1040NR. Irs 1040 ez form 2012 Attach a statement to your return that includes the following information (if applicable). Irs 1040 ez form 2012 Your name, taxpayer identification number, and tax year. Irs 1040 ez form 2012 A description of the types of services performed (whether on or off board). Irs 1040 ez form 2012 Names of vessels or registration numbers of aircraft on which you performed the services. Irs 1040 ez form 2012 Amount of U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 source transportation income derived from each type of service for each vessel or aircraft for the calendar year. Irs 1040 ez form 2012 Total amount of U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 source transportation income derived from all types of services for the calendar year. Irs 1040 ez form 2012 This 4% tax applies to your U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 source gross transportation income. Irs 1040 ez form 2012 This only includes transportation income that is treated as derived from sources in the United States if the transportation begins or ends in the United States. Irs 1040 ez form 2012 For transportation income from personal services, the transportation must be between the United States and a U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 possession. Irs 1040 ez form 2012 For personal services of a nonresident alien, this only applies to income derived from, or in connection with, an aircraft. Irs 1040 ez form 2012 Interrupted Period of Residence You are subject to tax under a special rule if you interrupt your period of U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 residence with a period of nonresidence. Irs 1040 ez form 2012 The special rule applies if you meet all of the following conditions. Irs 1040 ez form 2012 You were a U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 resident for a period that includes at least 3 consecutive calendar years. Irs 1040 ez form 2012 You were a U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 resident for at least 183 days in each of those years. Irs 1040 ez form 2012 You ceased to be treated as a U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 resident. Irs 1040 ez form 2012 You then again became a U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 resident before the end of the third calendar year after the end of the period described in (1) above. Irs 1040 ez form 2012 Under this special rule, you are subject to tax on your U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 source gross income and gains on a net basis at the graduated rates applicable to individuals (with allowable deductions) for the period you were a nonresident alien, unless you would be subject to a higher tax under the 30% tax (discussed earlier) on income not connected with a U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 trade or business. Irs 1040 ez form 2012 For information on how to figure the special tax, see How To Figure the Expatriation Tax (If You Expatriated Before June 17, 2008) under Expatriation Tax , below. Irs 1040 ez form 2012 Example. Irs 1040 ez form 2012 John Willow, a citizen of New Zealand, entered the United States on April 1, 2008, as a lawful permanent resident. Irs 1040 ez form 2012 On August 1, 2010, John ceased to be a lawful permanent resident and returned to New Zealand. Irs 1040 ez form 2012 During his period of residence, he was present in the United States for at least 183 days in each of three consecutive years (2008, 2009, and 2010). Irs 1040 ez form 2012 He returned to the United States on October 5, 2013, as a lawful permanent resident. Irs 1040 ez form 2012 He became a resident before the close of the third calendar year (2013) beginning after the end of his first period of residence (August 1, 2010). Irs 1040 ez form 2012 Therefore, he is subject to tax under the special rule for the period of nonresidence (August 2, 2010, through October 4, 2013) if it is more than the tax that would normally apply to him as a nonresident alien. Irs 1040 ez form 2012 Reporting requirements. Irs 1040 ez form 2012   If you are subject to this tax for any year in the period you were a nonresident alien, you must file Form 1040NR for that year. Irs 1040 ez form 2012 The return is due by the due date (including extensions) for filing your U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 income tax return for the year that you again become a U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 resident. Irs 1040 ez form 2012 If you already filed returns for that period, you must file amended returns. Irs 1040 ez form 2012 You must attach a statement to your return that identifies the source of all of your U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 and foreign gross income and the items of income subject to this special rule. Irs 1040 ez form 2012 Expatriation Tax The expatriation tax provisions apply to