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1042nr ez Publication 51 - Introductory Material Table of Contents Future Developments What's New Reminders Calendar Introduction Useful Items - You may want to see: Future Developments For the latest information about developments related to Publication 51 (Circular A), such as legislation enacted after it was published, go to www. 1042nr ez irs. 1042nr ez gov/pub51. 1042nr ez What's New Social security and Medicare tax for 2014. 1042nr ez  The social security tax rate is 6. 1042nr ez 2% each for the employee and employer, unchanged from 2013. 1042nr ez The social security wage base limit is $117,000. 1042nr ez The Medicare tax rate is 1. 1042nr ez 45% each for the employee and employer, unchanged from 2013. 1042nr ez There is no wage base limit for Medicare tax. 1042nr ez Social security and Medicare taxes apply to the wages of household workers you pay $1,900 or more in cash or an equivalent form of compensation. 1042nr ez Withholding allowance. 1042nr ez  The 2014 amount for one withholding allowance on an annual basis is $3,950. 1042nr ez Change of responsible party. 1042nr ez  Beginning January 1, 2014, any entity with an employer identification number (EIN) must file Form 8822-B, Change of Address or Responsible Party—Business, to report the latest change to its responsible party. 1042nr ez Form 8822-B must be filed within 60 days of the change. 1042nr ez If the change in the identity of your responsible party occurred before 2014, and you have not previously notified the IRS of the change, file Form 8822-B before March 1, 2014, reporting only the most recent change. 1042nr ez For a definition of "responsible party", see the Form 8822-B instructions. 1042nr ez Same-sex marriage. 1042nr ez  For federal tax purposes, individuals of the same sex are considered married if they were lawfully married in a state (or foreign country) whose laws authorize the marriage of two individuals of the same sex, even if the state (or foreign country) in which they now live does not recognize same-sex marriage. 1042nr ez For more information, see Revenue Ruling 2013-17, 2013-38 I. 1042nr ez R. 1042nr ez B. 1042nr ez 201, available at www. 1042nr ez irs. 1042nr ez gov/irb/2013-38_IRB/ar07. 1042nr ez html. 1042nr ez Notice 2013-61 provides special administrative procedures for employers to make claims for refund or adjustments of overpayments of social security and Medicare taxes with respect to certain same-sex spouse benefits before expiration of the period of limitations. 1042nr ez Notice 2013-61, 2013-44 I. 1042nr ez R. 1042nr ez B. 1042nr ez 432, is available at www. 1042nr ez irs. 1042nr ez gov/irb/2013-44_IRB/ar10. 1042nr ez html. 1042nr ez Reminders Additional Medicare Tax withholding. 1042nr ez  In addition to withholding Medicare tax at 1. 1042nr ez 45%, you must withhold a 0. 1042nr ez 9% Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. 1042nr ez You are required to begin withholding Additional Medicare Tax in the pay period in which you pay wages in excess of $200,000 to an employee and continue to withhold it each pay period until the end of the calendar year. 1042nr ez Additional Medicare Tax is only imposed on the employee. 1042nr ez There is no employer share of Additional Medicare Tax. 1042nr ez All wages that are subject to Medicare tax are subject to Additional Medicare Tax withholding if paid in excess of the $200,000 withholding threshold. 1042nr ez For more information on what wages are subject to Medicare tax, see the chart, Special Rules for Various Types of Services and Payments, in section 15 of Publication 15 (Circular E), Employer's Tax Guide. 1042nr ez For more information on Additional Medicare Tax, visit IRS. 1042nr ez gov and enter “Additional Medicare Tax” in the search box. 1042nr ez Work opportunity tax credit for qualified tax-exempt organizations hiring qualified veterans. 1042nr ez  The work opportunity tax credit is available for eligible unemployed veterans who begin work on or after November 22, 2011, and before January 1, 2014. 1042nr ez Qualified tax-exempt organizations that hire eligible unemployed veterans can claim the work opportunity tax credit against their payroll tax liability using Form 5884-C, Work Opportunity Credit for Qualified Tax-Exempt Organizations Hiring Qualified Veterans. 1042nr ez For more information, visit IRS. 1042nr ez gov and enter “work opportunity tax credit” in the search box. 1042nr ez Outsourcing payroll duties. 1042nr ez  Employers are responsible to ensure that tax returns are filed and deposits and payments are made, even if the employer contracts with a third party to perform these acts. 1042nr ez The employer remains responsible if the third party fails to perform any required action. 