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1040nr Instructions 2012

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1040nr Instructions 2012

1040nr instructions 2012 5. 1040nr instructions 2012   Exemptions, Deductions, and Credits Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: Items Related to Excluded Income Exemptions Contributions to Foreign Charitable Organizations Moving ExpensesAllocation of Moving Expenses Forms To File Contributions to Individual Retirement Arrangements Taxes of Foreign Countries and U. 1040nr instructions 2012 S. 1040nr instructions 2012 PossessionsCredit for Foreign Income Taxes Deduction for Foreign Income Taxes Deduction for Other Foreign Taxes How To Report Deductions Topics - This chapter discusses: The rules concerning items related to excluded income, Exemptions, Contributions to foreign charitable organizations, Moving expenses, Contributions to individual retirement arrangements (IRAs), Taxes of foreign countries and U. 1040nr instructions 2012 S. 1040nr instructions 2012 possessions, and How to report deductions. 1040nr instructions 2012 Useful Items - You may want to see: Publication 501 Exemptions, Standard Deduction, and Filing Information 514 Foreign Tax Credit for Individuals 521 Moving Expenses 523 Selling Your Home 590 Individual Retirement Arrangements (IRAs) 597 Information on the United States—Canada Income Tax Treaty Form (and Instructions) 1116 Foreign Tax Credit 2106 Employee Business Expenses 2555 Foreign Earned Income 2555-EZ Foreign Earned Income Exclusion 3903 Moving Expenses Schedule A (Form 1040) Itemized Deductions Schedule C (Form 1040) Profit or Loss From Business SS-5 Application for a Social Security Card W-7 Application for IRS Individual Taxpayer Identification Number See chapter 7 for information about getting these publications and forms. 1040nr instructions 2012 Items Related to Excluded Income U. 1040nr instructions 2012 S. 1040nr instructions 2012 citizens and resident aliens living outside the United States generally are allowed the same deductions as citizens and residents living in the United States. 1040nr instructions 2012 If you choose to exclude foreign earned income or housing amounts, you cannot deduct, exclude, or claim a credit for any item that can be allocated to or charged against the excluded amounts. 1040nr instructions 2012 This includes any expenses, losses, and other normally deductible items that are allocable to the excluded income. 1040nr instructions 2012 You can deduct only those expenses connected with earning includible income. 1040nr instructions 2012 These rules apply only to items definitely related to the excluded earned income and they do not apply to other items that are not definitely related to any particular type of gross income. 1040nr instructions 2012 These rules do not apply to items such as: Personal exemptions, Qualified retirement contributions, Alimony payments, Charitable contributions, Medical expenses, Mortgage interest, or Real estate taxes on your personal residence. 1040nr instructions 2012 For purposes of these rules, your housing deduction is not treated as allocable to your excluded income, but the deduction for self- employment tax is. 1040nr instructions 2012 If you receive foreign earned income in a tax year after the year in which you earned it, you may have to file an amended return for the earlier year to properly adjust the amounts of deductions, credits, or exclusions allocable to your foreign earned income and housing exclusions. 1040nr instructions 2012 Example. 1040nr instructions 2012 In 2012, you had $90,400 of foreign earned income and $9,500 of deductions allocable to your foreign earned income. 1040nr instructions 2012 You did not have a housing exclusion. 1040nr instructions 2012 Because you excluded all of your foreign earned income, you would not have been able to claim any of the deductions on your 2012 return. 1040nr instructions 2012 In 2013, you received a $12,000 bonus for work you did abroad in 2012. 1040nr instructions 2012 You can exclude $4,700 of the bonus because the limit on the foreign earned income exclusion for 2012 was $95,100 and you have already excluded $90,400. 1040nr instructions 2012 Since you must include $7,300 of the bonus ($12,000 − $4,700) for work you did in 2012 in income, you can file an amended return for 2012 to claim $677 of the deductions. 1040nr instructions 2012 This is the deductions allocable to the foreign earned income ($9,500) multiplied by the includible portion of the foreign earned income ($7,300) and divided by the total foreign earned income for 2012 ($102,400). 1040nr instructions 2012 Exemptions You can claim an exemption for your nonresident alien spouse on your separate return, provided your spouse has no gross income for U. 1040nr instructions 2012 S. 1040nr instructions 2012 tax purposes and is not the dependent of another U. 1040nr instructions 2012 S. 1040nr instructions 2012 taxpayer. 1040nr instructions 2012 You also can claim exemptions for individuals who qualify as your dependents. 1040nr instructions 2012 To be your dependent, the individual must be a U. 1040nr instructions 2012 S. 1040nr instructions 2012 citizen, U. 1040nr instructions 2012 S. 1040nr instructions 2012 national, U. 1040nr instructions 2012 S. 1040nr instructions 2012 resident alien, or a resident of Canada or Mexico for some part of the calendar year in which your tax year begins. 1040nr instructions 2012 Children. 1040nr instructions 2012   Children usually are citizens or residents of the same country as their parents. 1040nr instructions 2012 If you were a U. 1040nr instructions 2012 S. 1040nr instructions 2012 citizen when your child was born, your child generally is a U. 1040nr instructions 2012 S. 1040nr instructions 2012 citizen. 1040nr instructions 2012 This is true even if the child's other parent is a nonresident alien, the child was born in a foreign country, and the child lives abroad with the other parent. 1040nr instructions 2012   If you have a legally adopted child who is not a U. 1040nr instructions 2012 S. 1040nr instructions 2012 citizen, U. 1040nr instructions 2012 S. 1040nr instructions 2012 resident, or U. 1040nr instructions 2012 S. 1040nr instructions 2012 national, the child meets the citizen requirement if you are a U. 1040nr instructions 2012 S. 1040nr instructions 2012 citizen or U. 1040nr instructions 2012 S. 1040nr instructions 2012 national and the child lived with you as a member of your household all year. 1040nr instructions 2012 Social security number. 1040nr instructions 2012   You must include on your return the social security number (SSN) of each dependent for whom you claim an exemption. 1040nr instructions 2012 To get a social security number for a dependent, apply at a Social Security office or U. 1040nr instructions 2012 S. 1040nr instructions 2012 consulate. 1040nr instructions 2012 You must provide original or certified copies of documents to verify the dependent's age, identity, and citizenship, and complete Form SS-5. 1040nr instructions 2012   If you do not have an SSN for a child who was born in 2013 and died in 2013, attach a copy of the child's birth certificate to your tax return. 1040nr instructions 2012 Print “Died” in column (2) of line 6c of your Form 1040 or Form 1040A. 1040nr instructions 2012   If your dependent is a nonresident alien who is not eligible to get a social security number, you must list the dependent's individual taxpayer identification number (ITIN) instead of an SSN. 1040nr instructions 2012 To apply for an ITIN, file Form W-7 with the IRS. 1040nr instructions 2012 It usually takes 6 to 10 weeks to get an ITIN. 1040nr instructions 2012 Enter your dependent's ITIN wherever an SSN is requested on your tax return. 1040nr instructions 2012 More information. 1040nr instructions 2012   For more information about exemptions, see Publication 501. 1040nr instructions 2012 Contributions to Foreign Charitable Organizations If you make contributions directly to a foreign church or other foreign charitable organization, you generally cannot deduct them. 1040nr instructions 2012 Exceptions are explained under Canadian, Mexican, and Israeli charities, later. 1040nr instructions 2012 You can deduct contributions to a U. 1040nr instructions 2012 S. 1040nr instructions 2012 organization that transfers funds to a charitable foreign organization if the U. 1040nr instructions 2012 S. 1040nr instructions 2012 organization controls the use of the funds by the foreign organization or if the foreign organization is just an administrative arm of the U. 1040nr instructions 2012 S. 1040nr instructions 2012 organization. 1040nr instructions 2012 Canadian, Mexican, and Israeli charities. 1040nr instructions 2012   Under the income tax treaties with Canada, Mexico and Israel, you may be able to deduct contributions to certain Canadian, Mexican, and Israeli charitable organizations. 1040nr instructions 2012 Generally, you must have income from sources in Canada, Mexico, or Israel, and the organization must meet certain requirements. 1040nr instructions 2012 See Publication 597, Information on the United States-Canada Income Tax Treaty, and Publication 526, Charitable Contributions, for more information. 1040nr instructions 2012 Moving Expenses If you moved to a new home in 2013 because of your job or business, you may be able to deduct the expenses of your move. 1040nr instructions 2012 Generally, to be deductible, the moving expenses must have been paid or incurred in connection with starting work at a new job location. 1040nr instructions 2012 See Publication 521 for a complete discussion of the deduction for moving expenses and information about moves within the United States. 1040nr instructions 2012 Foreign moves. 1040nr instructions 2012   A foreign move is a move in connection with the start of work at a new job location outside the United States and its possessions. 1040nr instructions 2012 A foreign move does not include a move back to the United States or its possessions. 1040nr instructions 2012 Allocation of Moving Expenses When your new place of work is in a foreign country, your moving expenses are directly connected with the income earned in that foreign country. 1040nr instructions 2012 If you exclude all or part of the income that you earn at the new location under the foreign earned income exclusion or the foreign housing exclusion, you cannot deduct the part of your moving expense that is allocable to the excluded income. 1040nr instructions 2012 Also, you cannot deduct the part of the moving expense related to the excluded income for a move from a foreign country to the United States if you receive a reimbursement that you are able to treat as compensation for services performed in the foreign country. 1040nr instructions 2012 Year to which expense is connected. 1040nr instructions 2012   The moving expense is connected with earning the income (including reimbursements, as discussed in chapter 4 under Reimbursement of moving expenses ) either entirely in the year of the move or in 2 years. 1040nr instructions 2012 It is connected with earning the income entirely in the year of the move if you qualify for the foreign earned income exclusion under the bona fide residence test or physical presence test for at least 120 days during that tax year. 1040nr instructions 2012   If you do not qualify under either the bona fide residence test or the physical presence test for at least 120 days during the year of the move, the expense is connected with earning the income in 2 years. 1040nr instructions 2012 The moving expense is connected with the year of the move and the following year if the move is from the United States to a foreign country. 1040nr instructions 2012 The moving expense is connected with the year of the move and the preceding year if the move is from a foreign country to the United States. 1040nr instructions 2012 Amount allocable to excluded income. 1040nr instructions 2012   To figure the amount of your moving expense that is allocable to your excluded foreign earned income (and not deductible), you must multiply your total moving expense deduction by a fraction. 1040nr instructions 2012 The numerator (top number) of the fraction is the total of your excluded foreign earned income and housing amounts for both years and the denominator (bottom number) of the fraction is your total foreign earned income for both years. 1040nr instructions 2012 Example. 1040nr instructions 2012 On November 1, 2012, you transfer to Monaco. 1040nr instructions 2012 Your tax home is in Monaco, and you are a bona fide resident of Monaco for the entire tax year 2013. 1040nr instructions 2012 In 2012, you paid $6,000 for allowable moving expenses for your move from the United States to Monaco. 1040nr instructions 2012 You were fully reimbursed (under a nonaccountable plan) for these expenses in the same year. 1040nr instructions 2012 The reimbursement is included in your income. 1040nr instructions 2012 Your only other income consists of $16,000 wages earned in 2012 after the date of your move, and $100,100 wages earned in Monaco for 2013. 1040nr instructions 2012 Because you did not meet the bona fide residence test for at least 120 days during 2012, the year of the move, the moving expenses are for services you performed in both 2012 and the following year, 2013. 1040nr instructions 2012 Your total foreign earned income for both years is $122,100, consisting of $16,000 wages for 2012, $100,100 wages for 2013, and $6,000 moving expense reimbursement for both years. 1040nr instructions 2012 You have no housing exclusion. 1040nr instructions 2012 The total amount you can exclude is $113,190, consisting of the $97,600 full-year exclusion for 2013 and a $15,590 part-year exclusion for 2012 ($95,100 times the fraction of 60 qualifying bona fide residence days over 366 total days in the year). 1040nr instructions 2012 To find the part of your moving expenses that is not deductible, multiply your $6,000 total expenses by the fraction $113,190 over $122,100. 1040nr instructions 2012 The result, $5,562, is your nondeductible amount. 1040nr instructions 2012    You must report the full amount of the moving expense reimbursement in the year in which you received the reimbursement. 1040nr instructions 2012 In the preceding example, this year was 2012. 1040nr instructions 2012 You attribute the reimbursement to both 2012 and 2013 only to figure the amount of foreign earned income eligible for exclusion for each year. 1040nr instructions 2012 Move between foreign countries. 1040nr instructions 2012   If you move between foreign countries, your moving expense is allocable to income earned in the year of the move if you qualified under either the bona fide residence test or the physical presence test for a period that includes at least 120 days in the year of the move. 1040nr instructions 2012 New place of work in U. 1040nr instructions 2012 S. 1040nr instructions 2012   If your new place of work is in the United States, the deductible moving expenses are directly connected with the income earned in the United States. 1040nr instructions 2012 If you treat a reimbursement from your employer as foreign earned income (see the discussion in chapter 4), you must allocate deductible moving expenses to foreign earned income. 1040nr instructions 2012 Storage expenses. 1040nr instructions 2012   These expenses are attributable to work you do during the year in which you incur the storage expenses. 1040nr instructions 2012 You cannot deduct the amount allocable to excluded income. 