U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 citizens who have renounced their citizenship and long-term residents who have ended their residency. Irs 1040 ez form 2012 The rules that apply are based on the dates of expatriation, which are described in the following sections. Irs 1040 ez form 2012 Expatriation Before June 4, 2004. Irs 1040 ez form 2012 Expatriation After June 3, 2004, and Before June 17, 2008. Irs 1040 ez form 2012 Expatriation After June 16, 2008. Irs 1040 ez form 2012 Long-term resident defined. Irs 1040 ez form 2012   You are a long-term resident if you were a lawful permanent resident of the United States in at least 8 of the last 15 tax years ending with the year your residency ends. Irs 1040 ez form 2012 In determining if you meet the 8-year requirement, do not count any year that you are treated as a resident of a foreign country under a tax treaty and do not waive treaty benefits. Irs 1040 ez form 2012 Expatriation Before June 4, 2004 If you expatriated before June 4, 2004, the expatriation rules apply if one of the principal purposes of the action is the avoidance of U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 taxes. Irs 1040 ez form 2012 Unless you received a ruling from the IRS that you did not expatriate to avoid U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 taxes, you are presumed to have tax avoidance as a principal purpose if: Your average annual net income tax for the last 5 tax years ending before the date of your action to relinquish your citizenship or terminate your residency was more than $100,000, or Your net worth on the date of your action was $500,000 or more. Irs 1040 ez form 2012 The amounts above are adjusted for inflation if your expatriation action is after 1997 (see Table 4-1). Irs 1040 ez form 2012 Table 4-1. Irs 1040 ez form 2012 Inflation-Adjusted Amounts for Expatriation Actions Before June 4, 2004 IF you expatriated during . Irs 1040 ez form 2012 . Irs 1040 ez form 2012 . Irs 1040 ez form 2012   THEN the rules outlined on this page apply if . Irs 1040 ez form 2012 . Irs 1040 ez form 2012 . Irs 1040 ez form 2012     Your 5-year average annual net income tax was more than . Irs 1040 ez form 2012 . Irs 1040 ez form 2012 . Irs 1040 ez form 2012 OR Your net worth equaled or exceeded . Irs 1040 ez form 2012 . Irs 1040 ez form 2012 . Irs 1040 ez form 2012 1999   110,000   552,000 2000   112,000   562,000 2001   116,000   580,000 2002   120,000   599,000 2003   122,000   608,000 2004 (before June 4)*   124,000   622,000 *If you expatriated after June 3, 2004, see Expatriation After June 3, 2004, and Before June 17, 2008 or Expatriation After June 16, 2008. Irs 1040 ez form 2012 Reporting requirements. Irs 1040 ez form 2012   If you lost your U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 citizenship, you should have filed Form 8854 with a consular office or a federal court at the time of loss of citizenship. Irs 1040 ez form 2012 If you ended your long-term residency, you should have filed Form 8854 with the Internal Revenue Service when you filed your dual-status tax return for the year your residency ended. Irs 1040 ez form 2012   Your U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 residency is considered to have ended when you ceased to be a lawful permanent resident or you began to be treated as a resident of another country under a tax treaty and do not waive treaty benefits. Irs 1040 ez form 2012 Penalties. Irs 1040 ez form 2012   If you failed to file Form 8854, you may have to pay a penalty equal to the greater of 5% of the expatriation tax or $1,000. Irs 1040 ez form 2012 The penalty will be assessed for each year of the 10-year period beginning on the date of expatriation during which your failure to file continues. Irs 1040 ez form 2012 The penalty will not be imposed if you can show that the failure is due to reasonable cause and not willful neglect. Irs 1040 ez form 2012 Expatriation tax. Irs 1040 ez form 2012   The expatriation tax applies to the 10-year period following the date of expatriation or termination of residency. Irs 1040 ez form 2012 It is figured in the same way as for those expatriating after June 3, 2004, and before June 17, 2008. Irs 1040 ez form 2012 See How To Figure the Expatriation Tax (If You Expatriated Before June 17, 2008) in the next section. Irs 1040 ez form 2012 Expatriation After June 3, 2004, and Before June 17, 2008 If you expatriated after June 3, 2004, and before June 17, 2008, the expatriation rules apply to you if any of the following statements apply. Irs 1040 ez form 2012 Your average annual net income tax for the 5 tax years ending before the date of expatriation or termination of residency is more than: $124,000 if you expatriated or terminated residency in 2004. Irs 1040 ez form 2012 $127,000 if you expatriated or terminated residency in 2005. Irs 1040 ez form 2012 $131,000 if you expatriated or terminated residency in 2006. Irs 1040 ez form 2012 $136,000 if you expatriated or terminated residency in 2007. Irs 1040 ez form 2012 $139,000 if you expatriated or terminated residency in 2008. Irs 1040 ez form 2012 Your net worth is $2 million or more on the date of your expatriation or termination of residency. Irs 1040 ez form 2012 You fail to certify on Form 8854 that you have complied with all U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 federal tax obligations for the 5 tax years preceding the date of your expatriation or termination of residency. Irs 1040 ez form 2012 Exception for dual-citizens and certain minors. Irs 1040 ez form 2012   Certain dual-citizens and certain minors (defined next) are not subject to the expatriation tax even if they meet (1) or (2) earlier. Irs 1040 ez form 2012 However, they still must provide the certification required in (3). Irs 1040 ez form 2012 Certain dual-citizens. Irs 1040 ez form 2012   You may qualify for the exception described above if all of the following apply. Irs 1040 ez form 2012 You became at birth a U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 citizen and a citizen of another country and you continue to be a citizen of that other country. Irs 1040 ez form 2012 You were never a resident alien of the United States (as defined in chapter 1). Irs 1040 ez form 2012 You never held a U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 passport. Irs 1040 ez form 2012 You were present in the United States for no more than 30 days during any calendar year that is 1 of the 10 calendar years preceding your loss of U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 citizenship. Irs 1040 ez form 2012 Certain minors. Irs 1040 ez form 2012   You may qualify for the exception described above if you meet all of the following requirements. Irs 1040 ez form 2012 You became a U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 citizen at birth. Irs 1040 ez form 2012 Neither of your parents was a U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 citizen at the time of your birth. Irs 1040 ez form 2012 You expatriated before you were 18½. Irs 1040 ez form 2012 You were present in the United States for not more than 30 days during any calendar year that is 1 of the 10 calendar years preceding your expatriation. Irs 1040 ez form 2012 Tax consequences of presence in the United States. Irs 1040 ez form 2012   The following rules apply if you do not meet the exception above for dual-citizens and certain minors and the expatriation rules would otherwise apply to you. Irs 1040 ez form 2012   The expatriation tax does not apply to any tax year during the 10-year period if you are physically present in the United States for more than 30 days during the calendar year ending in that year. Irs 1040 ez form 2012 Instead, you are treated as a U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 citizen or resident and taxed on your worldwide income for that tax year. Irs 1040 ez form 2012 You must file Form 1040, 1040A, or 1040EZ and figure your tax as prescribed in the instructions for those forms. Irs 1040 ez form 2012   When counting the number of days of presence during a calendar year, count any day you were physically present in the United States at any time during the day. Irs 1040 ez form 2012 However, do not count any days (up to a limit of 30 days) on which you performed personal services in the United States for an employer who is not related to you if either of the following apply. Irs 1040 ez form 2012 You have ties with other countries. Irs 1040 ez form 2012 You have ties with other countries if: You became (within a reasonable period after your expatriation or termination of residency) a citizen or resident of the country in which you, your spouse, or either of your parents were born, and You became fully liable for income tax in that country. Irs 1040 ez form 2012 You were physically present in the United States for 30 days or less during each year in the 10-year period ending on the date of expatriation or termination of residency. Irs 1040 ez form 2012 Do not count any day you were an exempt individual or were unable to leave the United States because of a medical condition that arose while you were in the United States. Irs 1040 ez form 2012 See Exempt individual and Medical condition in chapter 1 under Substantial Presence Test, but disregard the information about Form 8843. Irs 1040 ez form 2012 Related employer. Irs 1040 ez form 2012   If your employer in the United States is any of the following, then your employer is related to you. Irs 1040 ez form 2012 You must count any days you performed services in the United States for that employer as days of presence in the United States. Irs 1040 ez form 2012 Members of your family. Irs 1040 ez form 2012 This includes only your brothers and sisters, half-brothers and half-sisters, spouse, ancestors (parents, grandparents, etc. Irs 1040 ez form 2012 ), and lineal descendants (children, grandchildren, etc. Irs 1040 ez form 2012 ). Irs 1040 ez form 2012 A partnership in which you directly or indirectly own more than 50% of the capital interest or the profits interest. Irs 1040 ez form 2012 A corporation in which you directly or indirectly own more than 50% in value of the outstanding stock. Irs 1040 ez form 2012 (See Publication 550, chapter 4, Constructive ownership of stock, for how to determine whether you directly or indirectly own outstanding stock. Irs 1040 ez form 2012 ) A tax-exempt charitable or educational organization that is directly or indirectly controlled, in any manner or by any method, by you or by a member of your family, whether or not this control is legally enforceable. Irs 1040 ez form 2012 Date of tax expatriation. Irs 1040 ez form 2012   For purposes of U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 tax rules, the date of your expatriation or termination of residency is the later of the dates on which you perform the following actions. Irs 1040 ez form 2012 You notify either the Department of State or the Department of Homeland Security (whichever is appropriate) of your expatriating act or termination of residency. Irs 1040 ez form 2012 You file Form 8854 in accordance with the form instructions. Irs 1040 ez form 2012 Annual return. Irs 1040 ez form 2012   If the expatriation tax applies to you, you must file Form 8854 each year during the 10-year period following the date of expatriation. Irs 1040 ez form 2012 You must file this form even if you owe no U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 tax. Irs 1040 ez form 2012 Penalty. Irs 1040 ez form 2012   If you fail to file Form 8854 for any tax year, fail to include all information required to be shown on the form, or include incorrect information, you may have to pay a penalty of $10,000. Irs 1040 ez form 2012 You will not have to pay a penalty if you show that the failure is due to reasonable cause and not to willful neglect. Irs 1040 ez form 2012 How To Figure the Expatriation Tax (If You Expatriated Before June 17, 2008) If the expatriation tax applies to you, you are generally subject to tax on your U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 source gross income and gains on a net basis at the graduated rates applicable to individuals (with allowable deductions) unless you would be subject to a higher tax under the 30% tax (discussed earlier) on income not connected with a U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 trade or business. Irs 1040 ez form 2012 For this purpose, U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 source gross income (defined in chapter 2) includes gains from the sale or exchange of: Property (other than stock or debt obligations) located in the United States, Stock issued by a U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 domestic corporation, and Debt obligations of U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 persons or of the United States, a state or political subdivision thereof, or the District of Columbia. Irs 1040 ez form 2012 U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 source income also includes any income or gain derived from stock in certain controlled foreign corporations if you owned, or were considered to own, at any time during the 2-year period ending on the date of expatriation, more than 50% of: The total combined voting power of all classes of that corporation's stock, or The total value of the stock. Irs 1040 ez form 2012 The income or gain is considered U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 source income only to the extent of your share of earnings and profits earned or accumulated before the date of expatriation and during the periods you met the ownership requirements discussed above. Irs 1040 ez form 2012 Any exchange of property is treated as a sale of the property at its fair market value on the date of the exchange and any gain is treated as U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 source gross income in the tax year of the exchange unless you enter into a gain recognition agreement under Notice 97-19. Irs 1040 ez form 2012 Other information. Irs 1040 ez form 2012   For more information on the expatriation tax provisions, including exceptions to the tax and special U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 source rules, see section 877 of the Internal Revenue Code. Irs 1040 ez form 2012 Expatriation Tax Return If you expatriated or terminated your U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 residency, or you are subject to the expatriation tax, you must file Form 8854, Initial and Annual Expatriation Statement. Irs 1040 ez form 2012 Attach it to Form 1040NR if you are required to file that form. Irs 1040 ez form 2012 If you are present in the United States following your expatriation and are subject to tax as a U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 citizen or resident, file