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Irs Govefile

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Irs Govefile

Irs govefile Publication 515 - Main Content Table of Contents Withholding of TaxWithholding Agent Withholding and Reporting Obligations Persons Subject to NRA WithholdingIdentifying the Payee Foreign Persons DocumentationBeneficial Owners Foreign Intermediaries and Foreign Flow-Through Entities Standards of Knowledge Presumption Rules Income Subject to NRA WithholdingSource of Income Fixed or Determinable Annual or Periodical Income (FDAP) Withholding on Specific IncomeEffectively Connected Income Income Not Effectively Connected Pay for Personal Services Performed Artists and Athletes (Income Codes 42 and 43) Other Income Foreign Governments and Certain Other Foreign Organizations U. Irs govefile S. Irs govefile Taxpayer Identification NumbersUnexpected payment. Irs govefile Depositing Withheld TaxesWhen Deposits Are Required Adjustment for Overwithholding Returns RequiredJoint owners. Irs govefile Electronic reporting. Irs govefile Partnership Withholding on Effectively Connected IncomeWho Must Withhold Foreign Partner Publicly Traded Partnerships U. Irs govefile S. Irs govefile Real Property InterestForeign corporations. Irs govefile Domestic corporations. Irs govefile U. Irs govefile S. Irs govefile real property holding corporations. Irs govefile Partnerships. Irs govefile Trusts and estates. Irs govefile Domestically controlled QIE. Irs govefile Late filing of certifications or notices. Irs govefile Certifications. Irs govefile Liability of agent or qualified substitute. Irs govefile Reporting and Paying the Tax Withholding Certificates Tax Treaty TablesTable 1 Table 2 Table 3 How To Get Tax HelpLow Income Taxpayer Clinics (LITCs). Irs govefile Withholding of Tax In most cases, a foreign person is subject to U. Irs govefile S. Irs govefile tax on its U. Irs govefile S. Irs govefile source income. Irs govefile Most types of U. Irs govefile S. Irs govefile source income received by a foreign person are subject to U. Irs govefile S. Irs govefile tax of 30%. Irs govefile A reduced rate, including exemption, may apply if there is a tax treaty between the foreign person's country of residence and the United States. Irs govefile The tax is generally withheld (NRA withholding) from the payment made to the foreign person. Irs govefile The term “NRA withholding” is used in this publication descriptively to refer to withholding required under sections 1441, 1442, and 1443 of the Internal Revenue Code. Irs govefile In most cases, NRA withholding describes the withholding regime that requires withholding on a payment of U. Irs govefile S. Irs govefile source income. Irs govefile Payments to foreign persons, including nonresident alien individuals, foreign entities, and governments, may be subject to NRA withholding. Irs govefile NRA withholding does not include withholding under section 1445 of the Code (see U. Irs govefile S. Irs govefile Real Property Interest, later) or under section 1446 of the Code (see Partnership Withholding on Effectively Connected Income , later). Irs govefile A withholding agent (defined next) is the person responsible for withholding on payments made to a foreign person. Irs govefile However, a withholding agent that can reliably associate the payment with documentation (discussed later) from a U. Irs govefile S. Irs govefile person is not required to withhold. Irs govefile In addition, a withholding agent may apply a reduced rate of withholding (including an exemption from withholding) if it can reliably associate the payment with documentation from a beneficial owner that is a foreign person entitled to a reduced rate of withholding. Irs govefile Withholding Agent You are a withholding agent if you are a U. Irs govefile S. Irs govefile or foreign person that has control, receipt, custody, disposal, or payment of any item of income of a foreign person that is subject to withholding. Irs govefile A withholding agent may be an individual, corporation, partnership, trust, association, nominee (under section 1446 of the Code), or any other entity, including any foreign intermediary, foreign partnership, or U. Irs govefile S. Irs govefile branch of certain foreign banks and insurance companies. Irs govefile You may be a withholding agent even if there is no requirement to withhold from a payment or even if another person has withheld the required amount from the payment. Irs govefile Although several persons may be withholding agents for a single payment, the full tax is required to be withheld only once. Irs govefile In most cases, the U. Irs govefile S. Irs govefile person who pays an amount subject to NRA withholding is the person responsible for withholding. Irs govefile However, other persons may be required to withhold. Irs govefile For example, a payment made by a flow-through entity or nonqualified intermediary that knows, or has reason to know, that the full amount of NRA withholding was not done by the person from which it receives a payment is required to do the appropriate withholding since it also falls within the definition of a withholding agent. Irs govefile In addition, withholding must be done by any qualified intermediary, withholding foreign partnership, or withholding foreign trust in accordance with the terms of its withholding agreement, discussed later. Irs govefile Liability for tax. Irs govefile   As a withholding agent, you are personally liable for any tax required to be withheld. Irs govefile This liability is independent of the tax liability of the foreign person to whom the payment is made. Irs govefile If you fail to withhold and the foreign payee fails to satisfy its U. Irs govefile S. Irs govefile tax liability, then both you and the foreign person are liable for tax, as well as interest and any applicable penalties. Irs govefile   The applicable tax will be collected only once. Irs govefile If the foreign person satisfies its U. Irs govefile S. Irs govefile tax liability, you are not liable for the tax but remain liable for any interest and penalties for failure to withhold. Irs govefile Determination of amount to withhold. Irs govefile   You must withhold on the gross amount subject to NRA withholding. Irs govefile You cannot reduce the gross amount by any deductions. Irs govefile However, see Scholarships and Fellowship Grants and Pay for Personal Services Performed , later, for when a deduction for a personal exemption may be allowed. Irs govefile   If the determination of the source of the income or the amount subject to tax depends on facts that are not known at the time of payment, you must withhold an amount sufficient to ensure that at least 30% of the amount subsequently determined to be subject to withholding is withheld. Irs govefile In no case, however, should you withhold more than 30% of the total amount paid. Irs govefile Or, you may make a reasonable estimate of the amount from U. Irs govefile S. Irs govefile sources and put a corresponding part of the amount due in escrow until the amount from U. Irs govefile S. Irs govefile sources can be determined, at which time withholding becomes due. Irs govefile When to withhold. Irs govefile   Withholding is required at the time you make a payment of an amount subject to withholding. Irs govefile A payment is made to a person if that person realizes income, whether or not there is an actual transfer of cash or other property. Irs govefile A payment is considered made to a person if it is paid for that person's benefit. Irs govefile For example, a payment made to a creditor of a person in satisfaction of that person's debt to the creditor is considered made to the person. Irs govefile A payment also is considered made to a person if it is made to that person's agent. Irs govefile   A U. Irs govefile S. Irs govefile partnership should withhold when any distributions that include amounts subject to withholding are made. Irs govefile However, if a foreign partner's distributive share of income subject to withholding is not actually distributed, the U. Irs govefile S. Irs govefile partnership must withhold on the foreign partner's distributive share of the income on the earlier of the date that a Schedule K-1 (Form 1065) is provided or mailed to the partner or the due date for furnishing that schedule. Irs govefile If the distributable amount consists of effectively connected income, see Partnership Withholding on Effectively Connected Income , later. Irs govefile A U. Irs govefile S. Irs govefile trust is required to withhold on the amount includible in the gross income of a foreign beneficiary to the extent the trust's distributable net income consists of an amount subject to withholding. Irs govefile To the extent a U. Irs govefile S. Irs govefile trust is required to distribute an amount subject to withholding but does not actually distribute the amount, it must withhold on the foreign beneficiary's allocable share at the time the income is required to be reported on Form 1042-S. Irs govefile Withholding and Reporting Obligations You are required to report payments subject to NRA withholding on Form 1042-S and to file a tax return on Form 1042. Irs govefile (See Returns Required , later. Irs govefile ) An exception from reporting may apply to individuals who are not required to withhold from a payment and who do not make the payment in the course of their trade or business. Irs govefile Form 1099 reporting and backup withholding. Irs govefile    You also may be responsible as a payer for reporting on Form 1099 payments made to a U. Irs govefile S. Irs govefile person. Irs govefile You must withhold 28% (backup withholding rate) from a reportable payment made to a U. Irs govefile S. Irs govefile person that is subject to Form 1099 reporting if any of the following apply. Irs govefile The U. Irs govefile S. Irs govefile person has not provided its taxpayer identification number (TIN) in the manner required. Irs govefile The IRS notifies you that the TIN furnished by the payee is incorrect. Irs govefile There has been a notified payee underreporting. Irs govefile There has been a payee certification failure. Irs govefile In most cases, a TIN must be provided by a U. Irs govefile S. Irs govefile non-exempt recipient on Form W-9, Request for Taxpayer Identification Number and Certification. Irs govefile A payer files a tax return on Form 945, Annual Return of Withheld Federal Income Tax, for backup withholding. Irs govefile You may be required to file Form 1099 and, if appropriate, backup withhold, even if you do not make the payments directly to that U. Irs govefile S. Irs govefile person. Irs govefile For example, you are required to report income paid to a foreign intermediary or flow-through entity that collects for a U. Irs govefile S. Irs govefile person subject to Form 1099 reporting. Irs govefile See Identifying the Payee , later, for more information. Irs govefile Also see Section S. Irs govefile Special Rules for Reporting Payments Made Through Foreign Intermediaries and Foreign Flow-Through Entities on Form 1099 in the General Instructions for Certain Information Returns. Irs govefile Foreign persons who provide Form W-8BEN, Form W-8ECI, or Form W-8EXP (or applicable documentary evidence) are exempt from backup withholding and Form 1099 reporting. Irs govefile Wages paid to employees. Irs govefile   If you are the employer of a nonresident alien, you generally must withhold taxes at graduated rates. Irs govefile See Pay for Personal Services Performed , later. Irs govefile Effectively connected income by partnerships. Irs govefile   A withholding agent that is a partnership (whether U. Irs govefile S. Irs govefile or foreign) is also responsible for withholding on its income effectively connected with a U. Irs govefile S. Irs govefile trade or business that is allocable to foreign partners. Irs govefile See Partnership Withholding on Effectively Connected Income , later, for more information. Irs govefile U. Irs govefile S. Irs govefile real property interest. Irs govefile   A withholding agent also may be responsible for withholding if a foreign person transfers a U. Irs govefile S. Irs govefile real property interest to the agent, or if it is a corporation, partnership, trust, or estate that distributes a U. Irs govefile S. Irs govefile real property interest to a shareholder, partner, or beneficiary that is a foreign person. Irs govefile See U. Irs govefile S. Irs govefile Real Property Interest , later. Irs govefile Persons Subject to NRA Withholding NRA withholding applies only to payments made to a payee that is a foreign person. Irs govefile It does not apply to payments made to U. Irs govefile S. Irs govefile persons. Irs govefile Usually, you determine the payee's status as a U. Irs govefile S. Irs govefile or foreign person based on the documentation that person provides. Irs govefile See Documentation , later. Irs govefile However, if you have received no documentation or you cannot reliably associate all or a part of a payment with documentation, then you must apply certain presumption rules, discussed later. Irs govefile Identifying the Payee In most cases, the payee is the person to whom you make the payment, regardless of whether that person is the beneficial owner of the income. Irs govefile However, there are situations in which the payee is a person other than the one to whom you actually make a payment. Irs govefile U. Irs govefile S. Irs govefile agent of foreign person. Irs govefile   If you make a payment to a U. Irs govefile S. Irs govefile person and you have actual knowledge that the U. Irs govefile S. Irs govefile person is receiving the payment as an agent of a foreign person, you must treat the payment as made to the foreign person. Irs govefile However, if the U. Irs govefile S. Irs govefile person is a financial institution, you may treat the institution as the payee provided you have no reason to believe that the institution will not comply with its own obligation to withhold. Irs govefile   If the payment is not subject to NRA withholding (for example, gross proceeds from the sales of securities), you must treat the payment as made to a U. Irs govefile S. Irs govefile person and not as a payment to a foreign person. Irs govefile You may be required to report the payment on Form 1099 and, if applicable, backup withhold. Irs govefile Disregarded entities. Irs govefile   A business entity that is not a corporation and that has a single owner may be disregarded as an entity separate from its owner (a disregarded entity) for federal tax purposes. Irs govefile The payee of a payment made to a disregarded entity is the owner of the entity. Irs govefile   If the owner of the entity is a foreign person, you must apply NRA withholding unless you can treat the foreign owner as a beneficial owner entitled to a reduced rate of withholding. Irs govefile   If the owner is a U. Irs govefile S. Irs govefile person, you do not apply NRA withholding. Irs govefile However, you may be required to report the payment on Form 1099 and, if applicable, backup withhold. Irs govefile You may assume that a foreign entity is not a disregarded entity unless you can reliably associate the payment with documentation provided by the owner or you have actual knowledge or reason to know that the foreign entity is a disregarded entity. Irs govefile Flow-Through Entities The payees of payments (other than income effectively connected with a U. Irs govefile S. Irs govefile trade or business) made to a foreign flow-through entity are the owners or beneficiaries of the flow-through entity. Irs govefile This rule applies for purposes of NRA withholding and for Form 1099 reporting and backup withholding. Irs govefile Income that is, or is deemed to be, effectively connected with the conduct of a U. Irs govefile S. Irs govefile trade or business of a flow-through entity is treated as paid to the entity. Irs govefile All of the following are flow-through entities. Irs govefile A foreign partnership (other than a withholding foreign partnership). Irs govefile A foreign simple or foreign grantor trust (other than a withholding foreign trust). Irs govefile A fiscally transparent entity receiving income for which treaty benefits are claimed. Irs govefile See Fiscally transparent entity , later. Irs govefile In most cases, you treat a payee as a flow-through entity if it provides you with a Form W-8IMY (see Documentation , later) on which it claims such status. Irs govefile You also may be required to treat the entity as a flow-through entity under the presumption rules, discussed later. Irs govefile You must determine whether the owners or beneficiaries of a flow-through entity are U. Irs govefile S. Irs govefile or foreign persons, how much of the payment relates to each owner or beneficiary, and, if the owner or beneficiary is foreign, whether a reduced rate of NRA withholding applies. Irs govefile You make these determinations based on the documentation and other information (contained in a withholding statement) that is associated with the flow-through entity's Form W-8IMY. Irs govefile If you do not have all of the information that is required to reliably associate a payment with a specific payee, you must apply the presumption rules. Irs