1042nr ez If you choose to outsource any of your payroll and related tax duties (that is, withholding, reporting, and paying over social security, Medicare, FUTA, and income taxes) to a third-party payer such as a payroll service provider or reporting agent, visit IRS. 1042nr ez gov and enter “outsourcing payroll duties” in the search box for helpful information on this topic. 1042nr ez COBRA premium assistance credit. 1042nr ez  The credit for COBRA premium assistance payments applies to premiums paid for employees involuntarily terminated between September 1, 2008, and May 31, 2010, and to premiums paid for up to 15 months. 1042nr ez For more information, see COBRA premium assistance credit under Introduction. 1042nr ez Compensation paid to H-2A foreign agricultural workers. 1042nr ez  Report compensation of $600 or more paid to foreign agricultural workers who entered the country on H-2A visas in box 1 of Form W-2, Wage and Tax Statement. 1042nr ez Compensation paid to H-2A workers for agricultural labor performed in connection with this visa is not subject to social security and Medicare taxes, and therefore should not be reported as wages subject to social security tax (line 2), Medicare tax (line 4), or Additional Medicare Tax withholding (line 6) on Form 943, Employer's Annual Federal Tax Return for Agricultural Employees, and should not be reported as social security wages (box 3) or Medicare wages (box 5) on Form W-2. 1042nr ez On Form W-2, do not check box 13 (Statutory employee), as H-2A workers are not statutory employees. 1042nr ez An employer is not required to withhold federal income tax from compensation it pays an H-2A worker for agricultural labor performed in connection with this visa unless the worker asks for withholding and the employer agrees. 1042nr ez In that case, the worker must give the employer a completed Form W-4, Employee's Withholding Allowance Certificate. 1042nr ez Federal income tax withheld should be reported on Form 943, line 8, and in box 2 of Form W-2. 1042nr ez These reporting rules apply when the H-2A worker provides his or her taxpayer identification number (TIN) to the employer. 1042nr ez For the rules relating to backup withholding and reporting when the H-2A worker does not provide a TIN, see the Instructions for Form 1099-MISC and the Instructions for Form 945. 1042nr ez Additional employment tax information. 1042nr ez  Visit the IRS website at www. 1042nr ez irs. 1042nr ez gov/businesses and click on Employment Taxes under Businesses Topics. 1042nr ez For employment tax information by telephone, call 1-800-829-4933 or 1-800-829-4059 (TDD/TTY for persons who are deaf, hard of hearing, or have a speech disability) Monday–Friday from 7:00 a. 1042nr ez m. 1042nr ez –7:00 p. 1042nr ez m. 1042nr ez local time (Alaska and Hawaii follow Pacific time). 1042nr ez Additionally, you can call IRS TeleTax at 1-800-829-4477 for recorded information by topic. 1042nr ez Disregarded entities and qualified subchapter S subsidiaries (QSubs). 1042nr ez  Eligible single-owner disregarded entities and QSubs are treated as separate entities for employment tax purposes. 1042nr ez Eligible single-member entities that have not elected to be taxed as corporations must report and pay employment taxes on wages paid to their employees using the entities' own names and EINs. 1042nr ez See Regulations sections 1. 1042nr ez 1361-4(a)(7) and 301. 1042nr ez 7701-2(c)(2)(iv). 1042nr ez Differential wage payments. 1042nr ez  Qualified differential wage payments made by employers to individuals serving in the Armed Forces after 2008 are subject to income tax withholding but not social security, Medicare, or FUTA taxes. 1042nr ez For more information, see Publication 15 (Circular E). 1042nr ez Federal tax deposits must be made by electronic funds transfer. 1042nr ez  You must use electronic funds transfer to make all federal tax deposits. 1042nr ez Generally, electronic fund transfers are made using the Electronic Federal Tax Payment System (EFTPS). 1042nr ez If you do not want to use EFTPS, you can arrange for your tax professional, financial institution, payroll service, or other trusted third party to make electronic deposits on your behalf. 1042nr ez Also, you may arrange for your financial institution to initiate a same-day wire payment on your behalf. 1042nr ez EFTPS is a free service provided by the Department of Treasury. 1042nr ez Services provided by your tax professional, financial institution, payroll service, or other third party may have a fee. 1042nr ez For more information on making federal tax deposits, see How To Deposit in section 7. 