Form 8854 with Form 1040. Irs 1040 ez form 2012 Expatriation After June 16, 2008 If you expatriated after June 16, 2008, the expatriation rules apply to you if you meet any of the following conditions. Irs 1040 ez form 2012 Your average annual net income tax for the 5 years ending before the date of expatriation or termination of residency is more than: $139,000 if you expatriated or terminated residency in 2008. Irs 1040 ez form 2012 $145,000 if you expatriated or terminated residency in 2009 or 2010. Irs 1040 ez form 2012 $147,000 if you expatriated or terminated residency in 2011. Irs 1040 ez form 2012 $151,000 if you expatriated or terminated residency in 2012. Irs 1040 ez form 2012 $155,000 if you expatriated or terminated residency in 2013. Irs 1040 ez form 2012 Your net worth is $2 million or more on the date of your expatriation or termination of residency. Irs 1040 ez form 2012 You fail to certify on Form 8854 that you have complied with all U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 federal tax obligations for the 5 years preceding the date of your expatriation or termination of residency. Irs 1040 ez form 2012 Exception for dual-citizens and certain minors. Irs 1040 ez form 2012   Certain dual-citizens and certain minors (defined next) are not subject to the expatriation tax even if they meet (1) or (2) above. Irs 1040 ez form 2012 However, they still must provide the certification required in (3) above. Irs 1040 ez form 2012 Certain dual-citizens. Irs 1040 ez form 2012   You may qualify for the exception described above if both of the following apply. Irs 1040 ez form 2012 You became at birth a U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 citizen and a citizen of another country and you continue to be a citizen of, and are taxed as a resident of, that other country. Irs 1040 ez form 2012 You have been a resident of the United States for not more than 10 years during the 15-year tax period ending with the tax year during which the expatriation occurs. Irs 1040 ez form 2012 For the purpose of determining U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 residency, use the substantial presence test described in chapter 1. Irs 1040 ez form 2012 Certain minors. Irs 1040 ez form 2012   You may qualify for the exception described earlier if you meet both of the following requirements. Irs 1040 ez form 2012 You expatriated before you were 18½. Irs 1040 ez form 2012 You have been a resident of the United States for not more than 10 tax years before the expatriation occurs. Irs 1040 ez form 2012 For the purpose of determining U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 residency, use the substantial presence test described in chapter 1. Irs 1040 ez form 2012 Expatriation date. Irs 1040 ez form 2012   Your expatriation date is the date you relinquish U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 citizenship (in the case of a former citizen) or terminate your long-term residency (in the case of a former U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 resident). Irs 1040 ez form 2012 Former U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 citizen. Irs 1040 ez form 2012   You are considered to have relinquished your U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 citizenship on the earliest of the following dates. Irs 1040 ez form 2012 The date you renounced U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 citizenship before a diplomatic or consular officer of the United States (provided that the voluntary renouncement was later confirmed by the issuance of a certificate of loss of nationality). Irs 1040 ez form 2012 The date you furnished to the State Department a signed statement of voluntary relinquishment of U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 nationality confirming the performance of an expatriating act (provided that the voluntary relinquishment was later confirmed by the issuance of a certificate of loss of nationality). Irs 1040 ez form 2012 The date the State Department issued a certificate of loss of nationality. Irs 1040 ez form 2012 The date that a U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 court canceled your certificate of naturalization. Irs 1040 ez form 2012 Former long-term resident. Irs 1040 ez form 2012   You are considered to have terminated your long-term residency on the earliest of the following dates. Irs 1040 ez form 2012 The date you voluntarily relinquished your lawful permanent resident status by filing Department of Homeland Security Form I-407 with a U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 consular or immigration officer, and the Department of Homeland Security determined that you have, in fact, abandoned your lawful permanent resident status. Irs 1040 ez form 2012 The date you became subject to a final administrative order for your removal from the United States under the Immigration and Nationality Act and you