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Tax Filing 2014

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Tax Filing 2014

Tax filing 2014 2. Tax filing 2014   American Opportunity Credit Table of Contents Introduction Can You Claim the CreditWho Can Claim the Credit Who Cannot Claim the Credit What Expenses QualifyQualified Education Expenses No Double Benefit Allowed Expenses That Do Not Qualify Who Is an Eligible StudentException. Tax filing 2014 Who Can Claim a Dependent's Expenses Figuring the CreditEffect of the Amount of Your Income on the Amount of Your Credit Refundable Part of Credit Claiming the Credit Introduction For 2013, there are two tax credits available to help you offset the costs of higher education by reducing the amount of your income tax. Tax filing 2014 They are the American opportunity credit (this chapter) and the lifetime learning credit ( chapter 3 ). Tax filing 2014 This chapter explains: Who can claim the American opportunity credit, What expenses qualify for the credit, Who is an eligible student, Who can claim a dependent's expenses, How to figure the credit, How to claim the credit, and When the credit must be repaid. Tax filing 2014 What is the tax benefit of the American opportunity credit. Tax filing 2014   For the tax year, you may be able to claim an American opportunity credit of up to $2,500 for qualified education expenses paid for each eligible student. Tax filing 2014   A tax credit reduces the amount of income tax you may have to pay. Tax filing 2014 Unlike a deduction, which reduces the amount of income subject to tax, a credit directly reduces the tax itself. Tax filing 2014 Forty percent of the American opportunity credit may be refundable. Tax filing 2014 This means that if the refundable portion of your credit is more than your tax, the excess will be refunded to you. Tax filing 2014   Your allowable American opportunity credit may be limited by the amount of your income. Tax filing 2014 Also, the nonrefundable part of the credit may be limited by the amount of your tax. Tax filing 2014 Overview of the American opportunity credit. Tax filing 2014   See Table 2-1, Overview of the American Opportunity Credit , for the basics of this credit. Tax filing 2014 The details are discussed in this chapter. Tax filing 2014 Can you claim more than one education credit this year. Tax filing 2014   For each student, you can elect for any year only one of the credits. Tax filing 2014 For example, if you elect to take the American opportunity credit for a child on your 2013 tax return, you cannot use that same child's qualified education expenses to figure the lifetime learning credit for 2013. Tax filing 2014   If you pay qualified education expenses for more than one student in the same year, you can choose to take the American opportunity credit on a per-student, per-year basis. Tax filing 2014 If you pay qualified education expenses for a student (or students) for whom you do not claim the American opportunity credit, you can use the adjusted qualified education expenses of that student (or those students) in figuring your lifetime learning credit. Tax filing 2014 This means that, for example, you can claim the American opportunity credit for one student and the lifetime learning credit for another student in the same year. Tax filing 2014 Differences between the American opportunity and lifetime learning credits. Tax filing 2014   There are several differences between these two credits. Tax filing 2014 For example, you can claim the American opportunity credit based on the same student's expenses for no more than 4 tax years, which includes any tax years you claimed the Hope Scholarship Credit for that student. Tax filing 2014 However, there is no limit on the number of years for which you can claim a lifetime learning credit based on the same student's expenses. Tax filing 2014 The differences between these credits are shown in Appendix B, Highlights of Education Tax Benefits for Tax Year 2013 near the end of this publication. Tax filing 2014 If you claim the American opportunity credit for any student, you can choose between using that student's adjusted qualified education expenses for the American opportunity credit or the lifetime learning credit. Tax filing 2014 If you have the choice, the American opportunity credit will always be greater than the lifetime learning credit. Tax filing 2014 Table 2-1. Tax filing 2014 Overview of the American Opportunity Credit Maximum credit Up to $2,500 credit per eligible student Limit on modified adjusted gross income (MAGI) $180,000 if married filing jointly; $90,000 if single, head of household, or qualifying widow(er) Refundable or nonrefundable 40% of credit may be refundable; the rest is nonrefundable Number of years of postsecondary education Available ONLY if the student had not completed the first 4 years of postsecondary education before 2013 Number of tax years credit available Available ONLY for 4 tax years per eligible student (including any year(s) Hope Scholarship Credit was claimed) Type of program required Student must be pursuing a program leading to a degree or other recognized education credential Number of courses Student must be enrolled at least half time for at least one academic period that begins during the tax year Felony drug conviction As of the end of 2013, the student had not been convicted of a felony for possessing or distributing a controlled substance Qualified expenses Tuition, required enrollment fees, and course materials that the student needs for a course of study whether or not the materials are bought at the educational institution as a condition of enrollment or attendance Payments for academic periods Payments made in 2013 for academic periods beginning in 2013 or beginning in the first 3 months of 2014 Can You Claim the Credit The following rules will help you determine if you are eligible to claim the American opportunity credit on your tax return. Tax filing 2014 Who Can Claim the Credit Generally, you can claim the American opportunity credit if all three of the following requirements are met. Tax filing 2014 You pay qualified education expenses of higher education. Tax filing 2014 You pay the education expenses for an eligible student. Tax filing 2014 The eligible student is either yourself, your spouse, or a dependent for whom you claim an exemption on your tax return. Tax filing 2014 Student qualifications. Tax filing 2014   Generally, you can take the American opportunity credit for a student only if all of the following four requirements are met. Tax filing 2014 As of the beginning of 2013, the student had not completed the first four years of postsecondary education (generally, the freshman through senior years of college), as determined by the eligible educational institution. Tax filing 2014 For this purpose, do not include academic credit awarded solely because of the student's performance on proficiency examinations. Tax filing 2014 Neither the American opportunity credit nor the Hope Scholarship Credit has been claimed (by you or anyone else) for this student for any four tax years before 2013. Tax filing 2014 If the American opportunity credit (and Hope Scholarship Credit) has been claimed for this student for any three or fewer tax years before 2013, this requirement is met. Tax filing 2014 For at least one academic period beginning (or treated as beginning) in 2013, the student both: Was enrolled in a program that leads to a degree, certificate, or other recognized educational credential; and Carried at least one-half the normal full-time workload for his or her course of study. Tax filing 2014 The standard for what is half of the normal full-time work load is determined by each eligible educational institution. Tax filing 2014 However, the standard may not be lower than any of those established by the U. Tax filing 2014 S. Tax filing 2014 Department of Education under the Higher Education Act of 1965. Tax filing 2014 For purposes of whether the student satisfies this third requirement for 2013, treat an academic period beginning in the first three months of 2014 as if it began in 2013 if qualified education expenses for the student were paid in 2013 for that academic period. Tax filing 2014 See Prepaid expenses, later. Tax filing 2014 As of the end of 2013, the student had not been convicted of a federal or state felony for possessing or distributing a controlled substance. Tax filing 2014 Example 1. Tax filing 2014 Sharon was eligible for the Hope Scholarship Credit for 2007 and 2008 and for the American opportunity credit for 2010 and 2012. Tax filing 2014 Her parents claimed the Hope Scholarship Credit for Sharon on their tax returns for 2007 and 2008 and claimed the American opportunity credit for Sharon on their 2010 tax return. Tax filing 2014 Sharon claimed the American opportunity credit on her 2012 tax return. Tax filing 2014 The American opportunity credit and Hope Scholarship Credit have been claimed for Sharon for four tax years before 2013. Tax filing 2014 Therefore, the American opportunity credit cannot be claimed by Sharon for 2013. Tax filing 2014 If Sharon were to file Form 8863 for 2013, she would check “Yes” for Part III, line 23, and would be eligible to claim only the lifetime learning credit. Tax filing 2014 Example 2. Tax filing 2014 Wilbert was eligible for the American opportunity credit for 2009, 2010, 2011, and 2013. Tax filing 2014 His parents claimed the American opportunity credit for Wilbert on their tax returns for 2009, 2010, and 2011. Tax filing 2014 No one claimed an American opportunity credit or Hope Scholarship Credit for Wilbert for any other tax year. Tax filing 2014 The American opportunity credit and Hope Scholarship Credit have been claimed for Wilbert for only three tax years before 2013. Tax filing 2014 Therefore, Wilbert meets the second requirement to be eligible for the American opportunity credit. Tax filing 2014 If Wilbert were to file Form 8863 for 2013, he would check “No” for Part III, line 23. Tax filing 2014 If Wilbert meets all of the other requirements, he is eligible for the American opportunity credit. Tax filing 2014 Example 3. Tax filing 2014 Glenda enrolls on a full-time basis in a degree program for the 2014 Spring semester, which begins in January 2014. Tax filing 2014 Glenda pays her tuition for the 2014 Spring semester in December 2013. Tax filing 2014 Because the tuition Glenda paid in 2013 relates to an academic period that begins in the first 3 months of 2014, her eligibility to claim an American opportunity credit in 2013 is determined as if the 2014 Spring semester began in 2013. Tax filing 2014 If the requirements above are not met for any student, you cannot take the American opportunity credit for that student. Tax filing 2014 You may be able to take the lifetime learning credit for part or all of that student's qualified education expenses instead. Tax filing 2014 Note. Tax filing 2014 Qualified education expenses paid by a dependent for whom you claim an exemption, or by a third party for that dependent, are considered paid by you. Tax filing 2014 “Qualified education expenses” are defined later under Qualified Education Expenses . Tax filing 2014 “Eligible students” are defined later under Who Is an Eligible Student . Tax filing 2014 A dependent for whom you claim an exemption is defined later under Who Can Claim a Dependent's Expenses . Tax filing 2014 You may find Figure 2-1, Can You Claim the American Opportunity Credit for 2013 , later, helpful in determining if you can claim an American opportunity credit on your tax return. Tax filing 2014 This image is too large to be displayed in the current screen. Tax filing 2014 Please click the link to view the image. Tax filing 2014 Figure 2-1 Can you claim the American opportunity credit for 2012? Who Cannot Claim the Credit You cannot claim the American opportunity credit for 2013 if any of the following apply. Tax filing 2014 Your filing status is married filing separately. Tax filing 2014 You are listed as a dependent on another person's tax return (such as your parents'). Tax filing 2014 See Who Can Claim a Dependent's Expenses , later. Tax filing 2014 Your modified adjusted gross income (MAGI) is $90,000 or more ($180,000 or more in the case of a joint return). Tax filing 2014 MAGI is explained later under Effect of the Amount of Your Income on the Amount of Your Credit . Tax filing 2014 You (or your spouse) were a nonresident alien for any part of 2013 and the nonresident alien did not elect to be treated as a resident alien for tax purposes. Tax filing 2014 More information on nonresident aliens can be found in Publication 519, U. Tax filing 2014 S. Tax filing 2014 Tax Guide for Aliens. Tax filing 2014 What Expenses Qualify The American opportunity credit is based on adjusted qualified education expenses you pay for yourself, your spouse, or a dependent for whom you claim an exemption on your tax return. Tax filing 2014 Generally, the credit is allowed for adjusted qualified education expenses paid in 2013 for an academic period beginning in 2013 or beginning in the first three months of 2014. Tax filing 2014 For example, if you paid $1,500 in December 2013 for qualified tuition for the spring 2014 semester beginning January 2014, you can use that $1,500 in figuring your 2013 credit. Tax filing 2014 Academic period. Tax filing 2014   An academic period includes a semester, trimester, quarter, or other period of study (such as a summer school session) as reasonably determined by an educational institution. Tax filing 2014 In the case of an educational institution that uses credit hours or clock hours and does not have academic terms, each payment period can be treated as an academic period. Tax filing 2014 Paid with borrowed funds. Tax filing 2014   You can claim an American opportunity credit for qualified education expenses paid with the proceeds of a loan. Tax filing 2014 Use the expenses to figure the American opportunity credit for the year in which the expenses are paid, not the year in which the loan is repaid. Tax filing 2014 Treat loan payments sent directly to the educational institution as paid on the date the institution credits the student's account. Tax filing 2014 Student withdraws from class(es). Tax filing 2014   You can claim an American opportunity credit for qualified education expenses not refunded when a student withdraws. Tax filing 2014 Qualified Education Expenses For purposes of the American opportunity credit, qualified education expenses are tuition and certain related expenses required for enrollment or attendance at an eligible educational institution. Tax filing 2014 Eligible educational institution. Tax filing 2014   An eligible educational institution is any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the U. Tax filing 2014 S. Tax filing 2014 Department of Education. Tax filing 2014 It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. Tax filing 2014 The educational institution should be able to tell you if it is an eligible educational institution. Tax filing 2014   Certain educational institutions located outside the United States also participate in the U. Tax filing 2014 S. Tax filing 2014 Department of Education's Federal Student Aid (FSA) programs. Tax filing 2014 Related expenses. Tax filing 2014   Student-activity fees are included in qualified education expenses only if the fees must be paid to the institution as a condition of enrollment or attendance. Tax filing 2014   However, expenses for books, supplies, and equipment needed for a course of study are included in qualified education expenses whether or not the materials are purchased from the educational institution. Tax filing 2014 Prepaid expenses. Tax filing 2014   Qualified education expenses paid in 2013 for an academic period that begins in the first three months of 2014 can be used in figuring an education credit for 2013 only. Tax filing 2014 See Academic period, earlier. Tax filing 2014 For example, if you pay $2,000 in December 2013, for qualified tuition for the 2014 winter quarter that begins in January 2014, you can use that $2,000 in figuring an education credit for 2013 only (if you meet all the other requirements). Tax filing 2014    You cannot use any amount you paid in 2012 or 2014 to figure the qualified education expenses you use to figure your 2013 education credit(s). Tax filing 2014   In the following examples, assume that each student is an eligible student at an eligible educational institution. Tax filing 2014 Example 1. Tax filing 2014 Jefferson is a sophomore in University V's degree program in dentistry. Tax filing 2014 This year, in addition to tuition, he is required to pay a fee to the university for the rental of the dental equipment he will use in this program. Tax filing 2014 Because the equipment rental is needed for his course of study, Jefferson's equipment rental fee is a qualified expense. Tax filing 2014 Example 2. Tax filing 2014 Grace and William, both first-year students at College W, are required to have certain books and other reading materials to use in their mandatory first-year classes. Tax filing 2014 The college has no policy about how students should obtain these materials, but any student who purchases them from College W's bookstore will receive a bill directly from the college. Tax filing 2014 William bought his books from a friend; Grace bought hers at College W's bookstore. Tax filing 2014 Both are qualified education expenses for the American opportunity credit. Tax filing 2014 Example 3. Tax filing 2014 When Kelly enrolled at College X for her freshman year, she had to pay a separate student activity fee in addition to her tuition. Tax filing 2014 This activity fee is required of all students, and is used solely to fund on-campus organizations and activities run by students, such as the student newspaper and the student government. Tax filing 2014 No portion of the fee covers personal expenses. Tax filing 2014 Although labeled as a student activity fee, the fee is required for Kelly's enrollment and attendance at College X and is a qualified expense. Tax filing 2014 No Double Benefit Allowed You cannot do any of the following. Tax filing 2014 Deduct higher education expenses on your income tax return (as, for example, a business expense) and also claim an American opportunity credit based on those same expenses. Tax filing 2014 Claim an American opportunity credit in the same year that you are claiming a tuition and fees deduction for the same student. Tax filing 2014 Claim an American opportunity credit for any student and use any of that student's expenses in figuring your lifetime learning credit. Tax filing 2014 Figure the tax-free portion of a distribution from a Coverdell education savings account (ESA) or qualified tuition program (QTP) using the same expenses you used to figure the American opportunity credit. Tax filing 2014 See Coordination With American Opportunity and Lifetime Learning Credits in chapter 7, Coverdell Education Savings Account, and Coordination With American Opportunity and Lifetime Learning Credits in chapter 8, Qualified Tuition Program. Tax filing 2014 Claim a credit based on qualified education expenses paid with tax-free educational assistance, such as a scholarship, grant, or assistance provided by an employer. Tax filing 2014 See Adjustments to Qualified Education Expenses, next. Tax filing 2014 Adjustments to Qualified Education Expenses For each student, reduce the qualified education expenses paid by or on behalf of that student under the following rules. Tax filing 2014 The result is the amount of adjusted qualified education expenses for each student. Tax filing 2014 Tax-free educational assistance. Tax filing 2014   For tax-free educational assistance received in 2013, reduce the qualified educational expenses for each academic period by the amount of tax-free educational assistance allocable to that academic period. Tax filing 2014 See Academic period, earlier. Tax filing 2014   Some tax-free educational assistance received after 2013 may be treated as a refund of qualified education expenses paid in 2013. Tax filing 2014 This tax-free educational assistance is any tax-free educational assistance received by you or anyone else after 2013 for qualified education expenses paid on behalf of a student in 2013 (or attributable to enrollment at an eligible educational institution during 2013). Tax filing 2014   If this tax-free educational assistance is received after 2013 but before you file your 2013 income tax return, see Refunds received after 2013 but before your income tax return is filed, later. Tax filing 2014 If this tax-free educational assistance is received after 2013 and after you file your 2013 income tax return, see Refunds received after 2013 and after your income tax return is filed, later. Tax filing 2014   Tax-free educational assistance includes: The tax-free parts of scholarships and fellowships (see Tax-Free Scholarships and Fellowships in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Pell grants (see Pell Grants and Other Title IV Need-Based Education Grants in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions). Tax filing 2014 Employer-provided educational assistance (see chapter 11, Employer-Provided Educational Assistance ), Veterans' educational assistance (see Veterans' Benefits in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), and Any other nontaxable (tax-free) payments (other than gifts or inheritances) received as educational assistance. Tax filing 2014 Generally, any scholarship or fellowship is treated as tax free. Tax filing 2014 However, a scholarship or fellowship is not treated as tax free to the extent the student includes it in gross income (if the student is required to file a tax return for the year the scholarship or fellowship is received) and either of the following is true. Tax filing 2014 The scholarship or fellowship (or any part of it) must be applied (by its terms) to expenses (such as room and board) other than qualified education expenses as defined in Qualified education expenses in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions. Tax filing 2014 The scholarship or fellowship (or any part of it) may be applied (by its terms) to expenses (such as room and board) other than qualified education expenses as defined in Qualified education expenses in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions. Tax filing 2014 You may be able to increase the combined value of an education credit and certain educational assistance if the student includes some or all of the educational assistance in income in the year it is received. Tax filing 2014 For examples, see Coordination with Pell grants and other scholarships, later. Tax filing 2014 Refunds. Tax filing 2014   A refund of qualified education expenses may reduce adjusted qualified education expenses for the tax year or require repayment (recapture) of a credit claimed in an earlier year. Tax filing 2014 Some tax-free