1040nr instructions 2012 Moving Expense Attributable to Foreign Earnings in 2 Years If your moving expense deduction is attributable to your foreign earnings in 2 years (the year of the move and the following year), you should request an extension of time to file your return for the year of the move until after the end of the second year. 1040nr instructions 2012 By then, you should have all the information needed to properly figure the moving expense deduction. 1040nr instructions 2012 See Extensions under When To File and Pay in chapter 1. 1040nr instructions 2012 If you do not request an extension, you should figure the part of the moving expense that you cannot deduct because it is allocable to the foreign earned income you are excluding. 1040nr instructions 2012 You do this by multiplying the moving expense by a fraction, the numerator (top number) of which is your excluded foreign earned income for the year of the move, and the denominator (bottom number) of which is your total foreign earned income for the year of the move. 1040nr instructions 2012 Once you know your foreign earnings and exclusion for the following year, you must either: Adjust the moving expense deduction by filing an amended return for the year of the move, or Recapture any additional unallowable amount as income on your return for the following year. 1040nr instructions 2012 If, after you make the final computation, you have an additional amount of allowable moving expense deduction, you can claim this only on an amended return for the year of the move. 1040nr instructions 2012 You cannot claim it on the return for the second year. 1040nr instructions 2012 Forms To File Report your moving expenses on Form 3903. 1040nr instructions 2012 Report your moving expense deduction on line 26 of Form 1040. 1040nr instructions 2012 If you must reduce your moving expenses by the amount allocable to excluded income (as explained later under How To Report Deductions ), attach a statement to your return showing how you figured this amount. 1040nr instructions 2012 For more information about figuring moving expenses, see Publication 521. 1040nr instructions 2012 Contributions to Individual Retirement Arrangements Contributions to your individual retirement arrangements (IRAs) that are traditional IRAs or Roth IRAs are generally limited to the lesser of $5,500 ($6,500 if 50 or older) or your compensation that is includible in your gross income for the tax year. 1040nr instructions 2012 In determining compensation for this purpose, do not take into account amounts you exclude under either the foreign earned income exclusion or the foreign housing exclusion. 1040nr instructions 2012 Do not reduce your compensation by the foreign housing deduction. 1040nr instructions 2012 If you are covered by an employer retirement plan at work, your deduction for your contributions to your traditional IRAs is generally limited based on your modified adjusted gross income. 1040nr instructions 2012 This is your adjusted gross income figured without taking into account the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction. 1040nr instructions 2012 Other modifications are also required. 1040nr instructions 2012 For more information on IRAs, see Publication 590. 1040nr instructions 2012 Taxes of Foreign Countries and U. 1040nr instructions 2012 S. 1040nr instructions 2012 Possessions You can take either a credit or a deduction for income taxes paid to a foreign country or a U. 1040nr instructions 2012 S. 1040nr instructions 2012 possession. 1040nr instructions 2012 Taken as a deduction, foreign income taxes reduce your taxable income. 1040nr instructions 2012 Taken as a credit, foreign income taxes reduce your tax liability. 1040nr instructions 2012 You must treat all foreign income taxes the same way. 1040nr instructions 2012 If you take a credit for any foreign income taxes, you cannot deduct any foreign income taxes. 1040nr instructions 2012 However, you may be able to deduct other foreign taxes. 1040nr instructions 2012 See Deduction for Other Foreign Taxes, later. 1040nr instructions 2012 There is no rule to determine whether it is to your advantage to take a deduction or a credit for foreign income taxes. 1040nr instructions 2012 In most cases, it is to your advantage to take foreign income taxes as a tax credit, which you subtract directly from your U. 1040nr instructions 2012 S. 1040nr instructions 2012 tax liability, rather than as a deduction in figuring taxable income. 1040nr instructions 2012 However, if foreign income taxes were imposed at a high rate and the proportion of foreign income to U. 1040nr instructions 2012 S. 1040nr instructions 2012 income is small, a lower final tax may result from deducting the foreign income taxes. 1040nr instructions 2012 In any event, you should figure your tax liability both ways and then use the one that is better for you. 1040nr instructions 2012 You can make or change your choice within 10 years from the due date for filing the tax return on which you are entitled to take either the deduction or the credit. 1040nr instructions 2012 Foreign income taxes. 1040nr instructions 2012   These are generally income taxes you pay to any foreign country or possession of the United States. 1040nr instructions 2012 Foreign income taxes on U. 1040nr instructions 2012 S. 1040nr instructions 2012 return. 1040nr instructions 2012   Foreign income taxes can only be taken as a credit on Form 1040, line 47, or as an itemized deduction on Schedule A. 1040nr instructions 2012 These amounts cannot be included as withheld income taxes on Form 1040, line 62. 1040nr instructions 2012 Foreign taxes paid on excluded income. 1040nr instructions 2012   You cannot take a credit or deduction for foreign income taxes paid on earnings you exclude from tax under any of the following. 1040nr instructions 2012 Foreign earned income exclusion. 1040nr instructions 2012 Foreign housing exclusion. 1040nr instructions 2012 Possession exclusion. 1040nr instructions 2012 If your wages are completely excluded, you cannot deduct or take a credit for any of the foreign taxes paid on your wages. 1040nr instructions 2012   If only part of your wages is excluded, you cannot deduct or take a credit for the foreign income taxes allocable to the excluded part. 1040nr instructions 2012 You find the taxes allocable to your excluded wages by applying a fraction to the foreign taxes paid on foreign earned income received during the tax year. 1040nr instructions 2012 The numerator (top number) of the fraction is your excluded foreign earned income received during the tax year minus deductible expenses allocable to that income (not including the foreign housing deduction). 1040nr instructions 2012 The denominator (bottom number) of the fraction is your total foreign earned income received during the tax year minus all deductible expenses allocable to that income (including the foreign housing deduction). 1040nr instructions 2012   If foreign law taxes both earned income and some other type of income and the taxes on the other type cannot be separated, the denominator of the fraction is the total amount of income subject to foreign tax minus deductible expenses allocable to that income. 1040nr instructions 2012    If you take a foreign tax credit for tax on income you could have excluded under your choice to exclude foreign earned income or your choice to exclude foreign housing costs, one or both of the choices may be considered revoked. 1040nr instructions 2012 Credit for Foreign Income Taxes If you take the foreign tax credit, you may have to file Form 1116 with Form 1040. 1040nr instructions 2012 Form 1116 is used to figure the amount of foreign tax paid or accrued that can be claimed as a foreign tax credit. 1040nr instructions 2012 Do not include the amount of foreign tax paid or accrued as withheld federal income taxes on Form 1040, line 62. 1040nr instructions 2012 The foreign income tax for which you can claim a credit is the amount of legal and actual tax liability you pay or accrue during the year. 1040nr instructions 2012 The amount for which you can claim a credit is not necessarily the amount withheld by the foreign country. 1040nr instructions 2012 You cannot take a foreign tax credit for income tax you paid to a foreign country that would be refunded by the foreign country if you made a claim for refund. 1040nr instructions 2012 Subsidies. 1040nr instructions 2012   If a foreign country returns your foreign tax payments to you in the form of a subsidy, you cannot claim a foreign tax credit based on these payments. 1040nr instructions 2012 This rule applies to a subsidy provided by any means that is determined, directly or indirectly, by reference to the amount of tax, or to the base used to figure the tax. 1040nr instructions 2012   Some ways of providing a subsidy are refunds, credits, deductions, payments, or discharges of obligations. 1040nr instructions 2012 A credit is also not allowed if the subsidy is given to a person related to you, or persons who participated in a transaction or a related transaction with you. 1040nr instructions 2012 Limit The foreign tax credit is limited to the part of your total U. 1040nr instructions 2012 S. 1040nr instructions 2012 tax that is in proportion to your taxable income from sources outside the United States compared to your total taxable income. 1040nr instructions 2012 The allowable foreign tax credit cannot be more than your actual foreign tax liability. 1040nr instructions 2012 Exemption from limit. 1040nr instructions 2012   You will not be subject to this limit and will not have to file Form 1116 if you meet all three of the following requirements. 1040nr instructions 2012 Your only foreign source income for the year is passive income (dividends, interest, royalties, etc. 1040nr instructions 2012 ) that is reported to you on a payee statement (such as a Form 1099-DIV or 1099-INT). 1040nr instructions 2012 Your foreign taxes for the year that qualify for the credit are not more than $300 ($600 if you are filing a joint return) and are reported on a payee statement. 1040nr instructions 2012 You elect this procedure. 1040nr instructions 2012 If you make this election, you cannot carry back or carry over any unused foreign tax to or from this year. 1040nr instructions 2012 Separate limit. 1040nr instructions 2012   You must figure the limit on a separate basis with regard to “passive category income” and “general category income” (see the instructions for Form 1116). 1040nr instructions 2012 Figuring the limit. 1040nr instructions 2012   In figuring taxable income in each category, you take into account only the amount that you must include in income on your federal tax return. 1040nr instructions 2012 Do not take any excluded amount into account. 1040nr instructions 2012   To determine your taxable income in each category, deduct expenses and losses that are definitely related to that income. 1040nr instructions 2012   Other expenses (such as itemized deductions or the standard deduction) not definitely related to specific items of income must be apportioned to the foreign income in each category by multiplying them by a fraction. 1040nr instructions 2012 The numerator (top number) of the fraction is your gross foreign income in the separate limit category. 1040nr instructions 2012 The denominator (bottom number) of the fraction is your gross income from all sources. 1040nr instructions 2012 For this purpose, gross income includes income that is excluded under the foreign earned income provisions but does not include any other exempt income. 1040nr instructions 2012 You must use special rules for deducting interest expenses. 1040nr instructions 2012 For more information on allocating and apportioning your deductions, see Publication 514. 1040nr instructions 2012 Exemptions. 1040nr instructions 2012   Do not take the deduction for exemptions for yourself, your spouse, or your dependents in figuring taxable income for purposes of the limit. 1040nr instructions 2012 Recapture of foreign losses. 1040nr instructions 2012   If you have an overall foreign loss and the loss reduces your U. 1040nr instructions 2012 S. 1040nr instructions 2012 source income (resulting in a reduction of your U. 1040nr instructions 2012 S. 1040nr instructions 2012 tax liability), you must recapture the loss in later years when you have taxable income from foreign sources. 1040nr instructions 2012 This is done by treating a part of your taxable income from foreign sources in later years as U. 1040nr instructions 2012 S. 1040nr instructions 2012 source income. 1040nr instructions 2012 This reduces the numerator of the limiting fraction and the resulting foreign tax credit limit. 1040nr instructions 2012 Recapture of domestic losses. 1040nr instructions 2012   If you have an overall domestic loss (resulting in no U. 1040nr instructions 2012 S. 1040nr instructions 2012 tax liability), you cannot claim a foreign tax credit for taxes paid during that year. 1040nr instructions 2012 You must recapture the loss in later years when you have U. 1040nr instructions 2012 S. 1040nr instructions 2012 source taxable income. 1040nr instructions 2012 This is done by treating a part of your taxable income from U. 1040nr instructions 2012 S. 1040nr instructions 2012 sources in later years as foreign source income. 1040nr instructions 2012 This increases the numerator of the limiting fraction and the resulting foreign tax credit limit. 1040nr instructions 2012 Foreign tax credit carryback and carryover. 1040nr instructions 2012   The amount of foreign income tax not allowed as a credit because of the limit can be carried back 1 year and carried forward 10 years. 1040nr instructions 2012   More information on figuring the foreign tax credit can be found in Publication 514. 1040nr instructions 2012 Deduction for Foreign Income Taxes Instead of taking the foreign tax credit, you can deduct foreign income taxes as an itemized deduction on Schedule A (Form 1040). 1040nr instructions 2012 You can deduct only foreign income taxes paid on income that is subject to U. 1040nr instructions 2012 S. 1040nr instructions 2012 tax. 1040nr instructions 2012 You cannot deduct foreign taxes paid on earnings you exclude from tax under any of the following. 1040nr instructions 2012 Foreign earned income exclusion. 1040nr instructions 2012 Foreign housing exclusion. 1040nr instructions 2012 Possession exclusion. 1040nr instructions 2012 Example. 1040nr instructions 2012 You are a U. 1040nr instructions 2012 S. 1040nr instructions 2012 citizen and qualify to exclude your foreign earned income. 1040nr instructions 2012 Your excluded wages in Country X are $70,000 on which you paid income tax of $10,000. 1040nr instructions 2012 You received dividends from Country X of $2,000 on which you paid income tax of $600. 1040nr instructions 2012 You can deduct the $600 tax payment because the dividends relating to it are subject to U. 1040nr instructions 2012 S. 1040nr instructions 2012 tax. 1040nr instructions 2012 Because you exclude your wages, you cannot deduct the income tax of $10,000. 1040nr instructions 2012 If you exclude only a part of your wages, see the earlier discussion under Foreign taxes paid on excluded income. 1040nr instructions 2012 Deduction for Other Foreign Taxes You can deduct real property taxes you pay that are imposed on you by a foreign country. 1040nr instructions 2012 You take this deduction on Schedule A (Form 1040). 1040nr instructions 2012 You cannot deduct other foreign taxes, such as personal property taxes, unless you incurred the expenses in a trade or business or in the production of income. 1040nr instructions 2012 On the other hand, you generally can deduct personal property taxes when you pay them to U. 1040nr instructions 2012 S. 1040nr instructions 2012 possessions. 