actually left the United States as a result of that order. Irs 1040 ez form 2012 If you were a dual resident of the United States and a country with which the United States has an income tax treaty, the date you began to be treated as a resident of that country and you determined that, for purposes of the treaty, you are a resident of the treaty country and notify the IRS of that treatment on Forms 8833 and 8854. Irs 1040 ez form 2012 See Effect of Tax Treaties in chapter 1 for more information about dual residents. Irs 1040 ez form 2012 How To Figure the Expatriation Tax (If You Expatriate After June 16, 2008) In the year you expatriate, you are subject to income tax on the net unrealized gain (or loss) in your property as if the property had been sold for its fair market value on the day before your expatriation date (“mark-to-market tax”). Irs 1040 ez form 2012 This applies to most types of property interests you held on the date of relinquishment of citizenship or termination of residency. Irs 1040 ez form 2012 But see Exceptions , later. Irs 1040 ez form 2012 Gains arising from deemed sales must be taken into account for the tax year of the deemed sale without regard to other U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 internal revenue laws. Irs 1040 ez form 2012 Losses from deemed sales must be taken into account to the extent otherwise provided under U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 internal revenue laws. Irs 1040 ez form 2012 However, Internal Revenue Code section 1091 (relating to the disallowance of losses on wash sales of stock and securities) does not apply. Irs 1040 ez form 2012 The net gain that you otherwise must include in your income is reduced (but not below zero) by: $600,000 if you expatriated or terminated residency before January 1, 2009. Irs 1040 ez form 2012 $626,000 if you expatriated or terminated residency in 2009. Irs 1040 ez form 2012 $627,000 if you expatriated or terminated residency in 2010. Irs 1040 ez form 2012 $636,000 if you expatriated or terminated residency in 2011. Irs 1040 ez form 2012 $651,000 if you expatriated or terminated residency in 2012. Irs 1040 ez form 2012 $668,000 if you expatriated or terminated residency in 2013. Irs 1040 ez form 2012 Exceptions. Irs 1040 ez form 2012   The mark-to-market tax does not apply to the following. Irs 1040 ez form 2012 Eligible deferred compensation items. Irs 1040 ez form 2012 Ineligible deferred compensation items. Irs 1040 ez form 2012 Interests in nongrantor trusts. Irs 1040 ez form 2012 Specified tax deferred accounts. Irs 1040 ez form 2012 Instead, items (1) and (3) may be subject to withholding at source. Irs 1040 ez form 2012 In the case of item (2), you are treated as receiving the present value of your accrued benefit as of the day before the expatriation date. Irs 1040 ez form 2012 In the case of item (4), you are treated as receiving a distribution of your entire interest in the account on the day before your expatriation date. Irs 1040 ez form 2012 See paragraphs (d), (e), and (f) of section 877A for more information. Irs 1040 ez form 2012 Expatriation Tax Return If you expatriated or terminated your U. Irs 1040 ez form 2012 S. Irs 1040 ez form 2012 residency, or you are subject to the expatriation rules (as discussed earlier in the first paragraph under Expatriation After June 16, 2008), you must file Form 8854. Irs 1040 ez form 2012 Attach it to Form 1040 or Form 1040NR if you are required to file either of those forms. Irs 1040 ez form 2012 Deferral of payment of mark-to-market tax. Irs 1040 ez form 2012   You can make an irrevocable election to defer payment of the mark-to-market tax imposed on the deemed sale of property. Irs 1040 ez form 2012 If you make this election, the following rules apply. Irs 1040 ez form 2012 You can make the election on a property-by-property basis. Irs 1040 ez form 2012 The deferred tax attributable to a particular property is due on the return for the tax year in which you dispose of the property. Irs 1040 ez form 2012 Interest is charged for the period the tax is deferred. Irs 1040 ez form 2012 The due date for the payment of the deferred tax cannot be extended beyond the earlier of the following dates. Irs 1040 ez form 2012 The due date of the return required for the year of death. Irs 1040 ez form 2012 The time that the security provided for the property fails to be adequate. Irs 1040 ez form 2012 See item (6) below. Irs 1040 ez form 2012 You make the election on Form 8854. Irs 1040 ez form 2012 You must provide adequate security (such as a bond). Irs 1040 ez form 2012 You must make an irrevocable waiver of any right under any treaty of the United States which would preclude assessment or collection of the mark-to-market tax. Irs 1040 ez form 2012   For more information about the deferral of payment, see the Instructions for Form 8854. Irs 1040 ez form 2012 Prev  Up  Next   Home   More Online Publications