educational assistance received after 2013 may be treated as a refund. Tax filing 2014 See Tax-free educational assistance, earlier. Tax filing 2014 Refunds received in 2013. Tax filing 2014   For each student, figure the adjusted qualified education expenses for 2013 by adding all the qualified education expenses for 2013 and subtracting any refunds of those expenses received from the eligible educational institution during 2013. Tax filing 2014 Refunds received after 2013 but before your income tax return is filed. Tax filing 2014   If anyone receives a refund after 2013 of qualified education expenses paid on behalf of a student in 2013 and the refund is paid before you file an income tax return for 2013, the amount of qualified education expenses for 2013 is reduced by the amount of the refund. Tax filing 2014 Refunds received after 2013 and after your income tax return is filed. Tax filing 2014   If anyone receives a refund after 2013 of qualified education expenses paid on behalf of a student in 2013 and the refund is paid after you file an income tax return for 2013, you may need to repay some or all of the credit. Tax filing 2014 See Credit recapture, next. Tax filing 2014 Credit recapture. Tax filing 2014    If any tax-free educational assistance for the qualified education expenses paid in 2013, or any refund of your qualified education expenses paid in 2013, is received after you file your 2013 income tax return, you must recapture (repay) any excess credit. Tax filing 2014 You do this by refiguring the amount of your adjusted qualified education expenses for 2013 by reducing the expenses by the amount of the refund or tax-free educational assistance. Tax filing 2014 You then refigure your education credit(s) for 2013 and figure the amount by which your 2013 tax liability would have increased if you claimed the refigured credit(s). Tax filing 2014 Include that amount as an additional tax for the year the refund or tax-free assistance was received. Tax filing 2014 Example. Tax filing 2014   You paid $7,000 tuition and fees in August 2013, and your child began college in September 2013. Tax filing 2014 You filed your 2013 tax return on February 17, 2014, and claimed an American opportunity credit of $2,500. Tax filing 2014 After you filed your return, you received a refund of $4,000. Tax filing 2014 You must refigure your 2013 American opportunity credit using $3,000 of qualified education expenses instead of $7,000. Tax filing 2014 The refigured credit is $2,250. Tax filing 2014 The increase to your tax liability is also $250. Tax filing 2014 Include the difference of $250 as additional tax on your 2014 tax return. Tax filing 2014 See the instructions for your 2014 income tax return to determine where to include this tax. Tax filing 2014 If you pay qualified education expenses in 2014 for an academic period that begins in the first 3 months of 2014 and you receive tax-free educational assistance, or a refund, as described above, you may choose to reduce your qualified education expenses for 2014 instead of reducing your expenses for 2013. Tax filing 2014 Amounts that do not reduce qualified education expenses. Tax filing 2014   Do not reduce qualified education expenses by amounts paid with funds the student receives as: Payment for services, such as wages, A loan, A gift, An inheritance, or A withdrawal from the student's personal savings. Tax filing 2014   Do not reduce the qualified education expenses by any scholarship or fellowship reported as income on the student's tax return in the following situations. Tax filing 2014 The use of the money is restricted, by the terms of the scholarship or fellowship, to costs of attendance (such as room and board) other than qualified education expenses as defined in Qualified education expenses in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions. Tax filing 2014 The use of the money is not restricted. Tax filing 2014 Example 1. Tax filing 2014 Joan paid $3,000 for tuition and $5,000 for room and board at University X. Tax filing 2014 The university did not require her to pay any fees in addition to her tuition in order to enroll in or attend classes. Tax filing 2014 To help pay these costs, she was awarded a $2,000 scholarship and a $4,000 student loan. Tax filing 2014 The terms of the scholarship state that it can be used to pay any of Joan's college expenses. Tax filing 2014 University X applies the $2,000 scholarship against Joan's $8,000 total bill, and Joan pays the $6,000 balance of her bill from University X with a combination of her student loan and her savings. Tax filing 2014 Joan does not report any portion of the scholarship as income on her tax return. Tax filing 2014 In figuring the amount of either education credit (American opportunity or lifetime learning), Joan must reduce her qualified education expenses by the amount of the scholarship ($2,000) because she excluded the entire scholarship from her income. Tax filing 2014 The student loan is not tax-free educational assistance, so she does not need to reduce her qualified expenses by any part of the loan proceeds. Tax filing 2014 Joan is treated as having paid $1,000 in qualified education expenses ($3,000 tuition – $2,000 scholarship). Tax filing 2014 Example 2. Tax filing 2014 The facts are the same as in Example 1, except that Joan reports her entire scholarship as income on her tax return. Tax filing 2014 Because Joan reported the entire $2,000 scholarship in her income, she does not need to reduce her qualified education expenses. Tax filing 2014 Joan is treated as having paid $3,000 in qualified education expenses. Tax filing 2014 Coordination with Pell grants and other scholarships. Tax filing 2014   In some cases, you may be able to reduce your tax liability by including scholarships in income. Tax filing 2014 If you are claiming an education credit for a claimed dependent who received a scholarship, you may be able to reduce your tax liability if the student includes the scholarship in income. Tax filing 2014 The scholarship must be one that may (by its terms) be applied to expenses (such as room and board) other than qualified education expenses. Tax filing 2014 Example 1—No scholarship. Tax filing 2014 Bill Pass, age 28 and unmarried, enrolled full-time in 2013 as a first-year student at a local college to earn a degree in law enforcement. Tax filing 2014 This was his first year of postsecondary education. Tax filing 2014 During 2013, he paid $5,600 for his qualified education expenses and $4,400 for his room and board for the fall 2013 semester. Tax filing 2014 He and the college meet all the requirements for the American opportunity credit. Tax filing 2014 Bill's AGI and his MAGI, for purposes of figuring his credit, are $30,000. Tax filing 2014 Bill takes the standard deduction of $5,950 and personal exemption of $3,800, reducing his AGI to taxable income of $20,250. Tax filing 2014 His income tax liability, before credits, is $2,599 and Bill claims no credits other than the American opportunity credit. Tax filing 2014 He figures his American opportunity credit based on qualified education expenses of $4,000, which results in a credit of $2,500 and tax after credits of $99. Tax filing 2014 Example 2—Scholarship excluded from income. Tax filing 2014 The facts are the same as in Example 1—No scholarship, except that Bill was awarded a $5,600 scholarship. Tax filing 2014 Under the terms of his scholarship, it may be used to pay any educational expenses, including room and board. Tax filing 2014 If Bill excludes the scholarship from income, he will be deemed (for purposes of computing his education credit) to have used the scholarship to pay for tuition, required fees, and course materials. Tax filing 2014 His adjusted qualified education expenses will be zero and he will not have an education credit. Tax filing 2014 Therefore, Bill's tax after credits would be $2,599. Tax filing 2014 Example 3—Scholarship partially included in income. Tax filing 2014 The facts are the same as in Example 2—Scholarship excluded from income. Tax filing 2014 If, unlike Example 2, Bill includes $4,000 of the scholarship in income, he will be deemed to have used that amount to pay for room and board. Tax filing 2014 The remaining $1,600 of the $5,600 scholarship will reduce his qualified education expenses and his adjusted qualified education expenses will be $4,000. Tax filing 2014 Bill's AGI will increase to $34,000, his taxable income will increase to $24,250, and his tax before credits will increase to $3,199. Tax filing 2014 Based on his adjusted qualified education expenses of $4,000, Bill would be able to claim an American opportunity tax credit of $2,500 and his tax after credits would be $699. Tax filing 2014 Expenses That Do Not Qualify Qualified education expenses do not include amounts paid for: Insurance, Medical expenses (including student health fees), Room and board, Transportation, or Similar personal, living, or family expenses. Tax filing 2014 This is true even if the amount must be paid to the institution as a condition of enrollment or attendance. Tax filing 2014 Sports, games, hobbies, and noncredit courses. Tax filing 2014   Qualified education expenses generally do not include expenses that relate to any course of instruction or other education that involves sports, games or hobbies, or any noncredit course. Tax filing 2014 However, if the course of instruction or other education is part of the student's degree program, these expenses can qualify. Tax filing 2014 Comprehensive or bundled fees. Tax filing 2014   Some eligible educational institutions combine all of their fees for an academic period into one amount. Tax filing 2014 If you do not receive or do not have access to an allocation showing how much you paid for qualified education expenses and how much you paid for personal expenses, such as those listed earlier, contact the institution. Tax filing 2014 The institution is required to make this allocation and provide you with the amount you paid (or were billed) for qualified education expenses on Form 1098-T, Tuition Statement. Tax filing 2014 See Figuring the Credit , later, for more information about Form 1098-T. Tax filing 2014 Who Is an Eligible Student To claim the American opportunity credit, the student for whom you pay qualified education expenses must be an eligible student. Tax filing 2014 This is a student who meets all of the following requirements. Tax filing 2014 The student did not have expenses that were used to figure an American opportunity credit in any 4 earlier tax years. Tax filing 2014 This includes any tax year(s) in which you claimed the Hope Scholarship Credit for the same student. Tax filing 2014 The student had not completed the first 4 years of postsecondary education (generally, the freshman, sophomore, junior, and senior years of college) before 2013. Tax filing 2014 For at least one academic period beginning in 2013, the student was enrolled at least half-time in a program leading to a degree, certificate, or other recognized educational credential. Tax filing 2014 The student has not been convicted of any federal or state felony for possessing or distributing a controlled substance as of the end of 2013. Tax filing 2014 These requirements are also shown in Figure 2-2, Who is an Eligible Student for the American Opportunity Credit , later. Tax filing 2014 Completion of first 4 years. Tax filing 2014   A student has completed the first 4 years of postsecondary education if the institution at which