govefile See Documentation and Presumption Rules , later. Irs govefile Withholding foreign partnerships and withholding foreign trusts are not flow-through entities. Irs govefile Foreign partnerships. Irs govefile    A foreign partnership is any partnership that is not organized under the laws of any state of the United States or the District of Columbia or any partnership that is treated as foreign under the income tax regulations. Irs govefile If a foreign partnership is not a withholding foreign partnership, the payees of income are the partners of the partnership, provided the partners are not themselves a flow-through entity or a foreign intermediary. Irs govefile However, the payee is the partnership itself if the partnership is claiming treaty benefits on the basis that it is not fiscally transparent and that it meets all the other requirements for claiming treaty benefits. Irs govefile If a partner is a foreign flow-through entity or a foreign intermediary, you apply the payee determination rules to that partner to determine the payees. Irs govefile Example 1. Irs govefile A nonwithholding foreign partnership has three partners: a nonresident alien individual; a foreign corporation; and a U. Irs govefile S. Irs govefile citizen. Irs govefile You make a payment of U. Irs govefile S. Irs govefile source interest to the partnership. Irs govefile It gives you a Form W-8IMY with which it associates Form W-8BEN from the nonresident alien; Form W-8BEN from the foreign corporation; and Form W-9 from the U. Irs govefile S. Irs govefile citizen. Irs govefile The partnership also gives you a complete withholding statement that enables you to associate a part of the interest payment to each partner. Irs govefile You must treat all three partners as the payees of the interest payment as if the payment were made directly to them. Irs govefile Report the payment to the nonresident alien and the foreign corporation on Forms 1042-S. Irs govefile Report the payment to the U. Irs govefile S. Irs govefile citizen on Form 1099-INT. Irs govefile Example 2. Irs govefile A nonwithholding foreign partnership has two partners: a foreign corporation and a nonwithholding foreign partnership. Irs govefile The second partnership has two partners, both nonresident alien individuals. Irs govefile You make a payment of U. Irs govefile S. Irs govefile source interest to the first partnership. Irs govefile It gives you a valid Form W-8IMY with which it associates a Form W-8BEN from the foreign corporation and a Form W-8IMY from the second partnership. Irs govefile In addition, Forms W-8BEN from the partners are associated with the Form W-8IMY from the second partnership. Irs govefile The Forms W-8IMY from the partnerships have complete withholding statements associated with them. Irs govefile Because you can reliably associate a part of the interest payment with the Form W-8BEN provided by the foreign corporation and the Forms W-8BEN provided by the nonresident alien individual partners as a result of the withholding statements, you must treat them as the payees of the interest. Irs govefile Example 3. Irs govefile You make a payment of U. Irs govefile S. Irs govefile source dividends to a withholding foreign partnership. Irs govefile The partnership has two partners, both foreign corporations. Irs govefile You can reliably associate the payment with a valid Form W-8IMY from the partnership on which it represents that it is a withholding foreign partnership. Irs govefile You must treat the partnership as the payee of the dividends. Irs govefile Foreign simple and grantor trust. Irs govefile   A trust is foreign unless it meets both of the following tests. Irs govefile A court within the United States is able to exercise primary supervision over the administration of the trust. Irs govefile One or more U. Irs govefile S. Irs govefile persons have the authority to control all substantial decisions of the trust. Irs govefile   In most cases, a foreign simple trust is a foreign trust that is required to distribute all of its income annually. Irs govefile A foreign grantor trust is a foreign trust that is treated as a grantor trust under sections 671 through 679 of the Code. Irs govefile   The payees of a payment made to a foreign simple trust are the beneficiaries of the trust. Irs govefile The payees of a payment made to a foreign grantor trust are the owners of the trust. Irs govefile However, the payee is the foreign simple or grantor trust itself if the trust is claiming treaty benefits on the basis that it is not fiscally transparent and that it meets all the other requirements for claiming treaty benefits. Irs govefile If the beneficiaries or owners are themselves flow-through entities or foreign intermediaries, you apply the payee determination rules to that beneficiary or owner to determine the payees. Irs govefile Example. Irs govefile A foreign simple trust has three beneficiaries: two nonresident alien individuals and a U. Irs govefile S. Irs govefile citizen. Irs govefile You make a payment of interest to the foreign trust. Irs govefile It gives you a Form W-8IMY with which it associates Forms W-8BEN from the nonresident aliens and a Form W-9 from the U. Irs govefile S. Irs govefile citizen. Irs govefile The trust also gives you a complete withholding statement that enables you to associate a part of the interest payment with the forms provided by each beneficiary. Irs govefile You must treat all three beneficiaries as the payees of the interest payment as if the payment were made directly to them. Irs govefile Report the payment to the nonresident aliens on Forms 1042-S. Irs govefile Report the payment to the U. Irs govefile S. Irs govefile citizen on Form 1099-INT. Irs govefile Fiscally transparent entity. Irs govefile   If a reduced rate of withholding under an income tax treaty is claimed, a flow-through entity includes any entity in which the interest holder must treat the entity as fiscally transparent. Irs govefile The determination of whether an entity is fiscally transparent is made on an item of income basis (that is, the determination is made separately for interest, dividends, royalties, etc. Irs govefile ). Irs govefile The interest holder in an entity makes the determination by applying the laws of the jurisdiction where the interest holder is organized, incorporated, or otherwise considered a resident. Irs govefile An entity is considered to be fiscally transparent for the income to the extent the laws of that jurisdiction require the interest holder to separately take into account on a current basis the interest holder's share of the income, whether or not distributed to the interest holder, and the character and source of the income to the interest holder are determined as if the income was realized directly from the source that paid it to the entity. Irs govefile Subject to the standards of knowledge rules discussed later, you generally make the determination that an entity is fiscally transparent based on a Form W-8IMY provided by the entity. Irs govefile   The payees of a payment made to a fiscally transparent entity are the interest holders of the entity. Irs govefile Example. Irs govefile Entity A is a business organization organized under the laws of country X that has an income tax treaty in force with the United States. Irs govefile A has two interest holders, B and C. Irs govefile B is a corporation organized under the laws of country Y. Irs govefile C is a corporation organized under the laws of country Z. Irs govefile Both countries Y and Z have an income tax treaty in force with the United States. Irs govefile A receives royalty income from U. Irs govefile S. Irs govefile sources that is not effectively connected with the conduct of a trade or business in the United States. Irs govefile For U. Irs govefile S. Irs govefile income tax purposes, A is treated as a partnership. Irs govefile Country X treats A as a partnership and requires the interest holders in A to separately take into account on a current basis their respective shares of the income paid to A even if the income is not distributed. Irs govefile The laws of country X provide that the character and source of the income to A's interest holders are determined as if the income was realized directly from the source that paid it to A. Irs govefile Accordingly, A is fiscally transparent in its jurisdiction, country X. Irs govefile B and C are not fiscally transparent under the laws of their respective countries of incorporation. Irs govefile Country Y requires B to separately take into account on a current basis B's share of the income paid to A, and the character and source of the income to B is determined as if the income was realized directly from the source that paid it to A. Irs govefile Accordingly, A is fiscally transparent for that income under the laws of country Y, and B is treated as deriving its share of the U. Irs govefile S. Irs govefile source royalty income for purposes of the U. Irs govefile S. Irs govefile -Y income tax treaty. Irs govefile Country Z, on the other hand, treats A as a corporation and does not require C to take into account its share of A's income on a current basis whether or not distributed. Irs govefile Therefore, A is not treated as fiscally transparent under the laws of country Z. Irs govefile Accordingly, C is not treated as deriving its share of the U. Irs govefile S. Irs govefile source royalty income for purposes of the U. Irs govefile S. Irs govefile -Z income tax treaty. Irs govefile Foreign Intermediaries In most cases, if you make payments to a foreign intermediary, the payees are the persons for whom the foreign intermediary collects the payment, such as account holders or customers, not the intermediary itself. Irs govefile This rule applies for purposes of NRA withholding and for Form 1099 reporting and backup withholding. Irs govefile You may, however, treat a qualified intermediary that has assumed primary withholding responsibility for a payment as the payee, and you are not required to withhold. Irs govefile An intermediary is a custodian, broker, nominee, or any other person that acts as an agent for another person. Irs govefile A foreign intermediary is either a qualified intermediary or a nonqualified intermediary. Irs govefile In most cases, you determine whether an entity is a qualified intermediary or a nonqualified intermediary based on the representations the intermediary makes on Form W-8IMY. Irs govefile You must determine whether the customers or account holders of a foreign intermediary are U. Irs govefile S. Irs govefile or foreign persons and, if the account holder or customer is foreign, whether a reduced rate of NRA withholding applies. Irs govefile You make these determinations based on the foreign intermediary's Form W-8IMY and associated information and documentation. Irs govefile If you do not have all of the information or documentation that is required to reliably associate a payment with a payee, you must apply the presumption rules. Irs govefile See Documentation and Presumption Rules , later. Irs govefile Nonqualified intermediary. Irs govefile   A nonqualified intermediary (NQI) is any intermediary that is a foreign person and that is not a qualified intermediary. Irs govefile The payees of a payment made to an NQI are the customers or account holders on whose behalf the NQI is acting. Irs govefile Example. Irs govefile You make a payment of interest to a foreign bank that is a nonqualified intermediary. Irs govefile The bank gives you a Form W-8IMY and the Forms W-8BEN of two foreign persons, and a Form W-9 from a U. Irs govefile S. Irs govefile person for whom the bank is collecting the payments. Irs govefile The bank also associates with its Form W-8IMY a withholding statement on which it allocates the interest payment to each account holder and provides all other information required to be on the withholding statement. Irs govefile The account holders are the payees of the interest payment. Irs govefile You should report the part of the interest paid to the two foreign persons on Forms 1042-S and the part paid to the U. Irs govefile S. Irs govefile person on Form 1099-INT. Irs govefile Qualified intermediary. Irs govefile   A qualified intermediary (QI) is any foreign intermediary (or foreign branch of a U. Irs govefile S. Irs govefile intermediary) that has entered into a qualified intermediary withholding agreement (discussed later) with the IRS. Irs govefile You may treat a QI as a payee to the extent the QI assumes primary withholding responsibility or primary Form 1099 reporting and backup withholding responsibility for a payment. Irs govefile In this situation, the QI is required to withhold the tax. Irs govefile You can determine whether a QI has assumed responsibility from the Form W-8IMY provided by the QI. Irs govefile   A payment to a QI to the extent it does not assume primary NRA withholding responsibility is considered made to the person on whose behalf the QI acts. Irs govefile If a QI does not assume Form 1099 reporting and backup withholding responsibility, you must report on Form 1099 and, if applicable, backup withhold as if you were making the payment directly to the U. Irs govefile S. Irs govefile person. Irs govefile Branches of financial institutions. Irs govefile   Branches of financial institutions are not permitted to operate as QIs if they are located outside of countries having approved “know-your-customer” (KYC) rules. Irs govefile The countries with approved KYC rules are listed on IRS. Irs govefile gov. Irs govefile QI withholding agreement. Irs govefile   Foreign financial institutions and foreign branches of U. Irs govefile S. Irs govefile financial institutions can enter into an agreement with the IRS to be a qualified intermediary. Irs govefile   A QI is entitled to certain simplified withholding and reporting rules. Irs govefile In general, there are three major areas whereby intermediaries with QI status are afforded such simplified treatment. Irs govefile   To apply for QI status, complete Form 14345, Qualified Intermediary Application, and Form SS-4, Application for Employer Identification Number. Irs govefile These forms, and the procedures required to obtain a QI withholding agreement are available at www. Irs govefile irs. Irs govefile gov/Businesses/Corporations/Qualified-Intermediaries-(QI). Irs govefile Documentation. Irs govefile   A QI is not required to forward documentation obtained from foreign account holders to the U. Irs govefile S. Irs govefile withholding agent from whom the QI receives a payment of U. Irs govefile S. Irs govefile source income. Irs govefile The QI maintains such documentation at its location and provides the U. Irs govefile S. Irs govefile withholding agent with withholding rate pools. Irs govefile A withholding rate pool is a payment of a single type of income that is subject to a single rate of withholding. Irs govefile   A QI is required to provide the U. Irs govefile S. Irs govefile withholding agent with information regarding U. Irs govefile S. Irs govefile persons subject to Form 1099 information reporting unless the QI assumes the primary obligation to do Form 1099 reporting and backup withholding. Irs govefile   If a QI obtains documentary evidence under the “know-your-customer” rules that apply to the QI under local law, and the documentary evidence is of a type specified in an attachment to the QI agreement, the documentary evidence remains valid until there is a change in circumstances or the QI knows the information is incorrect. Irs govefile This indefinite validity period rule does not apply to Forms W-8 or to documentary evidence that is not of the type specified in the attachment to the agreement. Irs govefile Form 1042-S reporting. Irs govefile   A QI is permitted to report payments made to its direct foreign account holders on a pooled basis rather than reporting payments to each direct account holder specifically. Irs govefile Pooled basis reporting is not available for payments to certain account holders, such as a nonqualified intermediary or a flow-through entity (discussed earlier). Irs govefile Collective refund procedures. Irs govefile   A QI may seek a refund on behalf of its direct account holders. Irs govefile The direct account holders, therefore, are not required to file returns with the IRS to obtain refunds, but rather may obtain them from the QI. Irs govefile U. Irs govefile S. Irs govefile branches of foreign banks and foreign insurance companies. Irs govefile   Special rules apply to a U. Irs govefile S. Irs govefile branch of a foreign bank subject to Federal Reserve Board supervision or a foreign insurance company subject to state regulatory supervision. Irs govefile If you agree to treat the branch as a U. Irs govefile S. Irs govefile person, you may treat the branch as a U. Irs govefile S. Irs govefile payee for a payment subject to NRA withholding provided you receive a Form W-8IMY from the U. Irs govefile S. Irs govefile branch on which the agreement is evidenced. Irs govefile If you treat the branch as a U. Irs govefile S. Irs govefile payee, you are not required to withhold. Irs govefile Even though you agree to treat the branch as a U. Irs govefile S. Irs govefile person, you must report the payment on Form 