1040nr instructions 2012 But if you claim the possession exclusion, see Publication 570. 1040nr instructions 2012 The deduction for foreign taxes other than foreign income taxes is not related to the foreign tax credit. 1040nr instructions 2012 You can take deductions for these miscellaneous foreign taxes and also claim the foreign tax credit for income taxes imposed by a foreign country. 1040nr instructions 2012 How To Report Deductions If you exclude foreign earned income or housing amounts, how you show your deductions on your tax return and how you figure the amount allocable to your excluded income depends on whether the expenses are used in figuring adjusted gross income (Form 1040, line 38) or are itemized deductions. 1040nr instructions 2012 If you have deductions used in figuring adjusted gross income, enter the total amount for each of these items on the appropriate lines and schedules of Form 1040. 1040nr instructions 2012 Generally, you figure the amount of a deduction related to the excluded income by multiplying the deduction by a fraction, the numerator of which is your foreign earned income exclusion and the denominator of which is your foreign earned income. 1040nr instructions 2012 Enter the amount of the deduction(s) related to excluded income on line 44 of Form 2555. 1040nr instructions 2012 If you have itemized deductions related to excluded income, enter on Schedule A (Form 1040) only the part not related to excluded income. 1040nr instructions 2012 You figure that amount by subtracting from the total deduction the amount related to excluded income. 1040nr instructions 2012 Generally, you figure the amount that is related to the excluded income by multiplying the total deduction by a fraction, the numerator of which is your foreign earned income exclusion and the denominator of which is your foreign earned income. 1040nr instructions 2012 Attach a statement to your return showing how you figured the deductible amount. 1040nr instructions 2012 Example 1. 1040nr instructions 2012 You are a U. 1040nr instructions 2012 S. 1040nr instructions 2012 citizen employed as an accountant. 1040nr instructions 2012 Your tax home is in Germany for the entire tax year. 1040nr instructions 2012 You meet the physical presence test. 1040nr instructions 2012 Your foreign earned income for the year was $122,000 and your investment income was $10,380. 1040nr instructions 2012 After excluding $97,600, your AGI is $34,780. 1040nr instructions 2012 You had unreimbursed business expenses of $2,500 for travel and entertainment in earning your foreign income, of which $500 was for meals and entertainment. 1040nr instructions 2012 These expenses are deductible only as miscellaneous deductions on Schedule A (Form 1040). 1040nr instructions 2012 You also have $500 of miscellaneous expenses that are not related to your foreign income that you enter on line 23 of Schedule A. 1040nr instructions 2012 You must fill out Form 2106. 1040nr instructions 2012 On that form, reduce your deductible meal and entertainment expenses by 50% ($250). 1040nr instructions 2012 You must reduce the remaining $2,250 of travel and entertainment expenses by 80% ($1,800) because you excluded 80% ($97,600/$122,000) of your foreign earned income. 1040nr instructions 2012 You carry the remaining total of $450 to line 21 of Schedule A. 1040nr instructions 2012 Add the $450 to the $500 that you have on line 23 and enter the total ($950) on line 24. 1040nr instructions 2012 On line 26 of Schedule A, enter $696, which is 2% of your adjusted gross income of $34,780 (line 38, Form 1040) and subtract it from the amount on line 24. 1040nr instructions 2012 Enter $254 on line 27 of Schedule A. 1040nr instructions 2012 Example 2. 1040nr instructions 2012 You are a U. 1040nr instructions 2012 S. 1040nr instructions 2012 citizen, have a tax home in Spain, and meet the physical presence test. 1040nr instructions 2012 You are self-employed and personal services produce the business income. 1040nr instructions 2012 Your gross income was $116,931, business expenses $66,895, and net income (profit) $50,036. 1040nr instructions 2012 You choose the foreign earned income exclusion and exclude $97,600 of your gross income. 1040nr instructions 2012 Since your excluded income is 83. 1040nr instructions 2012 47% of your total income, 83. 1040nr instructions 2012 47% of your business expenses are not deductible. 1040nr instructions 2012 Report your total income and expenses on Schedule C (Form 1040). 1040nr instructions 2012 On Form 2555 you will show the following: Line 20a, $116,931, gross income, Lines 42 and 43, $97,600, foreign earned income exclusion, and Line 44, $55,837 (83. 1040nr instructions 2012 47% × $66,895) business expenses attributable to the exclusion. 1040nr instructions 2012 In this situation (Example 2), you cannot use Form 2555-EZ since you had self-employment income and business expenses. 1040nr instructions 2012 Example 3. 1040nr instructions 2012 Assume in Example 2 that both capital and personal services combine to produce the business income. 1040nr instructions 2012 No more than 30% of your net income, or $15,011, assuming that this amount is a reasonable allowance for your services, is considered earned and can be excluded. 1040nr instructions 2012 Your exclusion of $15,011 is 12. 1040nr instructions 2012 84% of your gross income ($15,011 ÷ $116,931). 1040nr instructions 2012 Because you excluded 12. 1040nr instructions 2012 84% of your total income, $8,589 (. 1040nr instructions 2012 1284 x $66,895) of your business expenses is attributable to the excluded income and is not deductible. 1040nr instructions 2012 Example 4. 1040nr instructions 2012 You are a U. 1040nr instructions 2012 S. 1040nr instructions 2012 citizen, have a tax home in Brazil, and meet the physical presence test. 1040nr instructions 2012 You are self-employed and both capital and personal services combine to produce business income. 1040nr instructions 2012 Your gross income was $146,000, business expenses were $172,000, and your net loss was $26,000. 1040nr instructions 2012 A reasonable allowance for the services you performed for the business is $77,000. 1040nr instructions 2012 Because you incurred a net loss, the earned income limit of 30% of your net profit does not apply. 1040nr instructions 2012 The $77,000 is foreign earned income. 1040nr instructions 2012 If you choose to exclude the $77,000, you exclude 52. 1040nr instructions 2012 74% of your gross income ($77,000 ÷ $146,000), and 52. 1040nr instructions 2012 74% of your business expenses ($90,713) is attributable to that income and is not deductible. 1040nr instructions 2012 Show your total income and expenses on Schedule C (Form 1040). 1040nr instructions 2012 On Form 2555, exclude $77,000 and show $90,713 on line 44. 1040nr instructions 2012 Subtract line 44 from line 43, and enter the difference as a negative (in parentheses) on line 45. 1040nr instructions 2012 Because this amount is negative, enter it as a positive (no parentheses) on line 21, Form 1040, and combine it with your other income to arrive at total income on line 22 of Form 1040. 1040nr instructions 2012 In this situation (Example 4), you would probably not want to choose the foreign earned income exclusion if this was the first year you were eligible. 1040nr instructions 2012 If you had chosen the exclusion in an earlier year, you might want to revoke the choice for this year. 1040nr instructions 2012 To do so would mean that you could not claim the exclusion again for the next 5 tax years without IRS approval. 1040nr instructions 2012 See Choosing the Exclusion in chapter 4. 1040nr instructions 2012 Example 5. 1040nr instructions 2012 You are a U. 1040nr instructions 2012 S. 1040nr instructions 2012 citizen, have a tax home in Panama, and meet the bona fide residence test. 1040nr instructions 2012 You have been performing services for clients as a partner in a firm that provides services exclusively in Panama. 1040nr instructions 2012 Capital investment is not material in producing the partnership's income. 1040nr instructions 2012 Under the terms of the partnership agreement, you are to receive 50% of the net profits. 1040nr instructions 2012 The partnership received gross income of $244,000 and incurred operating expenses of $98,250. 1040nr instructions 2012 Of the net profits of $145,750, you received $72,875 as your distributive share. 1040nr instructions 2012 You choose to exclude $97,600 of your share of the gross income. 1040nr instructions 2012 Because you exclude 80% ($97,600 ÷ $122,000) of your share of the gross income, you cannot deduct $39,300, 80% of your share of the operating expenses (. 1040nr instructions 2012 80 × $49,125). 1040nr instructions 2012 Report $72,875, your distributive share of the partnership net profit, on Schedule E (Form 1040), Supplemental Income and Loss. 1040nr instructions 2012 On Form 2555, show $97,600 on line 42 and show $39,300 on line 44. 1040nr instructions 2012 Your exclusion on Form 2555 is $58,300. 1040nr instructions 2012 In this situation (Example 5), you cannot use Form 2555-EZ since you had earned income other than salaries and wages and you had business expenses. 1040nr instructions 2012 Prev  Up  Next   Home   More Online Publications
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Should I itemize?

You should itemize deductions if your total deductions are more than the standard deduction amount. Also, if your standard deduction is zero, you should itemize any deductions you have if:

  • You are married and filing a separate return, and your spouse itemizes deductions,
  • You are filing a tax return for a short tax year because of a change in your annual accounting period, or
  • You are a nonresident or dual-status alien during the year. You are considered a dual-status alien if you were both a nonresident and resident alien during the year.

NOTE: If you are a nonresident alien who is married to a U.S. citizen or resident at the end of the year, you can choose to be treated as a U.S. resident. (See Publication 519, U.S. Tax Guide for Aliens.) If you make this choice, you can take the standard deduction.

When to itemize

You may benefit from itemizing your deductions on Schedule A (Form 1040) if you:

  • Do not qualify for the standard deduction, or the amount you can claim is limited,
  • Had large uninsured medical and dental expenses during the year,
  • Paid interest and taxes on your home,
  • Had large unreimbursed employee business expenses or other miscellaneous deductions,
  • Had large uninsured casualty or theft losses,
  • Made large contributions to qualified charities, or
  • Have total itemized deductions that are more than the standard deduction to which you otherwise are entitled.

Helpful Publications

Tax Tips

Page Last Reviewed or Updated: 12-Nov-2013

The 1040nr Instructions 2012

1040nr instructions 2012 Publication 3920 - Main Contents Table of Contents Tax ForgivenessYears Eligible for Tax Forgiveness Amount of Tax Forgiven Refund of Taxes Paid How To Claim Tax Forgiveness Payments to SurvivorsSeptember 11th Victim Compensation Fund of 2001 Qualified Disaster Relief Payments Disability Payments Death Benefits Canceled Debt Payments to Survivors of Public Safety Officers Postponed Tax DeadlinesCovered area. 1040nr instructions 2012 Disaster Area Losses Estate Tax Reduction Structured Settlement Factoring Transactions Illustrated Worksheets B and C Additional Worksheets How To Get Tax Help Tax Forgiveness The IRS will forgive the federal income tax liabilities of decedents who died as a result of the Oklahoma City attack, September 11 attacks, and anthrax attacks. 1040nr instructions 2012 Income tax is forgiven for these decedents whether they were killed in an attack or in rescue or recovery operations. 1040nr instructions 2012 Any forgiven tax liability owed to the IRS will not have to be paid. 1040nr instructions 2012 Any forgiven tax liability that has already been paid will be refunded. 1040nr instructions 2012 (See Refund of Taxes Paid, later. 1040nr instructions 2012 ) To determine the amount of tax to be forgiven, read Years Eligible for Tax Forgiveness first. 1040nr instructions 2012 Then read Amount of Tax Forgiven. 1040nr instructions 2012 Decedents whose total forgiven tax liability for all eligible years is less than $10,000 are entitled to $10,000 minimum relief. 1040nr instructions 2012 Even decedents who were not required to file tax returns for the eligible tax years are entitled to $10,000 minimum relief. 1040nr instructions 2012 See Minimum Amount of Relief later under Amount of Tax Forgiven. 1040nr instructions 2012 Years Eligible for Tax Forgiveness The following paragraphs explain which years are eligible for tax forgiveness. 1040nr instructions 2012 Oklahoma City attack. 1040nr instructions 2012   For those who died from this attack, income tax is forgiven for 1994 and all later years up to and including the year of death. 1040nr instructions 2012 Example 1. 1040nr instructions 2012 A man was killed in the bombing of the federal building in Oklahoma City on April 19, 1995. 1040nr instructions 2012 His income tax is forgiven for 1994 and 1995. 1040nr instructions 2012 Example 2. 1040nr instructions 2012 A woman was wounded while walking outside the federal building in Oklahoma City on April 19, 1995. 1040nr instructions 2012 She subsequently died of her wounds in 1996. 1040nr instructions 2012 Her income tax is forgiven for 1994, 1995, and 1996. 1040nr instructions 2012 September 11 attacks and anthrax attacks. 1040nr instructions 2012   For those who die from these attacks, income tax is forgiven for 2000 and all later years up to and including the year of death. 1040nr instructions 2012 Example 1. 1040nr instructions 2012 A Pentagon employee died in the September 11 attack. 1040nr instructions 2012 Her income tax is forgiven for 2000 and 2001. 1040nr instructions 2012 Example 2. 1040nr instructions 2012 A visitor to the World Trade Center died in 2002 of wounds he sustained in the September 11 attack. 1040nr instructions 2012 His income tax liability is forgiven for 2000, 2001, and 2002. 1040nr instructions 2012 Amount of Tax Forgiven The IRS will forgive the decedent's income tax liability for all years eligible for tax forgiveness. 1040nr instructions 2012 On a joint return, only the decedent's part of the joint income tax liability is eligible for forgiveness. 1040nr instructions 2012 To figure the tax to be forgiven, use the following worksheets. 1040nr instructions 2012 Use Worksheet A for any eligible year the decedent filed a return as single, married filing separately, head of household, or qualifying widow(er). 1040nr instructions 2012 Use Worksheet B for any eligible year the decedent filed a joint return. 1040nr instructions 2012 See the illustrated Worksheet B near the end of this publication. 1040nr instructions 2012 Do not complete Worksheet A or B if the decedent was not required to file tax returns for the eligible tax years. 1040nr instructions 2012 Instead, complete Worksheet C and file a return for the decedent's last tax year. 1040nr instructions 2012 See Minimum Amount of Relief, later. 1040nr instructions 2012 If you need assistance, call the IRS at 1–866–562–5227 Monday through Friday during the following times. 