the student is enrolled awards the student 4 years of academic credit at that institution for coursework completed by the student before 2013. Tax filing 2014 This student generally would not be an eligible student for purposes of the American opportunity credit. Tax filing 2014 Exception. Tax filing 2014   Any academic credit awarded solely on the basis of the student's performance on proficiency examinations is disregarded in determining whether the student has completed 4 years of postsecondary education. Tax filing 2014 Enrolled at least half-time. Tax filing 2014   A student was enrolled at least half-time if the student was taking at least half the normal full-time work load for his or her course of study. Tax filing 2014   The standard for what is half of the normal full-time work load is determined by each eligible educational institution. Tax filing 2014 However, the standard may not be lower than any of those established by the U. Tax filing 2014 S. Tax filing 2014 Department of Education under the Higher Education Act of 1965. Tax filing 2014 Please click here for the text description of the image. Tax filing 2014 Figure 2-2 Example 1. Tax filing 2014 Mack graduated from high school in June 2012. Tax filing 2014 In September, he enrolled in an undergraduate degree program at College U, and attended full-time for both the 2012 fall and 2013 spring semesters. Tax filing 2014 For the 2013 fall semester, Mack was enrolled less than half-time. Tax filing 2014 Because Mack was enrolled in an undergraduate degree program on at least a half-time basis for at least one academic period that began during 2012 and at least one academic period that began during 2013, he is an eligible student for tax years 2012 and 2013 (including the 2013 fall semester when he enrolled at College U on less than a half-time basis). Tax filing 2014 Example 2. Tax filing 2014 After taking classes at College V on a part-time basis for a few years, Shelly became a full-time student for the 2013 spring semester. Tax filing 2014 College V classified Shelly as a second-semester senior (fourth year) for the 2013 spring semester and as a first-semester graduate student (fifth year) for the 2013 fall semester. Tax filing 2014 Because College V did not classify Shelly as having completed the first 4 years of postsecondary education as of the beginning of 2013, Shelly is an eligible student for tax year 2013. Tax filing 2014 Therefore, the qualified education expenses paid for the 2013 spring semester and the 2013 fall semester are taken into account in calculating the American opportunity credit for 2013. Tax filing 2014 Example 3. Tax filing 2014 During the 2012 fall semester, Larry was a high school student who took classes on a half-time basis at College X. Tax filing 2014 Larry was not enrolled as part of a degree program at College X because College X only admits students to a degree program if they have a high school diploma or equivalent. Tax filing 2014 Because Larry was not enrolled in a degree program at College X during 2012, Larry was not an eligible student for tax year 2012. Tax filing 2014 Example 4. Tax filing 2014 The facts are the same as in Example 3. Tax filing 2014 During the 2013 spring semester, Larry again attended College X but not as part of a degree program. Tax filing 2014 Larry graduated from high school in June 2013. Tax filing 2014 For the 2013 fall semester, Larry enrolled as a full-time student in College X as part of a degree program, and College X awarded Larry credit for his prior coursework at College X. Tax filing 2014 Because Larry was enrolled in a degree program at College X for the 2013 fall term on at least a half-time basis, Larry is an eligible student for all of tax year 2013. Tax filing 2014 Therefore, the qualified education expenses paid for classes taken at College X during both the 2013 spring semester (during which Larry was not enrolled in a degree program) and the 2013 fall semester are taken into account in computing any American opportunity credit. Tax filing 2014 Example 5. Tax filing 2014 Dee graduated from high school in June 2012. Tax filing 2014 In January 2013, Dee enrolled in a 1-year postsecondary certificate program on a full-time basis to obtain a certificate as a travel agent. Tax filing 2014 Dee completed the program in December 2013, and was awarded a certificate. Tax filing 2014 In January 2014, she enrolled in a 1-year postsecondary certificate program on a full-time basis to obtain a certificate as a computer programmer. Tax filing 2014 Dee is an eligible student for both tax years 2013 and 2014 because she meets the degree requirement, the work load requirement, and the year of study requirement for those years. Tax filing 2014 Who Can Claim a Dependent's Expenses If there are qualified education expenses for your dependent during a tax year, either you or your dependent, but not both of you, can claim an American opportunity credit for your dependent's expenses for that year. Tax filing 2014 For you to claim an American opportunity credit for your dependent's expenses, you must also claim an exemption for your dependent. Tax filing 2014 You do this by listing your dependent's name and other required information on Form 1040 (or Form 1040A), line 6c. Tax filing 2014 IF you. Tax filing 2014 . Tax filing 2014 . Tax filing 2014 THEN only. Tax filing 2014 . Tax filing 2014 . Tax filing 2014 claim an exemption on  your tax return for a  dependent who is an  eligible student you can claim the American opportunity credit based on that dependent's expenses. Tax filing 2014 The dependent cannot claim the credit. Tax filing 2014 do not claim an exemption on your tax return for a dependent who is an eligible student (even if entitled to the exemption) the dependent can claim the American opportunity credit. Tax filing 2014 You cannot claim the credit based on this dependent's expenses. Tax filing 2014 Expenses paid by dependent. Tax filing 2014   If you claim an exemption on your tax return for an eligible student who is your dependent, treat any expenses paid (or deemed paid) by your dependent as if you had paid them. Tax filing 2014 Include these expenses when figuring the amount of your American opportunity credit. Tax filing 2014    Qualified education expenses paid directly to an eligible educational institution for your dependent under a court-approved divorce decree are treated as paid by your dependent. Tax filing 2014 Expenses paid by you. Tax filing 2014   If you claim an exemption for a dependent who is an eligible student, only you can include any expenses you paid when figuring the amount of the American opportunity credit. Tax filing 2014 If neither you nor anyone else claims an exemption for the dependent, only the dependent can include any expenses you paid when figuring the American opportunity credit. Tax filing 2014 Expenses paid by others. Tax filing 2014   Someone other than you, your spouse, or your dependent (such as a relative or former spouse) may make a payment directly to an eligible educational institution to pay for an eligible student's qualified education expenses. Tax filing 2014 In this case, the student is treated as receiving the payment from the other person and, in turn, paying the institution. Tax filing 2014 If you claim an exemption on your tax return for the student, you are considered to have paid the expenses. Tax filing 2014 Example. Tax filing 2014 In 2013, Ms. Tax filing 2014 Allen makes a payment directly to an eligible educational institution for her grandson Todd's qualified education expenses. Tax filing 2014 For purposes of claiming an American opportunity credit, Todd is treated as receiving the money from his grandmother and, in turn, paying his qualified education expenses himself. Tax filing 2014 Unless an exemption for Todd is claimed on someone else's 2013 tax return, only Todd can use the payment to claim an American opportunity credit. Tax filing 2014 If anyone, such as Todd's parents, claims an exemption for Todd on his or her 2013 tax return, whoever claims the exemption may be able to use the expenses to claim an American opportunity credit. Tax filing 2014 If anyone else claims an exemption for Todd, Todd cannot claim an American opportunity credit. Tax filing 2014 Tuition reduction. Tax filing 2014    When an eligible educational institution provides a reduction in tuition to an employee of the institution (or spouse or dependent child of an employee), the amount of the reduction may or may not be taxable. Tax filing 2014 If it is taxable, the employee is treated as receiving a payment of that amount and, in turn, paying it to the educational institution on behalf of the student. Tax filing 2014 For more information on tuition reductions, see Qualified Tuition Reduction in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions. Tax filing 2014 Figuring the Credit The amount of the American opportunity credit (per eligible student) is the sum of: 100% of the first $2,000 of qualified education expenses you paid for the eligible student, and 25% of the next $2,000 of qualified education expenses you paid for that student. Tax filing 2014 The maximum amount of American opportunity credit you can claim in 2013 is $2,500 multiplied by the number of eligible students. Tax filing 2014 You can claim the full $2,500 for each eligible student for whom you paid at least $4,000 of adjusted qualified education expenses. Tax filing 2014 However, the credit may be reduced based on your MAGI. Tax filing 2014 See Effect of the Amount of Your Income on the Amount of Your Credit , later. Tax filing 2014 Example. Tax filing 2014 Jack and Kay Ford are married and file a joint tax return. Tax filing 2014 For 2013, they claim an exemption for their dependent daughter on their tax return. Tax filing 2014 Their MAGI is $70,000. Tax filing 2014 Their daughter is in her junior (third) year of studies at the local university. Tax filing 2014 Jack and Kay paid qualified education expenses of $4,300 in 2013. Tax filing 2014 Jack and Kay, their daughter, and the local university meet all of the requirements for the American opportunity credit. Tax filing 2014 Jack and Kay can claim a $2,500 American opportunity credit in 2013. Tax filing 2014 This is 100% of the first $2,000 of qualified education expenses, plus 25% of the next $2,000. Tax filing 2014 Form 1098-T. Tax filing 2014   To help you figure your American opportunity credit, the student should receive Form 1098-T, Tuition Statement. Tax filing 2014 Generally, an eligible educational institution (such as a college or university) must send Form 1098-T (or acceptable substitute) to each enrolled student by January 31, 2014. Tax filing 2014 An institution may choose to report either payments received (box 1), or amounts billed (box 2), for qualified education expenses. Tax filing 2014 However, the amounts in boxes 1 and 2 of Form 1098-T might be different than what you paid. Tax filing 2014 When figuring the credit, use only the amounts you paid or are deemed to have paid in 2013 for qualified education expenses. Tax filing 2014   In addition, Form 1098-T should give other information for that institution, such as adjustments made for prior years, the amount of scholarships or grants, reimbursements or refunds, and whether the student was enrolled at least half-time or was a graduate student. Tax filing 2014    The eligible educational institution may ask for a completed Form W-9S, Request for Student's or Borrower's Taxpayer Identification Number