1042-S. Irs govefile   A financial institution organized in a U. Irs govefile S. Irs govefile possession is treated as a U. Irs govefile S. Irs govefile branch. Irs govefile The special rules discussed in this section apply to a possessions financial institution. Irs govefile   If you are paying a U. Irs govefile S. Irs govefile branch an amount that is not subject to NRA withholding, treat the payment as made to a foreign person, irrespective of any agreement to treat the branch as a U. Irs govefile S. Irs govefile person for amounts subject to NRA withholding. Irs govefile Consequently, amounts not subject to NRA withholding that are paid to a U. Irs govefile S. Irs govefile branch are not subject to Form 1099 reporting or backup withholding. Irs govefile   Alternatively, a U. Irs govefile S. Irs govefile branch may provide you with a Form W-8IMY with which it associates the documentation of the persons on whose behalf it acts. Irs govefile In this situation, the payees are the persons on whose behalf the branch acts provided you can reliably associate the payment with valid documentation from those persons. Irs govefile See Nonqualified Intermediaries under  Documentation, later. Irs govefile   If the U. Irs govefile S. Irs govefile branch does not provide you with a Form W-8IMY, then you should treat a payment subject to NRA withholding as made to the foreign person of which the branch is a part and the income as effectively connected with the conduct of a trade or business in the United States. Irs govefile Withholding foreign partnership and foreign trust. Irs govefile   A withholding foreign partnership (WP) is any foreign partnership that has entered into a WP withholding agreement with the IRS and is acting in that capacity. Irs govefile A withholding foreign trust (WT) is a foreign simple or grantor trust that has entered into a WT withholding agreement with the IRS and is acting in that capacity. Irs govefile   A WP or WT may act in that capacity only for payments of amounts subject to NRA withholding that are distributed to, or included in the distributive share of, its direct partners, beneficiaries, or owners. Irs govefile A WP or WT acting in that capacity must assume NRA withholding responsibility for these amounts. Irs govefile You may treat a WP or WT as a payee if it has provided you with documentation (discussed later) that represents that it is acting as a WP or WT for such amounts. Irs govefile WP and WT withholding agreements. Irs govefile   The WP and WT withholding agreements and the application procedures for the agreements are in Revenue Procedure 2003-64. Irs govefile Also see the following items. Irs govefile Revenue Procedure 2004-21. Irs govefile Revenue Procedure 2005-77. Irs govefile Employer identification number (EIN). Irs govefile   A completed Form SS-4 must be submitted with the application for being a WP or WT. Irs govefile The WP or WT will be assigned a WP-EIN or WT-EIN to be used only when acting in that capacity. Irs govefile Documentation. Irs govefile   A WP or WT must provide you with a Form W-8IMY that certifies that the WP or WT is acting in that capacity and a written statement identifying the amounts for which it is so acting. Irs govefile The statement is not required to contain withholding rate pool information or any information relating to the identity of a direct partner, beneficiary, or owner. Irs govefile The Form W-8IMY must contain the WP-EIN or WT-EIN. Irs govefile Foreign Persons A payee is subject to NRA withholding only if it is a foreign person. Irs govefile A foreign person includes a nonresident alien individual, foreign corporation, foreign partnership, foreign trust, foreign estate, and any other person that is not a U. Irs govefile S. Irs govefile person. Irs govefile It also includes a foreign branch of a U. Irs govefile S. Irs govefile financial institution if the foreign branch is a qualified intermediary. Irs govefile In most cases, the U. Irs govefile S. Irs govefile branch of a foreign corporation or partnership is treated as a foreign person. Irs govefile Nonresident alien. Irs govefile   A nonresident alien is an individual who is not a U. Irs govefile S. Irs govefile citizen or a resident alien. Irs govefile A resident of a foreign country under the residence article of an income tax treaty is a nonresident alien individual for purposes of withholding. Irs govefile Married to U. Irs govefile S. Irs govefile citizen or resident alien. Irs govefile   Nonresident alien individuals married to U. Irs govefile S. Irs govefile citizens or resident aliens may choose to be treated as resident aliens for certain income tax purposes. Irs govefile However, these individuals are still subject to the NRA withholding rules that apply to nonresident aliens for all income except wages. Irs govefile Wages paid to these individuals are subject to graduated withholding. Irs govefile See Wages Paid to Employees—Graduated Withholding . Irs govefile Resident alien. Irs govefile   A resident alien is an individual who is not a citizen or national of the United States and who meets either the green card test or the substantial presence test for the calendar year. Irs govefile Green card test. Irs govefile An alien is a resident alien if the individual was a lawful permanent resident of the United States at any time during the calendar year. Irs govefile This is known as the green card test because these aliens hold immigrant visas (also known as green cards). Irs govefile Substantial presence test. Irs govefile An alien is considered a resident alien if the individual meets the substantial presence test for the calendar year. Irs govefile Under this test, the individual must be physically present in the United States on at least: 31 days during the current calendar year, and 183 days during the current year and the 2 preceding years, counting all the days of physical presence in the current year, but only 1/3 the number of days of presence in the first preceding year, and only 1/6 the number of days in the second preceding year. Irs govefile   In most cases, the days the alien is in the United States as a teacher, student, or trainee on an “F,” “J,” “M,” or “Q” visa are not counted. Irs govefile This exception is for a limited period of time. Irs govefile   For more information on resident and nonresident status, the tests for residence, and the exceptions to them, see Publication 519. Irs govefile Note. Irs govefile   If your employee is late in notifying you that his or her status changed from nonresident alien to resident alien, you may have to make an adjustment to Form 941 if that employee was exempt from withholding of social security and Medicare taxes as a nonresident alien. Irs govefile For more information on making adjustments, see chapter 13 of Publication 15 (Circular E). Irs govefile Resident of a U. Irs govefile S. Irs govefile possession. Irs govefile   A bona fide resident of Puerto Rico, the U. Irs govefile S. Irs govefile Virgin Islands, Guam, the Commonwealth of the Northern Mariana Islands (CNMI), or American Samoa who is not a U. Irs govefile S. Irs govefile citizen or a U. Irs govefile S. Irs govefile national is treated as a nonresident alien for the withholding rules explained here. Irs govefile A bona fide resident of a possession is someone who: Meets the presence test, Does not have a tax home outside the possession, and Does not have a closer connection to the United States or to a foreign country than to the possession. Irs govefile   For more information, see Publication 570, Tax Guide for Individuals With Income From U. Irs govefile S. Irs govefile Possessions. Irs govefile Foreign corporations. Irs govefile   A foreign corporation is one that does not fit the definition of a domestic corporation. Irs govefile A domestic corporation is one that was created or organized in the United States or under the laws of the United States, any of its states, or the District of Columbia. Irs govefile Guam or Northern Mariana Islands corporations. Irs govefile   A corporation created or organized in, or under the laws of, Guam or the CNMI is not considered a foreign corporation for the purpose of withholding tax for the tax year if: At all times during the tax year less than 25% in value of the corporation's stock is owned, directly or indirectly, by foreign persons; and At least 20% of the corporation's gross income is derived from sources within Guam or the CNMI for the 3-year period ending with the close of the preceding tax year of the corporation (or the period the corporation has been in existence, if less). Irs govefile Note. Irs govefile   The provisions discussed below under U. Irs govefile S. Irs govefile Virgin Islands and American Samoa corporations will apply to Guam or CNMI corporations when an implementing agreement is in effect between the United States and that possession. Irs govefile U. Irs govefile S. Irs govefile Virgin Islands and American Samoa corporations. Irs govefile   A corporation created or organized in, or under the laws of, the U. Irs govefile S. Irs govefile Virgin Islands or American Samoa is not considered a foreign corporation for the purposes of withholding tax for the tax year if: At all times during the tax year less than 25% in value of the corporation's stock is owned, directly or indirectly, by foreign persons, At least 65% of the corporation's gross income is effectively connected with the conduct of a trade or business in the U. Irs govefile S. Irs govefile Virgin Islands, American Samoa, Guam, the CNMI, or the United States for the 3-year period ending with the close of the tax year of the corporation (or the period the corporation or any predecessor has been in existence, if less), and No substantial part of the income of the corporation is used, directly or indirectly, to satisfy obligations to a person who is not a bona fide resident of the U. Irs govefile S. Irs govefile Virgin Islands, American Samoa, Guam, the CNMI, or the United States. Irs govefile Foreign private foundations. Irs govefile   A private foundation that was created or organized under the laws of a foreign country is a foreign private foundation. Irs govefile Gross investment income from sources within the United States paid to a qualified foreign private foundation is subject to NRA withholding at a 4% rate (unless exempted by a treaty) rather than the ordinary statutory 30% rate. Irs govefile Other foreign organizations, associations, and charitable institutions. Irs govefile   An organization may be exempt from income tax under section 501(a) of the Internal Revenue Code even if it was formed under foreign law. Irs govefile In most cases, you do not have to withhold tax on payments of income to these foreign tax-exempt organizations unless the IRS has determined that they are foreign private foundations. Irs govefile   Payments to these organizations, however, must be reported on Form 1042-S, even though no tax is withheld. Irs govefile   You must withhold tax on the unrelated business income (as described in Publication 598, Tax on Unrelated Business Income of Exempt Organizations) of foreign tax-exempt organizations in the same way that you would withhold tax on similar income of nonexempt organizations. Irs govefile U. Irs govefile S. Irs govefile branches of foreign persons. Irs govefile   In most cases, a payment to a U. Irs govefile S. Irs govefile branch of a foreign person is a payment made to the foreign person. Irs govefile However, you may treat payments to U. Irs govefile S. Irs govefile branches of foreign banks and foreign insurance companies (discussed earlier) that are subject to U. Irs govefile S. Irs govefile regulatory supervision as payments made to a U. Irs govefile S. Irs govefile person, if you and the U. Irs govefile S. Irs govefile branch have agreed to do so, and if their agreement is evidenced by a withholding certificate, Form W-8IMY. Irs govefile For this purpose, a financial institution organized under the laws of a U. Irs govefile S. Irs govefile possession is treated as a U. Irs govefile S. Irs govefile branch. Irs govefile Documentation In most cases, you must withhold 30% from the gross amount paid to a foreign payee unless you can reliably associate the payment with valid documentation that establishes either of the following. Irs govefile The payee is a U. Irs govefile S. Irs govefile person. Irs govefile The payee is a foreign person that is the beneficial owner of the income and is entitled to a reduced rate of withholding. Irs govefile In most cases, you must get the documentation before you make the payment. Irs govefile The documentation is not valid if you know, or have reason to know, that it is unreliable or incorrect. Irs govefile See Standards of Knowledge , later. Irs govefile If you cannot reliably associate a payment with valid documentation, you must use the presumption rules discussed later. Irs govefile For example, if you do not have documentation or you cannot determine the part of a payment that is allocable to specific documentation, you must use the presumption rules. Irs govefile The specific types of documentation are discussed in this section. Irs govefile However, see Withholding on Specific Income , later, as well as the instructions to the particular forms. Irs govefile As the withholding agent, you also may want to see the Instructions for the Requester of Forms W-8BEN, W-8ECI, W-8EXP, and W-8IMY. Irs govefile Section 1446 withholding. Irs govefile   Under section 1446 of the Code, a partnership must withhold tax on its effectively connected income allocable to a foreign partner. Irs govefile In most cases, a partnership determines if a partner is a foreign partner and the partner's tax classification based on the withholding certificate provided by the partner. Irs govefile This is the same documentation that is filed for NRA withholding, but may require additional information as discussed under each of the forms in this section. Irs govefile Joint owners. Irs govefile    If you make a payment to joint owners, you need to get documentation from each owner. Irs govefile Form W-9. Irs govefile   In most cases, you can treat the payee as a U. Irs govefile S. Irs govefile person if the payee gives you a Form W-9. Irs govefile The Form W-9 can be used only by a U. Irs govefile S. Irs govefile person and must contain the payee's taxpayer identification number (TIN). Irs govefile If there is more than one owner, you may treat the total amount as paid to a U. Irs govefile S. Irs govefile person if any one of the owners gives you a Form W-9. Irs govefile See U. Irs govefile S. Irs govefile Taxpayer Identification Numbers , later. Irs govefile U. Irs govefile S. Irs govefile persons are not subject to NRA withholding, but may be subject to Form 1099 reporting and backup withholding. Irs govefile Form W-8. Irs govefile   In most cases, a foreign payee of the income should give you a form in the Form W-8 series. Irs govefile Until further notice, you can rely upon Forms W-8 that contain a P. Irs govefile O. Irs govefile box as a permanent residence address provided you do not know, or have reason to know, that the person providing the form is a U. Irs govefile S. Irs govefile person and that a street address is available. Irs govefile You may rely on Forms W-8 for which there is a U. Irs govefile S. Irs govefile mailing address provided you received the form prior to December 31, 2001. Irs govefile   If certain requirements are met, the foreign person can give you documentary evidence, rather than a Form W-8. Irs govefile You can rely on documentary evidence in lieu of a Form W-8 for a payment made in a U. Irs govefile S. Irs govefile possession. Irs govefile Other documentation. Irs govefile   Other documentation may be required to claim an exemption from, or a reduced rate of, withholding on pay for personal services. Irs govefile The nonresident alien individual may have to give you a Form W-4 or a Form 8233, Exemption From Withholding on Compensation for Independent (and Certain Dependent) Personal Services of a Nonresident Alien Individual. Irs govefile These forms are discussed in Pay for Personal Services Performed under Withholding on Specific Income. Irs govefile Beneficial Owners If all the appropriate requirements have been established on a Form W-8BEN, W-8ECI, W-8EXP or, if applicable, on documentary evidence, you may treat the payee as a foreign beneficial owner. Irs govefile Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding. Irs govefile   This form is used by a foreign person to: Establish foreign status; Claim that such person is the beneficial owner of the income for which the form is being furnished or a partner in a partnership subject to section 1446 withholding; and If applicable, claim a reduced rate of, or exemption from, withholding under an income tax treaty. Irs govefile   Form W-8BEN also may be used to claim that the foreign person is exempt from Form 1099 reporting and backup withholding for income that is not subject to NRA withholding. Irs govefile For example, a foreign person may provide a Form W-8BEN to a broker to establish that the gross proceeds from the sale of securities are not subject to Form 1099 reporting or backup withholding. Irs govefile Claiming treaty benefits. Irs govefile   