1040nr instructions 2012 In English–7 a. 1040nr instructions 2012 m. 1040nr instructions 2012 to 10 p. 1040nr instructions 2012 m. 1040nr instructions 2012 local time. 1040nr instructions 2012 In Spanish–8 a. 1040nr instructions 2012 m. 1040nr instructions 2012 to 9:30 p. 1040nr instructions 2012 m. 1040nr instructions 2012 local time. 1040nr instructions 2012 Both spouses died. 1040nr instructions 2012   If both spouses died as a result of a terrorist attack and they filed a joint return for an eligible tax year, fill out Worksheet B for each spouse for that year. 1040nr instructions 2012 Do this to determine if each spouse qualifies for the minimum relief of $10,000 (discussed later under Minimum Amount of Relief). 1040nr instructions 2012 If you are certain that neither spouse's total forgiven tax liability for all eligible years is less than $10,000, skip Worksheet B. 1040nr instructions 2012 However, attach a computation of the forgiven tax liability to the final income tax return or amended tax return for each eligible year. 1040nr instructions 2012 The forgiven tax liability is the total tax shown on the joint return minus the taxes listed in the instructions for line 4 of Worksheet B. 1040nr instructions 2012 Residents of community property states. 1040nr instructions 2012   If the decedent was domiciled in a community property state and the spouse reported half the community income on a separate return, the surviving spouse can get a refund of taxes paid on his or her share of the decedent's income for the eligible years. 1040nr instructions 2012 Also, all of the decedent's income taxes paid for the eligible years will be refunded to either the executor or administrator of the estate, or to the surviving spouse if there is no legal representative. 1040nr instructions 2012 Worksheet B. 1040nr instructions 2012 Figuring the Tax To Be Forgiven (For Decedents Who Filed a Joint Return)       (A) First Eligible Year (1994 or 2000) (B) Second Eligible Year (1995 or 2001) (C) Third Eligible Year (1996 or 2002) 1 Enter the years eligible for forgiveness. 1040nr instructions 2012 1       2 Enter the decedent's taxable income. 1040nr instructions 2012 Figure taxable income as if a separate return had been filed. 1040nr instructions 2012 See the instructions. 1040nr instructions 2012 2       3 Enter the decedent's total tax. 1040nr instructions 2012 See the instructions. 1040nr instructions 2012 3       4 Enter the total, if any, of the decedent's taxes not eligible for forgiveness. 1040nr instructions 2012 See the instructions. 1040nr instructions 2012 4       5 Subtract line 4 from line 3. 1040nr instructions 2012 5       6 Enter the surviving spouse's taxable income. 1040nr instructions 2012 Figure taxable income as if a separate return had been filed. 1040nr instructions 2012 See the instructions. 1040nr instructions 2012 6       7 Enter the surviving spouse's total tax. 1040nr instructions 2012 See the instructions. 1040nr instructions 2012 7       8 Enter the total, if any, of the surviving spouse's taxes listed in the instructions for line 4. 1040nr instructions 2012 8       9 Subtract line 8 from line 7. 1040nr instructions 2012 9       10 Add lines 5 and 9. 1040nr instructions 2012 10       11 Enter the total tax from the joint return. 1040nr instructions 2012 See Table 1 on page 5 for the line number for years before 2002. 1040nr instructions 2012 11       12 Add lines 4 and 8. 1040nr instructions 2012 12       13 Subtract line 12 from line 11. 1040nr instructions 2012 13       14 Divide line 5 by line 10. 1040nr instructions 2012 Enter the result as a decimal. 1040nr instructions 2012 14       15 Tax to be forgiven. 1040nr instructions 2012 Multiply line 13 by line 14 and enter the result. 1040nr instructions 2012 15       Note. 1040nr instructions 2012 If the total of columns (A), (B), and (C) of line 15 (including any amounts shown on line 5 of Worksheet A) is less than $10,000, also complete Worksheet C. 1040nr instructions 2012 Attach the computation of the tax to be forgiven or a copy of this worksheet to the decedent's final income tax return or amended tax return (Form 1040X) for each year listed on line 1. 1040nr instructions 2012 If filing Form 1040X for an eligible year, enter the amount from line 15 above on Form 1040X in column B of line 10 as a decrease in tax. 1040nr instructions 2012 The IRS will determine the amount to be refunded. 1040nr instructions 2012 Worksheet B. 1040nr instructions 2012 Figuring the Tax To Be Forgiven (For Decedents Who Filed a Joint Return)       (A) First Eligible Year (1994 or 2000) (B) Second Eligible Year (1995 or 2001) (C) Third Eligible Year (1996 or 2002) 1 Enter the years eligible for forgiveness. 1040nr instructions 2012 1       2 Enter the decedent's taxable income. 1040nr instructions 2012 Figure taxable income as if a separate return had been filed. 1040nr instructions 2012 See the instructions. 1040nr instructions 2012 2       3 Enter the decedent's total tax. 1040nr instructions 2012 See the instructions. 1040nr instructions 2012 3       4 Enter the total, if any, of the decedent's taxes not eligible for forgiveness. 1040nr instructions 2012 See the instructions. 1040nr instructions 2012 4       5 Subtract line 4 from line 3. 1040nr instructions 2012 5       6 Enter the surviving spouse's taxable income. 1040nr instructions 2012 Figure taxable income as if a separate return had been filed. 1040nr instructions 2012 See the instructions. 1040nr instructions 2012 6       7 Enter the surviving spouse's total tax. 1040nr instructions 2012 See the instructions. 1040nr instructions 2012 7       8 Enter the total, if any, of the surviving spouse's taxes listed in the instructions for line 4. 1040nr instructions 2012 8       9 Subtract line 8 from line 7. 1040nr instructions 2012 9       10 Add lines 5 and 9. 1040nr instructions 2012 10       11 Enter the total tax from the joint return. 1040nr instructions 2012 See Table 1 on page 5 for the line number for years before 2002. 1040nr instructions 2012 11       12 Add lines 4 and 8. 1040nr instructions 2012 12       13 Subtract line 12 from line 11. 1040nr instructions 2012 13       14 Divide line 5 by line 10. 1040nr instructions 2012 Enter the result as a decimal. 1040nr instructions 2012 14       15 Tax to be forgiven. 1040nr instructions 2012 Multiply line 13 by line 14 and enter the result. 1040nr instructions 2012 15       Note. 1040nr instructions 2012 If the total of columns (A), (B), and (C) of line 15 (including any amounts shown on line 5 of Worksheet A) is less than $10,000, also complete Worksheet C. 1040nr instructions 2012 Attach the computation of the tax to be forgiven or a copy of this worksheet to the decedent's final income tax return or amended tax return (Form 1040X) for each year listed on line 1. 1040nr instructions 2012 If filing Form 1040X for an eligible year, enter the amount from line 15 above on Form 1040X in column B of line 10 as a decrease in tax. 1040nr instructions 2012 The IRS will determine the amount to be refunded. 1040nr instructions 2012 Instructions for Worksheet B Table 1. 1040nr instructions 2012 Total Tax Line on Decedent's Return Note: Use this table to find the total tax line on the decedent's income tax return. 1040nr instructions 2012 * Form 1994 1995 1996 2000 2001 1040 Line 53 Line 54 Line 51 Line 57 Line 58 1040A Line 27 Line 28 Line 28 Line 35 File Form 1040 1040EZ Line 9 Line 10 Line 10 Line 10 TeleFile Tax Record ** Line E Line J Line K 1040NR Line 51 Line 52 Line 49 Line 54 Line 54 1040NR–EZ N/A Line 17 Line 17 Line 18 File Form 1040NR * Line numbers for the 2002 forms were not available when this publication went to print. 1040nr instructions 2012 ** File Form 4506 to get a transcript of the decedent's account. 1040nr instructions 2012 Table 1. 1040nr instructions 2012 Total Tax Line on Decedent's Return Note: Use this table to find the total tax line on the decedent's income tax return. 1040nr instructions 2012 * Form 1994 1995 1996 2000 2001 1040 Line 53 Line 54 Line 51 Line 57 Line 58 1040A Line 27 Line 28 Line 28 Line 35 File Form 1040 1040EZ Line 9 Line 10 Line 10 Line 10 TeleFile Tax Record ** Line E Line J Line K 1040NR Line 51 Line 52 Line 49 Line 54 Line 54 1040NR–EZ N/A Line 17 Line 17 Line 18 File Form 1040NR * Line numbers for the 2002 forms were not available when this publication went to print. 1040nr instructions 2012 ** File Form 4506 to get a transcript of the decedent's account. 1040nr instructions 2012 Lines 2 and 6. 1040nr instructions 2012   Allocate income and deductions in the same manner they would have been allocated if the spouses had filed separate returns. 1040nr instructions 2012   Allocate wages and salaries to the spouse who performed the services and received the Form W-2. 1040nr instructions 2012 Business and investment income (including capital gains) are generally allocated to the spouse who owned the business or investment that produced the income. 1040nr instructions 2012 Income from a jointly owned business or investment should be allocated equally between the spouses unless there is evidence that shows a different allocation is appropriate. 1040nr instructions 2012   Allocate business deductions to the owner of the business. 1040nr instructions 2012 Allocate personal deductions (such as itemized deductions for mortgage interest and taxes) equally between the spouses unless there is evidence that shows a different allocation is appropriate. 1040nr instructions 2012 Lines 3 and 7. 1040nr instructions 2012   Figure the total tax as if a separate return had been filed. 1040nr instructions 2012 The total tax is the tax that would have been entered on the tax return line shown in Table 1 if a separate return had been filed. 1040nr instructions 2012 When figuring the tax using the Tax Table or Tax Rate Schedule, use the “Married filing separately” column in the Tax Table or Tax Rate Schedule Y-2. 1040nr instructions 2012   When figuring the total tax, allocate credits and other taxes, if any, in the same manner as they would have been allocated if the spouses had filed separate returns. 1040nr instructions 2012 If a credit would not have been allowed on a separate return, allocate the credit shown on the joint return between the spouses. 1040nr instructions 2012 Examples of credits generally not allowed on a separate return are the child and dependent care credit, credit for the elderly, adoption credit, education credits, and earned income credit. 1040nr instructions 2012 Line 4. 1040nr instructions 2012   Enter the total, if any, of the following taxes. 1040nr instructions 2012 Self-employment tax. 1040nr instructions 2012 Social security and Medicare tax on tip income not reported to employer. 1040nr instructions 2012 Tax on excess contributions to IRAs, Coverdell education savings accounts (formerly Ed IRAs), or Archer MSAs (formerly medical savings accounts). 1040nr instructions 2012 Tax on excess accumulation in qualified retirement plans. 1040nr instructions 2012 Household employment taxes. 1040nr instructions 2012 Uncollected social security and Medicare or RRTA tax on tips or group-term life insurance. 1040nr instructions 2012 Tax on golden parachute payments. 1040nr instructions 2012 Minimum Amount of Relief The minimum amount of relief is $10,000. 1040nr instructions 2012 If the decedent's total forgiven tax liability for all eligible years is less than $10,000, the difference between $10,000 and the total forgiven tax liability for those years will be treated as a tax payment for the decedent's last tax year. 1040nr instructions 2012 The IRS will refund the difference as explained under Refund of Taxes Paid. 1040nr instructions 2012 Use Worksheet C to figure the additional tax payment. 1040nr instructions 2012 But first complete Worksheet A or B, unless the decedent was not required to file tax returns for the eligible tax years. 1040nr instructions 2012 Example 1. 1040nr instructions 2012 An individual who died in the September 11 attacks had an income tax liability of $-0- for 2000 and $6,400 for 2001. 1040nr instructions 2012 The $6,400 is eligible for forgiveness. 1040nr instructions 2012 The IRS will forgive $6,400 and treat the difference between $10,000 and $6,400 ($3,600) as a tax payment for 2001. 1040nr instructions 2012 Example 2. 1040nr instructions 2012 A child who died in the September 11 attacks had no (-0-) income tax liability for 2000 or 2001. 1040nr instructions 2012 The IRS will treat $10,000 as a tax payment for 2001. 1040nr instructions 2012 Income received after date of death. 1040nr instructions 2012   Generally, income of the decedent received after the date of death must be reported on Form 1041 if the estate has gross income for the tax year of $600 or more. 1040nr instructions 2012 Examples are the final paycheck or dividends on stock owned by the decedent. 1040nr instructions 2012 However, this income is exempt from income tax and is not included on Form 1041 if it is received: After the date of the decedent's death, and Before the end of the decedent's tax year (determined without regard to death). 1040nr instructions 2012 Nonqualifying income. 1040nr instructions 2012   The following income is not exempt from tax. 1040nr instructions 2012 The tax on it is not eligible for forgiveness. 1040nr instructions 2012 Deferred compensation that would have been payable if the death had occurred because of an event other than these attacks. 1040nr instructions 2012 Amounts that would not have been payable but for an action taken after September 11, 2001. 1040nr instructions 2012 The following are examples of nonqualifying income. 1040nr instructions 2012 Amounts payable from a qualified retirement plan or IRA to the beneficiary or estate of the decedent. 1040nr instructions 2012 Amounts payable only as death or survivor's benefits from pre-existing arrangements that would have been paid if the death had occurred for another reason. 1040nr instructions 2012 Income received as a result of adjustments made by the decedent's employer to a plan or arrangement to accelerate the vesting of restricted property or the payment of nonqualified deferred compensation after the date of the attack. 1040nr instructions 2012 Interest on savings bonds cashed by the beneficiary of the decedent. 1040nr instructions 2012 If you are responsible for the estate of a decedent, see Publication 559. 1040nr instructions 2012 Publication 559 discusses how to complete and file federal income tax returns and explains your responsibility to pay any taxes due. 1040nr instructions 2012 Instructions for lines 2–9 of Worksheet C. 1040nr instructions 2012   The tax that would have been payable on the exempt income (discussed earlier) must be considered when determining whether a decedent is entitled to the $10,000 minimum relief. 1040nr instructions 2012 To figure the tax that would have been payable, you can use lines 2 through 9 of Worksheet C. 1040nr instructions 2012 Or, if special requirements are met, you can use the alternative computation instead. 1040nr instructions 2012 See Alternative computation, later. 1040nr instructions 2012   You have to use lines 2–9 (or the alternative computation) to figure the tax that would have been payable even if Form 1041 was not required to be filed. 1040nr instructions 2012 Use Form 1041 to figure what the taxable income would be without including the exempt income. 1040nr instructions 2012 Then enter that taxable income (even if a negative number) on line 2 of Worksheet C (or line 1 of Worksheet D, Alternative Computation of Tax on Exempt Income (Line 9 of Worksheet C)). 1040nr instructions 2012 Alternative computation. 1040nr instructions 2012   Instead of using lines 2–8 of Worksheet C to figure the tax on exempt income (line 9 of Worksheet C), you may be able to use Worksheet D. 1040nr instructions 2012 You can use Worksheet D to figure the tax on the exempt income payable by the estate and its beneficiaries only if both of the following requirements are met. 1040nr instructions 2012 The estate claimed an income distribution deduction on line 18 (Form 1041). 