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Where Can You File State Taxes For Free

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Where Can You File State Taxes For Free

Where can you file state taxes for free 1. Where can you file state taxes for free   Scholarships, Fellowships, Grants, and Tuition Reductions Table of Contents Reminder Introduction Scholarships and FellowshipsTax-Free Scholarships and Fellowships Taxable Scholarships and Fellowships Reporting Scholarships and Fellowships Other Types of Educational AssistanceFulbright Grants Pell Grants and Other Title IV Need-Based Education Grants Payment to Service Academy Cadets Veterans' Benefits Qualified Tuition Reduction Reminder Individual retirement arrangements (IRAs). Where can you file state taxes for free  You can set up and make contributions to an IRA if you receive taxable compensation. Where can you file state taxes for free Under this rule, a taxable scholarship or fellowship is compensation only if it is shown in box 1 of your Form W-2, Wage and Tax Statement. Where can you file state taxes for free For more information about IRAs, see Publication 590. Where can you file state taxes for free Introduction This chapter discusses the income tax treatment of various types of educational assistance you may receive if you are studying, teaching, or researching in the United States. Where can you file state taxes for free The educational assistance can be for a primary or secondary school, a college or university, or a vocational school. Where can you file state taxes for free Included are discussions of: Scholarships, Fellowships, Need-based education grants, such as a Pell Grant, and Qualified tuition reductions. Where can you file state taxes for free Many types of educational assistance are tax free if they meet the requirements discussed here. Where can you file state taxes for free Special rules apply to U. Where can you file state taxes for free S. Where can you file state taxes for free citizens and resident aliens who have received scholarships or fellowships for studying, teaching, or researching abroad. Where can you file state taxes for free For information about these rules, see Publication 54, Tax Guide for U. Where can you file state taxes for free S. Where can you file state taxes for free Citizens and Resident Aliens Abroad. Where can you file state taxes for free Scholarships and Fellowships A scholarship is generally an amount paid or allowed to, or for the benefit of, a student (whether an undergraduate or a graduate) at an educational institution to aid in the pursuit of his or her studies. Where can you file state taxes for free A fellowship is generally an amount paid for the benefit of an individual to aid in the pursuit of study or research. Where can you file state taxes for free Amount of scholarship or fellowship. Where can you file state taxes for free   The amount of a scholarship or fellowship includes the following: The value of contributed services and accommodations. Where can you file state taxes for free This includes such services and accommodations as room (lodging), board (meals), laundry service, and similar services or accommodations that are received by an individual as a part of a scholarship or fellowship. Where can you file state taxes for free The amount of tuition, matriculation, and other fees that are paid or remitted to the student to aid the student in pursuing study or research. Where can you file state taxes for free Any amount received in the nature of a family allowance as a part of a scholarship or fellowship. Where can you file state taxes for free Tax-Free Scholarships and Fellowships A scholarship or fellowship is tax free (excludable from gross income) only if you are a candidate for a degree at an eligible educational institution. Where can you file state taxes for free A scholarship or fellowship is tax free only to the extent: It does not exceed your expenses; It is not designated or earmarked for other purposes (such as room and board), and does not require (by its terms) that it cannot be used for qualified education expenses; and It does not represent payment for teaching, research, or other services required as a condition for receiving the scholarship. Where can you file state taxes for free (But for exceptions, see Payment for services,later. Where can you file state taxes for free Use Worksheet 1–1 to figure the amount of a scholarship or fellowship you can exclude from gross income. Where can you file state taxes for free Candidate for a degree. Where can you file state taxes for free   You are a candidate for a degree if you: Attend a primary or secondary school or are pursuing a degree at a college or university, or Attend an educational institution that: Provides a program that is acceptable for full credit toward a bachelor's or higher degree, or offers a program of training to prepare students for gainful employment in a recognized occupation; and Is authorized under federal or state law to provide such a program and is accredited by a nationally recognized accreditation agency. Where can you file state taxes for free Eligible educational institution. Where can you file state taxes for free   An eligible educational institution is one whose primary function is the presentation of formal instruction and that normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of students in attendance at the place where it carries on its educational activities. Where can you file state taxes for free Qualified education expenses. Where can you file state taxes for free   For purposes of tax-free scholarships and fellowships, these are expenses for: Tuition and fees required to enroll at or attend an eligible educational institution, and Course-related expenses, such as fees, books, supplies, and equipment that are required for the courses at the eligible educational institution. Where can you file state taxes for free These items must be required of all students in your course of instruction. Where can you file state taxes for free Expenses that do not qualify. Where can you file state taxes for free   Qualified education expenses do not include the cost of: Room and board, Travel, Research, Clerical help, or Equipment and other expenses that are not required for enrollment in or attendance at an eligible educational institution. Where can you file state taxes for free Payment for services. Where can you file state taxes for free   Generally, you cannot exclude from your gross income the part of any scholarship or fellowship that represents payment for teaching, research, or other services required as a condition for receiving the scholarship. Where can you file state taxes for free This applies even if all candidates for a degree must perform the services to receive the degree. Where can you file state taxes for free (See exceptions next. Where can you file state taxes for free ) Exceptions. Where can you file state taxes for free   You do not have to treat as payment for services the part of any scholarship or fellowship that represents payment for teaching, research, or other services if you receive the amount under: The National Health Service Corps Scholarship Program, or The Armed Forces Health Professions Scholarship and Financial Assistance Program. Where can you file state taxes for free Example 1. Where can you file state taxes for free You received a scholarship of $2,500. Where can you file state taxes for free The scholarship was not received under either of the exceptions mentioned above. Where can you file state taxes for free As a condition for receiving the scholarship, you must serve as a part-time teaching assistant. Where can you file state taxes for free Of the $2,500 scholarship, $1,000 represents payment for teaching. Where can you file state taxes for free The provider of your scholarship gives you a Form W-2 showing $1,000 as income. Where can you file state taxes for free Your qualified education expenses were at least $1,500. Where can you file state taxes for free Assuming that all other conditions are met, $1,500 of your scholarship is tax free. Where can you file state taxes for free The $1,000 you received for teaching is taxable. Where can you file state taxes for free Example 2. Where can you file state taxes for free You are a candidate for a degree at a medical school. Where can you file state taxes for free You receive a scholarship (not under either of the exceptions mentioned above) for your medical education and training. Where can you file state taxes for free The terms of your scholarship require you to perform future services. Where can you file state taxes for free A substantial penalty applies if you do not comply. Where can you file state taxes for free The entire amount of your grant is taxable as payment for services in the year it is received. Where can you file state taxes for free Athletic Scholarships An athletic scholarship is tax free only if and to the extent it meets the requirements discussed later. Where can you file state taxes for free Worksheet 1-1. Where can you file state taxes for free    You can use Worksheet 1-1, Taxable Scholarship and Fellowship Income , later, to figure the tax-free and taxable parts of your athletic scholarship. Where can you file state taxes for free    Worksheet 1-1. Where can you file state taxes for free Taxable Scholarship and Fellowship Income 1. Where can you file state taxes for free Enter the total amount of any scholarship or fellowship for 2013. Where can you file state taxes for free See Amount of scholarship or fellowship, earlier. Where can you file state taxes for free 1. Where can you file state taxes for free       If you are a degree candidate at an eligible educational institution, go to line 2. Where can you file state taxes for free If you are not a degree candidate at an eligible educational institution, stop here. Where can you file state taxes for free The entire amount is taxable. Where can you file state taxes for free For information on how to report this amount on your tax return, see Reporting Scholarships and Fellowships , earlier, in this chapter. Where can you file state taxes for free       2. Where can you file state taxes for free Enter the amount from line 1 that was for teaching, research, or any other services required as a condition for receiving the scholarship. Where can you file state taxes for free (Do not include amounts received for these items under the National Health Service Corps Scholarship Program or the Armed Forces Health Professions Scholarship and Financial Assistance Program. Where can you file state taxes for free ) 2. Where can you file state taxes for free     3. Where can you file state taxes for free Subtract line 2 from line 1 3. Where can you file state taxes for free     4. Where can you file state taxes for free Enter the amount from line 3 that your scholarship or fellowship required you to use for other than qualified education expenses 4. Where can you file state taxes for free     5. Where can you file state taxes for free Subtract line 4 from line 3 5. Where can you file state taxes for free     6. Where can you file state taxes for free Enter the amount of your qualified education expenses 6. Where can you file state taxes for free     7. Where can you file state taxes for free Enter the smaller of line 5 or line 6. Where can you file state taxes for free This amount is the most you can exclude from your gross income (the tax-free part of the scholarship or fellowship) 7. Where can you file state taxes for free     8. Where can you file state taxes for free Subtract line 7 from line 5 8. Where can you file state taxes for free     9. Where can you file state taxes for free Taxable part. Where can you file state taxes for free Add lines 2, 4, and 8. Where can you file state taxes for free See Reporting Scholarships and Fellowships , earlier, for how to report this amount on your tax return 9. Where can you file state taxes for free     Taxable Scholarships and Fellowships If and to the extent your scholarship or fellowship does not meet the requirements described earlier, it is taxable and must be included in gross income. Where can you file state taxes for free You can use Worksheet 1–1, Taxable Scholarship and Fellowship Income, later, to figure the tax-free and taxable parts of your scholarship or fellowship. Where can you file state taxes for free Reporting Scholarships and Fellowships Whether you must report your scholarship or fellowship depends on whether you must file a return and whether any part of your scholarship or fellowship is taxable. Where can you file state taxes for free If your only income is a completely tax-free scholarship or fellowship, you do not have to file a tax return and no reporting is necessary. Where can you file state taxes for free If all or part of your scholarship or fellowship is taxable and you are required to file a tax return, report the taxable amount as explained below. Where can you file state taxes for free You must report the taxable amount whether or not you received a Form W-2. Where can you file state taxes for free If you receive an incorrect Form W-2, ask the payer for a corrected one. Where can you file state taxes for free For information on whether you must file a return, see Publication 501, Exemptions, Standard Deduction, and Filing Information, or your income tax form instructions. Where can you file state taxes for free How To Report How you report any taxable scholarship or fellowship income depends on which return you file. Where can you file state taxes for free Form 1040EZ. Where can you file state taxes for free   If you file Form 1040EZ, include the taxable amount in the total on line 1. Where can you file state taxes for free If the taxable amount was not reported on Form W-2, also enter “SCH” and the taxable amount in the space to the left of line 1. Where can you file state taxes for free Form 1040A. Where can you file state taxes for free   If you file Form 1040A, include the taxable amount in the total on line 7. Where can you file state taxes for free If the taxable amount was not reported on Form W-2, also enter “SCH” and the taxable amount in the space to the left of line 7. Where can you file state taxes for free Form 1040. Where can you file state taxes for free   If you file Form 1040, include the taxable amount in the total on line 7. Where can you file state taxes for free If the taxable amount was not reported on Form W-2, also enter “SCH” and the taxable amount on the dotted line next to line 7. Where can you file state taxes for free Schedule SE (Form 1040). Where can you file state taxes for free   To determine your net earnings from self-employment, include