You may apply a reduced rate of withholding to a foreign person that provides a Form W-8BEN claiming a reduced rate of withholding under an income tax treaty only if the person provides a U. Irs govefile S. Irs govefile TIN and certifies that: It is a resident of a treaty country; It is the beneficial owner of the income; If it is an entity, it derives the income within the meaning of section 894 of the Internal Revenue Code (it is not fiscally transparent); and It meets any limitation on benefits provision contained in the treaty, if applicable. Irs govefile   If the foreign beneficial owner claiming a treaty benefit is related to you, the foreign beneficial owner also must certify on Form W-8BEN that it will file Form 8833, Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b), if the amount subject to NRA withholding received during a calendar year exceeds, in the aggregate, $500,000. Irs govefile   An entity derives income for which it is claiming treaty benefits only if the entity is not treated as fiscally transparent for that income. Irs govefile See Fiscally transparent entity discussed earlier under Flow-Through Entities. Irs govefile   Limitations on benefits provisions generally prohibit third country residents from obtaining treaty benefits. Irs govefile For example, a foreign corporation may not be entitled to a reduced rate of withholding unless a minimum percentage of its owners are citizens or residents of the United States or the treaty country. Irs govefile   The exemptions from, or reduced rates of, U. Irs govefile S. Irs govefile tax vary under each treaty. Irs govefile You must check the provisions of the tax treaty that apply. Irs govefile Tables at the end of this publication show the countries with which the United States has income tax treaties and the rates of withholding that apply in cases where all conditions of the particular treaty articles are satisfied. Irs govefile   If you know, or have reason to know, that an owner of income is not eligible for treaty benefits claimed, you must not apply the treaty rate. Irs govefile You are not, however, responsible for misstatements on a Form W-8, documentary evidence, or statements accompanying documentary evidence for which you did not have actual knowledge, or reason to know, that the statements were incorrect. Irs govefile Exceptions to TIN requirement. Irs govefile   A foreign person does not have to provide a TIN to claim a reduced rate of withholding under a treaty if the requirements for the following exceptions are met. Irs govefile Income from marketable securities (discussed next). Irs govefile Unexpected payments to an individual (discussed under U. Irs govefile S. Irs govefile Taxpayer Identification Numbers ). Irs govefile Marketable securities. Irs govefile   A Form W-8BEN provided to claim treaty benefits does not need a U. Irs govefile S. Irs govefile TIN if the foreign beneficial owner is claiming the benefits on income from marketable securities. Irs govefile For this purpose, income from a marketable security consists of the following items. Irs govefile Dividends and interest from stocks and debt obligations that are actively traded. Irs govefile Dividends from any redeemable security issued by an investment company registered under the Investment Company Act of 1940 (mutual fund). Irs govefile Dividends, interest, or royalties from units of beneficial interest in a unit investment trust that are (or were upon issuance) publicly offered and are registered with the SEC under the Securities Act of 1933. Irs govefile Income related to loans of any of the above securities. Irs govefile Offshore accounts. Irs govefile   If a payment is made outside the United States to an offshore account, a payee may give you documentary evidence, rather than Form W-8BEN. Irs govefile   In most cases, a payment is made outside the United States if you complete the acts necessary to effect the payment outside the United States. Irs govefile However, an amount paid by a bank or other financial institution on a deposit or account usually will be treated as paid at the branch or office where the amount is credited. Irs govefile An offshore account is an account maintained at an office or branch of a U. Irs govefile S. Irs govefile or foreign bank or other financial institution at any location outside the United States. Irs govefile   You may rely on documentary evidence given to you by a nonqualified intermediary or a flow-through entity with its Form W-8IMY. Irs govefile This rule applies even though you make the payment to a nonqualified intermediary or flow-through entity in the United States. Irs govefile In most cases, the nonqualified intermediary or flow-through entity that gives you documentary evidence also will have to give you a withholding statement, discussed later. Irs govefile Documentary evidence. Irs govefile   You may apply a reduced rate of withholding to income from marketable securities (discussed earlier) paid outside the United States to an offshore account if the beneficial owner gives you documentary evidence in place of a Form W-8BEN. Irs govefile To claim treaty benefits, the documentary evidence must be one of the following: A certificate of residence that: Is issued by a tax official of the treaty country of which the foreign beneficial owner claims to be a resident, States that the person has filed its most recent income tax return as a resident of that country, and Is issued within 3 years prior to being presented to you. Irs govefile Documentation for an individual that: Includes the individual's name, address, and photograph, Is an official document issued by an authorized governmental body, and Is issued no more than 3 years prior to being presented to you. Irs govefile Documentation for an entity that: Includes the name of the entity, Includes the address of its principal office in the treaty country, and Is an official document issued by an authorized governmental body. Irs govefile In addition to the documentary evidence, a foreign beneficial owner that is an entity must provide a statement that it derives the income for which it claims treaty benefits and that it meets one or more of the conditions set forth in a limitation on benefits article, if any, (or similar provision) contained in the applicable treaty. Irs govefile Form W-8ECI, Certificate of Foreign Person's Claim That Income Is Effectively Connected With the Conduct of a Trade or Business in the United States. Irs govefile   This form is used by a foreign person to: Establish foreign status, Claim that such person is the beneficial owner of the income for which the form is being furnished, and Claim that the income is effectively connected with the conduct of a trade or business in the United States. Irs govefile (See Effectively Connected Income , later. Irs govefile )   Effectively connected income for which a valid Form W-8ECI has been provided is generally not subject to NRA withholding. Irs govefile   If a partner submits this form to a partnership, the income claimed to be effectively connected with the conduct of a U. Irs govefile S. Irs govefile trade or business is subject to withholding under section 1446. Irs govefile If the partner has made, or will make, an election under section 871(d) or 882(d), the partner must submit Form W-8ECI, and attach a copy of the election, or a statement of intent to elect, to the form. Irs govefile    If the partner's only effectively connected income is the income allocated from the partnership and the partner is not making the election under section 871(d) or 882(d), the partner should provide Form W-8BEN to the partnership. Irs govefile Form W-8EXP, Certificate of Foreign Government or Other Foreign Organization for United States Tax Withholding. Irs govefile   This form is used by a foreign government, international organization, foreign central bank of issue, foreign tax-exempt organization, foreign private foundation, or government of a U. Irs govefile S. Irs govefile possession to: Establish foreign status, Claim that such person is the beneficial owner of the income for which the form is being furnished, and Claim a reduced rate of, or an exemption from, withholding as such an entity. Irs govefile   If the government or organization is a partner in a partnership carrying on a trade or business in the United States, the effectively connected income allocable to the partner is subject to withholding under section 1446. Irs govefile   See Foreign Governments and Certain Other Foreign Organizations , later. Irs govefile Foreign Intermediaries and Foreign Flow-Through Entities Payments made to a foreign intermediary or foreign flow-through entity are treated as made to the payees on whose behalf the intermediary or entity acts. Irs govefile The Form W-8IMY provided by a foreign intermediary or flow-through entity must be accompanied by additional information for you to be able to reliably associate the payment with a payee. Irs govefile The additional information required depends on the type of intermediary or flow-through entity and the extent of the withholding responsibilities it assumes. Irs govefile Form W-8IMY, Certificate of Foreign Intermediary, Foreign Flow-Through Entity, or Certain U. Irs govefile S. Irs govefile Branches for United States Tax Withholding. Irs govefile   This form is used by foreign intermediaries and foreign flow-through entities, as well as certain U. Irs govefile S. Irs govefile branches, to: Represent that a foreign person is a qualified intermediary or nonqualified intermediary, Represent, if applicable, that the qualified intermediary is assuming primary NRA withholding responsibility and/or primary Form 1099 reporting and backup withholding responsibility, Represent that a foreign partnership or a foreign simple or grantor trust is a withholding foreign partnership or a withholding foreign trust, Represent that a foreign flow-through entity is a nonwithholding foreign partnership, or a nonwithholding foreign trust and that the income is not effectively connected with the conduct of a trade or business in the United States, Represent that the provider is a U. Irs govefile S. Irs govefile branch of a foreign bank or insurance company and either is agreeing to be treated as a U. Irs govefile S. Irs govefile person or is transmitting documentation of the persons on whose behalf it is acting, or Represent that, for purposes of section 1446, it is an upper-tier foreign partnership or a foreign grantor trust and that the form is being used to transmit the required documentation. Irs govefile For information on qualifying as an upper-tier foreign partnership, see Regulations section 1. Irs govefile 1446-5. Irs govefile Qualified Intermediaries In most cases, a QI is any foreign intermediary that has entered into a QI withholding agreement (discussed earlier) with the IRS. Irs govefile A foreign intermediary that has received a QI employer identification number (QI-EIN) may represent on Form W-8IMY that it is a QI before it receives a fully executed agreement. Irs govefile The intermediary can claim that it is a QI until the IRS revokes its QI-EIN. Irs govefile The IRS will revoke a QI-EIN if the QI agreement is not executed and returned to the IRS within a reasonable period of time after the agreement was sent to the intermediary for signature. Irs govefile Responsibilities. Irs govefile   Payments made to a QI that does not assume NRA withholding responsibility are treated as paid to its account holders and customers. Irs govefile However, a QI is not required to provide you with documentation it obtains from its foreign account holders and customers. Irs govefile Instead, it provides you with a withholding statement that contains withholding rate pool information. Irs govefile A withholding rate pool is a payment of a single type of income, determined in accordance with the categories of income reported on Form 1042-S that is subject to a single rate of withholding. Irs govefile A qualified intermediary is required to provide you with information regarding U. Irs govefile S. Irs govefile persons subject to Form 1099 reporting and to provide you withholding rate pool information separately for each such U. Irs govefile S. Irs govefile person unless it has assumed Form 1099 reporting and backup withholding responsibility. Irs govefile For the alternative procedure for providing rate pool information for U. Irs govefile S. Irs govefile non-exempt persons, see the Form W-8IMY instructions. Irs govefile   The withholding statement must: Designate those accounts for which it acts as a qualified intermediary, Designate those accounts for which it assumes primary NRA withholding responsibility and/or primary Form 1099 and backup withholding responsibility, and Provide sufficient information for you to allocate the payment to a withholding rate pool. Irs govefile   The extent to which you must have withholding rate pool information depends on the withholding and reporting obligations assumed by the QI. Irs govefile Primary responsibility not assumed. Irs govefile   If a QI does not assume primary NRA withholding responsibility or primary Form 1099 reporting and backup withholding responsibility for the payment, you can reliably associate the payment with valid documentation only to the extent you can reliably determine the part of the payment that relates to each withholding rate pool for foreign payees. Irs govefile Unless the alternative procedure applies, the qualified intermediary must provide you with a separate withholding rate pool for each U. Irs govefile S. Irs govefile person subject to Form 1099 reporting and/or backup withholding. Irs govefile The QI must provide a Form W-9 or, in the absence of the form, the name, address, and TIN, if available, for such person. Irs govefile Primary NRA withholding responsibility assumed. Irs govefile   If you make a payment to a QI that assumes primary NRA withholding responsibility (but not primary Form 1099 reporting and backup withholding responsibility), you can reliably associate the payment with valid documentation only to the extent you can reliably determine the part of the payment that relates to the withholding rate pool for which the QI assumes primary NRA withholding responsibility and the part of the payment attributable to withholding rate pools for each U. Irs govefile S. Irs govefile person, unless the alternative procedure applies, subject to Form 1099 reporting and/or backup withholding. Irs govefile The QI must provide a Form W-9 or, in the absence of the form, the name, address, and TIN, if available, for such person. Irs govefile Primary NRA and Form 1099 responsibility assumed. Irs govefile   If you make a payment to a QI that assumes both primary NRA withholding responsibility and primary Form 1099 reporting and backup withholding responsibility, you can reliably associate a payment with valid documentation provided that you receive a valid Form W-8IMY. Irs govefile It is not necessary to associate the payment with withholding rate pools. Irs govefile Example. Irs govefile You make a payment of dividends to a QI. Irs govefile It has five customers: two are foreign persons who have provided documentation entitling them to a 15% rate of withholding on dividends; two are foreign persons subject to a 30% rate of withholding on dividends; and one is a U. Irs govefile S. Irs govefile individual who provides it with a Form W-9. Irs govefile Each customer is entitled to 20% of the dividend payment. Irs govefile The QI does not assume any primary withholding responsibility. Irs govefile The QI gives you a Form W-8IMY with which it associates the Form W-9 and a withholding statement that allocates 40% of the dividend to a 15% withholding rate pool, 40% to a 30% withholding rate pool, and 20% to the U. Irs govefile S. Irs govefile individual. Irs govefile You should report on Forms 1042-S 40% of the payment as made to a 15% rate dividend pool and 40% of the payment as made to a 30% rate dividend pool. Irs govefile The part of the payment allocable to the U. Irs govefile S. Irs govefile individual (20%) is reportable on Form 1099-DIV. Irs govefile Smaller partnerships and trusts. Irs govefile   A QI may apply special rules to a smaller partnership or trust (Joint Account Provision) only if the partnership or trust meets the following conditions. Irs govefile It is a foreign partnership or foreign simple or grantor trust. Irs govefile It is a direct account holder of the QI. Irs govefile It does not have any partner, beneficiary, or owner that is a U. Irs govefile S. Irs govefile person or a pass- through partner, beneficiary, or owner. Irs govefile   For information on these rules, see section 4A. Irs govefile 01 of the QI agreement. Irs govefile This is found in Appendix 3 of Revenue Procedure 2003-64. Irs govefile Also see Revenue Procedure 2004-21. Irs govefile Related partnerships and trusts. Irs govefile    A QI may apply special rules to a related partnership or trust only if the partnership or trust meets the following conditions. Irs govefile It is a foreign partnership or foreign simple or grantor trust. Irs govefile It is either: A direct account holder of the QI, or An indirect account holder of the QI that is a direct partner, beneficiary, or owner of a partnership or