1040nr instructions 2012 Each beneficiary submits the information necessary to refigure the income tax payable on the exempt income received from the decedent's estate. 1040nr instructions 2012 If requirement (2) is met but requirement (1) is not, you can still use Worksheet D if: Form 1041 was not required because exempt income was received, and The estate would have claimed an income distribution deduction if the exempt income were taxable. 1040nr instructions 2012 If you use this alternative computation, skip lines 2–8 of Worksheet C and enter the amount from line 8 of Worksheet D on line 9 of Worksheet C. 1040nr instructions 2012 Complete the rest of Worksheet C to determine the additional payment allowed. 1040nr instructions 2012 Worksheet C. 1040nr instructions 2012 Amount Treated as Tax Payment for Decedent's Last Tax Year Caution: The decedent is entitled to minimum relief of $10,000. 1040nr instructions 2012 Complete this worksheet only if the total tax forgiven for all eligible years is less than $10,000. 1040nr instructions 2012 1 Minimum relief amount. 1040nr instructions 2012 Note: Before completing lines 2–9, see Instructions for lines 2–9 of Worksheet C. 1040nr instructions 2012 1 $10,000 2 Enter the taxable income from line 22 (Form 1041) 2       3 Enter the distribution deduction from line 18 (Form 1041) . 1040nr instructions 2012 3       4 Add lines 2 and 3. 1040nr instructions 2012 4       5 Enter exempt income received after death minus expenses allocable to exempt income. 1040nr instructions 2012 (See Income received after date of death on page 5. 1040nr instructions 2012 ) 5       6 Add lines 4 and 5. 1040nr instructions 2012 6       7 Figure the tax on line 6 using Schedule G (Form 1041). 1040nr instructions 2012 7       8 Figure the tax on line 4 using Schedule G (Form 1041). 1040nr instructions 2012 8       9 Tax on exempt income. 1040nr instructions 2012 Subtract line 8 from line 7. 1040nr instructions 2012 9       10 Enter the total of columns (A)–(C) from line 5 of Worksheet A or line 15 of Worksheet B. 1040nr instructions 2012 If the decedent was not required to file tax returns for the eligible tax years, enter -0-. 1040nr instructions 2012 10       11 Add lines 9 and 10. 1040nr instructions 2012 11   12 Additional payment allowed. 1040nr instructions 2012 If line 11 is $10,000 or more, enter -0- and stop here. 1040nr instructions 2012 No additional amount is allowed as a tax payment. 1040nr instructions 2012 Otherwise, subtract line 11 from line 1 and enter the result. 1040nr instructions 2012 12   Note. 1040nr instructions 2012 The amount on line 12 is allowed as a tax payment for the decedent's last tax year (usually 1995 or 2001). 1040nr instructions 2012 Attach the computation of the additional payment allowed or a copy of this worksheet to the original or amended income tax return for the decedent's last tax year. 1040nr instructions 2012 If filing Form 1040, include the amount from line 12 above on the “Other payments” line of the form. 1040nr instructions 2012 Write "Sec. 1040nr instructions 2012 692(d)(2) Payment" and the amount to the right of the entry space. 1040nr instructions 2012 Also indicate whether a Form 1041 is being filed for the decedent's estate. 1040nr instructions 2012 If filing Form 1040X, include the amount from line 12 above on Form 1040X on line 15, columns (B) and (C). 1040nr instructions 2012 Write “Sec. 1040nr instructions 2012 692(d)(2) Payment” on the dotted line to the left of the entry space. 1040nr instructions 2012 Worksheet C. 1040nr instructions 2012 Amount Treated as Tax Payment for Decedent's Last Tax Year Caution: The decedent is entitled to minimum relief of $10,000. 1040nr instructions 2012 Complete this worksheet only if the total tax forgiven for all eligible years is less than $10,000. 1040nr instructions 2012 1 Minimum relief amount. 1040nr instructions 2012 Note: Before completing lines 2–9, see Instructions for lines 2–9 of Worksheet C. 1040nr instructions 2012 1 $10,000 2 Enter the taxable income from line 22 (Form 1041) 2       3 Enter the distribution deduction from line 18 (Form 1041) . 1040nr instructions 2012 3       4 Add lines 2 and 3. 1040nr instructions 2012 4       5 Enter exempt income received after death minus expenses allocable to exempt income. 1040nr instructions 2012 (See Income received after date of death on page 5. 1040nr instructions 2012 ) 5       6 Add lines 4 and 5. 1040nr instructions 2012 6       7 Figure the tax on line 6 using Schedule G (Form 1041). 1040nr instructions 2012 7       8 Figure the tax on line 4 using Schedule G (Form 1041). 1040nr instructions 2012 8       9 Tax on exempt income. 1040nr instructions 2012 Subtract line 8 from line 7. 1040nr instructions 2012 9       10 Enter the total of columns (A)–(C) from line 5 of Worksheet A or line 15 of Worksheet B. 1040nr instructions 2012 If the decedent was not required to file tax returns for the eligible tax years, enter -0-. 1040nr instructions 2012 10       11 Add lines 9 and 10. 1040nr instructions 2012 11   12 Additional payment allowed. 1040nr instructions 2012 If line 11 is $10,000 or more, enter -0- and stop here. 1040nr instructions 2012 No additional amount is allowed as a tax payment. 1040nr instructions 2012 Otherwise, subtract line 11 from line 1 and enter the result. 1040nr instructions 2012 12   Note. 1040nr instructions 2012 The amount on line 12 is allowed as a tax payment for the decedent's last tax year (usually 1995 or 2001). 1040nr instructions 2012 Attach the computation of the additional payment allowed or a copy of this worksheet to the original or amended income tax return for the decedent's last tax year. 1040nr instructions 2012 If filing Form 1040, include the amount from line 12 above on the “Other payments” line of the form. 1040nr instructions 2012 Write "Sec. 1040nr instructions 2012 692(d)(2) Payment" and the amount to the right of the entry space. 1040nr instructions 2012 Also indicate whether a Form 1041 is being filed for the decedent's estate. 1040nr instructions 2012 If filing Form 1040X, include the amount from line 12 above on Form 1040X on line 15, columns (B) and (C). 1040nr instructions 2012 Write “Sec. 1040nr instructions 2012 692(d)(2) Payment” on the dotted line to the left of the entry space. 1040nr instructions 2012 Worksheet D. 1040nr instructions 2012 Alternative Computation of Tax on Exempt Income (Line 9 of Worksheet C) 1 Enter the taxable income from line 22 (Form 1041) 1   2 Enter exempt income received after death minus expenses allocable to exempt income. 1040nr instructions 2012 (See Income received after date of death on page 5. 1040nr instructions 2012 ) 2   3 Add lines 1 and 2 3   4 Figure the tax on line 3 using Schedule G (Form 1041). 1040nr instructions 2012 4   5 Figure the tax on line 1 using Schedule G (Form 1041). 1040nr instructions 2012 5   6 Estate's tax on exempt income. 1040nr instructions 2012 Subtract line 5 from line 4 6   7 Beneficiaries' tax on exempt income. 1040nr instructions 2012 Figure the total tax that would have been payable by all beneficiaries. 1040nr instructions 2012 Do this by including in each beneficiary's gross income the exempt income received from the decedent's estate and refiguring the income tax. 1040nr instructions 2012 Add the amounts by which each beneficiary's income tax is increased. 1040nr instructions 2012 7   8 Add lines 6 and 7. 1040nr instructions 2012 Enter this amount on line 9 of Worksheet C. 1040nr instructions 2012 8   Worksheet D. 1040nr instructions 2012 Alternative Computation of Tax on Exempt Income (Line 9 of Worksheet C) 1 Enter the taxable income from line 22 (Form 1041) 1   2 Enter exempt income received after death minus expenses allocable to exempt income. 1040nr instructions 2012 (See Income received after date of death on page 5. 1040nr instructions 2012 ) 2   3 Add lines 1 and 2 3   4 Figure the tax on line 3 using Schedule G (Form 1041). 1040nr instructions 2012 4   5 Figure the tax on line 1 using Schedule G (Form 1041). 1040nr instructions 2012 5   6 Estate's tax on exempt income. 1040nr instructions 2012 Subtract line 5 from line 4 6   7 Beneficiaries' tax on exempt income. 1040nr instructions 2012 Figure the total tax that would have been payable by all beneficiaries. 1040nr instructions 2012 Do this by including in each beneficiary's gross income the exempt income received from the decedent's estate and refiguring the income tax. 1040nr instructions 2012 Add the amounts by which each beneficiary's income tax is increased. 1040nr instructions 2012 7   8 Add lines 6 and 7. 1040nr instructions 2012 Enter this amount on line 9 of Worksheet C. 1040nr instructions 2012 8   Refund of Taxes Paid The IRS will refund the following forgiven income tax liabilities. 1040nr instructions 2012 Income tax liabilities that have been paid. 1040nr instructions 2012 Income tax liabilities treated as paid because the total tax liability for all years eligible for tax forgiveness is less than $10,000. 1040nr instructions 2012 See Minimum Amount of Relief, earlier. 1040nr instructions 2012 Example 1. 1040nr instructions 2012 A man who died in the September 11 attacks had an income tax liability of $7,500 for 2000 and $6,500 for 2001. 1040nr instructions 2012 The total, $14,000, is eligible for tax forgiveness. 1040nr instructions 2012 However, he paid only $13,000 of that amount. 1040nr instructions 2012 The IRS will refund the $13,000 paid. 1040nr instructions 2012 Example 2. 1040nr instructions 2012 A child who died in the September 11 attacks had no income tax liability for 2000 or 2001. 1040nr instructions 2012 The child qualifies for the minimum relief of $10,000. 1040nr instructions 2012 The $10,000 is treated as a tax payment for 2001 and will be refunded. 1040nr instructions 2012 Period for filing a claim for credit or refund. 1040nr instructions 2012   To obtain a tax refund on a previously filed income tax return, file an amended return (Form 1040X or an amended Form 1041) within 3 years from the time the return was filed or 2 years from the time the tax was paid, whichever is later. 1040nr instructions 2012 For example, you have until April 15, 2004, to file an amended return on a 2000 Form 1040, 1040A, or 1040EZ that was filed by April 16, 2001, and for which the tax was paid when due. 1040nr instructions 2012 To obtain a refund on a return that has not been filed, file the return within 3 years of the original due date of the return. 1040nr instructions 2012 Extension of time for victims of Oklahoma City attack. 1040nr instructions 2012   The period described above has been extended for victims of the Oklahoma City attack. 1040nr instructions 2012 Survivors and personal representatives of these victims have until January 22, 2003, to file an original or amended return. 1040nr instructions 2012 How To Claim Tax Forgiveness Use the following procedures to claim income tax forgiveness. 1040nr instructions 2012 Which Form To Use The form you use depends on whether an income tax return for the eligible year was already filed for the decedent. 1040nr instructions 2012 Return required but not yet filed. 1040nr instructions 2012   File Form 1040 if the decedent was a U. 1040nr instructions 2012 S. 1040nr instructions 2012 citizen or resident. 1040nr instructions 2012 File Form 1040NR if the decedent was a nonresident alien. 1040nr instructions 2012 A nonresident alien is someone who is not a U. 1040nr instructions 2012 S. 1040nr instructions 2012 citizen or resident. 1040nr instructions 2012 Return required and already filed. 1040nr instructions 2012   File a separate Form 1040X for each year you are claiming tax relief. 1040nr instructions 2012 Return not required and not filed. 1040nr instructions 2012   File Form 1040 only for the year of death if the decedent was a U. 1040nr instructions 2012 S. 1040nr instructions 2012 citizen or resident. 1040nr instructions 2012 File Form 1040NR if the decedent was a nonresident alien. 1040nr instructions 2012 Return not required but already filed. 1040nr instructions 2012   File Form 1040X only for the year of death. 1040nr instructions 2012 How to complete the returns. 1040nr instructions 2012   Fill out Form 1040 or 1040NR according to its instructions but do not reduce the decedent's tax liability by any taxes that will be forgiven. 1040nr instructions 2012 Attach to each return a computation of the income tax to be forgiven or a copy of Worksheet A or B. 1040nr instructions 2012 If filing Form 1040 or Form 1040NR, also attach any Forms W–2. 1040nr instructions 2012 If the total forgiven tax liability for all eligible years is less than $10,000, attach to the decedent's final return a computation of the additional tax payment allowed or a copy of Worksheet C. 1040nr instructions 2012 Also, please write one of the following across the top of page 1 of each return. 1040nr instructions 2012 KITA—Oklahoma City KITA—9/11 KITA—Anthrax “KITA” means “killed in terrorist attack. 1040nr instructions 2012 ” Need a copy of a previously filed return?   You will find it easier to prepare Form 1040X if you have a copy of the decedent's previously filed tax return. 1040nr instructions 2012 If you need a copy, use Form 4506. 1040nr instructions 2012 The IRS will provide a free copy of the tax return if you write “DISASTER” in the top margin of Form 4506. 1040nr instructions 2012 Attach Letters Testamentary or other evidence to establish that you are authorized to act for the decedent's estate. 1040nr instructions 2012 Send Form 4506 to the address shown in the form instructions. 1040nr instructions 2012 Taxpayer identification number. 1040nr instructions 2012   A taxpayer identification number must be furnished on the decedent's returns. 1040nr instructions 2012 This is usually the decedent's social security number (SSN). 1040nr instructions 2012 However, a nonresident alien who is not eligible to get an SSN should have an individual taxpayer identification number (ITIN). 1040nr instructions 2012 If the decedent was a nonresident alien, had neither an SSN nor an ITIN, and was not required to file a U. 1040nr instructions 2012 S. 1040nr instructions 2012 income tax return for any tax year, do not apply for an ITIN. 1040nr instructions 2012 You may claim a refund by filing Form 1040NR without an SSN or ITIN. 1040nr instructions 2012 Necessary Documents Please attach the following documents to the return or amended return. 1040nr instructions 2012 Proof of death. 1040nr instructions 2012   Attach a copy of the death certificate. 1040nr instructions 2012 If the Department of Defense issued DD Form 1300, Report of Casualty, you can attach that form instead of the death certificate. 1040nr instructions 2012 Form 1310. 1040nr instructions 2012   You must send Form 1310 with all returns and claims for refund, unless either of the following applies. 1040nr instructions 2012 You are a surviving spouse filing an original or amended joint return with the decedent. 1040nr instructions 2012 You are a personal representative filing an original Form 1040 or Form 1040NR for the decedent and a court certificate showing your appointment is attached to the return. 1040nr instructions 2012 A personal representative is an executor or administrator of a decedent's estate, as certified or appointed by the court. 1040nr instructions 2012 A copy of the decedent's will cannot be accepted as evidence that you are the personal representative. 1040nr instructions 2012      If you have proof of death but do not have enough tax information to file a timely claim for a refund, file Form 1040X with Form 1310. 