amounts you receive under a scholarship as pay for your services that are reported to you on Form 1099-MISC, Miscellaneous Income. Where can you file state taxes for free If your net earnings are $400 or more, you must pay self-employment tax. Where can you file state taxes for free Use Schedule SE, Self-Employment Tax, to figure this tax. Where can you file state taxes for free Form 1040NR. Where can you file state taxes for free   If you file Form 1040NR, report the taxable amount on line 12. Where can you file state taxes for free Generally, you must report the amount shown in box 2 of Form(s) 1042-S, Foreign Person's U. Where can you file state taxes for free S. Where can you file state taxes for free Source Income Subject to Withholding. Where can you file state taxes for free See the Instructions for Form 1040NR for more information. Where can you file state taxes for free Form 1040NR-EZ. Where can you file state taxes for free   If you file Form 1040NR-EZ, report the taxable amount on line 5. Where can you file state taxes for free Generally, you must report the amount shown in box 2 of Form(s) 1042-S. Where can you file state taxes for free See the Instructions for Form 1040NR-EZ for more information. Where can you file state taxes for free Other Types of Educational Assistance The following discussions deal with other common types of educational assistance. Where can you file state taxes for free Fulbright Grants A Fulbright grant is generally treated as a scholarship or fellowship in figuring how much of the grant is tax free. Where can you file state taxes for free Pell Grants and Other Title IV Need-Based Education Grants These need-based grants are treated as scholarships for purposes of determining their tax treatment. Where can you file state taxes for free They are tax free to the extent used for qualified education expenses during the period for which a grant is awarded. Where can you file state taxes for free Payment to Service Academy Cadets An appointment to a United States military academy is not a scholarship or fellowship. Where can you file state taxes for free Payment you receive as a cadet or midshipman at an armed services academy is pay for personal services and will be reported to you in box 1 of Form W-2. Where can you file state taxes for free Include this pay in your income in the year you receive it unless one of the exceptions, discussed earlier under Payment for services , applies. Where can you file state taxes for free Veterans' Benefits Payments you receive for education, training, or subsistence under any law administered by the Department of Veterans Affairs (VA) are tax free. Where can you file state taxes for free Do not include these payments as income on your federal tax return. Where can you file state taxes for free If you qualify for one or more of the education benefits discussed in chapters 2 through 12, you may have to reduce the amount of education expenses qualifying for a specific benefit by part or all of your VA payments. Where can you file state taxes for free This applies only to the part of your VA payments that is required to be used for education expenses. Where can you file state taxes for free You may want to visit the Veteran's Administration website at www. Where can you file state taxes for free gibill. Where can you file state taxes for free va. Where can you file state taxes for free gov for specific information about the various VA benefits for education. Where can you file state taxes for free Example. Where can you file state taxes for free You have returned to college and are receiving two education benefits under the latest GI Bill: (1) a $1,534 monthly basic housing allowance (BHA) that is directly deposited to your checking account, and (2) $3,840 paid directly to your college for tuition. Where can you file state taxes for free Neither of these benefits is taxable and you do not report them on your tax return. Where can you file state taxes for free You also want to claim an American opportunity credit on your return. Where can you file state taxes for free You paid $5,000 in qualified education expenses (see chapter 2, American Opportunity Credit , later). Where can you file state taxes for free To figure the amount of credit, you must first subtract the $3,840 from your qualified education expenses because this payment under the GI Bill was required to be used for education expenses. Where can you file state taxes for free You do not subtract any amount of the BHA because it was paid to you and its use was not restricted. Where can you file state taxes for free Qualified Tuition Reduction If you are allowed to study tuition free or for a reduced rate of tuition, you may not have to pay tax on this benefit. Where can you file state taxes for free This is called a “tuition reduction. Where can you file state taxes for free ” You do not have to include a qualified tuition reduction in your income. Where can you file state taxes for free A tuition reduction is qualified only if you receive it from, and use it at, an eligible educational institution. Where can you file state taxes for free You do not have to use the tuition reduction at the eligible educational institution from which you received it. Where can you file state taxes for free In other words, if you work for an eligible educational institution and the institution arranges for you to take courses at another eligible educational institution without paying any tuition, you may not have to include the value of the free courses in your income. Where can you file state taxes for free The rules for determining if a tuition reduction is qualified, and therefore tax free, are different if the education provided is below the graduate level or is graduate education. Where can you file state taxes for free You must include in your income any tuition reduction you receive that is payment for your services. Where can you file state taxes for free Eligible educational institution. Where can you file state taxes for free   An eligible educational institution is one that maintains a regular faculty and curriculum and normally has a regularly enrolled body of students in attendance at the place where it carries on its educational activities. Where can you file state taxes for free Officers, owners, and highly compensated employees. Where can you file state taxes for free   Qualified tuition reductions apply to officers, owners, or highly compensated employees only if benefits are available to employees on a nondiscriminatory basis. Where can you file state taxes for free This means that the tuition reduction benefits must be available on substantially the same basis to each member of a group of employees. Where can you file state taxes for free The group must be defined under a reasonable classification set up by the employer. Where can you file state taxes for free The classification must not discriminate in favor of owners, officers, or highly compensated employees. Where can you file state taxes for free Payment for services. Where can you file state taxes for free   Generally, you must include in income the part of any qualified tuition reduction that represents payment for teaching, research, or other services by the student required as a condition of receiving the qualified tuition reduction. Where can you file state taxes for free This applies even if all candidates for a degree must perform the services to receive the degree. Where can you file state taxes for free (See below for exceptions. Where can you file state taxes for free ) Exceptions. Where can you file state taxes for free   You do not have to include in income the part of any scholarship or fellowship that represents payment for teaching, research, or other services if you receive the amount under: The National Health Service Corps Scholarship Program, or The Armed Forces Health Professions Scholarship and Financial Assistance Program. Where can you file state taxes for free Education Below the Graduate Level If you receive a tuition reduction for education below the graduate level (including primary, secondary, or high school), it is a qualified tuition reduction, and therefore tax free, only if your relationship to the educational institution providing the benefit is described below. Where can you file state taxes for free You are an employee of the eligible educational institution. Where can you file state taxes for free You were an employee of the eligible educational institution, but you retired or left on disability. Where can you file state taxes for free You are a widow or widower of an individual who died while an employee of the eligible educational institution or who retired or left on disability. Where can you file state taxes for free You are the dependent child or spouse of an individual described in (1) through (3), above. Where can you file state taxes for free Child of deceased parents. Where can you file state taxes for free   For purposes of the qualified tuition reduction, a child is a dependent child if the child is under age 25 and both parents have died. Where can you file state taxes for free Child of divorced parents. Where can you file state taxes for free   For purposes of the qualified tuition reduction, a dependent child of divorced parents is treated as the dependent of both parents. Where can you file state taxes for free Graduate Education A tuition reduction you receive for graduate education is qualified, and therefore tax free, if both of the following requirements are met. Where can you file state taxes for free It is provided by an eligible educational institution. Where can you file state taxes for free You are a graduate student who performs teaching or research activities for the educational institution. Where can you file state taxes for free You must include in income any other tuition reductions for graduate education that you receive. Where can you file state taxes for free How To Report Any tuition reduction that is taxable should be included as wages in box 1 of your Form W-2. Where can you file state taxes for free Report the amount from Form W-2, box 1, on line 7 (Form 1040 or Form 1040A) or line 1 (Form 1040EZ). Where can you file state taxes for free Prev  Up  Next   Home   More Online Publications
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Where can you file state taxes for free 4. Where can you file state taxes for free   Foreign Earned Income and Housing: Exclusion – Deduction Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: Who Qualifies for the Exclusions and the Deduction? RequirementsTax Home in Foreign Country Bona Fide Residence Test Physical Presence Test Waiver of Time Requirements U. Where can you file state taxes for free S. Where can you file state taxes for free Travel Restrictions Foreign Earned Income Foreign Earned Income ExclusionLimit on Excludable Amount Choosing the Exclusion Foreign Housing Exclusion and DeductionHousing Amount Foreign Housing Exclusion Foreign Housing Deduction Married Couples Form 2555 and Form 2555-EZForm 2555-EZ Form 2555 Topics - This chapter discusses: Who qualifies for the foreign earned income exclusion, the foreign housing exclusion, and the foreign housing deduction, The requirements that must be met to claim either exclusion or the deduction, How to figure the foreign earned income exclusion, and How to figure the foreign housing exclusion and the foreign housing deduction. Where can you file state taxes for free Useful Items - You may want to see: Publication 519 U. Where can you file state taxes for free S. Where can you file state taxes for free Tax Guide for Aliens 570 Tax Guide for Individuals With Income from U. Where can you file state taxes for free S. Where can you file state taxes for free Possessions 596 Earned Income Credit (EIC) Form (and Instructions) 1040X Amended U. Where can you file state taxes for free S. Where can you file state taxes for free Individual Income Tax Return 2555 Foreign Earned Income 2555-EZ Foreign Earned Income Exclusion See chapter 7 for information about getting these publications and forms. Where can you file state taxes for free Who Qualifies for the Exclusions and the Deduction? If you meet certain requirements, you may qualify for the foreign earned income and foreign housing exclusions and the foreign housing deduction. Where can you file state taxes for free If you are a U. Where can you file state taxes for free S. Where can you file state taxes for free citizen or a resident alien of the United States and you live abroad, you are taxed on your worldwide income. Where can you file state taxes for free However, you may qualify to exclude from income up to $97,600 of your foreign earnings. Where can you file state taxes for free In addition, you can exclude or deduct certain foreign housing amounts. Where can you file state taxes for free See Foreign Earned Income Exclusion and Foreign Housing Exclusion and Deduction, later. Where can you file state taxes for free You also may be entitled to exclude from income the value of meals and lodging provided to you by your employer. Where can you file state taxes for free See Exclusion of Meals and Lodging, later. Where can you file state taxes for free Requirements To claim the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction, you must meet all three of the following requirements. Where can you file state taxes for free Your tax home must be in a foreign country. Where can you file state taxes for free You must have foreign earned income. Where can you file state taxes for free You must be one of the following. Where can you file state taxes for free A U. Where can you file state taxes for free S. Where can you file state taxes for free citizen who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year. Where can you file state taxes for free A U. Where can you file state taxes for free S. Where can you file state taxes for free resident alien who is a citizen or national of a country with which the United States has an income tax treaty in effect and who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year. Where can you file state taxes for free A U. Where can you file state taxes for free S. Where can you file state taxes for free citizen or a U. Where can you file state taxes for free S. Where can you file state taxes for free resident alien who is physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months. Where can you file state taxes for free See Publication 519 to find out if you are a U. Where can you file state taxes for free S. Where can you file state taxes for free resident alien for tax purposes and whether you keep that alien status when you temporarily work abroad. Where can you file state taxes for free If you are a