trust to which the QI has applied this rule. Irs govefile For information on these rules, see section 4A. Irs govefile 02 of the QI agreement. Irs govefile This is found in Appendix 3 of Revenue Procedure 2003-64. Irs govefile Also see Revenue Procedure 2005-77. Irs govefile Nonqualified Intermediaries If you are making a payment to an NQI, foreign flow-through entity, or U. Irs govefile S. Irs govefile branch that is using Form W-8IMY to transmit information about the branch's account holders or customers, you can treat the payment (or a part of the payment) as reliably associated with valid documentation from a specific payee only if, prior to making the payment: You can allocate the payment to a valid Form W-8IMY, You can reliably determine how much of the payment relates to valid documentation provided by a payee (a person that is not itself a foreign intermediary, flow- through entity, or U. Irs govefile S. Irs govefile branch), and You have sufficient information to report the payment on Form 1042-S or Form 1099, if reporting is required. Irs govefile The NQI, flow-through entity, or U. Irs govefile S. Irs govefile branch must give you certain information on a withholding statement that is associated with the Form W-8IMY. Irs govefile A withholding statement must be updated to keep the information accurate prior to each payment. Irs govefile Withholding statement. Irs govefile   In most cases, a withholding statement must contain the following information. Irs govefile The name, address, and TIN (if any, or if required) of each person for whom documentation is provided. Irs govefile The type of documentation (documentary evidence, Form W-8, or Form W-9) for every person for whom documentation has been provided. Irs govefile The status of the person for whom the documentation has been provided, such as whether the person is a U. Irs govefile S. Irs govefile exempt recipient (U. Irs govefile S. Irs govefile person exempt from Form 1099 reporting), U. Irs govefile S. Irs govefile non-exempt recipient (U. Irs govefile S. Irs govefile person subject to Form 1099 reporting), or a foreign person. Irs govefile For a foreign person, the statement must indicate whether the person is a beneficial owner or a foreign intermediary, flow-through entity, or a U. Irs govefile S. Irs govefile branch. Irs govefile The type of recipient the person is, based on the recipient codes used on Form 1042-S. Irs govefile Information allocating each payment, by income type, to each payee (including U. Irs govefile S. Irs govefile exempt and U. Irs govefile S. Irs govefile non-exempt recipients) for whom documentation has been provided. Irs govefile The rate of withholding that applies to each foreign person to whom a payment is allocated. Irs govefile A foreign payee's country of residence. Irs govefile If a reduced rate of withholding is claimed, the basis for a reduced rate of withholding (for example, portfolio interest, treaty benefit, etc. Irs govefile ). Irs govefile In the case of treaty benefits claimed by entities, whether the applicable limitation on benefits statement and the statement that the foreign person derives the income for which treaty benefits are claimed, have been made. Irs govefile The name, address, and TIN (if any) of any other NQI, flow-through entity, or U. Irs govefile S. Irs govefile branch from which the payee will directly receive a payment. Irs govefile Any other information a withholding agent requests to fulfill its reporting and withholding obligations. Irs govefile Alternative procedure. Irs govefile   Under this alternative procedure the NQI can give you the information that allocates each payment to each foreign and U. Irs govefile S. Irs govefile exempt recipient by January 31 following the calendar year of payment, rather than prior to the payment being made as otherwise required. Irs govefile To take advantage of this procedure, the NQI must: (a) inform you, on its withholding statement, that it is using the alternative procedure; and (b) obtain your consent. Irs govefile You must receive the withholding statement with all the required information (other than item 5) prior to making the payment. Irs govefile    This alternative procedure cannot be used for payments to U. Irs govefile S. Irs govefile non-exempt recipients. Irs govefile Therefore, an NQI must always provide you with allocation information for all U. Irs govefile S. Irs govefile non-exempt recipients prior to a payment being made. Irs govefile Pooled withholding information. Irs govefile   If an NQI uses the alternative procedure, it must provide you with withholding rate pool information, as opposed to individual allocation information, prior to the payment of a reportable amount. Irs govefile A withholding rate pool is a payment of a single type of income (as determined by the income categories on Form 1042-S) that is subject to a single rate of withholding. Irs govefile For example, an NQI that has foreign account holders receiving royalties and dividends, both subject to the 15% rate, will provide you with information for two withholding rate pools (one for royalties and one for dividends). Irs govefile The NQI must provide you with the payee specific allocation information (information allocating each payment to each payee) by January 31 following the calendar year of payment. Irs govefile Failure to provide allocation information. Irs govefile   If an NQI fails to provide you with the payee specific allocation information for a withholding rate pool by January 31, you must not apply the alternative procedure to any of the NQI's withholding rate pools from that date forward. Irs govefile You must treat the payees as undocumented and apply the presumption rules, discussed later in Presumption Rules . Irs govefile An NQI is deemed to have f
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The Irs Govefile

Irs govefile 5. Irs govefile   Figuring Your Tax Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Tax Year Identification NumberF-1 and M-1 visa holders. Irs govefile J-1 visa holders. Irs govefile Filing StatusResident Aliens Nonresident Aliens Reporting Your Income DeductionsResident Aliens Nonresident Aliens ExemptionsResident Aliens Nonresident Aliens Itemized DeductionsResident Aliens Nonresident Aliens Tax Credits and PaymentsResident Aliens Nonresident Aliens Bona Fide Residents of American Samoa or Puerto Rico Introduction After you have determined your alien status, the source of your income, and if and how that income is taxed in the United States, your next step is to figure your tax. Irs govefile The information in this chapter is not as comprehensive for resident aliens as it is for nonresident aliens. Irs govefile Resident aliens should get publications, forms, and instructions for U. Irs govefile S. Irs govefile citizens, because the information for filing returns for resident aliens is generally the same as for U. Irs govefile S. Irs govefile citizens. Irs govefile If you are both a nonresident alien and a resident alien in the same tax year, see chapter 6 for a discussion of dual-status aliens. Irs govefile Topics - This chapter discusses: Identification numbers, Filing status, Deductions, Exemptions, Tax credits and payments, and Special rules for bona fide residents of American Samoa and Puerto Rico. Irs govefile Useful Items - You may want to see: Publication 463 Travel, Entertainment, Gift, and Car Expenses 501 Exemptions, Standard Deduction, and Filing Information 521 Moving Expenses 526 Charitable Contributions 535 Business Expenses 597 Information on the United States–Canada Income Tax Treaty Form (and Instructions) W-7 Application for IRS Individual Taxpayer Identification Number 1040 U. Irs govefile S. Irs govefile Individual Income Tax Return 1040NR U. Irs govefile S. Irs govefile Nonresident Alien Income Tax Return 1040NR-EZ U. Irs govefile S. Irs govefile Income Tax Return for Certain Nonresident Aliens With No Dependents 2106 Employee Business Expenses 2106-EZ Unreimbursed Employee Business Expenses 3903 Moving Expenses 4563 Exclusion of Income for Bona Fide Residents of American Samoa 8959 Additional Medicare Tax See chapter 12 for information about getting these publications and forms. Irs govefile Tax Year You must figure your income and file a tax return on the basis of an annual accounting period called a tax year. Irs govefile If you have not previously established a fiscal tax year, your tax year is the calendar year. Irs govefile A calendar year is 12 consecutive months ending on December 31. Irs govefile If you have previously established a regular fiscal year (12 consecutive months ending on the last day of a month other than December or a 52–53 week year) and are considered to be a U. Irs govefile S. Irs govefile resident for any calendar year, you will be treated as a U. Irs govefile S. Irs govefile resident for any part of your fiscal year that falls within that calendar year. Irs govefile Identification Number A taxpayer identification number must be furnished on returns, statements, and other tax-related documents. Irs govefile For an individual, this is a social security number (SSN). Irs govefile If you do not have and are not eligible to get an SSN, you must apply for an individual taxpayer identification number (ITIN). Irs govefile An employer identification number (EIN) is required if you are engaged in a trade or business as a sole proprietor and have employees or a qualified retirement plan. Irs govefile You must furnish a taxpayer identification number if you are: An alien who has income effectively connected with the conduct of a U. Irs govefile S. Irs govefile trade or business at any time during the year, An alien who has a U. Irs govefile S. Irs govefile office or place of business at any time during the year, A nonresident alien spouse treated as a resident, as discussed in chapter 1, or Any other alien who files a tax return, an amended return, or a refund claim (but not information returns). Irs govefile Social security number (SSN). Irs govefile   Generally, you can get an SSN if you have been lawfully admitted to the United States for permanent residence or under other immigration categories that authorize U. Irs govefile S. Irs govefile employment. Irs govefile   To apply for this number, get Form SS-5, Application for a Social Security Card, from your local Social Security Administration (SSA) office or call the SSA at 1-800-772-1213. Irs govefile You can also download Form SS-5 from the SSA's website at www. Irs govefile socialsecurity. Irs govefile gov/ssnumber/ss5. Irs govefile htm. Irs govefile You must visit an SSA office in person and submit your Form SS-5 along with original documentation showing your age, identity, immigration status, and authority to work in the United States. Irs govefile Generally, you will receive your card about 2 weeks after the SSA has all of the necessary information. Irs govefile F-1 and M-1 visa holders. Irs govefile    If you are an F-1 or M-1 student, you must also show your Form I-20. Irs govefile For more information, see SSA Publication 05-10181, International Students and Social Security Numbers, available online at www. Irs govefile socialsecurity. Irs govefile gov/pubs/10181. Irs govefile html. Irs govefile J-1 visa holders. Irs govefile   If you are a J-1 exchange visitor, you will also need to show your Form DS-2019. Irs govefile For more information, see SSA Publication 05-10107, Foreign Workers and Social Security Numbers, available online at www. Irs govefile socialsecurity. Irs govefile gov/pubs/10107. Irs govefile html. Irs govefile Individual taxpayer identification number (ITIN). Irs govefile   If you do not have and are not eligible to get an SSN, you must apply for an ITIN. Irs govefile For details on how to do so, see Form W-7 and its instructions. Irs govefile Allow 6 to 10 weeks for the IRS to notify you of your ITIN. Irs govefile If you already have an ITIN, enter it wherever an SSN is required on your tax return. Irs govefile   An ITIN is for tax use only. Irs govefile It does not entitle you to social security benefits or change your employment or immigration status under U. Irs govefile S. Irs govefile law. Irs govefile   In addition to those aliens who are required to furnish a taxpayer identification number and are not eligible for an SSN, a Form W-7 must be filed for: Alien individuals who are claimed as dependents and are not eligible for an SSN, and Alien spouses who are claimed as exemptions and are not eligible for an SSN. Irs govefile Employer identification number (EIN). Irs govefile   An individual may use an SSN (or ITIN) for individual taxes and an EIN for business taxes. Irs govefile To apply for an EIN, file Form SS-4, Application for Employer Identification Number, with the IRS. Irs govefile Filing Status The amount of your tax depends on your filing status. Irs govefile Your filing status is important in determining whether you can take certain deductions and credits. Irs govefile The rules for determining your filing status are different for resident aliens and nonresident aliens. Irs govefile Resident Aliens Resident aliens can use the same filing statuses available to U. Irs govefile S. Irs govefile citizens. Irs govefile See your form instructions or Publication 501 for more information on filing status. Irs govefile Married filing jointly. Irs govefile   Generally, you can file as married filing jointly only if both you and your spouse were resident aliens for the entire tax year, or if you make one of the choices discussed in chapter 1 to treat your spouse as a resident alien for the entire tax year. Irs govefile Qualifying widow(er). Irs govefile   If your spouse died in 2011 or 2012, you did not remarry before the end of 2013, and you have a dependent child living with you, you may qualify to file as a qualifying widow(er) and use the joint return tax rates. Irs govefile This applies only if you could have filed a joint return with your spouse for the year your spouse died. Irs govefile Head of household. Irs govefile   You can qualify as head of household if you are unmarried or considered unmarried on the last day of the year and you pay more than half the cost of keeping up a home for you and a qualifying person. Irs govefile You must be a resident alien for the entire tax year. Irs govefile   You are considered unmarried for this purpose if your spouse was a nonresident alien at any time during the year and you do not make one of the choices discussed in chapter 1 to treat your spouse as a resident alien for the entire tax year. Irs govefile Note. Irs govefile   Even if you are considered unmarried for head of household purposes because you are married to a nonresident alien, you may still be considered married for purposes of the earned income credit. Irs govefile In that case, you will not be entitled to the credit. Irs govefile See Publication 596 for more information. Irs govefile Nonresident Aliens If you are a nonresident alien filing Form 1040NR, you may be able to use one of the filing statuses discussed later. Irs govefile If you are filing Form 1040NR-EZ, you can only claim “Single nonresident alien” or “Married nonresident alien” as your filing status. Irs govefile Married nonresident alien. Irs govefile   Married nonresident aliens who are not married to U. Irs govefile S. Irs govefile citizens or residents generally must use the Tax Table column or the Tax Computation Worksheet for married filing separate returns when determining the tax on income effectively connected with a U. Irs govefile S. Irs govefile trade or business. Irs govefile Exceptions. Irs govefile   Married nonresident aliens normally cannot use the Tax Table column or the Tax Computation Worksheet for single individuals. Irs govefile However, you may be able to file as single if you lived apart from your spouse during the last 6 months of the year and you are a married resident of Canada, Mexico, South Korea, or are a married U. Irs govefile S. Irs govefile national. Irs govefile See the instructions for Form 1040NR or Form 1040NR-EZ to see if you qualify. Irs govefile U. Irs govefile S. Irs govefile national is defined later in this section under Qualifying widow(er) . Irs govefile   A nonresident alien generally cannot file as married filing jointly. Irs govefile However, a nonresident alien who is married to a U. Irs govefile S. Irs govefile citizen or resident can choose to be treated as a resident and file a joint return on Form 1040, Form 1040A, or Form 1040EZ. Irs govefile For information on these choices, see chapter 1. Irs govefile If you do not make the choice to file jointly, file Form 1040NR or Form 1040NR-EZ and use the Tax Table column or the Tax Computation Worksheet for married individuals filing separately. Irs govefile Qualifying widow(er). Irs govefile   You may be eligible to file as a qualifying widow(er) and use the joint return tax rates if all of the following conditions apply. Irs govefile You were a resident of Canada, Mexico, or South Korea, or a U. Irs govefile S. Irs govefile national (defined later). Irs govefile Your spouse died in 2011 or 2012 and you did not remarry before the end of 2013. Irs govefile You have a dependent child living with you. Irs govefile See the instructions for Form 1040NR for the rules for