1040nr instructions 2012 Include a statement saying an amended return will be filed as soon as the necessary tax information is available. 1040nr instructions 2012 Where To File The IRS has set up a special office for processing returns and claims for tax forgiveness. 1040nr instructions 2012 Use one of the addresses shown below. 1040nr instructions 2012 Where you file the returns or claims depends on whether you use the U. 1040nr instructions 2012 S. 1040nr instructions 2012 Postal Service or a private delivery service. 1040nr instructions 2012 Please do not send these returns or claims to any of the addresses shown in the tax form instructions. 1040nr instructions 2012 U. 1040nr instructions 2012 S. 1040nr instructions 2012 Postal Service. 1040nr instructions 2012   If you use the U. 1040nr instructions 2012 S. 1040nr instructions 2012 Postal Service, file these returns and claims at the following address. 1040nr instructions 2012 Internal Revenue Service P. 1040nr instructions 2012 O. 1040nr instructions 2012 Box 4053 Woburn, MA 01888 Private delivery service. 1040nr instructions 2012   Private delivery services cannot deliver items to P. 1040nr instructions 2012 O. 1040nr instructions 2012 boxes. 1040nr instructions 2012 If you use a private delivery service, file these returns and claims at the following address. 1040nr instructions 2012 Internal Revenue Service Stop 661 310 Lowell St. 1040nr instructions 2012 Andover, MA 01810 Designated private delivery services. 1040nr instructions 2012   You can use the following private delivery services to file these returns and claims. 1040nr instructions 2012 Airborne Express (Airborne): Overnight Air Express Service, Next Afternoon Service, and Second Day Service. 1040nr instructions 2012 DHL Worldwide Express (DHL): DHL “Same Day” Service, and DHL USA Overnight. 1040nr instructions 2012 Federal Express (FedEx): FedEx Priority Overnight, FedEx Standard Overnight, and FedEx 2Day. 1040nr instructions 2012 United Parcel Service (UPS): UPS Next Day Air, UPS Next Day Air Saver, UPS 2nd Day Air, UPS 2nd Day Air A. 1040nr instructions 2012 M. 1040nr instructions 2012 , UPS Worldwide Express Plus, and UPS Worldwide Express. 1040nr instructions 2012 The private delivery service can tell you how to get written proof of the mailing date. 1040nr instructions 2012 Payments to Survivors The following section discusses the tax treatment of certain amounts received by survivors. 1040nr instructions 2012 September 11th Victim Compensation Fund of 2001 Payments from the September 11th Victim Compensation Fund of 2001 are not included in income. 1040nr instructions 2012 Qualified Disaster Relief Payments Qualified disaster relief payments are not included in income. 1040nr instructions 2012 These payments are not subject to income tax, self-employment tax, or employment taxes (social security, Medicare, and federal unemployment taxes). 1040nr instructions 2012 No withholding applies to these payments. 1040nr instructions 2012 Qualified disaster relief payments include payments you receive (regardless of the source) after September 10, 2001, for the following expenses. 1040nr instructions 2012 Reasonable and necessary personal, family, living, or funeral expenses incurred as a result of a terrorist attack. 1040nr instructions 2012 Reasonable and necessary expenses incurred for the repair or rehabilitation of a personal residence due to a terrorist attack. 1040nr instructions 2012 (A personal residence can be a rented residence or one you own. 1040nr instructions 2012 ) Reasonable and necessary expenses incurred for the repair or replacement of the contents of a personal residence due to a terrorist attack. 1040nr instructions 2012 Qualified disaster relief payments also include the following. 1040nr instructions 2012 Payments made by common carriers (for example, American Airlines and United Airlines regarding the September 11 attacks) because of death or physical injury incurred as a result of a terrorist attack. 1040nr instructions 2012 Amounts paid by a federal, state, or local government in connection with a terrorist attack to those affected by the attack. 1040nr instructions 2012 Qualified disaster relief payments do not include: Insurance or other reimbursements for expenses, or Income replacement payments, such as payments of lost wages, lost business income, or unemployment compensation. 1040nr instructions 2012 Disability Payments For tax years ending after September 10, 2001, disability payments for injuries incurred as a direct result of a terrorist attack directed against the United States (or its allies), whether outside or within the United States, are not included in income. 1040nr instructions 2012 Death Benefits Payments received by an individual or the estate of a decedent from the employer of an employee who died as a result of the Oklahoma City or September 11 terrorist attacks, or as a result of the anthrax attacks, are not included in income. 1040nr instructions 2012 Only the amount that exceeds the benefits that would have been payable if the death had occurred for a reason other than a terrorist or anthrax attack is excludable. 1040nr instructions 2012 However, the exclusion does apply to incidental death benefits paid under a qualified retirement plan even if these amounts would have been payable if the death had occurred for a reason other than a terrorist or anthrax attack. 1040nr instructions 2012 If you included death benefits in income on a previously filed return and they are now excludable under the above rule, file Form 1040X to amend that return. 1040nr instructions 2012 For information on the period for filing Form 1040X, see Period for filing claim for credit or refund earlier under Refund of Taxes Paid. 1040nr instructions 2012 If that period has expired, you are granted an extension. 1040nr instructions 2012 You have until January 22, 2003, to file Form 1040X to exclude the death benefits. 1040nr instructions 2012 On top of page 1 of Form 1040X, write “Extension of Limitations Under PL 107–134, sec. 1040nr instructions 2012 102(b)(2). 1040nr instructions 2012 ” Canceled Debt Canceled debt is not included in your income (or the income of the estate) if: You (or the estate) were liable, or became liable, for the debt of a decedent, and The debt was canceled after September 10, 2001, and before January 1, 2002, because the decedent died as a result of the September 11 attacks or anthrax attacks. 1040nr instructions 2012 The lender is not required to report the canceled debt on Form 1099–C, Cancellation of Debt. 1040nr instructions 2012 Payments to Survivors of Public Safety Officers If you are a survivor of a public safety officer who died in the line of duty, certain amounts you receive are not included in income. 1040nr instructions 2012 Bureau of Justice Assistance payments. 1040nr instructions 2012   If you are a surviving dependent of a public safety officer (law enforcement officer or firefighter) who died in the line of duty, do not include in your income the death benefit paid to you by the Bureau of Justice Assistance. 1040nr instructions 2012 Government plan annuity. 1040nr instructions 2012   If you receive a survivor annuity as the child or spouse (or former spouse) of a public safety officer who was killed in the line of duty, you generally do not have to include it in income. 1040nr instructions 2012 This exclusion applies to the amount of the annuity based on the officer's service as a public safety officer. 1040nr instructions 2012 For this purpose, the term public safety officer includes police and law enforcement officers, firefighters, and rescue squad and ambulance crews. 1040nr instructions 2012 More information. 1040nr instructions 2012   For more information, see Publication 559. 1040nr instructions 2012 Postponed Tax Deadlines The IRS may postpone for up to 1 year certain tax deadlines of taxpayers who are affected by a terrorist attack. 1040nr instructions 2012 The tax deadlines the IRS may postpone include those for filing income and employment tax returns, paying income and employment taxes, and making contributions to a traditional IRA or Roth IRA. 1040nr instructions 2012 If any tax deadline is postponed, the IRS will publicize the postponement in the affected area and publish a news release, revenue ruling, revenue procedure, notice, announcement, or other guidance in the Internal Revenue Bulletin (IRB). 1040nr instructions 2012 Affected taxpayers. 1040nr instructions 2012   If the IRS postpones a tax deadline, the following taxpayers are eligible for the postponement. 1040nr instructions 2012 Any individual whose main home is located in a covered area (defined later). 1040nr instructions 2012 Any business entity or sole proprietor whose principal place of business is located in a covered area. 1040nr instructions 2012 Any individual, business entity, or sole proprietor whose records needed to meet a postponed deadline are maintained in a covered area. 1040nr instructions 2012 The main home or principal place of business does not have to be located in the covered area. 1040nr instructions 2012 Any estate or trust whose tax records necessary to meet a postponed tax deadline are maintained in a covered area. 1040nr instructions 2012 Any individual who is a relief worker affiliated with a recognized government or philanthropic organization and who is assisting in a covered area. 1040nr instructions 2012 The spouse on a joint return with a taxpayer who is eligible for postponements. 1040nr instructions 2012 Any other person determined by the IRS to be affected by a terrorist attack. 1040nr instructions 2012 Covered area. 1040nr instructions 2012   This is an area in which a terrorist attack took place and in which the IRS has decided to postpone tax deadlines for up to 1 year. 1040nr instructions 2012 Abatement of interest. 1040nr instructions 2012   The IRS may abate (forgive) the interest on any underpaid income tax for the length of any postponement. 1040nr instructions 2012 Disaster Area Losses If your property was damaged or destroyed as a result of the September 11 attacks, you can choose to deduct your disaster loss on your 2000 return (or amended return) rather than on your 2001 return. 1040nr instructions 2012 You must make this choice to deduct your loss on your 2000 return by the later of the following dates. 1040nr instructions 2012 The due date (without extensions) for filing your 2001 income tax return (April 15, 2002, if you are a calendar year taxpayer). 1040nr instructions 2012 The due date (with extensions) for the 2000 return. 1040nr instructions 2012 For more information about disaster area losses, see Publication 547. 1040nr instructions 2012 Estate Tax Reduction The federal estate tax is reduced for taxable estates of individuals who died as a result of the Oklahoma City attack, the September 11 attacks, and the anthrax attacks. 1040nr instructions 2012 The estate tax is computed using a new rate schedule on page 25 of the November 2001 revision of the instructions for Form 706. 1040nr instructions 2012 The estate tax is reduced by credits against the estate tax, including the unified credit and the state death tax credit. 1040nr instructions 2012 These credits may reduce or eliminate the estate tax due. 1040nr instructions 2012 A special rule extends until January 22, 2003, the period of time allowed to file a claim for a refund of estate taxes that have been paid. 1040nr instructions 2012 Recovery from the September 11th Victim Compensation Fund. 1040nr instructions 2012   The value of claims for a decedent's pain and suffering is normally included in the gross estate. 1040nr instructions 2012 However, if the estate chooses to seek recovery from this fund, the IRS has determined that, in view of the unique circumstances of this situation and the high likelihood that such claims will be valued at a nominal or zero amount, the claims will be valued at zero for estate tax purposes. 1040nr instructions 2012 Thus, there are no federal estate tax consequences if an estate or beneficiary receives a recovery from this fund. 1040nr instructions 2012 Which estates must file a return. 1040nr instructions 2012   For decedents dying in 2001, Form 706 must be filed by the executor for the estate of every U. 1040nr instructions 2012 S. 1040nr instructions 2012 citizen or resident whose gross estate, plus adjusted taxable gifts and specific exemption, is more than $675,000. 1040nr instructions 2012 Form 706 must be filed within 9 months after the date of decedent's death unless you receive an extension of time to file. 1040nr instructions 2012 Use Form 4768, Application for Extension of Time To File a Return and/or Pay U. 1040nr instructions 2012 S. 1040nr instructions 2012 Estate (and Generation-Skipping Transfer) Taxes, to apply for an extension. 1040nr instructions 2012 Where to file. 1040nr instructions 2012   Returns on which the new rate schedule is used should be sent to the following address, which was not available when Form 706 went to print. 1040nr instructions 2012 Internal Revenue Service E & G Department/Stop 824T 201 W. 1040nr instructions 2012 Rivercenter Blvd. 1040nr instructions 2012 Covington, KY 41011 More information. 1040nr instructions 2012   For more information on the federal estate tax, see the instructions for Form 706. 1040nr instructions 2012 Structured Settlement Factoring Transactions A person who acquires payment rights in a structured settlement arrangement after February 21, 2002, may be subject to a 40% excise tax unless the transfer of the payment rights was approved in advance in a qualified order. 1040nr instructions 2012 The excise tax is figured on the excess of the undiscounted amount of the payments being acquired over the total amount actually paid to acquire them. 1040nr instructions 2012 However, this tax will not apply to transactions entered into from February 22, 2002, to July 1, 2002, if certain requirements are met. 1040nr instructions 2012 For information about these requirements, see Internal Revenue Code section 5891. 1040nr instructions 2012 Worksheet B Illustrated. 1040nr instructions 2012 Figuring the Tax To Be Forgiven (For Decedents Who Filed a Joint Return)       (A) First Eligible Year (1994 or 2000) (B) Second Eligible Year (1995 or 2001) (C) Third Eligible Year (1996 or 2002) 1 Enter the years eligible for forgiveness. 1040nr instructions 2012 1 2000 2001   2 Enter the decedent's taxable income. 1040nr instructions 2012 Figure taxable income as if a separate return had been filed. 1040nr instructions 2012 See the instructions. 1040nr instructions 2012 2 $17,259 $14,295   3 Enter the decedent's total tax. 1040nr instructions 2012 See the instructions. 1040nr instructions 2012 3 6,123 5,250   4 Enter the total, if any, of the decedent's taxes not eligible for forgiveness. 1040nr instructions 2012 See the instructions. 1040nr instructions 2012 4 3,532 3,109   5 Subtract line 4 from line 3. 1040nr instructions 2012 5 2,591 2,141   6 Enter the surviving spouse's taxable income. 1040nr instructions 2012 Figure taxable income as if a separate return had been filed. 1040nr instructions 2012 See the instructions for line 2. 1040nr instructions 2012 6 29,025 29,850   7 Enter the surviving spouse's total tax. 1040nr instructions 2012 See the instructions. 1040nr instructions 2012 7 5,277 5,391   8 Enter the total, if any, of the surviving spouse's taxes listed in the instructions for line 4. 1040nr instructions 2012 8 0 0   9 Subtract line 8 from line 7. 1040nr instructions 2012 9 5,277 5,391   10 Add lines 5 and 9. 1040nr instructions 2012 10 7,868 7,532   11 Enter the total tax from the joint return. 