and Certification, or similar statement to obtain the student's name, address, and taxpayer identification number. Tax filing 2014 Effect of the Amount of Your Income on the Amount of Your Credit The amount of your American opportunity credit is phased out (gradually reduced) if your MAGI is between $80,000 and $90,000 ($160,000 and $180,000 if you file a joint return). Tax filing 2014 You cannot claim an American opportunity credit if your MAGI is $90,000 or more ($180,000 or more if you file a joint return). Tax filing 2014 Modified adjusted gross income (MAGI). Tax filing 2014   For most taxpayers, MAGI is adjusted gross income (AGI) as figured on their federal income tax return. Tax filing 2014 MAGI when using Form 1040A. Tax filing 2014   If you file Form 1040A, your MAGI is the AGI on line 22 of that form. Tax filing 2014 MAGI when using Form 1040. Tax filing 2014   If you file Form 1040, your MAGI is the AGI on line 38 of that form, modified by adding back any: Foreign earned income exclusion, Foreign housing exclusion, Foreign housing deduction, Exclusion of income by bona fide residents of American Samoa, and Exclusion of income by bona fide residents of Puerto Rico. Tax filing 2014 You can use Worksheet 2-1, next, to figure your MAGI. Tax filing 2014    Worksheet 2-1. Tax filing 2014 MAGI for the American Opportunity Credit 1. Tax filing 2014 Enter your adjusted gross income  (Form 1040, line 38)   1. Tax filing 2014   2. Tax filing 2014 Enter your foreign earned income exclusion and/or housing exclusion (Form 2555, line 45, or Form 2555-EZ, line 18)   2. Tax filing 2014       3. Tax filing 2014 Enter your foreign housing deduction (Form 2555, line 50)   3. Tax filing 2014       4. Tax filing 2014 Enter the amount of income from Puerto Rico you are excluding   4. Tax filing 2014       5. Tax filing 2014 Enter the amount of income from American Samoa you are excluding (Form 4563, line 15)   5. Tax filing 2014       6. Tax filing 2014 Add the amounts on lines 2, 3, 4, and 5   6. Tax filing 2014   7. Tax filing 2014 Add the amounts on lines 1 and 6. Tax filing 2014  This is your modified adjusted  gross income. Tax filing 2014 Enter here and  on Form 8863, line 3   7. Tax filing 2014   Phaseout. Tax filing 2014   If your MAGI is within the range of incomes where the credit must be reduced, you will figure your reduced credit using lines 2-7, of Form 8863, Part I. Tax filing 2014 The same method is shown in the following example. Tax filing 2014 Example. Tax filing 2014 You are filing a joint return and your MAGI is $165,000. Tax filing 2014 In 2013, you paid $5,000 of qualified education expenses. Tax filing 2014 You figure a tentative American opportunity credit of $2,500 (100% of the first $2,000 of qualified education expenses, plus 25% of the next $2,000 of qualified education expenses). Tax filing 2014 Because your MAGI is within the range of incomes where the credit must be reduced, you must multiply your tentative credit ($2,500) by a fraction. Tax filing 2014 The numerator of the fraction is $180,000 (the upper limit for those filing a joint return) minus your MAGI. Tax filing 2014 The denominator is $20,000, the range of incomes for the phaseout ($160,000 to $180,000). Tax filing 2014 The result is the amount of your phased out (reduced) American opportunity credit ($1,875). Tax filing 2014      $2,500 × $180,000 − $165,000  $20,000 = $1,875   Refundable Part of Credit Forty percent of the American opportunity credit is refundable for most taxpayers. Tax filing 2014 However, if you were under age 24 at the end of 2013 and the conditions listed below apply to you, you cannot claim any part of the American opportunity credit as a refundable credit on your tax return. Tax filing 2014 Instead, your allowed credit (figured on Form 8863, Part II) will be used to reduce your tax as a nonrefundable credit only. Tax filing 2014 You do not qualify for a refund if items 1 (a, b, or c), 2, and 3 below apply to you. Tax filing 2014 You were: Under age 18 at the end of 2013, or Age 18 at the end of 2013 and your earned income (defined below) was less than one-half of your support (defined below), or Over age 18 and under age 24 at the end of 2013 and a full-time student (defined below) and your earned income (defined below) was less than one-half of your support (defined below). Tax filing 2014 At least one of your parents was alive at the end of 2013. Tax filing 2014 You are filing a return as single, head of household, qualifying widow(er), or married filing separately for 2013. Tax filing 2014 Earned income. Tax filing 2014   Earned income includes wages, salaries, professional fees, and other payments received for personal services actually performed. Tax filing 2014 Earned income includes the part of any scholarship or fellowship that represents payment for teaching, research, or other services performed by the student that are required as a condition for receiving the scholarship or fellowship. Tax filing 2014 Earned income does not include that part of the compensation for personal services rendered to a corporation which represents a distribution of earnings or profits rather than a reasonable allowance as compensation for the personal services actually rendered. Tax filing 2014   If you are a sole proprietor or a partner in a trade or business in which both personal services and capital are material income-producing factors, earned income also includes a reasonable allowance for compensation for personal services, but not more than 30% of your share of the net profits from that trade or business (after subtracting the deduction for one-half of self-employment tax). Tax filing 2014 However, if capital is not an income-producing factor and your personal services produced the business income, the 30% limit does not apply. Tax filing 2014 Support. Tax filing 2014   Your support includes food, shelter, clothing, medical and dental care, education, and the like. Tax filing 2014 Generally, the amount of the item of support will be the amount of expenses incurred by the one furnishing such item. Tax filing 2014 If the item of support is in the form of property or lodging, measure the amount of such item of support by its fair market value. Tax filing 2014 However, a scholarship received by you is not considered support if you are a full-time student. Tax filing 2014 See Publication 501 for details. Tax filing 2014 Full-time student. Tax filing 2014   You are a full-time student for 2013 if during any part of any 5 calendar months during the year you were enrolled as a full-time student at an eligible educational institution (defined earlier), or took a full-time, on-farm training course given by such an institution or by a state, county, or local government agency. Tax filing 2014 Claiming the Credit You claim the American opportunity credit by completing Form 8863 and submitting it with your Form 1040 or 1040A. Tax filing 2014 Enter the nonrefundable part of the credit on Form 1040, line 49, or on Form 1040A, line 31. Tax filing 2014 Enter the refundable part of the credit on Form 1040, line 66, or on Form 1040A, line 40. Tax filing 2014 A filled-in Form 8863 is shown at the end of this publication. Tax filing 2014 Note. Tax filing 2014 In Appendix A. Tax filing 2014 at the end of this publication, there is an example illustrating the use of Form 8863 when both the American opportunity credit and the lifetime learning credit are claimed on the same tax return. Tax filing 2014 Prev  Up  Next   Home   More Online Publications
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The Tax Filing 2014

Tax filing 2014 4. Tax filing 2014   Filing U. Tax filing 2014 S. Tax filing 2014 Tax Returns Table of Contents Who Must FileFiling Requirement if Possession Income Is Excluded When To FileExtension of Time To File Where To File Special Rules for Completing Your U. Tax filing 2014 S. Tax filing 2014 Tax ReturnU. Tax filing 2014 S. Tax filing 2014 Armed Forces. Tax filing 2014 Deductions if Possession Income Is Excluded Foreign Tax Credit if Possession Income Is Excluded Self-Employment Tax Additional Medicare Tax Net Investment Income Tax Paying Your TaxesEstimated Tax Double TaxationCompetent Authority Assistance The information in chapter 3 will tell you if a U. Tax filing 2014 S. Tax filing 2014 income tax return is required for your situation. Tax filing 2014 If a U. Tax filing 2014 S. Tax filing 2014 return is required, your next step is to see if you meet the filing requirements. Tax filing 2014 If you do meet the filing requirements, the information presented in this chapter will help you understand the special procedures involved. Tax filing 2014 This chapter discusses: Filing requirements, When to file your return, Where to send your return, How to adjust your deductions and credits if you are excluding income from American Samoa or Puerto Rico, How to make estimated tax payments and pay self-employment tax, and How to request assistance in resolving instances of double taxation. Tax filing 2014 Who Must File If you are not required to file a possession tax return that includes your worldwide income, you must generally file a U. Tax filing 2014 S. Tax filing 2014 income tax return if your gross income is at least the amount shown in Table 4-1, later, for your filing status and age. Tax filing 2014 If you were a bona fide resident of American Samoa or Puerto Rico and are able to exclude your possession income from your U. Tax filing 2014 S. Tax filing 2014 tax return, your filing requirement may be less than the amount in Table 4-1. Tax filing 2014 For details, see the information under Filing Requirement if Possession Income Is Excluded , later. Tax filing 2014 Some individuals (such as those who can be claimed as a dependent on another person's return or who owe certain taxes, such as self-employment tax) must file a tax return even though the gross income is less than the amount shown in Table 4-1 for their filing status and age. Tax filing 2014 For more information, see the Form 1040 instructions. Tax filing 2014 Filing Requirement if Possession Income Is Excluded If you were a bona fide resident of American Samoa or Puerto Rico and qualify to exclude possession income on your U. Tax filing 2014 S. Tax filing 2014 tax return, you must determine your adjusted filing requirement. Tax filing 2014 Generally, your filing requirement is based on the total of your (and your spouse's if filing a joint return) personal exemption(s) plus your standard deduction. Tax filing 2014 Personal exemption. Tax filing 2014   When figuring your filing requirement, your personal exemption is allowed in full. Tax filing 2014 Do not reduce it for this purpose. Tax filing 2014 Do not include exemptions for your dependents. Tax filing 2014 Allowable standard deduction. Tax filing 2014   Unless your filing status is married filing separately, the minimum income level at which you must file a return is based, in part, on the standard deduction for your filing status and age. Tax filing 2014 Because the standard deduction applies to all types of income, it must be divided between your excluded income and income from other sources. Tax filing 2014 Multiply the regular standard deduction for your filing status and age (this is zero if you are married filing a separate return; all others, see Form 1040 instructions) by the following fraction:      Gross income subject to U. Tax filing 2014 S. Tax filing 2014 income tax     Gross income from all sources (including excluded possession income)   