1042nr ez To get more information about EFTPS or to enroll in EFTPS, visit www. 1042nr ez eftps. 1042nr ez gov or call 1-800-555-4477 or 1-800-733-4829 (TDD). 1042nr ez Additional information about EFTPS is also available in Publication 966, Electronic Federal Tax Payment System: A Guide To Getting Started. 1042nr ez Electronic filing and payment. 1042nr ez  Now, more than ever before, businesses can enjoy the benefits of filing tax returns and paying their taxes electronically. 1042nr ez Whether you rely on a tax professional or handle your own taxes, the IRS offers you convenient programs to make it easier. 1042nr ez Spend less time and worry on taxes and more time running your business. 1042nr ez Use e-file and the Electronic Federal Tax Payment System (EFTPS) to your benefit. 1042nr ez For e-file, visit the IRS website at www. 1042nr ez irs. 1042nr ez gov/efile for additional information. 1042nr ez For EFTPS, visit www. 1042nr ez eftps. 1042nr ez gov or call EFTPS Customer Service at 1-800-555-4477 (business), 1-800-316-6541 (individual), or 1-800-733-4829 (TDD) for additional information. 1042nr ez For electronic filing of Form W-2, visit www. 1042nr ez socialsecurity. 1042nr ez gov/employer. 1042nr ez If you are filing your tax return or paying your federal taxes electronically, a valid EIN is required. 1042nr ez If a valid EIN is not provided, the return or payment will not be processed. 1042nr ez This may result in penalties and delays in processing your return or payment. 1042nr ez Electronic funds withdrawal (EFW). 1042nr ez  If you file Form 943 electronically, you can e-file and e-pay (electronic funds withdrawal) the balance due in a single step using tax preparation software or through a tax professional. 1042nr ez However, do not use EFW to make federal tax deposits. 1042nr ez For more information on paying your taxes using EFW, visit the IRS website at www. 1042nr ez irs. 1042nr ez gov/e-pay. 1042nr ez A fee may be charged to file electronically. 1042nr ez Credit or debit card payments. 1042nr ez   Employers can pay the balance due shown on Form 943 by credit or debit card. 1042nr ez Do not use a credit or debit card to make federal tax deposits. 1042nr ez For more information on paying your taxes with a credit or debit card, visit the IRS website at www. 1042nr ez irs. 1042nr ez gov/e-pay. 1042nr ez When you hire a new employee. 1042nr ez  Ask each new employee to complete the 2014 Form W-4 or its Spanish version, Formulario W-4(SP), Certificado de Exención de Retenciones del Empleado. 1042nr ez Also, ask the employee to show you his or her social security card so that you can record the employee's name and social security number accurately. 1042nr ez If the employee has lost the card or recently changed names, have the employee apply for a duplicate or corrected card. 1042nr ez If the employee does not have a card, have the employee apply for one on Form SS-5, Application for a Social Security Card. 1042nr ez See section 1 for more information. 1042nr ez Eligibility for employment. 1042nr ez  You must verify that each new employee is legally eligible to work in the United States. 1042nr ez This includes completing the U. 1042nr ez S. 1042nr ez Citizenship and Immigration Services (USCIS) Form I-9, Employment Eligibility Verification. 1042nr ez You can get the form from USCIS offices or by calling 1-800-870-3676. 1042nr ez Contact the USCIS at 1-800-375-5283, or visit the USCIS website at www. 1042nr ez uscis. 1042nr ez gov for more information. 1042nr ez New hire reporting. 1042nr ez   You are required to report any new employee to a designated state new-hire registry. 1042nr ez A new employee is an employee who has not previously been employed by you or was previously employed by you but has been separated from such prior employment for at least 60 consecutive days. 1042nr ez Many states accept a copy of Form W-4 with employer information added. 1042nr ez Visit the Office of Child Support Enforcement's website at www. 1042nr ez acf. 1042nr ez hhs. 1042nr ez gov/programs/cse/newhire for more information. 1042nr ez Dishonored payments. 1042nr ez  Any form of payment that is dishonored and returned from a financial institution is subject to a penalty. 1042nr ez The penalty is $25 or 2% of the payment, whichever is more. 1042nr ez However, the penalty on dishonored payments of $24. 1042nr ez 99 or less is an amount equal to the payment. 1042nr ez For example, a dishonored payment of $18 is charged a penalty of $18. 1042nr ez Forms in Spanish. 