1040nr instructions 2012 See Table 1 on page 5 for the line number for years before 2002. 1040nr instructions 2012 11 10,789 9,728   12 Add lines 4 and 8. 1040nr instructions 2012 12 3,532 3,109   13 Subtract line 12 from line 11. 1040nr instructions 2012 13 7,257 6,619   14 Divide line 5 by line 10. 1040nr instructions 2012 Enter the result as a decimal. 1040nr instructions 2012 14 . 1040nr instructions 2012 329 . 1040nr instructions 2012 284   15 Tax to be forgiven. 1040nr instructions 2012 Multiply line 13 by line 14 and enter the result. 1040nr instructions 2012 15 $2,388 $1,880   Note. 1040nr instructions 2012 If the total of columns (A), (B), and (C) of line 15 (including any amounts shown on line 5 of Worksheet A) is less than $10,000, also complete Worksheet C. 1040nr instructions 2012 Attach the computation of the tax to be forgiven or a copy of this worksheet to the decedent's final income tax return or amended tax return (Form 1040X) for each year listed on line 1. 1040nr instructions 2012 If filing Form 1040X for an eligible year, enter the amount from line 15 above on Form 1040X in column B of line 10 as a decrease in tax. 1040nr instructions 2012 The IRS will determine the amount to be refunded. 1040nr instructions 2012 Worksheet B Illustrated. 1040nr instructions 2012 Figuring the Tax To Be Forgiven (For Decedents Who Filed a Joint Return)       (A) First Eligible Year (1994 or 2000) (B) Second Eligible Year (1995 or 2001) (C) Third Eligible Year (1996 or 2002) 1 Enter the years eligible for forgiveness. 1040nr instructions 2012 1 2000 2001   2 Enter the decedent's taxable income. 1040nr instructions 2012 Figure taxable income as if a separate return had been filed. 1040nr instructions 2012 See the instructions. 1040nr instructions 2012 2 $17,259 $14,295   3 Enter the decedent's total tax. 1040nr instructions 2012 See the instructions. 1040nr instructions 2012 3 6,123 5,250   4 Enter the total, if any, of the decedent's taxes not eligible for forgiveness. 1040nr instructions 2012 See the instructions. 1040nr instructions 2012 4 3,532 3,109   5 Subtract line 4 from line 3. 1040nr instructions 2012 5 2,591 2,141   6 Enter the surviving spouse's taxable income. 1040nr instructions 2012 Figure taxable income as if a separate return had been filed. 1040nr instructions 2012 See the instructions for line 2. 1040nr instructions 2012 6 29,025 29,850   7 Enter the surviving spouse's total tax. 1040nr instructions 2012 See the instructions. 1040nr instructions 2012 7 5,277 5,391   8 Enter the total, if any, of the surviving spouse's taxes listed in the instructions for line 4. 1040nr instructions 2012 8 0 0   9 Subtract line 8 from line 7. 1040nr instructions 2012 9 5,277 5,391   10 Add lines 5 and 9. 1040nr instructions 2012 10 7,868 7,532   11 Enter the total tax from the joint return. 1040nr instructions 2012 See Table 1 on page 5 for the line number for years before 2002. 1040nr instructions 2012 11 10,789 9,728   12 Add lines 4 and 8. 1040nr instructions 2012 12 3,532 3,109   13 Subtract line 12 from line 11. 1040nr instructions 2012 13 7,257 6,619   14 Divide line 5 by line 10. 1040nr instructions 2012 Enter the result as a decimal. 1040nr instructions 2012 14 . 1040nr instructions 2012 329 . 1040nr instructions 2012 284   15 Tax to be forgiven. 1040nr instructions 2012 Multiply line 13 by line 14 and enter the result. 1040nr instructions 2012 15 $2,388 $1,880   Note. 1040nr instructions 2012 If the total of columns (A), (B), and (C) of line 15 (including any amounts shown on line 5 of Worksheet A) is less than $10,000, also complete Worksheet C. 1040nr instructions 2012 Attach the computation of the tax to be forgiven or a copy of this worksheet to the decedent's final income tax return or amended tax return (Form 1040X) for each year listed on line 1. 1040nr instructions 2012 If filing Form 1040X for an eligible year, enter the amount from line 15 above on Form 1040X in column B of line 10 as a decrease in tax. 1040nr instructions 2012 The IRS will determine the amount to be refunded. 1040nr instructions 2012 Illustrated Worksheets B and C A wife lost her husband in the September 11 attack on the World Trade Center. 1040nr instructions 2012 They filed a joint return for 2000 and the wife chose to file a joint return as a surviving spouse for 2001. 1040nr instructions 2012 The returns for 2000 and 2001 showed the following income, deductions, and tax liabilities. 1040nr instructions 2012 After the husband died, his estate received income of $4,000. 1040nr instructions 2012 Of that amount, $1,000 is net profit from Schedule C received before the end of 2001. 1040nr instructions 2012 This net profit is exempt from income tax as explained earlier under Income received after date of death. 1040nr instructions 2012 The wife files Form 1041 because the gross income of the estate for the tax year ($3,000) is $600 or more. 1040nr instructions 2012 To determine how much of the husband's tax liability for 2000 and 2001 is to be forgiven, the wife completes Worksheet B. 1040nr instructions 2012 She also completes Worksheet C because the forgiven tax liabilities for 2000 and 2001 (line 15 of Worksheet B) total less than $10,000. 1040nr instructions 2012 To claim tax relief for 2000, the wife files Form 1040X and attaches a copy of Worksheet B. 1040nr instructions 2012 To claim tax relief for 2001, she files Form 1040 and attaches copies of Worksheets B and C. 1040nr instructions 2012   2000 2001 Wages (wife) $35,000 $36,000 Net profit from Schedule C, Profit or Loss From Business (husband) 25,000 22,000 Interest income (joint account) 1,000 1,100 Deduction for ½ of self-employment tax (husband) (1,766) (1,555) Standard deduction (7,350) (7,600) Personal exemptions (2) (5,600) (5,800) Taxable income $46,284 $44,145 Joint income tax liability $7,257 $6,619 Plus: Self-employment tax (husband) 3,532 3,109 Total tax liability $10,789 $9,728   2000 2001 Wages (wife) $35,000 $36,000 Net profit from Schedule C, Profit or Loss From Business (husband) 25,000 22,000 Interest income (joint account) 1,000 1,100 Deduction for ½ of self-employment tax (husband) (1,766) (1,555) Standard deduction (7,350) (7,600) Personal exemptions (2) (5,600) (5,800) Taxable income $46,284 $44,145 Joint income tax liability $7,257 $6,619 Plus: Self-employment tax (husband) 3,532 3,109 Total tax liability $10,789 $9,728 Worksheet C Illustrated. 1040nr instructions 2012 Amount Treated as Tax Payment for Decedent's Last Tax Year Caution: The decedent is entitled to minimum relief of $10,000. 1040nr instructions 2012 Complete this worksheet only if the total tax forgiven for all eligible years is less than $10,000. 1040nr instructions 2012 1 Minimum relief amount. 1040nr instructions 2012 Note: Before completing lines 2–9, see Instructions for lines 2–9 of Worksheet C. 1040nr instructions 2012 1 $10,000 2 Enter the taxable income from line 22 (Form 1041) 2 2,400     3 Enter the distribution deduction from line 18 (Form 1041) . 1040nr instructions 2012 3 0     4 Add lines 2 and 3. 1040nr instructions 2012 4 2,400     5 Enter exempt income received after death minus expenses allocable to exempt income. 1040nr instructions 2012 (See Income received after date of death on page 5. 1040nr instructions 2012 ) 5 1,000     6 Add lines 4 and 5. 1040nr instructions 2012 6 3,400     7 Figure the tax on line 6 using Schedule G (Form 1041). 1040nr instructions 2012 7 710     8 Figure the tax on line 4 using Schedule G (Form 1041). 1040nr instructions 2012 8 435     9 Tax on exempt income. 1040nr instructions 2012 Subtract line 8 from line 7. 1040nr instructions 2012 9 275     10 Enter the total of columns (A)–(C) from line 5 of Worksheet A or line 15 of Worksheet B. 1040nr instructions 2012 If the decedent was not required to file tax returns for the eligible tax years, enter -0-. 1040nr instructions 2012 10 4,268     11 Add lines 9 and 10. 1040nr instructions 2012 11 $4,543 12 Additional payment allowed. 1040nr instructions 2012 If line 11 is $10,000 or more, enter -0- and stop here. 1040nr instructions 2012 No additional amount is allowed as a tax payment. 1040nr instructions 2012 Otherwise, subtract line 11 from line 1 and enter the result. 1040nr instructions 2012 12 $5,457 Note. 1040nr instructions 2012 The amount on line 12 is allowed as a tax payment for the decedent's last tax year (usually 1995 or 2001). 1040nr instructions 2012 Attach the computation of the additional payment allowed or a copy of this worksheet to the original or amended income tax return for the decedent's last tax year. 1040nr instructions 2012 If filing Form 1040, include the amount from line 12 above on the “Other payments” line of the form. 1040nr instructions 2012 Write "Sec. 1040nr instructions 2012 692(d)(2) Payment" and the amount to the right of the entry space. 1040nr instructions 2012 Also indicate whether a Form 1041 is being filed for the decedent's estate. 1040nr instructions 2012 If filing Form 1040X, include the amount from line 12 above on Form 1040X on line 15, columns (B) and (C). 1040nr instructions 2012 Write “Sec. 1040nr instructions 2012 692(d)(2) Payment” on the dotted line to the left of the entry space. 1040nr instructions 2012 Worksheet C Illustrated. 1040nr instructions 2012 Amount Treated as Tax Payment for Decedent's Last Tax Year Caution: The decedent is entitled to minimum relief of $10,000. 1040nr instructions 2012 Complete this worksheet only if the total tax forgiven for all eligible years is less than $10,000. 1040nr instructions 2012 1 Minimum relief amount. 1040nr instructions 2012 Note: Before completing lines 2–9, see Instructions for lines 2–9 of Worksheet C. 1040nr instructions 2012 1 $10,000 2 Enter the taxable income from line 22 (Form 1041) 2 2,400     3 Enter the distribution deduction from line 18 (Form 1041) . 1040nr instructions 2012 3 0     4 Add lines 2 and 3. 1040nr instructions 2012 4 2,400     5 Enter exempt income received after death minus expenses allocable to exempt income. 1040nr instructions 2012 (See Income received after date of death on page 5. 1040nr instructions 2012 ) 5 1,000     6 Add lines 4 and 5. 1040nr instructions 2012 6 3,400     7 Figure the tax on line 6 using Schedule G (Form 1041). 1040nr instructions 2012 7 710     8 Figure the tax on line 4 using Schedule G (Form 1041). 1040nr instructions 2012 8 435     9 Tax on exempt income. 1040nr instructions 2012 Subtract line 8 from line 7. 1040nr instructions 2012 9 275     10 Enter the total of columns (A)–(C) from line 5 of Worksheet A or line 15 of Worksheet B. 1040nr instructions 2012 If the decedent was not required to file tax returns for the eligible tax years, enter -0-. 1040nr instructions 2012 10 4,268     11 Add lines 9 and 10. 1040nr instructions 2012 11 $4,543 12 Additional payment allowed. 1040nr instructions 2012 If line 11 is $10,000 or more, enter -0- and stop here. 1040nr instructions 2012 No additional amount is allowed as a tax payment. 1040nr instructions 2012 Otherwise, subtract line 11 from line 1 and enter the result. 1040nr instructions 2012 12 $5,457 Note. 1040nr instructions 2012 The amount on line 12 is allowed as a tax payment for the decedent's last tax year (usually 1995 or 2001). 1040nr instructions 2012 Attach the computation of the additional payment allowed or a copy of this worksheet to the original or amended income tax return for the decedent's last tax year. 1040nr instructions 2012 If filing Form 1040, include the amount from line 12 above on the “Other payments” line of the form. 1040nr instructions 2012 Write "Sec. 1040nr instructions 2012 692(d)(2) Payment" and the amount to the right of the entry space. 1040nr instructions 2012 Also indicate whether a Form 1041 is being filed for the decedent's estate. 1040nr instructions 2012 If filing Form 1040X, include the amount from line 12 above on Form 1040X on line 15, columns (B) and (C). 1040nr instructions 2012 Write “Sec. 1040nr instructions 2012 692(d)(2) Payment” on the dotted line to the left of the entry space. 1040nr instructions 2012 Additional Worksheets The following additional worksheets are provided for your convenience. 1040nr instructions 2012 Worksheet A. 1040nr instructions 2012 Figuring the Tax To Be Forgiven (For Decedents Who Filed a Return as Single, Married Filing Separately, Head of Household, or Qualifying Widow(er))         (A) First Eligible Year (1994 or 2000) (B) Second Eligible Year (1995 or 2001) (C) Third Eligible Year (1996 or 2002) 1 Enter the years eligible for tax forgiveness. 1040nr instructions 2012 1       2 Enter the total tax from the decedent's income tax return. 1040nr instructions 2012 See Table 1 on page 5 for the line number for years before 2002. 1040nr instructions 2012 2       3 Enter the following taxes, if any, shown on the decedent's income tax return. 1040nr instructions 2012 (These taxes are not eligible for forgiveness. 1040nr instructions 2012 )           a Self-employment tax. 1040nr instructions 2012 3a         b Social security and Medicare tax on tip income not reported to employer. 1040nr instructions 2012 3b         c Tax on excess contributions to IRAs, Coverdell education savings accounts (formerly Ed IRAs), or Archer MSAs (formerly medical savings accounts). 1040nr instructions 2012 3c         d Tax on excess accumulation in qualified retirement plans. 1040nr instructions 2012 3d         e Household employment taxes. 1040nr instructions 2012 3e         f Uncollected social security and Medicare or RRTA tax on tips or group-term life insurance. 1040nr instructions 2012 3f         g Tax on golden parachute payments. 1040nr instructions 2012 3g       4 Add lines 3a through 3g. 1040nr instructions 2012 4       5 Tax to be forgiven. 1040nr instructions 2012 Subtract line 4 from line 2. 1040nr instructions 2012 5       Note. 1040nr instructions 2012 If the total of columns (A), (B), and (C) of line 5 (including any amounts shown on line 15 of Worksheet B) is less than $10,000, also complete Worksheet C. 1040nr instructions 2012 Attach the computation of the tax to be forgiven or a copy of this worksheet to the decedent's final income tax return or amended tax return (Form 1040X) for each year listed on line 1. 1040nr instructions 2012 If filing Form 1040X for an eligible year, enter the amount from line 5 above on Form 1040X in column B of line 10 as a decrease in tax. 1040nr instructions 2012 The IRS will determine the amount to be refunded. 1040nr instructions 2012 Worksheet A. 1040nr instructions 2012 Figuring the Tax To Be Forgiven (For Decedents Who Filed a Return as Single, Married Filing Separately, Head of Household, or Qualifying Widow(er))         (A) First Eligible Year (1994 or 2000) (B) Second Eligible Year (1995 or 2001) (C) Third Eligible Year (1996 or 2002) 1 Enter the years eligible for tax forgiveness. 1040nr instructions 2012 1       2 Enter the total tax from the decedent's income tax return. 1040nr instructions 2012 See Table 1 on page 5 for the line number for years before 2002. 1040nr instructions 2012 2       3 Enter the following taxes, if any, shown on the decedent's income tax return. 1040nr instructions 2012 (These taxes are not eligible for forgiveness. 1040nr instructions 2012 )           a Self-employment tax. 1040nr instructions 2012 3a         b Social security and Medicare tax on tip income not reported to employer. 1040nr instructions 2012 3b         c Tax on excess contributions to IRAs, Coverdell education savings accounts (formerly Ed IRAs), or Archer MSAs (formerly medical savings accounts). 1040nr instructions 2012 3c         d Tax on excess accumulation in qualified retirement plans. 1040nr instructions 2012 3d         e Household employment taxes. 