nonresident alien married to a U. Where can you file state taxes for free S. Where can you file state taxes for free citizen or resident alien, and both you and your spouse choose to treat you as a resident alien, you are a resident alien for tax purposes. Where can you file state taxes for free For information on making the choice, see the discussion in chapter 1 under Nonresident Alien Spouse Treated as a Resident . Where can you file state taxes for free Waiver of minimum time requirements. Where can you file state taxes for free   The minimum time requirements for bona fide residence and physical presence can be waived if you must leave a foreign country because of war, civil unrest, or similar adverse conditions in that country. Where can you file state taxes for free This is fully explained under Waiver of Time Requirements , later. Where can you file state taxes for free   See Figure 4-A and information in this chapter to determine if you are eligible to claim either exclusion or the deduction. Where can you file state taxes for free Tax Home in Foreign Country To qualify for the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction, your tax home must be in a foreign country throughout your period of bona fide residence or physical presence abroad. Where can you file state taxes for free Bona fide residence and physical presence are explained later. Where can you file state taxes for free Tax Home Your tax home is the general area of your main place of business, employment, or post of duty, regardless of where you maintain your family home. Where can you file state taxes for free Your tax home is the place where you are permanently or indefinitely engaged to work as an employee or self-employed individual. Where can you file state taxes for free Having a “tax home” in a given location does not necessarily mean that the given location is your residence or domicile for tax purposes. Where can you file state taxes for free If you do not have a regular or main place of business because of the nature of your work, your tax home may be the place where you regularly live. Where can you file state taxes for free If you have neither a regular or main place of business nor a place where you regularly live, you are considered an itinerant and your tax home is wherever you work. Where can you file state taxes for free You are not considered to have a tax home in a foreign country for any period in which your abode is in the United States. Where can you file state taxes for free However, your abode is not necessarily in the United States while you are temporarily in the United States. Where can you file state taxes for free Your abode is also not necessarily in the United States merely because you maintain a dwelling in the United States, whether or not your spouse or dependents use the dwelling. Where can you file state taxes for free “Abode” has been variously defined as one's home, habitation, residence, domicile, or place of dwelling. Where can you file state taxes for free It does not mean your principal place of business. Where can you file state taxes for free “Abode” has a domestic rather than a vocational meaning and does not mean the same as “tax home. Where can you file state taxes for free ” The location of your abode often will depend on where you maintain your economic, family, and personal ties. Where can you file state taxes for free Example 1. Where can you file state taxes for free You are employed on an offshore oil rig in the territorial waters of a foreign country and work a 28-day on/28-day off schedule. Where can you file state taxes for free You return to your family residence in the United States during your off periods. Where can you file state taxes for free You are considered to have an abode in the United States and do not satisfy the tax home test in the foreign country. Where can you file state taxes for free You cannot claim either of the exclusions or the housing deduction. Where can you file state taxes for free Example 2. Where can you file state taxes for free For several years, you were a marketing executive with a producer of machine tools in Toledo, Ohio. Where can you file state taxes for free In November of last year, your employer transferred you to London, England, for a minimum of 18 months to set up a sales operation for Europe. Where can you file state taxes for free Before you left, you distributed business cards showing your business and home addresses in London. Where can you file state taxes for free You kept ownership of your home in Toledo but rented it to another family. Where can you file state taxes for free You placed your car in storage. Where can you file state taxes for free In November of last year, you moved your spouse, children, furniture, and family pets to a home your employer rented for you in London. Where can you file state taxes for free Shortly after moving, you leased a car and you and your spouse got British driving licenses. Where can you file state taxes for free Your entire family got library cards for the local public library. Where can you file state taxes for free You and your spouse opened bank accounts with a London bank and secured consumer credit. Where can you file state taxes for free You joined a local business league and both you and your spouse became active in the neighborhood civic association and worked with a local charity. Where can you file state taxes for free Your abode is in London for the time you live there. Where can you file state taxes for free You satisfy the tax home test in the foreign country. Where can you file state taxes for free Please click here for the text description of the image. Where can you file state taxes for free Figure 4–A Can I Claim the Exclusion or Deduction? Temporary or Indefinite Assignment The location of your tax home often depends on whether your assignment is temporary or indefinite. Where can you file state taxes for free If you are temporarily absent from your tax home in the United States on business, you may be able to deduct your away-from-home expenses (for travel, meals, and lodging), but you would not qualify for the foreign earned income exclusion. Where can you file state taxes for free If your new work assignment is for an indefinite period, your new place of employment becomes your tax home and you would not be able to deduct any of the related expenses that you have in the general area of this new work assignment. Where can you file state taxes for free If your new tax home is in a foreign country and you meet the other requirements, your earnings may qualify for the foreign earned income exclusion. Where can you file state taxes for free If you expect your employment away from home in a single location to last, and it does last, for 1 year or less, it is temporary unless facts and circumstances indicate otherwise. Where can you file state taxes for free If you expect it to last for more than 1 year, it is indefinite. Where can you file state taxes for free If you expect it to last for 1 year or less, but at some later date you expect it to last longer than 1 year, it is temporary (in the absence of facts and circumstances indicating otherwise) until your expectation changes. Where can you file state taxes for free Once your expectation changes, it is indefinite. Where can you file state taxes for free Foreign Country To meet the bona fide residence test or the physical presence test, you must live in or be present in a foreign country. Where can you file state taxes for free A foreign country includes any territory under the sovereignty of a government other than that of the United States. Where can you file state taxes for free The term “foreign country” includes the country's airspace and territorial waters, but not international waters and the airspace above them. Where can you file state taxes for free It also includes the seabed and subsoil of those submarine areas adjacent to the country's territorial waters over which it has exclusive rights under international law to explore and exploit the natural resources. Where can you file state taxes for free The term “foreign country” does not include Antarctica or U. Where can you file state taxes for free S. Where can you file state taxes for free possessions such as Puerto Rico, Guam, the Commonwealth of the Northern Mariana Islands, the U. Where can you file state taxes for free S. Where can you file state taxes for free Virgin Islands, and Johnston Island. Where can you file state taxes for free For purposes of the foreign earned income exclusion, the foreign housing exclusion, and the foreign housing deduction, the terms “foreign,” “abroad,” and “overseas” refer to areas outside the United States and those areas listed or described in the previous sentence. Where can you file state taxes for free American Samoa, Guam, and the Commonwealth of the Northern Mariana Islands Residence or presence in a U. Where can you file state taxes for free S. Where can you file state taxes for free possession does not qualify you for the foreign earned income exclusion. Where can you file state taxes for free You may, however, qualify for an exclusion of your possession income on your U. Where can you file state taxes for free S. Where can you file state taxes for free return. Where can you file state taxes for free American Samoa. Where can you file state taxes for free   There is a possession exclusion available to individuals who are bona fide residents of American Samoa for the entire tax year. Where can you file state taxes for free Gross income from sources within American Samoa may be eligible for this exclusion. Where can you file state taxes for free Income that is effectively connected with the conduct of a trade or business within American Samoa also may be eligible for this exclusion. Where can you file state taxes for free Use Form 4563, Exclusion of Income for Bona Fide Residents of American Samoa, to figure the exclusion. Where can you file state taxes for free Guam and the Commonwealth of the Northern Mariana Islands. Where can you file state taxes for free   An exclusion will be available to residents of Guam and the Commonwealth of the Northern Mariana Islands if, and when, new implementation agreements take effect between the United States and those possessions. Where can you file state taxes for free   For more information, see Publication 570. Where can you file state taxes for free Puerto Rico and U. Where can you file state taxes for free S. Where can you file state taxes for free Virgin Islands Residents of Puerto Rico and the U. Where can you file state taxes for free S. Where can you file state taxes for free Virgin Islands cannot claim the foreign earned income exclusion or the foreign housing exclusion. Where can you file state taxes for free Puerto Rico. Where can you file state taxes for free   Generally, if you are a U. Where can you file state taxes for free S. Where can you file state taxes for free citizen who is a bona fide resident of Puerto Rico for the entire tax year, you are not subject to U. Where can you file state taxes for free S. Where can you file state taxes for free tax on income from Puerto Rican sources. Where can you file state taxes for free This does not include amounts paid for services performed as an employee of the United States. Where can you file state taxes for free However, you are subject to U. Where can you file state taxes for free S. Where can you file state taxes for free tax on your income from sources outside Puerto Rico. Where can you file state taxes for free In figuring your U. Where can you file state taxes for free S. Where can you file state taxes for free tax, you cannot deduct expenses allocable to income not subject to tax. Where can you file state taxes for free Bona Fide Residence Test You meet the bona fide residence test if you are a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year. Where can you file state taxes for free You can use the bona fide residence test to qualify for the exclusions and the deduction only if you are either: A U. Where can you file state taxes for free S. Where can you file state taxes for free citizen, or A U. Where can you file state taxes for free S. Where can you file state taxes for free resident alien who is a citizen or national of a country with which the United States has an income tax treaty in effect. Where can you file state taxes for free You do not automatically acquire bona fide resident status merely by living in a foreign country or countries for 1 year. Where can you file state taxes for free If you go to a foreign country to work on a particular job for a specified period of time, you ordinarily will not be regarded as a bona fide resident of that country even though you work there for 1 tax year or longer. Where can you file state taxes for free The length of your stay and the nature of your job are only two of the factors to be considered in determining whether you meet the bona fide residence test. Where can you file state taxes for free Bona fide residence. Where can you file state taxes for free   To meet the bona fide residence test, you must have established a bona fide residence in a foreign country. Where can you file state taxes for free   Your bona fide residence is not necessarily the same as your domicile. Where can you file state taxes for free Your domicile is your permanent home, the place to which you always return or intend to return. Where can you file state taxes for free Example. Where can you file state taxes for free You could have your domicile in Cleveland, Ohio, and a bona fide residence in Edinburgh, Scotland, if you intend to return eventually to Cleveland. Where can you file state taxes for free The fact that you go to Scotland does not automatically make Scotland your bona fide residence. Where can you file state taxes for free If you go there as a tourist, or on a short business trip, and return to the United States, you have not established bona fide residence in Scotland. Where can you file state taxes for free But if you go to Scotland to work for an indefinite or extended period and you set up permanent quarters there for yourself and your family, you probably have established a bona fide residence in a foreign country, even though you intend to return eventually to the United States. Where can you file state taxes for free You are clearly not a resident of Scotland in the first instance. Where can you file state taxes for free However, in the second, you are a resident because your stay in Scotland appears to be permanent. Where can you file state taxes for free If your residency is not as clearly defined as either of these illustrations, it may be more difficult to decide whether you have