Example. Tax filing 2014 Barbara Spruce, a U. Tax filing 2014 S. Tax filing 2014 citizen, is single, under 65, and a bona fide resident of American Samoa. Tax filing 2014 During 2013, she received $20,000 of income from American Samoa sources (qualifies for exclusion) and $8,000 of income from sources outside the possession (subject to U. Tax filing 2014 S. Tax filing 2014 income tax). Tax filing 2014 Her allowable standard deduction for 2013 is figured as follows:   $8,000 $28,000 × $6,100 (regular standard deduction) = $1,743   Adjusted filing requirement. Tax filing 2014   Figure your adjusted filing requirement by adding the amount of your allowable standard deduction to the amount of your personal exemption. Tax filing 2014 You must file a U. Tax filing 2014 S. Tax filing 2014 income tax return if your gross income is at least the amount shown on line 3 of the following worksheet. Tax filing 2014    1. Tax filing 2014 Enter the allowable standard deduction you figured earlier under Allowable standard deduction . Tax filing 2014 If your filing status is married filing separately, enter -0-   2. Tax filing 2014 Personal exemption. Tax filing 2014 If your filing status is married filing jointly, enter $7,800; if someone can claim you as a dependent, enter -0-; otherwise, enter $3,900   3. Tax filing 2014 Add lines 1 and 2. Tax filing 2014 You must file a U. Tax filing 2014 S. Tax filing 2014 income tax return if your gross income from sources outside the relevant possession is at least this amount   Table 4-1. Tax filing 2014 2013 Filing Requirements Chart for Most Taxpayers IF your filing status is. Tax filing 2014 . Tax filing 2014 . Tax filing 2014 AND at the end of 2013 you were*. Tax filing 2014 . Tax filing 2014 . Tax filing 2014 THEN file a return if your gross income** was at least. Tax filing 2014 . Tax filing 2014 . Tax filing 2014 single under 65 $10,000 65 or older $11,500 married filing jointly*** under 65 (both spouses) $20,000 65 or older (one spouse) $21,200 65 or older (both spouses) $22,400 married filing separately any age $3,900 head of household under 65 $12,850 65 or older $14,350 qualifying widow(er)  with dependent child under 65 $16,100 65 or older $17,300 * If you were born on January 1, 1949, you are considered to be age 65 at the end of 2013. Tax filing 2014 ** Gross income means all income you received in the form of money, goods, property, and services that is not exempt from tax, including any income from sources outside the United States (even if you can exclude part or all of it). Tax filing 2014 Do not include social security benefits unless (a) you are married filing a separate return and you lived with your spouse at any time during 2013, or (b) one-half of your social security benefits plus your other gross income is more than $25,000 ($32,000 if married filing jointly). Tax filing 2014 If (a) or (b) applies, see the instructions for Form 1040 or Publication 915, Social Security and Equivalent Railroad Retirement Benefits, to figure the taxable part of social security benefits you must include in gross income. Tax filing 2014 *** If you did not live with your spouse at the end of 2013 (or on the date your spouse died) and your gross income was at least $3,900 you must file a return regardless of your age. Tax filing 2014 Example 1. Tax filing 2014 James and Joan Thompson, one over 65, are U. Tax filing 2014 S. Tax filing 2014 citizens and bona fide residents of Puerto Rico during the entire tax year. Tax filing 2014 They file a joint income tax return. Tax filing 2014 During 2013, they received $35,000 of income from Puerto Rico sources (qualifies for exclusion) and $6,000 of income from sources outside Puerto Rico (subject to U. Tax filing 2014 S. Tax filing 2014 income tax). Tax filing 2014 Their allowable standard deduction for 2013 is figured as follows:   $6,000 $41,000 × $13,400 ( standard deduction for 65 or older (one spouse) ) = $1,961   The Thompsons do not have to file a U. Tax filing 2014 S. Tax filing 2014 income tax return because their gross income subject to U. Tax filing 2014 S. Tax filing 2014 tax ($6,000) is less than their allowable standard deduction plus their personal exemptions ($1,961+ $7,800= $9,761). Tax filing 2014 Example 2. Tax filing 2014 Barbara Spruce (see Example under Allowable standard deduction, earlier), however, must file a U. Tax filing 2014 S. Tax filing 2014 income tax return because her gross income subject to U. Tax filing 2014 S. Tax filing 2014 tax ($8,000) is more than her allowable standard deduction plus her personal exemption ($1,743 + $3,900 = $5,643). Tax filing 2014 If you must file a U. Tax filing 2014 S. Tax filing 2014 income tax return, you may be able to file a paperless return using IRS e-file. Tax filing 2014 See your form instructions or visit our website at IRS. Tax filing 2014 gov. Tax filing 2014 When To File If you file on a calendar year basis, the due date for filing your U. Tax filing 2014 S. Tax filing 2014 income tax return is April 15 following the end of your tax year. Tax filing 2014 If you use a fiscal year (a year ending on the last day of a month other than December), the due date is the 15th day of the 4th month after the end of your fiscal year. Tax filing 2014 If any due date falls on a Saturday, Sunday, or legal holiday, your tax return is due on the next business day. Tax filing 2014 For your 2013 tax return, the due date is April 15, 2014. Tax filing 2014 If you mail your federal tax return, it is considered timely if it bears an official postmark dated on or before the due date, including any extensions. Tax filing 2014 If you use a private delivery service designated by the IRS, generally the postmark date is the date the private delivery service records in its database or marks on the mailing label. Tax filing 2014 See your form instructions for a list of designated private delivery services. Tax filing 2014 Extension of Time To File You can get an extension of time to file your U. Tax filing 2014 S. Tax filing 2014 income tax return. Tax filing 2014 Special rules apply for those living outside the United States. Tax filing 2014 Automatic 6-Month Extension If you cannot file your 2013 return by the due date, you can get an automatic 6-month extension of time to file. Tax filing 2014 Example. Tax filing 2014 If your return must be filed by April 15, 2014, you will have until October 15, 2014, to file. Tax filing 2014 Although you are not required to make a payment of the tax you estimate as due, Form 4868 does not extend the time to pay taxes. Tax filing 2014 If you do not pay the amount due by the regular due date (generally April 15), you will owe interest on any unpaid tax from the original due date to the date you pay the tax. Tax filing 2014 You may also be charged penalties (see the Instructions for Form 4868). Tax filing 2014 How to get the automatic extension. Tax filing 2014   You can get the automatic 6-month extension if you do one of the following by the due date for filing your return. Tax filing 2014 E-file Form 4868 using your personal computer or a tax professional. Tax filing 2014 E-file and pay by credit or debit card. Tax filing 2014 Your payment must be at least $1. Tax filing 2014 You may pay by phone or over the Internet. Tax filing 2014 Do not file Form 4868. Tax filing 2014 File a paper Form 4868. Tax filing 2014 If you are a fiscal year taxpayer, you must file a paper Form 4868. Tax filing 2014 See Form 4868 for information on getting an extension using these options. Tax filing 2014 When to file. Tax filing 2014   You must request the automatic extension by the due date for your return. Tax filing 2014 You can file your return any time before the 6-month extension period ends. Tax filing 2014 When you file your return. Tax filing 2014   Enter any payment you made related to the extension of time to file on Form 1040, line 68. Tax filing 2014 If you file Form 1040A, U. Tax filing 2014 S. Tax filing 2014 Individual Income Tax Return, or Form 1040EZ, Income Tax Return for Single and Joint Filers With No Dependents, include that payment in your total payments on Form 1040A, line 41, or Form 1040EZ, line 9. Tax filing 2014 Also enter “Form 4868” and the amount paid in the space to the left of the entry space for line 41 or line 9. Tax filing 2014 You cannot ask the Internal Revenue Service to figure your tax if you use the extension of time to file. Tax filing 2014 Individuals Outside the United States and Puerto Rico You are allowed an automatic 2-month extension (until June 16, 2014, if you use the calendar year) to file your 2013 return and pay any federal income tax due if: You are a U. Tax filing 2014 S. Tax filing 2014 citizen or resident, and On the due date of your return: You are living outside of the United States and Puerto Rico, and your main place of business or post of duty is outside the United States and Puerto Rico, or You are in military or naval service on duty outside the United States and Puerto Rico. Tax filing 2014 However, if you pay the tax due after the regular due date (generally April 15), interest will be charged from April 15 until the date the tax is paid. Tax filing 2014 If you serve in a combat zone or qualified hazardous duty area, you may be eligible for a longer extension of time to file. Tax filing 2014 For more information, see Publication 3, Armed Forces' Tax Guide. Tax filing 2014 Married taxpayers. Tax filing 2014   If you file a joint return, only one spouse has to qualify for this automatic extension. Tax filing 2014 However, if you and your spouse file separate returns, this automatic extension applies only to the spouse who qualifies. Tax filing 2014 How to get the extension. Tax filing 2014   To use this special automatic extension, you must attach a statement to your return explaining what situation qualified you for the extension. Tax filing 2014 (See the situations listed under (2), earlier. Tax filing 2014 ) Extension beyond 2 months. Tax filing 2014   If you cannot file your 2013 return within the automatic 2-month extension period, you can get an additional 4-month extension, for a total of 6 months. Tax filing 2014 File Form 4868 by the end of the automatic extension period (June 16, 2014 for calendar year taxpayers). Tax filing 2014 Be sure to check the box on Form 4868, line 8, if appropriate. Tax filing 2014   In addition to this 6-month extension, taxpayers who are out of the country (as defined under (2) earlier) can request a discretionary 2-month additional extension of time to file their returns (to December 15 for calendar year taxpayers). Tax filing 2014   To request this extension, you must send the IRS a letter explaining the reasons why you need the additional 2 months. Tax filing 2014 Send the letter by the extended due date (October 15 for calendar year taxpayers) to:  Department of the Treasury Internal Revenue Service Austin, TX 73301-0215 USA   You will not receive any notification from the IRS unless your request is denied for being untimely. Tax filing 2014 Where To File Use the addresses listed below if you have to file Form 1040 with the United States and you are excluding possession income from American Samoa or Puerto Rico. Tax filing 2014 If you are not including a check or a money order, send your U. Tax filing 2014 S. Tax filing 2014 tax return and all attachments to:   Department of the Treasury Internal Revenue Service Austin, TX 73301-0215 USA If you are including a check or a money order, send your U. Tax filing 2014 S. Tax filing 2014 tax return