filing as a qualifying widow(er) with a dependent child. Irs govefile   A U. Irs govefile S. Irs govefile national is an individual who, although not a U. Irs govefile S. Irs govefile citizen, owes his or her allegiance to the United States. Irs govefile U. Irs govefile S. Irs govefile nationals include American Samoans and Northern Mariana Islanders who chose to become U. Irs govefile S. Irs govefile nationals instead of U. Irs govefile S. Irs govefile citizens. Irs govefile Head of household. Irs govefile   You cannot file as head of household if you are a nonresident alien at any time during the tax year. Irs govefile However, if you are married, your spouse can qualify as a head of household if: Your spouse is a resident alien or U. Irs govefile S. Irs govefile citizen for the entire tax year, You do not choose to be treated as a resident alien, and Your spouse meets the other requirements for this filing status, as discussed earlier under Resident Aliens . Irs govefile Note. Irs govefile   Even if your spouse is considered unmarried for head of household purposes because you are a nonresident alien, your spouse may still be considered married for purposes of the earned income credit. Irs govefile In that case, your spouse will not be entitled to the credit. Irs govefile See Publication 596 for more information. Irs govefile Estates and trusts. Irs govefile   A nonresident alien estate or trust using Form 1040NR must use Tax Rate Schedule W in the Form 1040NR instructions when determining the tax on income effectively connected with a U. Irs govefile S. Irs govefile trade or business. Irs govefile Special rules for aliens from certain U. Irs govefile S. Irs govefile possessions. Irs govefile   A nonresident alien who is a bona fide resident of American Samoa or Puerto Rico for the entire tax year and who is temporarily working in the United States should read Bona Fide Residents of American Samoa or Puerto Rico, at the end of this chapter, for information about special rules. Irs govefile Reporting Your Income You must report each item of income that is taxable according to the rules in chapters 2, 3, and 4. Irs govefile For resident aliens, this includes income from sources both within and outside the United States. Irs govefile For nonresident aliens, this includes both income that is effectively connected with a trade or business in the United States (subject to graduated tax rates) and income from U. Irs govefile S. Irs govefile sources that is not effectively connected (subject to a flat 30% tax rate or lower tax treaty rate). Irs govefile Deductions Resident and nonresident aliens can claim similar deductions on their U. Irs govefile S. Irs govefile tax returns. Irs govefile However, nonresident aliens generally can claim only deductions related to income that is effectively connected with their U. Irs govefile S. Irs govefile trade or business. Irs govefile Resident Aliens You can claim the same deductions allowed to U. Irs govefile S. Irs govefile citizens if you are a resident alien for the entire tax year. Irs govefile While the discussion that follows contains some of the same general rules and guidelines that apply to you, it is specifically directed toward nonresident aliens. Irs govefile You should get Form 1040 and instructions for more information on how to claim your allowable deductions. Irs govefile Nonresident Aliens You can claim deductions to figure your effectively connected taxable income. Irs govefile You generally cannot claim deductions related to income that is not connected with your U. Irs govefile S. Irs govefile business activities. Irs govefile Except for personal exemptions, and certain itemized deductions, discussed later, you can claim deductions only to the extent they are connected with your effectively connected income. Irs govefile Ordinary and necessary business expenses. Irs govefile   You can deduct all ordinary and necessary expenses in the operation of your U. Irs govefile S. Irs govefile trade or business to the extent they relate to income effectively connected with that trade or business. Irs govefile The deduction for travel expenses while in the United States is discussed under Itemized Deductions, later. Irs govefile For information about other business expenses, see Publication 535. Irs govefile Losses. Irs govefile   You can deduct losses resulting from transactions that you entered into for profit and that you were not reimbursed for by insurance, etc. Irs govefile to the extent that they relate to income that is effectively connected with a trade or business in the United States. Irs govefile Educator expenses. Irs govefile   If you were an eligible educator in 2013, you can deduct as an adjustment to income up to $250 in unreimbursed qualified expenses you paid or incurred during 2013 for books, supplies (other than nonathletic supplies for courses of instruction in health or physical education), computer equipment, and other equipment and materials used in the classroom. Irs govefile For more information, see your tax form instructions. Irs govefile Individual retirement arrangement (IRA). Irs govefile   If you made contributions to a traditional IRA for 2013, you may be able to take an IRA deduction. Irs govefile But you must have taxable compensation effectively connected with a U. Irs govefile S. Irs govefile trade or business to do so. Irs govefile A Form 5498 should be sent to you by May 31, 2014, that shows all contributions to your traditional IRA for 2013. Irs govefile If you were covered by a retirement plan (qualified pension, profit-sharing (including 401(k)), annuity, SEP, SIMPLE, etc. Irs govefile ) at work or through self-employment, your IRA deduction may be reduced or eliminated. Irs govefile But you can still make contributions to a traditional IRA even if you cannot deduct them. Irs govefile If you made nondeductible contributions to a traditional IRA for 2013, you must report them on Form 8606, Nondeductible IRAs. Irs govefile   For more information, see Publication 590, Individual Retirement Arrangements (IRAs). Irs govefile Moving expenses. Irs govefile   If you are a nonresident alien temporarily in the United States earning taxable income for performing personal services, you can deduct moving expenses to the United States if you meet both of the following tests. Irs govefile You are a full-time employee for at least 39 weeks during the 12 months right after you move, or if you are self-employed, you work full time for at least 39 weeks during the first 12 months and 78 weeks during the first 24 months right after you move. Irs govefile Your new job location is at least 50 miles farther (by the shortest commonly traveled route) from your former home than your former job location was. Irs govefile If you had no former job location, the new job location must be at least 50 miles from your former home. Irs govefile   You cannot deduct the moving expense you have when returning to your home abroad or moving to a foreign job site. Irs govefile   Figure your deductible moving expenses to the United States on Form 3903, and deduct them on line 26 of Form 1040NR. Irs govefile   For more information on the moving expense deduction, see Publication 521. Irs govefile Reimbursements. Irs govefile   If your employer reimbursed you for allowable moving expenses under an accountable plan, your employer should have excluded these reimbursements from your income. Irs govefile You can only deduct allowable moving expenses that were not reimbursed by your employer or that were reimbursed but the reimbursement was included in your income. Irs govefile For more information, see Publication 521. Irs govefile Moving expense or travel expense. Irs govefile   If you deduct moving expenses to the United States, you cannot also deduct travel expenses (discussed later under Itemized Deductions) while temporarily away from your tax home in a foreign country. Irs govefile Moving expenses are based on a change in your principal place of business while travel expenses are based on your temporary absence from your principal place of business. Irs govefile Self-employed SEP, SIMPLE, and qualified retirement plans. Irs govefile   If you are self-employed, you may be able to deduct contributions to a SEP, SIMPLE, or qualified retirement plan that provides retirement benefits for yourself and your common-law employees, if any. Irs govefile To make deductible contributions for yourself, you must have net earnings from self-employment that are effectively connected with your U. Irs govefile S. Irs govefile trade or business. Irs govefile   Get Publication 560, Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans), for further information. Irs govefile Penalty on early withdrawal of savings. Irs govefile   You must include in income all effectively connected interest income you receive or that is credited to your account during the year. Irs govefile Do not reduce it by any penalty you must pay on an early withdrawal from a time savings account. Irs govefile However, if the interest income is effectively connected with your U. Irs govefile S. Irs govefile trade or business during the year, you can deduct on line 30 of Form 1040NR the amount of the early withdrawal penalty that the banking institution charged. Irs govefile Student loan interest expense. Irs govefile   If you paid interest on a student loan in 2013, you may be able to deduct up to $2,500 of the interest you paid. Irs govefile Generally, you can claim the deduction if all the following requirements are met. Irs govefile Your filing status is any filing status except married filing separately. Irs govefile Your modified adjusted gross income is less than $75,000. Irs govefile No one else is claiming an exemption for you on his or her 2013 tax return. Irs govefile You paid interest on a loan taken out only to pay tuition and other qualified higher education expenses for yourself, your spouse, someone who was your dependent when the loan was taken out, or someone you could have claimed as a dependent for the year the loan was taken out except that: The person filed a joint return, The person had gross income that was equal to or more than the exemption amount for that year ($3,900 for 2013), or You could be claimed as a dependent on someone else's return. Irs govefile The loan is not from a related person or a person who borrowed the proceeds under a qualified employer plan or a contract purchased under such a plan. Irs govefile The education expenses were paid or incurred within a reasonable period of time before or after the loan was taken out. Irs govefile The person for whom the expenses were paid or incurred was an eligible student. Irs govefile Use the worksheet in the Form 1040NR or Form 1040NR-EZ instructions to figure the deduction. Irs govefile For more information, see Publication 970, Tax Benefits for Education. Irs govefile Exemptions Resident aliens can claim personal exemptions and exemptions for dependents in the same way as U. Irs govefile S. Irs govefile citizens. Irs govefile However, nonresident aliens generally can claim only a personal exemption for themselves on their U. Irs govefile S. Irs govefile tax return. Irs govefile Resident Aliens You can claim personal exemptions and exemptions for dependents according to the dependency rules for U. Irs govefile S. Irs govefile citizens. Irs govefile You can claim an exemption for your spouse on a separate return if your spouse had no gross income for U. Irs govefile S. Irs govefile tax purposes and was not the dependent of another taxpayer. Irs govefile You can claim this exemption even if your spouse has not been a resident alien for a full tax year or is an alien who has not come to the United States. Irs govefile You can claim an exemption for each person who qualifies as a dependent according to the rules for U. Irs govefile S. Irs govefile citizens. Irs govefile The dependent must be a citizen or national (defined earlier) of the United States or be a resident of the United States, Canada, or Mexico for some part of the calendar year in which your tax year begins. Irs govefile Get Publication 501 for more information. Irs govefile Your spouse and each dependent for whom you claim an exemption must have either an SSN or an ITIN. Irs govefile See Identification Number, earlier. Irs govefile Nonresident Aliens Generally, if you are a nonresident alien engaged in a trade or business in the United States, you can claim only one personal exemption ($3,900 for 2013). Irs govefile You may be able to claim an exemption for a spouse and a dependent if you are described in any of the following discussions. Irs govefile Your spouse and each dependent for whom you claim an exemption must have either an SSN or an ITIN. Irs govefile See Identification Number, earlier. Irs govefile Residents of Mexico or Canada or U. Irs govefile S. Irs govefile nationals. Irs govefile   If you are a resident of Mexico or Canada or a national of the United States (defined earlier), you can also claim a personal exemption for your spouse if your spouse had no gross income for U. Irs govefile S. Irs govefile tax purposes and cannot be claimed as the dependent on another U. Irs govefile S. Irs govefile taxpayer's return. Irs govefile In addition, you can claim exemptions for your dependents who meet certain tests. Irs govefile Residents of Mexico, Canada, or nationals of the United States must use the same rules as U. Irs govefile S. Irs govefile citizens to determine who is a dependent and for which dependents exemptions can be claimed. Irs govefile See Publication 501 for these rules. Irs govefile For purposes of these rules, dependents who are U. Irs govefile S. Irs govefile nationals meet the citizenship test discussed in Publication 501. Irs govefile Residents of South Korea. Irs govefile   Nonresident aliens who are residents of South Korea may be able to claim exemptions for a spouse and children. Irs govefile The income tax treaty with South Korea imposes two additional requirements on South Korean residents: The spouse and all children claimed must live with the alien in the United States at some time during the tax year, and The additional deduction for the exemptions must be prorated based on the ratio of the alien's U. Irs govefile S. Irs govefile source gross income effectively connected with a U. Irs govefile S. Irs govefile trade or business for the tax year to the alien's entire income from all sources during the tax year. Irs govefile Example. Irs govefile Mr. Irs govefile Park, a nonresident alien who is a resident of South Korea, lives temporarily in the United States with his wife and two children. Irs govefile During the tax year he receives U. Irs govefile S. Irs govefile compensation of $18,000. Irs govefile He also receives $6,000 of income from sources outside the United States that is not effectively connected with his U. Irs govefile S. Irs govefile trade or business. Irs govefile Thus, his total income for the year is $24,000. Irs govefile Mr. Irs govefile Park meets all requirements for claiming exemptions for his spouse and two children. Irs govefile The additional deduction for 2013 is $8,775 figured as follows: $18,000 $24,000 × $11,700* = $8,775               *3 × $3,900 = $11,700   Students and business apprentices from India. Irs govefile   Students and business apprentices who are eligible for the benefits of Article 21(2) of the United States–India Income Tax Treaty may be able to claim exemptions for their spouse and dependents. Irs govefile   You can claim an exemption for your spouse if he or she had no gross income during the year and cannot be claimed as a dependent on another U. Irs govefile S. Irs govefile taxpayer's return. Irs govefile   You can claim exemptions for each of your dependents not admitted to the United States on “F-2,” “J-2,” or “M-2” visas if they meet the same rules that apply to U. Irs govefile S. Irs govefile citizens. Irs govefile See Publication 501 for these rules. Irs govefile   List your spouse and dependents on line 7c of Form 1040NR. Irs govefile Enter the total on the appropriate line to the right of line 7c. Irs govefile Itemized Deductions Nonresident aliens can claim some of the same itemized deductions that resident aliens can claim. Irs govefile However, nonresident aliens can claim itemized deductions only if they have income effectively connected with their U. Irs govefile S. Irs govefile trade or business. Irs govefile Resident Aliens You can claim the same itemized deductions as U. Irs govefile S. Irs govefile citizens, using Schedule A of Form 1040. Irs govefile These deductions include certain medical and dental expenses, state and local income taxes, real estate taxes, interest you paid on a home mortgage, charitable contributions, casualty and theft losses, and miscellaneous deductions. Irs govefile If you do not itemize your deductions, you can claim the standard deduction for your particular filing status. Irs govefile For further information, see Form 1040 and instructions. Irs govefile Nonresident Aliens You can deduct certain itemized deductions if you receive income effectively connected with your U. Irs govefile S. Irs govefile trade or business. Irs govefile These deductions include state and local income taxes, charitable contributions