established a bona fide residence. Where can you file state taxes for free Determination. Where can you file state taxes for free   Questions of bona fide residence are determined according to each individual case, taking into account factors such as your intention, the purpose of your trip, and the nature and length of your stay abroad. Where can you file state taxes for free   To meet the bona fide residence test, you must show the Internal Revenue Service (IRS) that you have been a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year. Where can you file state taxes for free The IRS decides whether you are a bona fide resident of a foreign country largely on the basis of facts you report on Form 2555. Where can you file state taxes for free IRS cannot make this determination until you file Form 2555. Where can you file state taxes for free Statement to foreign authorities. Where can you file state taxes for free   You are not considered a bona fide resident of a foreign country if you make a statement to the authorities of that country that you are not a resident of that country, and the authorities: Hold that you are not subject to their income tax laws as a resident, or Have not made a final decision on your status. Where can you file state taxes for free Special agreements and treaties. Where can you file state taxes for free   An income tax exemption provided in a treaty or other international agreement will not in itself prevent you from being a bona fide resident of a foreign country. Where can you file state taxes for free Whether a treaty prevents you from becoming a bona fide resident of a foreign country is determined under all provisions of the treaty, including specific provisions relating to residence or privileges and immunities. Where can you file state taxes for free Example 1. Where can you file state taxes for free You are a U. Where can you file state taxes for free S. Where can you file state taxes for free citizen employed in the United Kingdom by a U. Where can you file state taxes for free S. Where can you file state taxes for free employer under contract with the U. Where can you file state taxes for free S. Where can you file state taxes for free Armed Forces. Where can you file state taxes for free You are not subject to the North Atlantic Treaty Status of Forces Agreement. Where can you file state taxes for free You may be a bona fide resident of the United Kingdom. Where can you file state taxes for free Example 2. Where can you file state taxes for free You are a U. Where can you file state taxes for free S. Where can you file state taxes for free citizen in the United Kingdom who qualifies as an “employee” of an armed service or as a member of a “civilian component” under the North Atlantic Treaty Status of Forces Agreement. Where can you file state taxes for free You are not a bona fide resident of the United Kingdom. Where can you file state taxes for free Example 3. Where can you file state taxes for free You are a U. Where can you file state taxes for free S. Where can you file state taxes for free citizen employed in Japan by a U. Where can you file state taxes for free S. Where can you file state taxes for free employer under contract with the U. Where can you file state taxes for free S. Where can you file state taxes for free Armed Forces. Where can you file state taxes for free You are subject to the agreement of the Treaty of Mutual Cooperation and Security between the United States and Japan. Where can you file state taxes for free Being subject to the agreement does not make you a bona fide resident of Japan. Where can you file state taxes for free Example 4. Where can you file state taxes for free You are a U. Where can you file state taxes for free S. Where can you file state taxes for free citizen employed as an “official” by the United Nations in Switzerland. Where can you file state taxes for free You are exempt from Swiss taxation on the salary or wages paid to you by the United Nations. Where can you file state taxes for free This does not prevent you from being a bona fide resident of Switzerland. Where can you file state taxes for free Effect of voting by absentee ballot. Where can you file state taxes for free   If you are a U. Where can you file state taxes for free S. Where can you file state taxes for free citizen living abroad, you can vote by absentee ballot in any election held in the United States without risking your status as a bona fide resident of a foreign country. Where can you file state taxes for free   However, if you give information to the local election officials about the nature and length of your stay abroad that does not match the information you give for the bona fide residence test, the information given in connection with absentee voting will be considered in determining your status, but will not necessarily be conclusive. Where can you file state taxes for free Uninterrupted period including entire tax year. Where can you file state taxes for free   To meet the bona fide residence test, you must reside in a foreign country or countries for an uninterrupted period that includes an entire tax year. Where can you file state taxes for free An entire tax year is from January 1 through December 31 for taxpayers who file their income tax returns on a calendar year basis. Where can you file state taxes for free   During the period of bona fide residence in a foreign country, you can leave the country for brief or temporary trips back to the United States or elsewhere for vacation or business. Where can you file state taxes for free To keep your status as a bona fide resident of a foreign country, you must have a clear intention of returning from such trips, without unreasonable delay, to your foreign residence or to a new bona fide residence in another foreign country. Where can you file state taxes for free Example 1. Where can you file state taxes for free You arrived with your family in Lisbon, Portugal, on November 1, 2011. Where can you file state taxes for free Your assignment is indefinite, and you intend to live there with your family until your company sends you to a new post. Where can you file state taxes for free You immediately established residence there. Where can you file state taxes for free You spent April of 2012 at a business conference in the United States. Where can you file state taxes for free Your family stayed in Lisbon. Where can you file state taxes for free Immediately following the conference, you returned to Lisbon and continued living there. Where can you file state taxes for free On January 1, 2013, you completed an uninterrupted period of residence for a full tax year (2012), and you meet the bona fide residence test. Where can you file state taxes for free Example 2. Where can you file state taxes for free Assume the same facts as in Example 1, except that you transferred back to the United States on December 13, 2012. Where can you file state taxes for free You would not meet the bona fide residence test because your bona fide residence in the foreign country, although it lasted more than a year, did not include a full tax year. Where can you file state taxes for free You may, however, qualify for the foreign earned income exclusion or the housing exclusion or deduction under the physical presence test (discussed later). Where can you file state taxes for free Bona fide resident for part of a year. Where can you file state taxes for free   Once you have established bona fide residence in a foreign country for an uninterrupted period that includes an entire tax year, you are a bona fide resident of that country for the period starting with the date you actually began the residence and ending with the date you abandon the foreign residence. Where can you file state taxes for free Your period of bona fide residence can include an entire tax year plus parts of 2 other tax years. Where can you file state taxes for free Example. Where can you file state taxes for free You were a bona fide resident of Singapore from March 1, 2011, through September 14, 2013. Where can you file state taxes for free On September 15, 2013, you returned to the United States. Where can you file state taxes for free Since you were a bona fide resident of a foreign country for all of 2012, you were also a bona fide resident of a foreign country from March 1, 2011, through the end of 2011 and from January 1, 2013, through September 14, 2013. Where can you file state taxes for free Reassignment. Where can you file state taxes for free   If you are assigned from one foreign post to another, you may or may not have a break in foreign residence between your assignments, depending on the circumstances. Where can you file state taxes for free Example 1. Where can you file state taxes for free You were a resident of Pakistan from October 1, 2012, through November 30, 2013. Where can you file state taxes for free On December 1, 2013, you and your family returned to the United States to wait for an assignment to another foreign country. Where can you file state taxes for free Your household goods also were returned to the United States. Where can you file state taxes for free Your foreign residence ended on November 30, 2013, and did not begin again until after you were assigned to another foreign country and physically entered that country. Where can you file state taxes for free Since you were not a bona fide resident of a foreign country for the entire tax year of 2012 or 2013 you do not meet the bona fide residence test in either year. Where can you file state taxes for free You may, however, qualify for the foreign earned income exclusion or the housing exclusion or deduction under the physical presence test, discussed later. Where can you file state taxes for free Example 2. Where can you file state taxes for free Assume the same facts as in Example 1, except that upon completion of your assignment in Pakistan you were given a new assignment to Turkey. Where can you file state taxes for free On December 1, 2013, you and your family returned to the United States for a month's vacation. Where can you file state taxes for free On January 2, 2014, you arrived in Turkey for your new assignment. Where can you file state taxes for free Because you did not interrupt your bona fide residence abroad, you meet the bona fide residence test. Where can you file state taxes for free Physical Presence Test You meet the physical presence test if you are physically present in a foreign country or countries 330 full days during a period of 12 consecutive months. Where can you file state taxes for free The 330 days do not have to be consecutive. Where can you file state taxes for free Any U. Where can you file state taxes for free S. Where can you file state taxes for free citizen or resident alien can use the physical presence test to qualify for the exclusions and the deduction. Where can you file state taxes for free The physical presence test is based only on how long you stay in a foreign country or countries. Where can you file state taxes for free This test does not depend on the kind of residence you establish, your intentions about returning, or the nature and purpose of your stay abroad. Where can you file state taxes for free 330 full days. Where can you file state taxes for free   Generally, to meet the physical presence test, you must be physically present in a foreign country or countries for at least 330 full days during a 12-month period. Where can you file state taxes for free You can count days you spent abroad for any reason. Where can you file state taxes for free You do not have to be in a foreign country only for employment purposes. Where can you file state taxes for free You can be on vacation. Where can you file state taxes for free   You do not meet the physical presence test if illness, family problems, a vacation, or your employer's orders cause you to be present for less than the required amount of time. Where can you file state taxes for free Exception. Where can you file state taxes for free   You can be physically present in a foreign country or countries for less than 330 full days and still meet the physical presence test if you are required to leave a country because of war or civil unrest. Where can you file state taxes for free See Waiver of Time Requirements, later. Where can you file state taxes for free Full day. Where can you file state taxes for free   A full day is a period of 24 consecutive hours, beginning at midnight. Where can you file state taxes for free Travel. Where can you file state taxes for free    When you leave the United States to go directly to a foreign country or when you return directly to the United States from a foreign country, the time you spend on or over international waters does not count toward the 330-day total. Where can you file state taxes for free Example. Where can you file state taxes for free You leave the United States for France by air on June 10. Where can you file state taxes for free You arrive in France at 9:00 a. Where can you file state taxes for free m. Where can you file state taxes for free on June 11. Where can you file state taxes for free Your first full day of physical presence in France is June 12. Where can you file state taxes for free Passing over foreign country. Where can you file state taxes for free   If, in traveling from the United States to a foreign country, you pass over a foreign country before midnight of the day you leave, the first day you can count toward the 330-day total is the day following the day you leave the United States. Where can you file state taxes for free Example. Where can you file state taxes for free You leave the United States by air at 9:30 a. Where can you file state taxes for free m. Where can you file state taxes for free on June 10 to travel to Kenya. Where can you file state taxes for free You pass over western Africa at 11:00 p. Where can you file state taxes for free m. Where can you file state taxes for free on June 10 and arrive in Kenya at 12:30 a. Where can you file state taxes for free m. Where can you file state taxes for free on June 11. Where can you file state taxes for free Your first full day in a foreign country is June 11. Where can you file state taxes for free Change of location. Where can you file state taxes for free   You can move about from one place to another in a foreign country or to another foreign country without losing full days. Where can you file state taxes for free If any part of your travel is not within any foreign country and takes less than 24 hours, you are considered to be in a foreign country during that part of travel. Where can you file state taxes for free Example 1. Where can you file state taxes for free You