and all attachments to:  Internal Revenue Service P. Tax filing 2014 O. Tax filing 2014 Box 1303 Charlotte, NC 28201-1303 USA Also send your U. Tax filing 2014 S. Tax filing 2014 return to these addresses if you are attaching Form 5074 or Form 8689. Tax filing 2014 If you are not in either of the above categories, send your return to the address shown in the Form 1040 instructions for the possession or state in which you reside. Tax filing 2014 Special Rules for Completing Your U. Tax filing 2014 S. Tax filing 2014 Tax Return If you are not excluding possession income from your U. Tax filing 2014 S. Tax filing 2014 tax return, follow the instructions for the specific forms you file. Tax filing 2014 However, you may not qualify to claim the earned income credit (EIC). Tax filing 2014 Earned income credit. Tax filing 2014   Even if you maintain a household in one of the possessions discussed in this publication that is your main home and the home of your qualifying child, you cannot claim the earned income credit on your U. Tax filing 2014 S. Tax filing 2014 tax return. Tax filing 2014 This credit is available only if you maintain the household in the United States or you are serving on extended active duty in the U. Tax filing 2014 S. Tax filing 2014 Armed Forces. Tax filing 2014 U. Tax filing 2014 S. Tax filing 2014 Armed Forces. Tax filing 2014   U. Tax filing 2014 S. Tax filing 2014 military personnel stationed outside the United States on extended active duty are considered to live in the United States during that duty period for purposes of the EIC. Tax filing 2014 Extended active duty means you are called or ordered to duty for an indefinite period or for a period of more than 90 days. Tax filing 2014 Once you begin serving your extended active duty, you are still considered to have been on extended active duty even if you do not serve more than 90 days. Tax filing 2014 Income from American Samoa or Puerto Rico excluded. Tax filing 2014   You will not be allowed to take deductions and credits that apply to the excluded income. Tax filing 2014 The additional information you need follows. Tax filing 2014 Deductions if Possession Income Is Excluded Deductions that specifically apply to your excluded possession income, such as employee business expenses, are not allowable on your U. Tax filing 2014 S. Tax filing 2014 income tax return. Tax filing 2014 Deductions that do not specifically apply to any particular type of income must be divided between your excluded income from sources in the relevant possession and income from all other sources to find the part that you can deduct on your U. Tax filing 2014 S. Tax filing 2014 tax return. Tax filing 2014 Examples of such deductions are alimony payments, the standard deduction, and certain itemized deductions (such as medical expenses, charitable contributions, real estate taxes, and mortgage interest on your home). Tax filing 2014 Figuring the deduction. Tax filing 2014   To find the part of a deduction that is allowable, multiply the deduction by the following fraction. Tax filing 2014   Gross income subject to U. Tax filing 2014 S. Tax filing 2014 income tax     Gross income from all sources (including excluded possession income)   Adjustments to Income Your adjusted gross income equals your gross income minus certain deductions (adjustments). Tax filing 2014 Moving expense deduction. Tax filing 2014   Generally, expenses of a move to a possession are directly attributable to wages, salaries, and other earned income from that possession. Tax filing 2014 Likewise, the expenses of a move back to the United States are generally attributable to U. Tax filing 2014 S. Tax filing 2014 earned income. Tax filing 2014   If you are claiming expenses for a move to a relevant possession, how and where you will deduct the expenses depends on your status as a bona fide resident and if any of your possession income is excluded on your U. Tax filing 2014 S. Tax filing 2014 tax return. Tax filing 2014 For more information, see Moving expense deduction in chapter 3 under the name of the relevant possession. Tax filing 2014   If you are claiming expenses for a move from a U. Tax filing 2014 S. Tax filing 2014 possession to the United States, use Form 3903 to figure your deductible expenses and enter the amount on Form 1040, line 26. Tax filing 2014 For purposes of deducting moving expenses, the possessions are considered part of the United States. Tax filing 2014 See Publication 521, Moving Expenses, for information about what expenses are deductible. Tax filing 2014 Self-employment tax deduction. Tax filing 2014   Generally, if you are reporting self-employment income on your U. Tax filing 2014 S. Tax filing 2014 return, you can include the deductible part of your self-employment tax on Form 1040, line 27. Tax filing 2014 This is an income tax deduction only; it is not a deduction in figuring net earnings from self-employment (for self-employment tax). Tax filing 2014   However, if you are a bona fide resident of American Samoa or Puerto Rico and you exclude all of your self-employment income from gross income, you cannot take the deduction on Form 1040, line 27, because the deduction is related to excluded income. Tax filing 2014   If only part of your self-employment income is excluded, the part of the deduction that is based on the nonexcluded income is allowed. Tax filing 2014 This would happen if, for instance, you have two businesses and only the income from one of them is excludable. Tax filing 2014   For purposes of the deduction only, figure the self-employment tax on the nonexcluded income by multiplying your total self-employment tax (from Schedule SE (Form 1040)), Self-Employment Tax) by the following fraction. Tax filing 2014   Self-employment income subject to U. Tax filing 2014 S. Tax filing 2014 income tax     Total self-employment income (including excluded possession income)   The result is your self-employment tax on nonexcluded income. Tax filing 2014 Include the deductible part of this amount on Form 1040, line 27. Tax filing 2014 Individual retirement arrangement (IRA) deduction. Tax filing 2014   Do not take excluded income into account when figuring your deductible IRA contribution. Tax filing 2014 Standard Deduction The standard deduction is composed of the regular standard deduction amount and the additional standard deduction for taxpayers who are blind or age 65 or over. Tax filing 2014 To find the amount you can claim on Form 1040, line 40, first figure your full standard deduction according to the Instructions for Form 1040. Tax filing 2014 Then multiply your full standard deduction by the following fraction. Tax filing 2014   Gross income subject to U. Tax filing 2014 S. Tax filing 2014 income tax     Gross income from all sources (including excluded possession income)   In the space above line 40, enter “Standard deduction modified due to income excluded under section 931 (if American Samoa) or section 933 (if Puerto Rico). Tax filing 2014 ” This calculation may not be the same as the one you used to determine if you need to file a U. Tax filing 2014 S. Tax filing 2014 tax return. Tax filing 2014 Itemized Deductions Most itemized deductions do not apply to a particular type of income. Tax filing 2014 However, itemized deductions can be divided into three categories. Tax filing 2014 Those that apply specifically to excluded income, such as employee business expenses, are not deductible. Tax filing 2014 Those that apply specifically to income subject to U. Tax filing 2014 S. Tax filing 2014 income tax, which might also be employee business expenses, are fully allowable under the Instructions for Schedule A (Form 1040), Itemized Deductions. Tax filing 2014 Those that do not apply to specific income must be allocated between your gross income subject to U. Tax filing 2014 S. Tax filing 2014 income tax and your total gross income from all sources. Tax filing 2014 The example given later shows how to figure the deductible part of each type of expense that is not related to specific income. Tax filing 2014 Example. Tax filing 2014 In 2013, you and your spouse are both under 65 and U. Tax filing 2014 S. Tax filing 2014 citizens who are bona fide residents of Puerto Rico during the entire tax year. Tax filing 2014 You file a joint income tax return. Tax filing 2014 During 2013, you earned $20,000 from Puerto Rican sources (excluded from U. Tax filing 2014 S. Tax filing 2014 gross income) and your spouse earned $60,000 from the U. Tax filing 2014 S. Tax filing 2014 Government. Tax filing 2014 You have $16,000 of itemized deductions that do not apply to any specific type of income. Tax filing 2014 These are medical expenses of $4,000, real estate taxes of $5,000, home mortgage interest of $6,000, and charitable contributions of $1,000 (cash contributions). Tax filing 2014 You determine the amount of each deduction that you can claim on your Schedule A (Form 1040), Itemized Deductions, by multiplying the deduction by the fraction shown under Figuring the deduction , earlier under Deductions if Possession Income is Excluded. Tax filing 2014   Medical Expenses   $60,000$80,000 × $4,000 = $3,000  (enter on line 1  of Schedule A)     Real Estate Taxes   $60,000$80,000 × $5,000 = $3,750  (enter on line 6  of Schedule A)     Home Mortgage Interest   $60,000$80,000 × $6,000 = $4,500  (enter on line 10 or 11 of  Schedule A)     Charitable Contributions (cash contributions)   $60,000$80,000 × $1,000 = $750  (enter on line 16 of Schedule A)   Enter on Schedule A (Form 1040) only the allowable portion of each deduction. Tax filing 2014 Overall limitation on itemized deductions. Tax filing 2014   If your adjusted gross income (discussed earlier) is over $300,000 if married filing jointly or qualifying widow(er); $275,000 if head of household; $250,000 if single; or $150,000 if married filing separately; see the Itemized Deductions Worksheet in the Instructions for Schedule A (Form 1040), to figure your itemized deductions. Tax filing 2014 Personal Exemptions Personal exemptions are allowed in full even if excluding possession income. Tax filing 2014 However, depending upon your adjusted gross income and filing status, the amount you can deduct may be reduced. Tax filing 2014 See the Deduction for Exemptions Worksheet—Line 42 in the instructions for Form 1040. Tax filing 2014 Foreign Tax Credit if Possession Income Is Excluded If you must report American Samoa or Puerto Rico source income on your U. Tax filing 2014 S. Tax filing 2014 tax return, you can claim a foreign tax credit for income taxes paid to the possession on that income. Tax filing 2014 However, you cannot claim a foreign tax credit for taxes paid on possession income that is excluded on your U. Tax filing 2014 S. Tax filing 2014 tax return. Tax filing 2014 The foreign tax credit is generally figured on Form 1116. Tax filing 2014 If you have income, such as U. Tax filing 2014 S. Tax filing 2014 Government wages, that is not excludable, and you also have possession source income that is excludable, you must figure the credit by reducing your foreign taxes paid or accrued by the taxes based on the excluded income. Tax filing 2014 You make this reduction for each separate income category. Tax filing 2014 To find the amount of this reduction, use the following formula for each income category. Tax filing 2014 Excluded income from possession sources less deductible expenses based on that income x Tax paid or accrued to the possession = Reduction in foreign taxes Total income