to U. Irs govefile S. Irs govefile organizations, casualty and theft losses, and miscellaneous deductions. Irs govefile Use Schedule A of Form 1040NR to claim itemized deductions. Irs govefile If you are filing Form 1040NR-EZ, you can only claim a deduction for state or local income taxes. Irs govefile If you are claiming any other itemized deduction, you must file Form 1040NR. Irs govefile Standard deduction. Irs govefile   Nonresident aliens cannot claim the standard deduction. Irs govefile However, see Students and business apprentices from India , next. Irs govefile Students and business apprentices from India. Irs govefile   A special rule applies to students and business apprentices who are eligible for the benefits of Article 21(2) of the United States–India Income Tax Treaty. Irs govefile You can claim the standard deduction provided you do not claim itemized deductions. Irs govefile   Use Worksheet 5-1 to figure your standard deduction. Irs govefile If you are married and your spouse files a return and itemizes deductions, you cannot take the standard deduction. Irs govefile State and local income taxes. Irs govefile   You can deduct state and local income taxes you paid on income that is effectively connected with a trade or business in the United States. Irs govefile If you received a refund or rebate in 2013 of taxes you paid in an earlier year, do not reduce your deduction by that amount. Irs govefile Instead, you must include the refund or rebate in income if you deducted the taxes in the earlier year and the deduction reduced your tax. Irs govefile See Recoveries in Publication 525 for details on how to figure the amount to include in income. Irs govefile Charitable contributions. Irs govefile   You can deduct your charitable contributions or gifts to qualified organizations subject to certain limits. Irs govefile Qualified organizations include organizations that are religious, charitable, educational, scientific, or literary in nature, or that work to prevent cruelty to children or animals. Irs govefile Certain organizations that promote national or international amateur sports competition are also qualified organizations. Irs govefile Foreign organizations. Irs govefile   Contributions made directly to a foreign organization are not deductible. Irs govefile However, you can deduct contributions to a U. Irs govefile S. Irs govefile organization that transfers funds to a charitable foreign organization if the U. Irs govefile S. Irs govefile organization controls the use of the funds or if the foreign organization is only an administrative arm of the U. Irs govefile S. Irs govefile organization. Irs govefile   For more information about organizations that qualify to receive charitable contributions, see Publication 526, Charitable Contributions. Irs govefile Worksheet 5-1. Irs govefile 2013 Standard Deduction Worksheet for Students and Business Apprentices From India Caution. Irs govefile If you are married filing a separate return and your spouse itemizes deductions, do not complete this worksheet. Irs govefile You cannot take the standard deduction even if you were born before January 2, 1949, or are blind. Irs govefile 1 Enter the amount shown below for your filing status. Irs govefile           Single or married filing separately—$6,100 Qualifying widow(er)—$12,200 1. Irs govefile           2 Can you be claimed as a dependent on someone else's U. Irs govefile S. Irs govefile income tax return?  No. Irs govefile Enter the amount from line 1 on line 4. Irs govefile Skip line 3 and go to line 5. Irs govefile   Yes. Irs govefile Go to line 3. Irs govefile         3 Is your earned income* more than $650?           Yes. Irs govefile Add $350 to your earned income. Irs govefile Enter the total. Irs govefile           No. Irs govefile Enter $1,000 3. Irs govefile       4 Enter the smaller of line 1 or line 3 4. Irs govefile   5 If born before January 2, 1949, OR blind, enter $1,200 ($1,500 if single). Irs govefile If born before January 2, 1949, AND blind, enter $2,400 ($3,000 if single). Irs govefile Otherwise, enter -0- 5. Irs govefile   6 Add lines 4 and 5. Irs govefile Enter the total here and on Form 1040NR, line 38 (or Form 1040NR-EZ, line 11). Irs govefile Print “Standard Deduction Allowed Under U. Irs govefile S. Irs govefile –India Income Tax Treaty” in the space to the left of these lines. Irs govefile This is your standard deduction for 2013. Irs govefile 6. Irs govefile   *Earned income includes wages, salaries, tips, professional fees, and other compensation received for personal services you performed. Irs govefile It also includes any amount received as a scholarship that you must include in your income. Irs govefile Generally, your earned income is the total of the amount(s) you reported on Form 1040NR, lines 8,12,13, and 19, minus amounts on lines 27 and 31 (or Form 1040NR-EZ, lines 3 and 5, minus any amount on line 8). Irs govefile Contributions from which you benefit. Irs govefile   If you receive a benefit as a result of making a contribution to a qualified organization, you can deduct only the amount of your contribution that is more than the value of the benefit you receive. Irs govefile   If you pay more than the fair market value to a qualified organization for merchandise, goods, or services, the amount you pay that is more than the value of the item can be a charitable contribution. Irs govefile For the excess amount to qualify, you must pay it with the intent to make a charitable contribution. Irs govefile Cash contributions. Irs govefile   You cannot deduct a cash contribution, regardless of the amount, unless you keep as a record of the contribution a bank record (such as a canceled check, a bank copy of a canceled check, or a bank statement containing the name of the charity, the date, and the amount) or a written record from the charity. Irs govefile The written record must include the name of the charity, date of the contribution, and the amount of the contribution. Irs govefile   You may deduct a cash contribution of $250 or more only if you have a written statement from the charitable organization showing: The amount of any money contributed, Whether the organization gave you any goods or services in return for your contribution, and A description and estimate of the value of any goods or services described in (2). Irs govefile If you received only intangible religious benefits, the organization must state this, but it does not have to describe or value the benefit. Irs govefile Noncash contributions. Irs govefile   For contributions not made in cash, the records you must keep depend on the amount of your deduction. Irs govefile See Publication 526 for details. Irs govefile For example, if you make a noncash contribution and the amount of your deduction is more than $500, you must complete and attach to your tax return Form 8283, Noncash Charitable Contributions. Irs govefile If you deduct more than $500 for a contribution of a motor vehicle, boat, or airplane, you must also attach a statement from the charitable organization to your return. Irs govefile If your total deduction is over $5,000, you also may have to get appraisals of the values of the property. Irs govefile If the donated property is valued at more than $5,000, you must obtain a qualified appraisal. Irs govefile You generally must attach to your tax return an appraisal of any property if your deduction for the property is more than $500,000. Irs govefile See Form 8283 and its instructions for details. Irs govefile Contributions of appreciated property. Irs govefile   If you contribute property to a qualified organization, the amount of your charitable contribution is generally the fair market value of the property at the time of the contribution. Irs govefile However, if you contribute property with a fair market value that is more than your basis in it, you may have to reduce the fair market value by the amount of appreciation (increase in value) when you figure your deduction. Irs govefile Your basis in the property is generally what you paid for it. Irs govefile If you need more information about basis, get Publication 551, Basis of Assets. Irs govefile   Different rules apply to figuring your deduction, depending on whether the property is: Ordinary income property, or Capital gain property. Irs govefile For information about these rules, see Publication 526. Irs govefile Limit. Irs govefile   The amount you can deduct in a tax year is limited in the same way it is for a citizen or resident of the United States. Irs govefile For a discussion of limits on charitable contributions and other information, get Publication 526. Irs govefile Casualty and theft losses. Irs govefile   You can deduct your loss from fire, storm, shipwreck, or other casualty, or theft of property even though your property is not connected with a U. Irs govefile S. Irs govefile trade or business. Irs govefile The property can be personal use property or income-producing property not connected with a U. Irs govefile S. Irs govefile trade or business. Irs govefile The property must be located in the United States at the time of the casualty or theft. Irs govefile You can deduct theft losses only in the year in which you discover the loss. Irs govefile   The amount of the loss is the fair market value of the property immediately before the casualty or theft less its fair market value immediately after the casualty or theft (but not more than its cost or adjusted basis) less any insurance or other reimbursement. Irs govefile The fair market value of property immediately after a theft is considered zero, because you no longer have the property. Irs govefile   If your property is covered by insurance, you should file a timely insurance claim for reimbursement. Irs govefile If you do not, you cannot deduct this loss as a casualty or theft loss. Irs govefile   Figure your deductible casualty and theft losses on Form 4684, Casualties and Thefts. Irs govefile Losses from personal use property. Irs govefile    You cannot deduct the first $100 of each casualty or theft loss to property held for personal use. Irs govefile You can deduct only the total of these losses for the year (reduced by the $100 limit) that is more than 10% of your adjusted gross income (line 37, Form 1040NR) for the year. Irs govefile Losses from income-producing property. Irs govefile   These losses are not subject to the limitations that apply to personal use property. Irs govefile Use Section B of Form 4684 to figure your deduction for these losses. Irs govefile Job expenses and other miscellaneous deductions. Irs govefile   You can deduct job expenses, such as allowable unreimbursed travel expenses (discussed next), and other miscellaneous deductions. Irs govefile Generally, the allowable deductions must be related to effectively connected income. Irs govefile Deductible expenses include: Union dues, Safety equipment and small tools needed for your job, Dues to professional organizations, Subscriptions to professional journals, Tax return preparation fees, and Casualty and theft losses of property used in performing services as an employee (employee property). Irs govefile   Most miscellaneous itemized deductions are deductible only if they are more than 2% of your adjusted gross income (line 37, Form 1040NR). Irs govefile For more information on miscellaneous deductions, see the instructions for Form 1040NR. Irs govefile Travel expenses. Irs govefile   You may be able to deduct your ordinary and necessary travel expenses while you are temporarily performing personal services in the United States. Irs govefile Generally, a temporary assignment in a single location is one that is realistically expected to last (and does in fact last) for one year or less. Irs govefile You must be able to show you were present in the United States on an activity that required your temporary absence from your regular place of work. Irs govefile   For example, if you have established a “tax home” through regular employment in a foreign country, and intend to return to similar employment in the same country at the end of your temporary stay in the United States, you can deduct reasonable travel expenses you paid. Irs govefile You cannot deduct travel expenses for other members of your family or party. Irs govefile Deductible travel expenses. Irs govefile   If you qualify, you can deduct your expenses for: Transportation—airfare, local transportation, including train, bus, etc. Irs govefile , Lodging—rent paid, utilities (do not include telephone), hotel or motel room expenses, and Meal expenses—actual expenses allowed if you keep records of the amounts, or, if you do not wish to keep detailed records, you are generally allowed a standard meal allowance amount depending on the date and area of your travel. Irs govefile You generally can deduct only 50% of unreimbursed meal expenses. Irs govefile The standard meal allowance rates for high-cost areas are available at www. Irs govefile gsa. Irs govefile gov/perdiem. Irs govefile The rates for other areas are in Publication 463. Irs govefile   Use Form 2106 or 2106-EZ to figure your allowable expenses that you claim on line 7 of Schedule A (Form 1040NR). Irs govefile Expenses allocable to U. Irs govefile S. Irs govefile tax-exempt income. Irs govefile   You cannot deduct an expense, or part of an expense, that is allocable to U. Irs govefile S. Irs govefile tax-exempt income, including income exempt by tax treaty. Irs govefile Example. Irs govefile Irina Oak, a citizen of Poland, resided in the United States for part of the year to acquire business experience from a U. Irs govefile S. Irs govefile company. Irs govefile During her stay in the United States, she received a salary of $8,000 from her Polish employer. Irs govefile She received no other U. Irs govefile S. Irs govefile source income. Irs govefile She spent $3,000 on travel expenses, of which $1,000 were for meals. Irs govefile None of these expenses were reimbursed. Irs govefile Under the tax treaty with Poland, $5,000 of her salary is exempt from U. Irs govefile S. Irs govefile income tax. Irs govefile In filling out Form 2106-EZ, she must reduce her deductible meal expenses by half ($500). Irs govefile She must reduce the remaining $2,500 of travel expenses by 62. Irs govefile 5% ($1,563) because 62. Irs govefile 5% ($5,000 ÷ $8,000) of her salary is exempt from tax. Irs govefile She enters the remaining total of $937 on line 7 of Schedule A (Form 1040NR). Irs govefile She completes the remaining lines according to the instructions for Schedule A. Irs govefile More information. Irs govefile   For more information about deductible expenses, reimbursements, and recordkeeping, get Publication 463. Irs govefile Tax Credits and Payments This discussion covers tax credits and payments for resident aliens, followed by a discussion of the credits and payments for nonresident aliens. Irs govefile Resident Aliens Resident aliens generally claim tax credits and report tax payments, including withholding, using the same rules that apply to U. Irs govefile S. Irs govefile citizens. Irs govefile The following items are some of the credits you may be able to claim. Irs govefile Foreign tax credit. Irs govefile   You can claim a credit, subject to certain limits, for income tax you paid or accrued to a foreign country on foreign source income. Irs govefile You cannot claim a credit for taxes paid or accrued on excluded foreign earned income. Irs govefile To claim a credit for income taxes paid or accrued to a foreign country, you generally will file Form 1116, Foreign Tax Credit (Individual, Estate, or Trust), with your Form 1040. Irs govefile   For more information, get Publication 514, Foreign Tax Credit for Individuals. Irs govefile Child and dependent care credit. Irs govefile   You may be able to take this credit if you pay someone to care for your qualifying child who is under age 13, or your disabled dependent or disabled spouse, so that you can work or look for work. Irs govefile Generally, you must be able to claim an exemption for your dependent. Irs govefile   For more information, get Publication 503, Child and Dependent Care Expenses, and Form 2441, Child and Dependent Care Expenses. Irs govefile Credit for the elderly or the disabled. Irs govefile   You may qualify for this credit if you are 65 or older or if you retired on permanent and total disability. Irs govefile For more information on this credit, get Publication 524, Credit for the Elderly or the Disabled, and Schedule R (Form 1040A or 1040). Irs govefile Education credits. Irs govefile   You may qualify for these credits if you paid qualified education expenses for yourself, your spouse, or your dependent. Irs govefile There are two education credits: the American Opportunity Credit and the lifetime learning credit. Irs govefile You cannot claim these credits if you are married filing separately. Irs govefile Use Form 8863, Education Credits (American Opportunity and Lifetime Learning Credits), to figure the credit. Irs govefile For more information, see Publication 970. Irs govefile Retirement savings contributions credit. Irs govefile   You may qualify for this credit (also known as the saver's credit) if you made eligible contributions to an employer-sponsored retirement plan or