leave Ireland by air at 11:00 p. Where can you file state taxes for free m. Where can you file state taxes for free on July 6 and arrive in Sweden at 5:00 a. Where can you file state taxes for free m. Where can you file state taxes for free on July 7. Where can you file state taxes for free Your trip takes less than 24 hours and you lose no full days. Where can you file state taxes for free Example 2. Where can you file state taxes for free You leave Norway by ship at 10:00 p. Where can you file state taxes for free m. Where can you file state taxes for free on July 6 and arrive in Portugal at 6:00 a. Where can you file state taxes for free m. Where can you file state taxes for free on July 8. Where can you file state taxes for free Since your travel is not within a foreign country or countries and the trip takes more than 24 hours, you lose as full days July 6, 7, and 8. Where can you file state taxes for free If you remain in Portugal, your next full day in a foreign country is July 9. Where can you file state taxes for free In United States while in transit. Where can you file state taxes for free   If you are in transit between two points outside the United States and are physically present in the United States for less than 24 hours, you are not treated as present in the United States during the transit. Where can you file state taxes for free You are treated as traveling over areas not within any foreign country. Where can you file state taxes for free    Please click here for the text description of the image. Where can you file state taxes for free Figure 4-B How to figure the 12-month period. Where can you file state taxes for free   There are four rules you should know when figuring the 12-month period. Where can you file state taxes for free Your 12-month period can begin with any day of the month. Where can you file state taxes for free It ends the day before the same calendar day, 12 months later. Where can you file state taxes for free Your 12-month period must be made up of consecutive months. Where can you file state taxes for free Any 12-month period can be used if the 330 days in a foreign country fall within that period. Where can you file state taxes for free You do not have to begin your 12-month period with your first full day in a foreign country or end it with the day you leave. Where can you file state taxes for free You can choose the 12-month period that gives you the greatest exclusion. Where can you file state taxes for free In determining whether the 12-month period falls within a longer stay in the foreign country, 12-month periods can overlap one another. Where can you file state taxes for free Example 1. Where can you file state taxes for free You are a construction worker who works on and off in a foreign country over a 20-month period. Where can you file state taxes for free You might pick up the 330 full days in a 12-month period only during the middle months of the time you work in the foreign country because the first few and last few months of the 20-month period are broken up by long visits to the United States. Where can you file state taxes for free Example 2. Where can you file state taxes for free You work in New Zealand for a 20-month period from January 1, 2012, through August 31, 2013, except that you spend 28 days in February 2012 and 28 days in February 2013 on vacation in the United States. Where can you file state taxes for free You are present in New Zealand for at least 330 full days during each of the following two 12-month periods: January 1, 2012 – December 31, 2012 and September 1, 2012 – August 31, 2013. Where can you file state taxes for free By overlapping the 12-month periods in this way, you meet the physical presence test for the whole 20-month period. Where can you file state taxes for free See Figure 4-B, on the previous page. Where can you file state taxes for free Waiver of Time Requirements Both the bona fide residence test and the physical presence test contain minimum time requirements. Where can you file state taxes for free The minimum time requirements can be waived, however, if you must leave a foreign country because of war, civil unrest, or similar adverse conditions in that country. Where can you file state taxes for free You must be able to show that you reasonably could have expected to meet the minimum time requirements if not for the adverse conditions. Where can you file state taxes for free To qualify for the waiver, you must actually have your tax home in the foreign country and be a bona fide resident of, or be physically present in, the foreign country on or before the beginning date of the waiver. Where can you file state taxes for free Early in 2014, the IRS will publish in the Internal Revenue Bulletin a list of the only countries that qualify for the waiver for 2013 and the effective dates. Where can you file state taxes for free If you left one of the countries on or after the date listed for each country, you can meet the bona fide residence test or physical presence test for 2013 without meeting the minimum time requirement. Where can you file state taxes for free However, in figuring your exclusion, the number of your qualifying days of bona fide residence or physical presence includes only days of actual residence or presence within the country. Where can you file state taxes for free U. Where can you file state taxes for free S. Where can you file state taxes for free Travel Restrictions If you are present in a foreign country in violation of U. Where can you file state taxes for free S. Where can you file state taxes for free law, you will not be treated as a bona fide resident of a foreign country or as physically present in a foreign country while you are in violation of the law. Where can you file state taxes for free Income that you earn from sources within such a country for services performed during a period of violation does not qualify as foreign earned income. Where can you file state taxes for free Your housing expenses within that country (or outside that country for housing your spouse or dependents) while you are in violation of the law cannot be included in figuring your foreign housing amount. Where can you file state taxes for free For 2013, the only country to which travel restrictions applied was Cuba. Where can you file state taxes for free The restrictions applied for the entire year. Where can you file state taxes for free However, individuals working at the U. Where can you file state taxes for free S. Where can you file state taxes for free Naval Base at Guantanamo Bay in Cuba are not in violation of U. Where can you file state taxes for free S. Where can you file state taxes for free law. Where can you file state taxes for free Personal service income earned by individuals at the base is eligible for the foreign earned income exclusion provided the other requirements are met. Where can you file state taxes for free Foreign Earned Income To claim the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction, you must have foreign earned income. Where can you file state taxes for free Foreign earned income generally is income you receive for services you perform during a period in which you meet both of the following requirements. Where can you file state taxes for free Your tax home is in a foreign country. Where can you file state taxes for free You meet either the bona fide residence test or the physical presence test. Where can you file state taxes for free To determine whether your tax home is in a foreign country, see Tax Home in Foreign Country, earlier. Where can you file state taxes for free To determine whether you meet either the bona fide residence test or the physical presence test, see Bona Fide Residence Test and Physical Presence Test, earlier. Where can you file state taxes for free Foreign earned income does not include the following amounts. Where can you file state taxes for free The value of meals and lodging that you exclude from your income because the meals and lodging were furnished for the convenience of your employer. Where can you file state taxes for free Pension or annuity payments you receive, including social security benefits (see Pensions and annuities, later). Where can you file state taxes for free Pay you receive as an employee of the U. Where can you file state taxes for free S. Where can you file state taxes for free Government. Where can you file state taxes for free (See U. Where can you file state taxes for free S. Where can you file state taxes for free Government Employees, later. Where can you file state taxes for free ) Amounts you include in your income because of your employer's contributions to a nonexempt employee trust or to a nonqualified annuity contract. Where can you file state taxes for free Any unallowable moving expense deduction that you choose to recapture as explained under Moving Expense Attributable to Foreign Earnings in 2 Years in chapter 5. Where can you file state taxes for free Payments you receive after the end of the tax year following the tax year in which you performed the services that earned the income. Where can you file state taxes for free Earned income. Where can you file state taxes for free   This is pay for personal services performed, such as wages, salaries, or professional fees. Where can you file state taxes for free The list that follows classifies many types of income into three categories. Where can you file state taxes for free The column headed Variable Income lists income that may fall into either the earned income category, the unearned income category, or partly into both. Where can you file state taxes for free For more information on earned and unearned income, see Earned and Unearned Income, later. Where can you file state taxes for free Earned Income Unearned Income Variable Income Salaries and wages Dividends Business profits Commissions Interest Royalties Bonuses Capital gains Rents Professional fees Gambling winnings Scholarships and fellowships Tips Alimony     Social security benefits     Pensions     Annuities     In addition to the types of earned income listed, certain noncash income and allowances or reimbursements are considered earned income. Where can you file state taxes for free Noncash income. Where can you file state taxes for free   The fair market value of property or facilities provided to you by your employer in the form of lodging, meals, or use of a car is earned income. Where can you file state taxes for free Allowances or reimbursements. Where can you file state taxes for free   Earned income includes allowances or reimbursements you receive, such as the following amounts. Where can you file state taxes for free    Cost-of-living allowances. Where can you file state taxes for free Overseas differential. Where can you file state taxes for free Family allowance. Where can you file state taxes for free Reimbursement for education or education allowance. Where can you file state taxes for free Home leave allowance. Where can you file state taxes for free Quarters allowance. Where can you file state taxes for free Reimbursement for moving or moving allowance (unless excluded from income as discussed later in Reimbursement of employee expenses under Earned and Unearned Income). Where can you file state taxes for free Source of Earned Income The source of your earned income is the place where you perform the services for which you received the income. Where can you file state taxes for free Foreign earned income is income you receive for working in a foreign country. Where can you file state taxes for free Where or how you are paid has no effect on the source of the income. Where can you file state taxes for free For example, income you receive for work done in Austria is income from a foreign source even if the income is paid directly to your bank account in the United States and your employer is located in New York City. Where can you file state taxes for free Example. Where can you file state taxes for free You are a U. Where can you file state taxes for free S. Where can you file state taxes for free citizen, a bona fide resident of Canada, and working as a mining engineer. Where can you file state taxes for free Your salary is $76,800 per year. Where can you file state taxes for free You also receive a $6,000 cost-of-living allowance, and a $6,000 education allowance. Where can you file state taxes for free Your employment contract did not indicate that you were entitled to these allowances only while outside the United States. Where can you file state taxes for free Your total income is $88,800. Where can you file state taxes for free You work a 5-day week, Monday through Friday. Where can you file state taxes for free After subtracting your vacation, you have a total of 240 workdays in the year. Where can you file state taxes for free You worked in the United States during the year for 6 weeks (30 workdays). Where can you file state taxes for free The following shows how to figure the part of your income that is for work done in Canada during the year. Where can you file state taxes for free   Number of days worked in Canada during the year (210) × Total income ($88,800) = $77,700     Number of days of work during the year for which payment was made (240)   Your foreign source earned income is $77,700. Where can you file state taxes for free Earned and Unearned Income Earned income was defined earlier as pay for personal services performed. Where can you file state taxes for free Some types of income are not easily identified as earned or unearned income. Where can you file state taxes for free Some of these types of income are further explained here. Where can you file state taxes for free Income from a sole proprietorship or partnership. Where can you file state taxes for free   Income from a business in which capital investment is an important part of producing the income may be unearned income. Where can you file state taxes for free If you are a sole proprietor or partner and your personal services are also an important part of producing the income, the part of the income that represents the value of your personal services will be treated as earned income. Where can you file state taxes for free Capital a factor. Where can you file state taxes for free   If capital investment is an important part of producing income, no more than 30% of your share of the net profits of the business is earned income. Where can you file state taxes for free   If you have no net profits, the part of your gross profit that represents a reasonable allowance for personal services actually performed is considered earned income. Where can you file state taxes for free Because you do not have a net profit, the 30% limit does