subject to possession tax less deductible expenses based on that income Enter the amount of the reduction on Form 1116, line 12. Tax filing 2014 For more information on the foreign tax credit, see Publication 514. Tax filing 2014 Example. Tax filing 2014 Jason and Lynn Reddy are U. Tax filing 2014 S. Tax filing 2014 citizens who were bona fide residents of Puerto Rico during all of 2013. Tax filing 2014 They file a joint tax return. Tax filing 2014 The following table shows their excludable and taxable income for U. Tax filing 2014 S. Tax filing 2014 federal income tax purposes. Tax filing 2014   Taxable   Excludable Jason's wages from  U. Tax filing 2014 S. Tax filing 2014 Government $25,000     Lynn's wages from Puerto Rico  corp. Tax filing 2014     $15,000 Dividend from Puerto Rico corp. Tax filing 2014 doing business in Puerto Rico     200 Dividend from U. Tax filing 2014 S. Tax filing 2014  corp. Tax filing 2014 doing business  in U. Tax filing 2014 S. Tax filing 2014 * 1,000     Totals $26,000   $15,200 * Income from sources outside Puerto Rico is taxable. Tax filing 2014   Jason and Lynn must file 2013 income tax returns with both Puerto Rico and the United States. Tax filing 2014 They have gross income of $26,000 for U. Tax filing 2014 S. Tax filing 2014 tax purposes. Tax filing 2014 They paid taxes to Puerto Rico of $4,000 ($3,980 on their wages and $20 on the dividend from the Puerto Rico corporation). Tax filing 2014 They figure their foreign tax credit on two Forms 1116, which they must attach to their U. Tax filing 2014 S. Tax filing 2014 return. Tax filing 2014 They fill out one Form 1116 for wages and one Form 1116 for the dividend. Tax filing 2014 Jason and Lynn figure the Puerto Rico taxes on excluded income as follows. Tax filing 2014   Wages: ($15,000 ÷ $40,000) × $3,980 = $1,493   Dividend: ($200 ÷ $200) × $20 = $20 They enter $1,493 on Form 1116, line 12, for wages and $20 on the second Form 1116, line 12, for the dividend. Tax filing 2014 Self-Employment Tax Self-employment tax includes both social security and Medicare taxes for individuals who are self-employed. Tax filing 2014 A U. Tax filing 2014 S. Tax filing 2014 citizen or resident alien who is self-employed must pay self-employment tax on net self-employment earnings of $400 or more. Tax filing 2014 This rule applies whether or not the earnings are excludable from gross income (or whether or not a U. Tax filing 2014 S. Tax filing 2014 income tax return must otherwise be filed). Tax filing 2014 Bona fide residents of the possessions discussed in this publication are considered U. Tax filing 2014 S. Tax filing 2014 residents for this purpose and are subject to the self-employment tax. Tax filing 2014 Forms to file. Tax filing 2014   If you have net self-employment income and are subject to self-employment tax, file one of the following with the United States. Tax filing 2014 If you are required to file Form 1040 with the United States, complete Schedule SE (Form 1040) and attach it to your Form 1040. Tax filing 2014 If you are not required to file Form 1040 with the United States and you are a bona fide resident of American Samoa, the CNMI, Guam, Puerto Rico, or the USVI, file Form 1040-SS. Tax filing 2014 If you are a resident of Puerto Rico, you can file the Spanish-language Form 1040-PR instead. Tax filing 2014 Do not file forms 1040-SS or 1040-PR with Form 1040. Tax filing 2014 If you are required to pay Additional Medicare Tax (discussed later) on your self-employment income, attach Form 8959, Additional Medicare Tax to Form 1040, Form 1040-SS, or Form 1040-PR, as applicable. Tax filing 2014 Chapter 11 Bankruptcy cases. Tax filing 2014   While you are a debtor in a chapter 11 bankruptcy case, your net profit or loss from self-employment will be included on the income tax return (Form 1041, U. Tax filing 2014 S. Tax filing 2014 Income Tax Return for Estates and Trusts) of the bankruptcy estate. Tax filing 2014 However, you—not the bankruptcy estate—are responsible for paying self-employment tax on your net earnings from self-employment. Tax filing 2014   Use Schedule SE (Form 1040), Form 1040-SS, or Form 1040-PR, as determined above, to figure your correct amount of self-employment tax. Tax filing 2014   For other reporting requirements, see Chapter 11 Bankruptcy Cases in the Instructions for Form 1040. Tax filing 2014 Additional Medicare Tax Beginning in 2013, a 0. Tax filing 2014 9% Additional Medicare Tax applies to Medicare wages, railroad retirement (RRTA) compensation, and self-employment income that are more than: $125,000 if married filing separately, $250,000 if married filing jointly, or $200,000 if single, head of household, or qualifying widow(er). Tax filing 2014 Medicare wages and self-employment income are combined to determine if income exceeds the threshold. Tax filing 2014 A self-employment loss should not be considered for purposes of this tax. Tax filing 2014 RRTA compensation should be separately compared to the threshold. Tax filing 2014 Your employer is responsible for withholding the 0. Tax filing 2014 9% Additional Medicare Tax on Medicare wages or RRTA compensation it pays to you in excess of $200,000. Tax filing 2014 You should consider this withholding, if applicable, in determining whether you need to make estimated tax payments. Tax filing 2014 There are no special rules for U. Tax filing 2014 S. Tax filing 2014 citizens and nonresident aliens living abroad for purposes of this provision. Tax filing 2014 Wages, RRTA compensation, and self-employment income that are subject to Medicare tax will also be subject to Additional Medicare Tax if in excess of the applicable threshold. Tax filing 2014 For more information, see Form 8959, Additional Medicare Tax, and its instructions or visit www. Tax filing 2014 irs. Tax filing 2014 gov and enter the following words in the search box: Additional Medicare Tax. Tax filing 2014 You cannot include the Additional Medicare Tax as a deductible part of your self-employment tax. Tax filing 2014 Net Investment Income Tax Beginning in 2013, the Net Investment Income Tax (NIIT) imposes a 3. Tax filing 2014 8% tax on the lesser of an individual’s net investment income or the excess of the individual’s modified adjusted gross income over a specified threshold amount. Tax filing 2014 Bona fide residents of Puerto Rico and American Samoa who may have a federal income tax return filing obligation may be liable for the NIIT if the taxpayer’s modified adjusted gross income from non-territory sources exceeds a specified threshold amount. Tax filing 2014 The NIIT does not apply to any individual who is a nonresident alien with respect to the United States. Tax filing 2014 Bona fide residents must take into account any additional tax liability associated with the NIIT when calculating your estimated tax payments. Tax filing 2014 Forms to file. Tax filing 2014   If you are a bona fide resident of American Samoa and Puerto Rico and you are required to pay the NIIT, you must file Form 1040 with the United States and attach Form 8960, Net Investment Income Tax—Individuals, Estates, and Trusts. Tax filing 2014 For more information, see Form 8960 and its instructions. Tax filing 2014 Paying Your Taxes You may find that not all of your income tax has been paid through withholding by either the United States or the possession. Tax filing 2014 This is often true if you have income that is not subject to withholding, such as self-employment, interest, or rental income. Tax filing 2014 In this situation, you may need to make estimated tax payments. Tax filing 2014 Estimated Tax If your estimated income tax obligation is to the United States, use the worksheet in the Form 1040-ES package to figure your estimated tax, including self-employment tax. Tax filing 2014 Include the Additional Medicare Tax and Net Investment Income Tax if applicable. Tax filing 2014 If you are paying by check or money order, use the payment vouchers in the Form 1040-ES package. Tax filing 2014 Or, you can make your payments electronically and not have to file any paper forms. Tax filing 2014 See the Form 1040-ES instructions for information on making payments. Tax filing 2014 Double Taxation Mutual agreement procedures exist to settle issues where there is inconsistent tax treatment between the IRS and the taxing authorities of the following possessions. Tax filing 2014 American Samoa. Tax filing 2014 The Commonwealth of Puerto Rico. Tax filing 2014 The Commonwealth of the Northern Mariana Islands. Tax filing 2014 Guam. Tax filing 2014 The U. Tax filing 2014 S. Tax filing 2014 Virgin Islands. Tax filing 2014 These issues usually involve allocations of income, deductions, credits, or allowances between related persons; determinations of residency; and determinations of the source of income and related expenses. Tax filing 2014 Competent Authority Assistance The tax coordination agreements between the United States and the possession tax departments contain provisions allowing the competent authorities of the United States and the relevant possession to resolve, by mutual agreement, inconsistent tax treatment by the two jurisdictions. Tax filing 2014 How to make your request. Tax filing 2014   Your request for competent authority assistance must include all the information listed in Revenue Procedure 2006-23, 2006-20 I. Tax filing 2014 R. Tax filing 2014 B. Tax filing 2014 900 available at www. Tax filing 2014 irs. Tax filing 2014 gov/pub/irs-irbs/irb06-49. Tax filing 2014 pdf. Tax filing 2014    Also, see Notice 2013-78, which provides proposed updates to the procedures for requesting U. Tax filing 2014 S. Tax filing 2014 competent authority assistance under tax treaties. Tax filing 2014 As noted, an update to Revenue Procedure 2006-23 will be published in the future. Tax filing 2014   Your request must be in the form of a letter addressed to the Deputy Commissioner (International) LB&I. Tax filing 2014 It must contain a statement that competent authority assistance is requested under the mutual agreement procedure with the possession. Tax filing 2014 You (or a person having authority to sign your federal return) must sign and date the request. Tax filing 2014    Send your written request for U. Tax filing 2014 S. Tax filing 2014 assistance under this procedure to:   Deputy Commissioner (International) Large Business and International Division Internal Revenue Service 1111 Constitution Avenue, N. Tax filing 2014 W. Tax filing 2014  Routing: M4-365 Washington, DC 20224 (Attention: TAIT) Nonresident aliens generally must present their initial request for assistance to the relevant possession tax agency. Tax filing 2014 Credit or Refund In addition to the tax assistance request, if you seek a credit or refund of any overpayment of U. Tax filing 2014 S. Tax filing 2014 tax paid on the income in question, you should file a claim on Form 1040X, Amended U. Tax filing 2014 S. Tax filing 2014 Individual Income Tax Return. Tax filing 2014 Indicate on the form that a request for assistance under the mutual agreement procedure with the possession has been filed. Tax filing 2014 Attach a copy of the request to the form. Tax filing 2014 Also, you should take whatever steps must be taken under the possession tax code to prevent the expiration of the statutory period for filing a claim for credit or refund of a possession tax. Tax filing 2014 See Revenue Procedure 2006-54 (or its successor), section 9, for complete information. Tax filing 2014 Prev  Up  Next   Home   More Online Publications