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1040s

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1040s

1040s Index A Additional Medicare Tax, Reminders, Additional Medicare Tax withholding. 1040s Aliens, nonresident, Withholding income taxes on the wages of nonresident alien employees. 1040s , Withholding adjustment for nonresident alien employees. 1040s Assistance (see Tax help) C COBRA premium assistance credit, Reminders COBRA Premium Assistance Credit, COBRA premium assistance credit. 1040s Commodity wages, Commodity wages. 1040s Crew leaders, Crew Leaders, 10. 1040s Federal Unemployment (FUTA) Tax D Deposit Penalties, Deposit Penalties Deposit rules Electronic funds transfer, 7. 1040s Depositing Taxes Lookback period, Lookback period. 1040s Differential wage payments, Reminders Disregarded entities, Reminders E Electronic deposits, Electronic deposit requirement. 1040s Electronic payment, Reminders Electronic reporting, Calendar Employee defined, 2. 1040s Who Are Employees? Employer identification number (EIN), Employer identification number (EIN). 1040s Employers of farmworkers, 2. 1040s Who Are Employees? Exemption from withholding, Exemption from federal income tax withholding. 1040s F Farmworkers Crew leaders, Crew Leaders Defined, 2. 1040s Who Are Employees? Federal unemployment (FUTA) taxes, 10. 1040s Federal Unemployment (FUTA) Tax Forms 843, Form 843. 1040s 940, 10. 1040s Federal Unemployment (FUTA) Tax 943, 8. 1040s Form 943 943-X, Prior Year Adjustments I-9, Reminders W-2, Filing corrections to Forms W-2 and W-3. 1040s W-4, Reminders, Form W-4. 1040s W-4(SP), Reminders, Form W-4. 1040s H H-2A visa holders, Compensation paid to H-2A visa holders. 1040s Household employees Employment tax withholding, Household employees. 1040s I Income tax withholding How to figure, How To Figure Federal Income Tax Withholding Percentage method, 13. 1040s Federal Income Tax Withholding Methods Wage bracket method, 13. 1040s Federal Income Tax Withholding Methods Who must withhold, 5. 1040s Federal Income Tax Withholding Independent contractor, 2. 1040s Who Are Employees? L Lookback period, Lookback period. 1040s N Noncash wages, Commodity wages. 1040s P Penalties, Deposit Penalties Prior year adjustments, Prior Year Adjustments Publications (see Tax help) Q Qualified subchapter S subsidiaries (QSubs), Reminders R Reconciling Forms W-2, W-3, and 943, 11. 1040s Reconciling Wage Reporting Forms Reconciling wage reporting forms, 11. 1040s Reconciling Wage Reporting Forms S Share farmers, Share farmers. 1040s Social security and Medicare withholding, 4. 1040s Social Security and Medicare Taxes Social security number (SSN), Social security number (SSN). 1040s Spouses who own and operate a business together , Business Owned and Operated by Spouses Supplemental wages, Supplemental wages. 1040s T Tax help, How To Get Tax Help Taxpayer identification number, 1. 1040s Taxpayer Identification Numbers Trust fund recovery penalty, Trust fund recovery penalty. 1040s TTY/TDD information, How To Get Tax Help W Withholding Income tax, 5. 1040s Federal Income Tax Withholding Nonresident aliens, Withholding adjustment for nonresident alien employees. 1040s Supplemental wages, Supplemental wages. 1040s Prev  Up     Home   More Online Publications
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The 1040s

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