not apply. Where can you file state taxes for free Example 1. Where can you file state taxes for free You are a U. Where can you file state taxes for free S. Where can you file state taxes for free citizen and meet the bona fide residence test. Where can you file state taxes for free You invest in a partnership based in Cameroon that is engaged solely in selling merchandise outside the United States. Where can you file state taxes for free You perform no services for the partnership. Where can you file state taxes for free At the end of the tax year, your share of the net profits is $80,000. Where can you file state taxes for free The entire $80,000 is unearned income. Where can you file state taxes for free Example 2. Where can you file state taxes for free Assume that in Example 1 you spend time operating the business. Where can you file state taxes for free Your share of the net profits is $80,000; 30% of your share of the profits is $24,000. Where can you file state taxes for free If the value of your services for the year is $15,000, your earned income is limited to the value of your services, $15,000. Where can you file state taxes for free Capital not a factor. Where can you file state taxes for free   If capital is not an income-producing factor and personal services produce the business income, the 30% rule does not apply. Where can you file state taxes for free The entire amount of business income is earned income. Where can you file state taxes for free Example. Where can you file state taxes for free You and Lou Green are management consultants and operate as equal partners in performing services outside the United States. Where can you file state taxes for free Because capital is not an income- producing factor, all the income from the partnership is considered earned income. Where can you file state taxes for free Income from a corporation. Where can you file state taxes for free   The salary you receive from a corporation is earned income only if it represents a reasonable allowance as compensation for work you do for the corporation. Where can you file state taxes for free Any amount over what is considered a reasonable salary is unearned income. Where can you file state taxes for free Example 1. Where can you file state taxes for free You are a U. Where can you file state taxes for free S. Where can you file state taxes for free citizen and an officer and stockholder of a corporation in Honduras. Where can you file state taxes for free You perform no work or service of any kind for the corporation. Where can you file state taxes for free During the tax year you receive a $10,000 “salary” from the corporation. Where can you file state taxes for free The $10,000 clearly is not for personal services and is unearned income. Where can you file state taxes for free Example 2. Where can you file state taxes for free You are a U. Where can you file state taxes for free S. Where can you file state taxes for free citizen and work full time as secretary-treasurer of your corporation. Where can you file state taxes for free During the tax year you receive $100,000 as salary from the corporation. Where can you file state taxes for free If $80,000 is a reasonable allowance as pay for the work you did, then $80,000 is earned income. Where can you file state taxes for free Stock options. Where can you file state taxes for free   You may have earned income if you disposed of stock that you got by exercising a stock option granted to you under an employee stock purchase plan. Where can you file state taxes for free   If your gain on the disposition of stock you got by exercising an option is treated as capital gain, your gain is unearned income. Where can you file state taxes for free   However, if you disposed of the stock less than 2 years after you were granted the option or less than 1 year after you got the stock, part of the gain on the disposition may be earned income. Where can you file state taxes for free It is considered received in the year you disposed of the stock and earned in the year you performed the services for which you were granted the option. Where can you file state taxes for free Any part of the earned income that is due to work you did outside the United States is foreign earned income. Where can you file state taxes for free   See Publication 525, Taxable and Nontaxable Income, for a discussion of the treatment of stock options. Where can you file state taxes for free Pensions and annuities. Where can you file state taxes for free    For purposes of the foreign earned income exclusion, the foreign housing exclusion, and the foreign housing deduction, amounts received as pensions or annuities are unearned income. Where can you file state taxes for free Royalties. Where can you file state taxes for free   Royalties from the leasing of oil and mineral lands and patents generally are a form of rent or dividends and are unearned income. Where can you file state taxes for free   Royalties received by a writer are earned income if they are received: For the transfer of property rights of the writer in the writer's product, or Under a contract to write a book or series of articles. Where can you file state taxes for free Rental income. Where can you file state taxes for free   Generally, rental income is unearned income. Where can you file state taxes for free If you perform personal services in connection with the production of rent, up to 30% of your net rental income can be considered earned income. Where can you file state taxes for free Example. Where can you file state taxes for free Larry Smith, a U. Where can you file state taxes for free S. Where can you file state taxes for free citizen living in Australia, owns and operates a rooming house in Sydney. Where can you file state taxes for free If he is operating the rooming house as a business that requires capital and personal services, he can consider up to 30% of net rental income as earned income. Where can you file state taxes for free On the other hand, if he just owns the rooming house and performs no personal services connected with its operation, except perhaps making minor repairs and collecting rents, none of his net income from the house is considered earned income. Where can you file state taxes for free It is all unearned income. Where can you file state taxes for free Professional fees. Where can you file state taxes for free   If you are engaged in a professional occupation (such as a doctor or lawyer), all fees received in the performance of these services are earned income. Where can you file state taxes for free Income of an artist. Where can you file state taxes for free   Income you receive from the sale of paintings you created is earned income. Where can you file state taxes for free Scholarships and fellowships. Where can you file state taxes for free   Any portion of a scholarship or fellowship grant that is paid to you for teaching, research or other services is considered earned income if you must include it in your gross income. Where can you file state taxes for free If the payer of the grant is required to provide you with a Form W-2, Wage and Tax Statement, these amounts will be listed as wages. Where can you file state taxes for free    Certain scholarship and fellowship income may be exempt under other provisions. Where can you file state taxes for free See Publication 970, Tax Benefits for Education, chapter 1. Where can you file state taxes for free Use of employer's property or facilities. Where can you file state taxes for free   If you receive fringe benefits in the form of the right to use your employer's property or facilities, the fair market value of that right is earned income. Where can you file state taxes for free Fair market value is the price at which the property would change hands between a willing buyer and a willing seller, neither being required to buy or sell, and both having reasonable knowledge of all the necessary facts. Where can you file state taxes for free Example. Where can you file state taxes for free You are privately employed and live in Japan all year. Where can you file state taxes for free You are paid a salary of $6,000 a month. Where can you file state taxes for free You live rent-free in a house provided by your employer that has a fair rental value of $3,000 a month. Where can you file state taxes for free The house is not provided for your employer's convenience. Where can you file state taxes for free You report on the calendar-year, cash basis. Where can you file state taxes for free You received $72,000 salary from foreign sources plus $36,000 fair rental value of the house, or a total of $108,000 of earned income. Where can you file state taxes for free Reimbursement of employee expenses. Where can you file state taxes for free   If you are reimbursed under an accountable plan (defined below) for expenses you incur on your employer's behalf and you have adequately accounted to your employer for the expenses, do not include the reimbursement for those expenses in your earned income. Where can you file state taxes for free   The expenses for which you are reimbursed are not considered allocable (related) to your earned income. Where can you file state taxes for free If expenses and reimbursement are equal, there is nothing to allocate to excluded income. Where can you file state taxes for free If expenses are more than the reimbursement, the unreimbursed expenses are considered to have been incurred in producing earned income and must be divided between your excluded and included income in determining the amount of unreimbursed expenses you can deduct. Where can you file state taxes for free (See chapter 5. Where can you file state taxes for free ) If the reimbursement is more than the expenses, no expenses remain to be divided between excluded and included income and the excess reimbursement must be included in earned income. Where can you file state taxes for free   These rules do not apply to the following individuals. Where can you file state taxes for free Straight-commission salespersons. Where can you file state taxes for free Employees who have arrangements with their employers under which taxes are not withheld on a percentage of the commissions because the employers consider that percentage to be attributable to the employees' expenses. Where can you file state taxes for free Accountable plan. Where can you file state taxes for free   An accountable plan is a reimbursement or allowance arrangement that includes all three of the following rules. Where can you file state taxes for free The expenses covered under the plan must have a business connection. Where can you file state taxes for free The employee must adequately account to the employer for these expenses within a reasonable period of time. Where can you file state taxes for free The employee must return any excess reimbursement or allowance within a reasonable period of time. Where can you file state taxes for free Reimbursement of moving expenses. Where can you file state taxes for free   Reimbursement of moving expenses may be earned income. Where can you file state taxes for free You must include as earned income: Any reimbursements of, or payments for, nondeductible moving expenses, Reimbursements that are more than your deductible expenses and that you do not return to your employer, Any reimbursements made (or treated as made) under a nonaccountable plan (any plan that does not meet the rules listed above for an accountable plan), even if they are for deductible expenses, and Any reimbursement of moving expenses you deducted in an earlier year. Where can you file state taxes for free This section discusses reimbursements that must be included in earned income. Where can you file state taxes for free Publication 521, Moving Expenses, discusses additional rules that apply to moving expense deductions and reimbursements. Where can you file state taxes for free   The rules for determining when the reimbursement is considered earned or where the reimbursement is considered earned may differ somewhat from the general rules previously discussed. Where can you file state taxes for free   Although you receive the reimbursement in one tax year, it may be considered earned for services performed, or to be performed, in another tax year. Where can you file state taxes for free You must report the reimbursement as income on your return in the year you receive it, even if it is considered earned during a different year. Where can you file state taxes for free Move from U. Where can you file state taxes for free S. Where can you file state taxes for free to foreign country. Where can you file state taxes for free   If you move from the United States to a foreign country, your moving expense reimbursement is generally considered pay for future services to be performed at the new location. Where can you file state taxes for free The reimbursement is considered earned solely in the year of the move if you qualify for the exclusion for a period that includes at least 120 days during that tax year. Where can you file state taxes for free   If you are neither a bona fide resident of nor physically present in a foreign country or countries for a period that includes 120 days during the year of the move, a portion of the reimbursement is considered earned in the year of the move and a portion is considered earned in the year following the year of the move. Where can you file state taxes for free To figure the amount earned in the year of the move, multiply the reimbursement by a fraction. Where can you file state taxes for free The numerator (top number) is the number of days in your qualifying period that fall within the year of the move, and the denominator (bottom number) is the total number of days in the year of the move. Where can you file state taxes for free   The difference between the total reimbursement and the amount considered earned in the year of the move is the amount considered earned in the year following the year of the move. Where can you file state taxes for free The part earned in each year is figured as shown in the following example. Where can you file state taxes for free Example. Where can you file state taxes for free You are a U. Where can you file state taxes for free S. Where can you file state taxes for free citizen working in the United States. Where can you file state taxes for free You were told in October 2012 that you were being transferred to a foreign country. Where can you file state taxes for free You arrived in the foreign country on December 15, 2012, and you are a bona fide resident for the remainder of 2012 and all of 2013. Where can you file state taxes for free Your employer reimbursed you $2,000 in January 2013 for the part of the moving expense that you were not allowed to deduct. Where can you file state taxes for free Because you did not qualify for the exclusion under the bona fide residence test for at least 120 days in 2012 (the year of the move), the reimbursement is considered pay for services performed in the foreign country for both 2012 and 2013. Where can you file state taxes for free You figure the part of the reimbursement for services performed in the foreign country in 2012 by multiplying the total reimbursement by a fraction. Where can you file state taxes for free The fraction is the number of days during which you were a bona fide resident in 2012 (the year of the move) divided by 366. Where can you file state taxes for free The remaining part of the reimbursement is for services performed in the foreign country in 2013. Where can you file state taxes for free This computation is used only to determine when the reimbursement is considered earned. Where can you file state taxes for free You would include the amount of the reimbursement in income in 2013, the year you received it. Where can you file state taxes for free Move between foreign countries. Where can you file state taxes for free   If you move between foreign countries, any moving expense reimbursement that you must include in income will be considered earned in the year of the move if you qualify for the foreign earned income exclusion for a period that includes at least 120 days in the year of the move. Where can you file state taxes for free Move to U. Where can you file state taxes for free S. Where can you file state taxes for free   If you move to the United States, the moving expense reimbursement that you must include in income is generally considered to be U. Where can you file state taxes for free S. Where can you file state taxes for free source income. Where can you file state taxes for free   However, if under either an agreement between you and your employer or a statement of company policy that is reduced to writing before your move to the foreign country, your employer will reimburse you for your move back to the United States regardless of whether you continue to work for the employer, the includible reimbursement is considered compensation for past services performed in the foreign country. Where can you file state taxes for free The includible reimbursement is considered earned in the year of the move if you qualify for the foreign earned income exclusion for a period that includes at least 120 days during that year. Where can you file state taxes for free Otherwise, you treat the includible reimbursement as received for services performed in the foreign country in the year of the move and the year immediately before the year of the move. Where can you file state taxes for free   See the discussion under Move from U. Where can you file state taxes for free S. Where can you file state taxes for free to foreign country , earlier, to figure the amount of the includible reimbursement considered earned in the year of the move. Where can you file state taxes for free The amount earned in the year before the year of the move is the difference between the total includible reimbursement and the amount earned in the year of the move. Where can you file state taxes for free Example. Where can you file state taxes for free You are a U. Where can you file state taxes for free S. Where can you file state taxes for free citizen employed in a foreign country. Where can you file state taxes for free You retired from employment with your employer on March 31, 2013, and returned to the United States after having been a bona fide resident of the foreign country for several years. Where can you file state taxes for free A written agreement with your employer entered into before you went abroad provided that you would be reimbursed for your move back to the United States. Where can you file state taxes for free In April 2013, your former employer reimbursed you $4,000 for the part of the cost of your move back to the United States that you were not allowed to deduct. Where can you file state taxes for free Because you were not a bona fide resident of a foreign country or countries for a period that included at least 120 days in 2013 (the year of the move), the includible reimbursement is considered pay for services performed in the foreign country for both 2013 and 2012. Where can you file state taxes for free You figure the part of the moving expense reimbursement for services performed in the foreign country for 2013 by multiplying the total includible reimbursement by a fraction. Where can you file state taxes for free The fraction is the number of days of foreign residence during the year (90) divided by the number of days in the year (365). Where can you file state taxes for free The remaining part of the includible reimbursement is for services performed in the foreign country in 2012. Where can you file state taxes for free You report the amount of the includible reimbursement in 2013, the year you received it. Where can you file state taxes for free    In this example, if you met the physical presence test for a period that included at least 120 days in 2013, the moving expense reimbursement would be considered earned entirely in the year of the move. Where can you file state taxes for free Storage expense reimbursements. Where can you file state taxes for free   If you are reimbursed for storage expenses, the reimbursement is for services you perform during the period of time for which the storage expenses are incurred. Where can you file state taxes for free U. Where can you file state taxes for free S. Where can you file state taxes for free Government Employees For purposes of the foreign earned income exclusion, the foreign housing exclusion, and the foreign housing deduction, foreign earned income does not include any amounts paid by the United States or any of its agencies to its employees. Where can you file state taxes for free This includes amounts paid from both appropriated and nonappropriated funds. Where can you file state taxes for free The following organizations (and other organizations similarly organized and operated under United States Army, Navy, or Air Force regulations) are integral parts of the Armed Forces, agencies, or instrumentalities of the United States. Where can you file state taxes for free United States Armed Forces exchanges. Where can you file state taxes for free Commissioned and noncommissioned officers' messes. Where can you file state taxes for free Armed Forces motion picture services. Where can you file state taxes for free Kindergartens on foreign Armed Forces installations. Where can you file state taxes for free Amounts paid by the United States or its agencies to persons who are not their employees may qualify for exclusion or deduction. Where can you file state taxes for free If you are a U. Where can you file state taxes for free S. Where can you file state taxes for free Government employee paid by a U. Where can you file state taxes for free S. Where can you file state taxes for free agency that assigned you to a foreign government to perform specific services for which the agency is reimbursed by the foreign government, your pay is from the U. Where can you file state taxes for free S. Where can you file state taxes for free Government and does not qualify for exclusion or deduction. Where can you file state taxes for free If you have questions about whether you are an employee or an independent contractor, get Publication 15-A, Employer's Supplemental Tax Guide. Where can you file state taxes for free American Institute in Taiwan. Where can you file state taxes for free   Amounts paid by the American Institute in Taiwan are not foreign earned income for purposes of the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction. Where can you file state taxes for free If you are an employee of the American Institute in Taiwan, allowances you receive are exempt from U. Where can you file state taxes for free S. Where can you file state taxes for free tax up to the amount that equals tax-exempt allowances received by civilian employees of the U. Where can you file state taxes for free S. Where can you file state taxes for free Government. Where can you file state taxes for free Allowances. Where can you file state taxes for free   Cost-of-living and foreign-area allowances paid under certain acts of Congress to U. Where can you file state taxes for free S. Where can you file state taxes for free civilian officers and employees stationed in Alaska and Hawaii or elsewhere outside the 48 contiguous states and the District of Columbia can be excluded from gross income. Where can you file state taxes for free Post differentials are wages that must be included in gross income, regardless of the act of Congress under which they are paid. Where can you file state taxes for free More information. Where can you file state taxes for free   Publication 516, U. Where can you file state taxes for free S. Where can you file state taxes for free Government Civilian Employees Stationed Abroad, has more information for U. Where can you file state taxes for free S. Where can you file state taxes for free Government employees abroad. Where can you file state taxes for free Exclusion of Meals and Lodging You do not include in your income the value of meals and lodging provided to you and your family by your employer at no charge if the following conditions are met. Where can you file state taxes for free The meals are furnished: On the business premises of your employer, and For the convenience of your employer. Where can you file state taxes for free The lodging is furnished: On the business premises of your employer, For the convenience of your employer, and As a condition of your employment. Where can you file state taxes for free If these conditions are met, do not include the value of the meals or lodging in your income, even if a law or your employment contract says that they are provided as compensation. Where can you file state taxes for free Amounts you do not include in income because of these rules are not foreign earned income. Where can you file state taxes for free If you receive a Form W-2, excludable amounts should not be included in the total reported in box 1 as wages. Where can you file state taxes for free Family. Where can you file state taxes for free   Your family, for this purpose, includes only your spouse and your dependents. Where can you file state taxes for free Lodging. Where can you file state taxes for free   The value of lodging includes the cost of heat, electricity, gas, water, sewer service, and similar items needed to make the lodging fit to live in. Where can you file state taxes for free Business premises of employer. Where can you file state taxes for free   Generally, the business premises of your employer is wherever you work. Where can you file state taxes for free For example, if you work as a housekeeper, meals and lodging provided in your employer's home are provided on the business premises of your employer. Where can you file state taxes for free Similarly, meals provided to cowhands while herding cattle on land leased or owned by their employer are considered provided on the premises of their employer. Where can you file state taxes for free Convenience of employer. Where can you file state taxes for free   Whether meals or lodging are provided for your employer's convenience must be determined from all the facts and circumstances. Where can you file state taxes for free Meals furnished at no charge are considered provided for your employer's convenience if there is a good business reason for providing them, other than to give you more pay. Where can you file state taxes for free   On the other hand, if your employer provides meals to you or your family as a means of giving you more pay, and there is no other business reason for providing them, their value is extra income to you because they are not furnished for the convenience of your employer. Where can you file state taxes for free Condition of employment. Where can you file state taxes for free   Lodging is provided as a condition of employment if you must accept the lodging to properly carry out the duties of your job. Where can you file state taxes for free You must accept lodging to properly carry out your duties if, for example, you must be available for duty at all times or you could not perform your duties if the lodging was not furnished. Where can you file state taxes for free Foreign camps. Where can you file state taxes for free   If the lodging is in a camp located in a foreign country, the camp is considered part of your employer's business premises. Where can you file state taxes for free The camp must be: Provided for your employer's convenience because the place where you work is in a remote area where satisfactory housing is not available to you on the open market within a reasonable commuting distance, Located as close as reasonably possible in the area where you work, and Provided in a common area or enclave that is not available to the general public for lodging or accommodations and that normally houses at least ten employees. Where can you file state taxes for free Foreign Earned Income Exclusion If your tax home is in a foreign country and you meet the bona fide residence test or the physical presence test, you can choose to exclude from your income a limited amount of your foreign earned income. Where can you file state taxes for free Foreign earned income was defined earlier in this chapter. Where can you file state taxes for free You also can choose to exclude from your income a foreign housing amount. Where can you file state taxes for free This is explained later under Foreign Housing Exclusion. Where can you file state taxes for free If you choose to exclude a foreign housing amount, you must figure the foreign housing exclusion before you figure the foreign earned income exclusion. Where can you file state taxes for free Your foreign earned income exclusion is limited to your foreign earned income minus your foreign housing exclusion. Where can you file state taxes for free If you choose to exclude foreign earned income, you cannot deduct, exclude, or claim a credit for any item that can be allocated to or charged against the excluded amounts. Where can you file state taxes for free This includes any expenses, losses, and other normally deductible items allocable to the excluded income. Where can you file state taxes for free For more information about deductions and credits, see chapter 5 . Where can you file state taxes for free Limit on Excludable Amount You may be able to exclude