1040nr instructions 2012 3e         f Uncollected social security and Medicare or RRTA tax on tips or group-term life insurance. 1040nr instructions 2012 3f         g Tax on golden parachute payments. 1040nr instructions 2012 3g       4 Add lines 3a through 3g. 1040nr instructions 2012 4       5 Tax to be forgiven. 1040nr instructions 2012 Subtract line 4 from line 2. 1040nr instructions 2012 5       Note. 1040nr instructions 2012 If the total of columns (A), (B), and (C) of line 5 (including any amounts shown on line 15 of Worksheet B) is less than $10,000, also complete Worksheet C. 1040nr instructions 2012 Attach the computation of the tax to be forgiven or a copy of this worksheet to the decedent's final income tax return or amended tax return (Form 1040X) for each year listed on line 1. 1040nr instructions 2012 If filing Form 1040X for an eligible year, enter the amount from line 5 above on Form 1040X in column B of line 10 as a decrease in tax. 1040nr instructions 2012 The IRS will determine the amount to be refunded. 1040nr instructions 2012 Worksheet B. 1040nr instructions 2012 Figuring the Tax To Be Forgiven (For Decedents Who Filed a Joint Return)       (A) First Eligible Year (1994 or 2000) (B) Second Eligible Year (1995 or 2001) (C) Third Eligible Year (1996 or 2002) 1 Enter the years eligible for forgiveness. 1040nr instructions 2012 1       2 Enter the decedent's taxable income. 1040nr instructions 2012 Figure taxable income as if a separate return had been filed. 1040nr instructions 2012 See the instructions. 1040nr instructions 2012 2       3 Enter the decedent's total tax. 1040nr instructions 2012 See the instructions. 1040nr instructions 2012 3       4 Enter the total, if any, of the decedent's taxes not eligible for forgiveness. 1040nr instructions 2012 See the instructions. 1040nr instructions 2012 4       5 Subtract line 4 from line 3. 1040nr instructions 2012 5       6 Enter the surviving spouse's taxable income. 1040nr instructions 2012 Figure taxable income as if a separate return had been filed. 1040nr instructions 2012 See the instructions. 1040nr instructions 2012 6       7 Enter the surviving spouse's total tax. 1040nr instructions 2012 See the instructions. 1040nr instructions 2012 7       8 Enter the total, if any, of the surviving spouse's taxes listed in the instructions for line 4. 1040nr instructions 2012 8       9 Subtract line 8 from line 7. 1040nr instructions 2012 9       10 Add lines 5 and 9. 1040nr instructions 2012 10       11 Enter the total tax from the joint return. 1040nr instructions 2012 See Table 1 on page 5 for the line number for years before 2002. 1040nr instructions 2012 11       12 Add lines 4 and 8. 1040nr instructions 2012 12       13 Subtract line 12 from line 11. 1040nr instructions 2012 13       14 Divide line 5 by line 10. 1040nr instructions 2012 Enter the result as a decimal. 1040nr instructions 2012 14       15 Tax to be forgiven. 1040nr instructions 2012 Multiply line 13 by line 14 and enter the result. 1040nr instructions 2012 15       Note. 1040nr instructions 2012 If the total of columns (A), (B), and (C) of line 15 (including any amounts shown on line 5 of Worksheet A) is less than $10,000, also complete Worksheet C. 1040nr instructions 2012 Attach the computation of the tax to be forgiven or a copy of this worksheet to the decedent's final income tax return or amended tax return (Form 1040X) for each year listed on line 1. 1040nr instructions 2012 If filing Form 1040X for an eligible year, enter the amount from line 15 above on Form 1040X in column B of line 10 as a decrease in tax. 1040nr instructions 2012 The IRS will determine the amount to be refunded. 1040nr instructions 2012 Worksheet B. 1040nr instructions 2012 Figuring the Tax To Be Forgiven (For Decedents Who Filed a Joint Return)       (A) First Eligible Year (1994 or 2000) (B) Second Eligible Year (1995 or 2001) (C) Third Eligible Year (1996 or 2002) 1 Enter the years eligible for forgiveness. 1040nr instructions 2012 1       2 Enter the decedent's taxable income. 1040nr instructions 2012 Figure taxable income as if a separate return had been filed. 1040nr instructions 2012 See the instructions. 1040nr instructions 2012 2       3 Enter the decedent's total tax. 1040nr instructions 2012 See the instructions. 1040nr instructions 2012 3       4 Enter the total, if any, of the decedent's taxes not eligible for forgiveness. 1040nr instructions 2012 See the instructions. 1040nr instructions 2012 4       5 Subtract line 4 from line 3. 1040nr instructions 2012 5       6 Enter the surviving spouse's taxable income. 1040nr instructions 2012 Figure taxable income as if a separate return had been filed. 1040nr instructions 2012 See the instructions. 1040nr instructions 2012 6       7 Enter the surviving spouse's total tax. 1040nr instructions 2012 See the instructions. 1040nr instructions 2012 7       8 Enter the total, if any, of the surviving spouse's taxes listed in the instructions for line 4. 1040nr instructions 2012 8       9 Subtract line 8 from line 7. 1040nr instructions 2012 9       10 Add lines 5 and 9. 1040nr instructions 2012 10       11 Enter the total tax from the joint return. 1040nr instructions 2012 See Table 1 on page 5 for the line number for years before 2002. 1040nr instructions 2012 11       12 Add lines 4 and 8. 1040nr instructions 2012 12       13 Subtract line 12 from line 11. 1040nr instructions 2012 13       14 Divide line 5 by line 10. 1040nr instructions 2012 Enter the result as a decimal. 1040nr instructions 2012 14       15 Tax to be forgiven. 1040nr instructions 2012 Multiply line 13 by line 14 and enter the result. 1040nr instructions 2012 15       Note. 1040nr instructions 2012 If the total of columns (A), (B), and (C) of line 15 (including any amounts shown on line 5 of Worksheet A) is less than $10,000, also complete Worksheet C. 1040nr instructions 2012 Attach the computation of the tax to be forgiven or a copy of this worksheet to the decedent's final income tax return or amended tax return (Form 1040X) for each year listed on line 1. 1040nr instructions 2012 If filing Form 1040X for an eligible year, enter the amount from line 15 above on Form 1040X in column B of line 10 as a decrease in tax. 1040nr instructions 2012 The IRS will determine the amount to be refunded. 1040nr instructions 2012 Worksheet C. 1040nr instructions 2012 Amount Treated as Tax Payment for Decedent's Last Tax Year Caution: The decedent is entitled to minimum tax forgiveness of $10,000. 1040nr instructions 2012 Complete this worksheet only if the total tax forgiven for all eligible years is less than $10,000. 1040nr instructions 2012 1 Minimum tax forgiveness. 1040nr instructions 2012 Note. 1040nr instructions 2012 Before completing lines 2–9, see Instructions for lines 2–9 of Worksheet C. 1040nr instructions 2012 1 $10,000 2 Enter the taxable income from line 22 (Form 1041) 2       3 Enter the distribution deduction from line 18 (Form 1041) . 1040nr instructions 2012 3       4 Add lines 2 and 3. 1040nr instructions 2012 4       5 Enter exempt income received after death minus expenses allocable to exempt income. 1040nr instructions 2012 (See Income received after date of death on page 5. 1040nr instructions 2012 ) 5       6 Add lines 4 and 5. 1040nr instructions 2012 6       7 Figure the tax on line 6 using Schedule G (Form 1041). 1040nr instructions 2012 7       8 Figure the tax on line 4 using Schedule G (Form 1041). 1040nr instructions 2012 8       9 Tax on exempt income. 1040nr instructions 2012 Subtract line 8 from line 7. 1040nr instructions 2012 9       10 Enter the total of columns (A)–(C) from line 5 of Worksheet A or line 15 of Worksheet B. 1040nr instructions 2012 If the decedent was not required to file tax returns for the eligible tax years, enter -0-. 1040nr instructions 2012 10       11 Add lines 9 and 10. 1040nr instructions 2012 11   12 Additional payment allowed. 1040nr instructions 2012 If line 11 is $10,000 or more, enter -0- and stop here. 1040nr instructions 2012 No additional amount is allowed as a tax payment. 1040nr instructions 2012 Otherwise, subtract line 11 from line 1 and enter the result. 1040nr instructions 2012 12   Note. 1040nr instructions 2012 The amount on line 12 is allowed as a tax payment for the decedent's last tax year (usually 1995 or 2001). 1040nr instructions 2012 Attach the computation of the additional payment allowed or a copy of this worksheet to the original or amended income tax return for the decedent's last tax year. 1040nr instructions 2012 If filing Form 1040, include the amount from line 12 above on the “Other payments” line of the form. 1040nr instructions 2012 Write "Sec. 1040nr instructions 2012 692(d)(2) Payment" and the amount to the right of the entry space. 1040nr instructions 2012 Also indicate whether a Form 1041 is being filed for the decedent's estate. 1040nr instructions 2012 If filing Form 1040X, include the amount from line 12 above on Form 1040X on line 15, columns (B) and (C). 1040nr instructions 2012 Write “Sec. 1040nr instructions 2012 692(d)(2) Payment” on the dotted line to the left of the entry space. 1040nr instructions 2012 Worksheet C. 1040nr instructions 2012 Amount Treated as Tax Payment for Decedent's Last Tax Year Caution: The decedent is entitled to minimum tax forgiveness of $10,000. 1040nr instructions 2012 Complete this worksheet only if the total tax forgiven for all eligible years is less than $10,000. 1040nr instructions 2012 1 Minimum tax forgiveness. 1040nr instructions 2012 Note. 1040nr instructions 2012 Before completing lines 2–9, see Instructions for lines 2–9 of Worksheet C. 1040nr instructions 2012 1 $10,000 2 Enter the taxable income from line 22 (Form 1041) 2       3 Enter the distribution deduction from line 18 (Form 1041) . 1040nr instructions 2012 3       4 Add lines 2 and 3. 1040nr instructions 2012 4       5 Enter exempt income received after death minus expenses allocable to exempt income. 1040nr instructions 2012 (See Income received after date of death on page 5. 1040nr instructions 2012 ) 5       6 Add lines 4 and 5. 1040nr instructions 2012 6       7 Figure the tax on line 6 using Schedule G (Form 1041). 1040nr instructions 2012 7       8 Figure the tax on line 4 using Schedule G (Form 1041). 1040nr instructions 2012 8       9 Tax on exempt income. 1040nr instructions 2012 Subtract line 8 from line 7. 1040nr instructions 2012 9       10 Enter the total of columns (A)–(C) from line 5 of Worksheet A or line 15 of Worksheet B. 1040nr instructions 2012 If the decedent was not required to file tax returns for the eligible tax years, enter -0-. 1040nr instructions 2012 10       11 Add lines 9 and 10. 1040nr instructions 2012 11   12 Additional payment allowed. 1040nr instructions 2012 If line 11 is $10,000 or more, enter -0- and stop here. 1040nr instructions 2012 No additional amount is allowed as a tax payment. 1040nr instructions 2012 Otherwise, subtract line 11 from line 1 and enter the result. 1040nr instructions 2012 12   Note. 1040nr instructions 2012 The amount on line 12 is allowed as a tax payment for the decedent's last tax year (usually 1995 or 2001). 1040nr instructions 2012 Attach the computation of the additional payment allowed or a copy of this worksheet to the original or amended income tax return for the decedent's last tax year. 1040nr instructions 2012 If filing Form 1040, include the amount from line 12 above on the “Other payments” line of the form. 1040nr instructions 2012 Write "Sec. 1040nr instructions 2012 692(d)(2) Payment" and the amount to the right of the entry space. 1040nr instructions 2012 Also indicate whether a Form 1041 is being filed for the decedent's estate. 1040nr instructions 2012 If filing Form 1040X, include the amount from line 12 above on Form 1040X on line 15, columns (B) and (C). 1040nr instructions 2012 Write “Sec. 1040nr instructions 2012 692(d)(2) Payment” on the dotted line to the left of the entry space. 1040nr instructions 2012 How To Get Tax Help Special IRS assistance. 1040nr instructions 2012   The IRS is providing special help for those affected by the terrorist attacks, as well as survivors and personal representatives of the victims. 1040nr instructions 2012 We have set up a special toll-free number for people who may have trouble filing or paying their taxes because they were affected by the terrorist attacks, or who have other tax issues related to the attacks. 1040nr instructions 2012 Call 1–866–562–5227 Monday through Friday In English–7 a. 1040nr instructions 2012 m. 1040nr instructions 2012 to 10 p. 1040nr instructions 2012 m. 1040nr instructions 2012 local time In Spanish–8 a. 1040nr instructions 2012 m. 1040nr instructions 2012 to 9:30 p. 1040nr instructions 2012 m. 1040nr instructions 2012 local time   The IRS web site at www. 1040nr instructions 2012 irs. 1040nr instructions 2012 gov has notices and other tax relief information. 1040nr instructions 2012 Check it periodically for any new guidance or to see if Congress has enacted new legislation. 1040nr instructions 2012   Business taxpayers affected by the attacks can e-mail their questions to corp. 1040nr instructions 2012 disaster. 1040nr instructions 2012 relief@irs. 1040nr instructions 2012 gov. 1040nr instructions 2012   For current information on Presidentially declared disaster areas, check the Federal Emergency Management Agency Web site at www. 1040nr instructions 2012 fema. 1040nr instructions 2012 gov. 1040nr instructions 2012 Other help from the IRS. 1040nr instructions 2012   You can get help with unresolved tax issues, order free publications and forms, ask tax questions, and get more information from the IRS in several ways. 1040nr instructions 2012 By selecting the method that is best for you, you will have quick and easy access to tax help. 1040nr instructions 2012 Contacting your Taxpayer Advocate. 1040nr instructions 2012   If you have attempted to deal with an IRS problem unsuccessfully, you should contact your Taxpayer Advocate. 1040nr instructions 2012   The Taxpayer Advocate represents your interests and concerns within the IRS by protecting your rights and resolving problems that have not been fixed through normal channels. 1040nr instructions 2012 While Taxpayer Advocates cannot change the tax law or make a technical tax decision, they can clear up problems that resulted from previous contacts and ensure that your case is given a complete and impartial review. 1040nr instructions 2012   To contact your Taxpayer Advocate: Call the Taxpayer Advocate at 1–877–777–4778. 1040nr instructions 2012 Call the IRS at 1–800–829–1040. 1040nr instructions 2012 Call, write, or fax the Taxpayer Advocate office in your area. 1040nr instructions 2012 Call 1–800–829–4059 if you are a TTY/TDD user. 1040nr instructions 2012   For more information, see Publication 1546, The Taxpayer Advocate Service of the IRS. 1040nr instructions 2012 Free tax services. 1040nr instructions 2012   To find out what services are available, get Publication 910, Guide to Free Tax Services. 1040nr instructions 2012 It contains a list of free tax publications and an index of tax topics. 1040nr instructions 2012 It also describes other free tax information services, including tax education and assistance programs and a list of TeleTax topics. 1040nr instructions 2012 Personal computer. 1040nr instructions 2012 With your personal computer and modem, you can access the IRS on the Internet at www. 1040nr instructions 2012 irs. 1040nr instructions 2012 gov. 1040nr instructions 2012 While visiting our web site, you can: Find answers to questions you may have. 1040nr instructions 2012 Download forms and publications or search for forms and pub