to an individual retirement arrangement (IRA) in 2013. Irs govefile You cannot claim this credit if: You were born after January 1, 1996, You were a full-time student, Your exemption is claimed by someone else on his or her 2013 tax return, or Your adjusted gross income is more than: $59,000, if your filing status is married filing jointly, $44,250, if your filing status is head of household, or $29,500, if your filing status is single, married filing separately, or qualifying widow(er). Irs govefile Use Form 8880, Credit for Qualified Retirement Savings Contributions, to figure the credit. Irs govefile For more information, see Publication 590. Irs govefile Child tax credit. Irs govefile   You may be able to take this credit if you have a qualifying child. Irs govefile   A qualifying child for purposes of the child tax credit is a child who: Was under age 17 at the end of 2013. Irs govefile Is your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, half brother, half sister, or a descendant of any of them (for example, your grandchild, niece, or nephew). Irs govefile Is a U. Irs govefile S. Irs govefile citizen, a U. Irs govefile S. Irs govefile national, or a resident alien. Irs govefile Did not provide over half of his or her own support for 2013. Irs govefile Lived with you more than half of 2013. Irs govefile Temporary absences, such as for school, vacation, or medical care, count as time lived in the home. Irs govefile Is claimed as a dependent on your return. Irs govefile An adopted child is always treated as your own child. Irs govefile An adopted child includes a child lawfully placed with you for legal adoption. Irs govefile   See your form instructions for additional details. Irs govefile Adoption credit. Irs govefile   You may qualify to take a tax credit of up to $12,970 for qualifying expenses paid to adopt an eligible child. Irs govefile This amount may be allowed for the adoption of a child with special needs regardless of whether you have qualifying expenses. Irs govefile To claim the adoption credit, file Form 8839, Qualified Adoption Expenses, with your Form 1040. Irs govefile Earned income credit. Irs govefile   You may qualify for an earned income credit of up to $3,250 if a child lived with you in the United States and your earned income and adjusted gross income were each less than $37,870 ($43,210 if married filing jointly). Irs govefile If two children lived with you in the United States and your earned income and adjusted gross income were each less than $43,038 ($48,378 if married filing jointly), your credit could be as much as $5,372. Irs govefile If three or more children lived with you in the United States and your earned income and adjusted gross income were each less than $46,227 ($51,567 if married filing jointly), your credit could be as much as $6,044. Irs govefile If you do not have a qualifying child and your earned income and adjusted gross income were each less than $14,340 ($19,680 if married filing jointly), your credit could be as much as $487. Irs govefile You cannot claim the earned income credit if your filing status is married filing separately. Irs govefile    You and your spouse (if filing a joint return) and any qualifying child must have valid SSNs to claim this credit. Irs govefile You cannot claim the credit using an ITIN. Irs govefile If a social security card has a legend that says Not Valid for Employment and the number was issued so that you (or your spouse or your qualifying child) could receive a federally funded benefit, you cannot claim the earned income credit. Irs govefile An example of a federally funded benefit is Medicaid. Irs govefile If a card has this legend and the individual's immigration status has changed so that the individual is now a U. Irs govefile S. Irs govefile citizen or lawful permanent resident, ask the SSA to issue a new social security card without the legend. Irs govefile Other information. Irs govefile   There are other eligibility rules that are not discussed here. Irs govefile For more information, get Publication 596, Earned Income Credit. Irs govefile Nonresident Aliens You can claim some of the same credits that resident aliens can claim. Irs govefile You can also report certain taxes you paid, are considered to have paid, or that were withheld from your income. Irs govefile Credits Credits are allowed only if you receive effectively connected income. Irs govefile You may be able to claim some of the following credits. Irs govefile Foreign tax credit. Irs govefile   If you receive foreign source income that is effectively connected with a trade or business in the United States, you can claim a credit for any income taxes paid or accrued to any foreign country or U. Irs govefile S. Irs govefile possession on that income. Irs govefile   If you do not have foreign source income effectively connected with a U. Irs govefile S. Irs govefile trade or business, you cannot claim credits against your U. Irs govefile S. Irs govefile tax for taxes paid or accrued to a foreign country or U. Irs govefile S. Irs govefile possession. Irs govefile   You cannot take any credit for taxes imposed by a foreign country or U. Irs govefile S. Irs govefile possession on your U. Irs govefile S. Irs govefile source income if those taxes were imposed only because you are a citizen or resident of the foreign country or possession. Irs govefile   If you claim a foreign tax credit, you generally will have to attach to your return a Form 1116. Irs govefile See Publication 514 for more information. Irs govefile Child and dependent care credit. Irs govefile   You may qualify for this credit if you pay someone to care for your qualifying child who is under age 13, or your disabled dependent or disabled spouse, so that you can work or look for work. Irs govefile Generally, you must be able to claim an exemption for your dependent. Irs govefile   Married nonresident aliens can claim the credit only if they choose to file a joint return with a U. Irs govefile S. Irs govefile citizen or resident spouse as discussed in chapter 1, or if they qualify as certain married individuals living apart (see Joint Return Test in Publication 503). Irs govefile   The amount of your child and dependent care expense that qualifies for the credit in any tax year cannot be more than your earned income from the United States for that tax year. Irs govefile Earned income generally means wages, salaries, and professional fees for personal services performed. Irs govefile   For more information, get Publication 503. Irs govefile Education credits. Irs govefile   If you are a nonresident alien for any part of the year, you generally cannot claim the education credits. Irs govefile However, if you are married and choose to file a joint return with a U. Irs govefile S. Irs govefile citizen or resident spouse as discussed in chapter 1, you may be eligible for these credits. Irs govefile Retirement savings contributions credit. Irs govefile   You may qualify for this credit (also known as the saver's credit) if you made eligible contributions to an employer-sponsored retirement plan or to an individual retirement arrangement (IRA) in 2013. Irs govefile You cannot claim this credit if: You were born after January 1, 1996, You were a full-time student, Your exemption is claimed by someone else on his or her 2013 tax return, or Your adjusted gross income is more than $29,500. Irs govefile Use Form 8880 to figure the credit. Irs govefile For more information, see Publication 590. Irs govefile Child tax credit. Irs govefile   You may be able to take this credit if you have a qualifying child. Irs govefile   A qualifying child for purposes of the child tax credit is a child who: Was under age 17 at the end of 2013. Irs govefile Is your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, half brother, half sister, or a descendant of any of them (for example, your grandchild, niece, or nephew). Irs govefile Is a U. Irs govefile S. Irs govefile citizen, a U. Irs govefile S. Irs govefile national, or a resident alien. Irs govefile Did not provide over half of his or her own support for 2013. Irs govefile Lived with you more than half of 2013. Irs govefile Temporary absences, such as for school, vacation, or medical care, count as time lived in the home. Irs govefile Is claimed as a dependent on your return. Irs govefile An adopted child is always treated as your own child. Irs govefile An adopted child includes a child lawfully placed with you for legal adoption. Irs govefile   See your form instructions for additional details. Irs govefile Adoption credit. Irs govefile   You may qualify to take a tax credit of up to $12,970 for qualifying expenses paid to adopt an eligible child. Irs govefile This amount may be allowed for the adoption of a child with special needs regardless of whether you have qualifying expenses. Irs govefile To claim the adoption credit, file Form 8839 with your Form 1040NR. Irs govefile   Married nonresident aliens can claim the credit only if they choose to file a joint return with a U. Irs govefile S. Irs govefile citizen or resident spouse as discussed in chapter 1, or if they qualify as certain married individuals living apart (see Married Persons Not Filing Jointly in the Form 8839 instructions). Irs govefile Credit for prior year minimum tax. Irs govefile   If you paid alternative minimum tax in a prior year, get Form 8801, Credit for Prior Year Minimum Tax—Individuals, Estates, and Trusts, to see if you qualify for this credit. Irs govefile Earned income credit. Irs govefile   If you are a nonresident alien for any part of the tax year, you generally cannot get the earned income credit. Irs govefile However, if you are married and choose to file a joint return with a U. Irs govefile S. Irs govefile citizen or resident spouse as discussed in chapter 1, you may be eligible for the credit. Irs govefile    You, your spouse, and any qualifying child must have valid SSNs to claim this credit. Irs govefile You cannot claim the credit using an ITIN. Irs govefile If a social security card has a legend that says Not Valid for Employment and the number was issued so that you (or your spouse or your qualifying child) could receive a federally funded benefit, you cannot claim the earned income credit. Irs govefile An example of a federally funded benefit is Medicaid. Irs govefile If a card has this legend and the individual's immigration status has changed so that the individual is now a U. Irs govefile S. Irs govefile citizen or lawful permanent resident, ask the SSA to issue a new social security card without the legend. Irs govefile   See Publication 596 for more information on the credit. Irs govefile Tax Withheld You can claim the tax withheld during the year as a payment against your U. Irs govefile S. Irs govefile tax. Irs govefile You claim it on line 61 of Form 1040NR or on line 18 of Form 1040NR-EZ. Irs govefile The tax withheld reduces any tax you owe with Form 1040NR or Form 1040NR-EZ. Irs govefile Withholding from wages. Irs govefile   Any federal income tax withheld from your wages during the tax year while you were a nonresident alien is allowed as a payment against your U. Irs govefile S. Irs govefile income tax liability for the same year. Irs govefile You can claim the income tax withheld whether or not you were engaged in a trade or business in the United States during the year, and whether or not the wages (or any other income) were connected with a trade or business in the United States. Irs govefile Excess social security tax withheld. Irs govefile   If you have two or more employers, you may be able to claim a credit against your U. Irs govefile S. Irs govefile income tax liability for social security tax withheld in excess of the maximum required. Irs govefile See Social Security and Medicare Taxes in chapter 8 for more information. Irs govefile Additional Medicare Tax. Irs govefile   Your employer is responsible for withholding the 0. Irs govefile 9% Additional Medicare Tax on Medicare wages or RRTA compensation it pays to you in excess of $200,000 in 2013. Irs govefile If you do not owe Additional Medicare Tax, you can claim a credit for any withheld Additional Medicare Tax against the total tax liability shown on your tax return by filing Form 8959. Irs govefile Tax paid on undistributed long-term capital gains. Irs govefile   If you are a shareholder in a mutual fund (or other regulated investment company) or real estate investment trust, you can claim a credit for your share of any taxes paid by the company on its undistributed long-term capital gains. Irs govefile You will receive information on Form 2439, Notice to Shareholder of Undistributed Long-Term Capital Gains, which you must attach to your return. Irs govefile Tax withheld at the source. Irs govefile   You can claim as a payment any tax withheld at the source on investment and other fixed or determinable annual or periodic income paid to you. Irs govefile Fixed or determinable income includes interest, dividend, rental, and royalty income that you do not claim to be effectively connected income. Irs govefile Wage or salary payments can be fixed or determinable income to you, but usually are subject to withholding as discussed above. Irs govefile Taxes on fixed or determinable income are withheld at a 30% rate or at a lower treaty rate. Irs govefile Tax withheld on partnership income. Irs govefile   If you are a foreign partner in a partnership, the partnership will withhold tax on your share of effectively connected taxable income from the partnership. Irs govefile The partnership will give you a statement on Form 8805, Foreign Partner's Information Statement of Section 1446 Withholding Tax, showing the tax withheld. Irs govefile A partnership that is publicly traded may withhold on your actual distributions of effectively connected income. Irs govefile In this case, the partnership will give you a statement on Form 1042-S. Irs govefile Claim the tax withheld as a payment on line 61b or 61d of Form 1040NR, as appropriate. Irs govefile Claiming tax withheld on your return. Irs govefile   When you fill out your tax return, take extra care to enter the correct amount of any tax withheld shown on your information documents. Irs govefile The following table lists some of the more common information documents and shows where to find the amount of tax withheld. Irs govefile Form number Location  of tax  withheld RRB-1042S Box 12 SSA-1042S Box 9 W-2 Box 2 W-2c Box 2 1042-S Box 9 8805 Line 10 8288-A Box 2 Bona Fide Residents of American Samoa or Puerto Rico If you are a nonresident alien who is a bona fide resident of American Samoa or Puerto Rico for the entire tax year, you generally are taxed the same as resident aliens. Irs govefile You should file Form 1040 and report all income from sources both in and outside the United States. Irs govefile However, you can exclude the income discussed in the following paragraphs. Irs govefile For tax purposes other than reporting income, however, you will be treated as a nonresident alien. Irs govefile For example, you are not allowed the standard deduction, you cannot file a joint return, and you are not allowed a deduction for a dependent unless that person is a citizen or national of the United States. Irs govefile There are also limits on what deductions and credits are allowed. Irs govefile See Nonresident Aliens under Deductions , Itemized Deductions , and Tax Credits and Payments in this chapter. Irs govefile Residents of Puerto Rico. Irs govefile   If you are a bona fide resident of Puerto Rico for the entire year, you can exclude from gross income all income from sources in Puerto Rico (other than amounts for services performed as an employee of the United States or any of its agencies). Irs govefile   If you report income on a calendar year basis and you do not have wages subject to withholding, file your return and pay your tax by June 15. Irs govefile You must also make your first payment of estimated tax by June 15. Irs govefile You cannot file a joint income tax return or make joint payments of estimated tax. Irs govefile However, if you are married to a U. Irs govefile S. Irs govefile citizen or resident, see Nonresident Spouse Treated as a Resident in chapter 1. Irs govefile   If you earn wages subject to withholding, your U. Irs govefile S. Irs govefile income tax return is due by April 15. Irs govefile Your first payment of estimated tax is also due by April 15. Irs govefile For information on withholding and estimated tax, see chapter 8 . Irs govefile Residents of American Samoa. Irs govefile   If you are a bona fide resident of American Samoa for the entire year, you can exclude from gross income all income from sources in American Samoa (other than amounts for services performed as an employee of the U. Irs govefile S. Irs govefile government or any of its agencies). Irs govefile An employee of the American Samoan government is not considered an employee of the U. Irs govefile S. Irs govefile government or any of its agencies for purposes of the exclusion. Irs govefile For more information about this exclusion, get Form 4563 and Publication 570, Tax Guide for Individuals With Income From U. Irs govefile S. Irs govefile Possessions. Irs govefile Prev  Up  Next   Home   More Online Publications