up to $97,600 of your foreign earned income in 2013. Where can you file state taxes for free You cannot exclude more than the smaller of: $97,600, or Your foreign earned income (discussed earlier) for the tax year minus your foreign housing exclusion (discussed later). Where can you file state taxes for free If both you and your spouse work abroad and each of you meets either the bona fide residence test or the physical presence test, you can each choose the foreign earned income exclusion. Where can you file state taxes for free You do not both need to meet the same test. Where can you file state taxes for free Together, you and your spouse can exclude as much as $195,200. Where can you file state taxes for free Paid in year following work. Where can you file state taxes for free   Generally, you are considered to have earned income in the year in which you do the work for which you receive the income, even if you work in one year but are not paid until the following year. Where can you file state taxes for free If you report your income on a cash basis, you report the income on your return for the year you receive it. Where can you file state taxes for free If you work one year, but are not paid for that work until the next year, the amount you can exclude in the year you are paid is the amount you could have excluded in the year you did the work if you had been paid in that year. Where can you file state taxes for free For an exception to this general rule, see Year-end payroll period, later. Where can you file state taxes for free Example. Where can you file state taxes for free You were a bona fide resident of Brazil for all of 2012 and 2013. Where can you file state taxes for free You report your income on the cash basis. Where can you file state taxes for free In 2012, you were paid $84,200 for work you did in Brazil during that year. Where can you file state taxes for free You excluded all of the $84,200 from your income in 2012. Where can you file state taxes for free In 2013, you were paid $117,300 for your work in Brazil. Where can you file state taxes for free $18,800 was for work you did in 2012 and $98,500 was for work you did in 2013. Where can you file state taxes for free You can exclude $10,900 of the $18,800 from your income in 2013. Where can you file state taxes for free This is the $95,100 maximum exclusion in 2012 minus the $84,200 actually excluded that year. Where can you file state taxes for free You must include the remaining $7,900 in income in 2013 because you could not have excluded that income in 2012 if you had received it that year. Where can you file state taxes for free You can exclude $97,600 of the $98,500 you were paid for work you did in 2013 from your 2013 income. Where can you file state taxes for free Your total foreign earned income exclusion for 2013 is $108,500 ($10,900 for work you did in 2012 and $97,600 for work you did in 2013). Where can you file state taxes for free You would include in your 2013 income $8,800 ($7,900 for the work you did in 2012 and $900 for the work you did in 2013). Where can you file state taxes for free Year-end payroll period. Where can you file state taxes for free   There is an exception to the general rule that income is considered earned in the year you do the work for which you receive the income. Where can you file state taxes for free If you are a cash-basis taxpayer, any salary or wage payment you receive after the end of the year in which you do the work for which you receive the pay is considered earned entirely in the year you receive it if all four of the following apply. Where can you file state taxes for free The period for which the payment is made is a normal payroll period of your employer that regularly applies to you. Where can you file state taxes for free The payroll period includes the last day of your tax year (December 31 if you figure your taxes on a calendar-year basis). Where can you file state taxes for free The payroll period is not longer than 16 days. Where can you file state taxes for free The payday comes at the same time in relation to the payroll period that it would normally come and it comes before the end of the next payroll period. Where can you file state taxes for free Example. Where can you file state taxes for free You are paid twice a month. Where can you file state taxes for free For the normal payroll period that begins on the first of the month and ends on the fifteenth of the month, you are paid on the sixteenth day of the month. Where can you file state taxes for free For the normal payroll period that begins on the sixteenth of the month and ends on the last day of the month, you are paid on the first day of the following month. Where can you file state taxes for free Because all of the above conditions are met, the pay you received on January 1, 2013, is considered earned in 2013. Where can you file state taxes for free Income earned over more than 1 year. Where can you file state taxes for free   Regardless of when you actually receive income, you must apply it to the year in which you earned it in figuring your excludable amount for that year. Where can you file state taxes for free For example, a bonus may be based on work you did over several years. Where can you file state taxes for free You determine the amount of the bonus that is considered earned in a particular year in two steps. Where can you file state taxes for free Divide the bonus by the number of calendar months in the period when you did the work that resulted in the bonus. Where can you file state taxes for free Multiply the result of (1) by the number of months you did the work during the year. Where can you file state taxes for free This is the amount that is subject to the exclusion limit for that tax year. Where can you file state taxes for free Income received more than 1 year after it was earned. Where can you file state taxes for free   You cannot exclude income you receive after the end of the year following the year you do the work to earn it. Where can you file state taxes for free Example. Where can you file state taxes for free   You were a bona fide resident of Sweden for 2011, 2012, and 2013. Where can you file state taxes for free You report your income on the cash basis. Where can you file state taxes for free In 2011, you were paid $69,000 for work you did in Sweden that year and in 2012 you were paid $74,000 for that year's work in Sweden. Where can you file state taxes for free You excluded all the income on your 2011 and 2012 returns. Where can you file state taxes for free   In 2013, you were paid $92,000; $82,000 for your work in Sweden during 2013, and $10,000 for work you did in Sweden in 2011. Where can you file state taxes for free You cannot exclude any of the $10,000 for work done in 2011 because you received it after the end of the year following the year in which you earned it. Where can you file state taxes for free You must include the $10,000 in income. Where can you file state taxes for free You can exclude all of the $82,000 received for work you did in 2013. Where can you file state taxes for free Community income. Where can you file state taxes for free   The maximum exclusion applies separately to the earnings of spouses. Where can you file state taxes for free Ignore any community property laws when you figure your limit on the foreign earned income exclusion. Where can you file state taxes for free Part-year exclusion. Where can you file state taxes for free   If the period for which you qualify for the foreign earned income exclusion includes only part of the year, you must adjust the maximum limit based on the number of qualifying days in the year. Where can you file state taxes for free The number of qualifying days is the number of days in the year within the period on which you both: Have your tax home in a foreign country, and Meet either the bona fide residence test or the physical presence test. Where can you file state taxes for free   For this purpose, you can count as qualifying days all days within a period of 12 consecutive months once you are physically present and have your tax home in a foreign country for 330 full days. Where can you file state taxes for free To figure your maximum exclusion, multiply the maximum excludable amount for the year by the number of your qualifying days in the year, and then divide the result by the number of days in the year. Where can you file state taxes for free Example. Where can you file state taxes for free You report your income on the calendar-year basis and you qualified for the foreign earned income exclusion under the bona fide residence test for 75 days in 2013. Where can you file state taxes for free You can exclude a maximum of 75/365 of $97,600, or $20,055, of your foreign earned income for 2013. Where can you file state taxes for free If you qualify under the bona fide residence test for all of 2014, you can exclude your foreign earned income up to the 2014 limit. Where can you file state taxes for free Physical presence test. Where can you file state taxes for free   Under the physical presence test, a 12-month period can be any period of 12 consecutive months that includes 330 full days. Where can you file state taxes for free If you qualify for the foreign earned income exclusion under the physical presence test for part of a year, it is important to carefully choose the 12-month period that will allow the maximum exclusion for that year. Where can you file state taxes for free Example. Where can you file state taxes for free You are physically present and have your tax home in a foreign country for a 16-month period from June 1, 2012, through September 30, 2013, except for 16 days in December 2012 when you were on vacation in the United States. Where can you file state taxes for free You figure the maximum exclusion for 2012 as follows. Where can you file state taxes for free Beginning with June 1, 2012, count forward 330 full days. Where can you file state taxes for free Do not count the 16 days you spent in the United States. Where can you file state taxes for free The 330th day, May 12, 2013, is the last day of a 12-month period. Where can you file state taxes for free Count backward 12 months from May 11, 2013, to find the first day of this 12-month period, May 12, 2012. Where can you file state taxes for free This 12-month period runs from May 12, 2012, through May 11, 2013. Where can you file state taxes for free Count the total days during 2012 that fall within this 12-month period. Where can you file state taxes for free This is 234 days (May 12, 2012 – December 31, 2012). Where can you file state taxes for free Multiply $95,100 (the maximum exclusion for 2012) by the fraction 234/366 to find your maximum exclusion for 2012 ($60,802). Where can you file state taxes for free You figure the maximum exclusion for 2013 in the opposite manner. Where can you file state taxes for free Beginning with your last full day, September 30, 2013, count backward 330 full days. Where can you file state taxes for free Do not count the 16 days you spent in the United States. Where can you file state taxes for free That day, October 20, 2012, is the first day of a 12-month period. Where can you file state taxes for free Count forward 12 months from October 20, 2012, to find the last day of this 12-month period, October 19, 2013. Where can you file state taxes for free This 12-month period runs from October 20, 2012, through October 19, 2013. Where can you file state taxes for free Count the total days during 2013 that fall within this 12-month period. Where can you file state taxes for free This is 292 days (January 1, 2013 – October 19, 2013). Where can you file state taxes for free Multiply $97,600, the maximum limit, by the fraction 292/365 to find your maximum exclusion for 2013 ($78,080). Where can you file state taxes for free Choosing the Exclusion The foreign earned income exclusion is voluntary. Where can you file state taxes for free You can choose the exclusion by completing the appropriate parts of Form 2555. Where can you file state taxes for free When You Can Choose the Exclusion Your initial choice of the exclusion on Form 2555 or Form 2555-EZ generally must be made with one of the following returns. Where can you file state taxes for free A return filed by the due date (including any extensions). Where can you file state taxes for free A return amending a timely-filed return. Where can you file state taxes for free Amended returns generally must be filed by the later of 3 years after the filing date of the original return or 2 years after the tax is paid. Where can you file state taxes for free A return filed within 1 year from the original due date of the return (determined without regard to any extensions). Where can you file state taxes for free Filing after the above periods. Where can you file state taxes for free   You can choose the exclusion on a return filed after the periods described above if you owe no federal income tax after taking into account the exclusion. Where can you file state taxes for free If you owe federal income tax after taking into account the exclusion, you can choose the exclusion on a return filed after the periods described earlier if you file before the IRS discovers that you failed to choose the exclusion. Where can you file state taxes for free Whether or not you owe federal income tax after taking the exclusion into account, if you file your return after the periods described earlier, you must type or legibly print at the top of the first page of the Form 1040 “Filed pursuant to section 1. Where can you file state taxes for free 911-7(a)(2)(i)(D). Where can you file state taxes for free ” If you owe federal income tax after taking into account the foreign earned income exclusion and the IRS discovered that you failed to choose the exclusion, you may still be able to choose the exclusion. Where can you file state taxes for free You must request a private letter ruling under Income Tax Regulation 301. Where can you file state taxes for free 9100-3 and Revenue Procedure 2013-1, 2013-1 I. Where can you file state taxes for free R. Where can you file state taxes for free B. Where can you file state taxes for free 1, available at www. Where can you file state taxes for free irs. Where can you file state taxes for free gov/irb/2013-01_IRB/ar06. Where can you file state taxes for free html. Where can you file state taxes for free Effect of Choosing the Exclusion Once you choose to exclude your foreign earned income, that choice remains in effect for that year and all later years unless you revoke it. Where can you file state taxes for free Foreign tax credit or deduction. Where can you file state taxes for free