1042nr ez  You can provide Formulario W-4(SP) in place of Form W-4 to your Spanish-speaking employees. 1042nr ez For more information, see Publicación 17(SP), El Impuesto Federal sobre los Ingresos (Para Personas Físicas). 1042nr ez For nonemployees, Formulario W-9(SP), Solicitud y Certificación del Número de Identificación del Contribuyente, may be used in place of Form W-9, Request for Taxpayer Identification Number and Certification. 1042nr ez References in this publication to Form W-4 or Form W-9 also apply to their equivalent Spanish translations—Formulario W-4(SP) or Formulario W-9(SP). 1042nr ez Information returns. 1042nr ez  You may be required to file information returns to report certain types of payments made during the year. 1042nr ez For example, you must file Form 1099-MISC, Miscellaneous Income, to report payments of $600 or more to persons not treated as employees (for example, independent contractors) for services performed for your trade or business. 1042nr ez For details about filing Forms 1099 and for information about required electronic filing, see the General Instructions for Certain Information Returns for general information and the separate, specific instructions for each information return that you file (for example, Instructions for Form 1099-MISC). 1042nr ez Generally, do not use Forms 1099 to report wages or other compensation that you paid to employees; report these amounts on Form W-2. 1042nr ez See the General Instructions for Forms W-2 and W-3 for details about filing Forms W-2 and for information about required electronic filing. 1042nr ez If you file 250 or more Forms W-2, you must file them electronically. 1042nr ez SSA will not accept Forms W-2 and W-3 filed on any magnetic media. 1042nr ez Information reporting customer service site. 1042nr ez  The IRS operates the Enterprise Computing Center—Martinsburg, a centralized customer service site, to answer questions about reporting on Forms W-2, W-3, 1099, and other information returns. 1042nr ez If you have questions related to reporting on information returns, you may call 1-866-455-7438 (toll free), 304-263-8700 (toll call), or 304-267-3367 (TDD/TTY for persons who are deaf, heard of hearing, or have a speech disability). 1042nr ez The call site can also be reached by email at mccirp@irs. 1042nr ez gov. 1042nr ez Do not include tax identification numbers (TINs) or attachments in email correspondence because electronic mail is not secure. 1042nr ez Web-based application for an employer identification number (EIN). 1042nr ez  You can apply for an employer identification number (EIN) online by visiting IRS. 1042nr ez gov and clicking on the Apply for an EIN Online link under Tools. 1042nr ez When a crew leader furnishes workers to you. 1042nr ez  Record the crew leader's name, address, and EIN. 1042nr ez See sections 2 and 10. 1042nr ez Change of address. 1042nr ez  Use Form 8822-B to notify the IRS of an address change. 1042nr ez Do not mail form 8822-B with your employment tax return. 1042nr ez Ordering forms and publications. 1042nr ez  You can order your 2013 and 2014 employment tax and information return forms, instructions, and publications online at www. 1042nr ez irs. 1042nr ez gov/businesses. 1042nr ez Click on the Online Ordering for Information Returns and Employer Returns. 1042nr ez You can also visit www. 1042nr ez irs. 1042nr ez gov/formspubs to download other forms and publications. 1042nr ez Instead of ordering paper Forms W-2 and W-3, consider filing them electronically using the Social Security Administration's (SSA) free e-file service. 1042nr ez Visit the SSA's Employer W-2 Filing Instructions & Information website at  www. 1042nr ez socialsecurity. 1042nr ez gov/employer, to register for Business Services Online. 1042nr ez You will be able to create and file “fill-in” versions of Forms W-2 with SSA and can print out completed copies of Forms W-2 for filing with state and local governments, distribution to your employees, and for your records. 1042nr ez Form W-3 will be created for you based on your Forms W-2. 1042nr ez Tax Questions. 1042nr ez   If you have a tax question, check the information available on IRS. 1042nr ez gov or call 1-800-829-4933 (businesses), 1-800-829-1040 (individuals), or 1-800-829-4059 (TDD/TTY for persons who are deaf, hard of hearing, or have a speech disability) Monday–Friday from 7:00 a. 1042nr ez m. 1042nr ez –7:00 p. 1042nr ez m. 1042nr ez local time (Alaska and Hawaii follow Pacific time). 1042nr ez We cannot answer tax questions sent to the address provided later for comments and suggestions. 1042nr ez Recordkeeping. 1042nr ez  Keep all records of employment taxes for at least 4 years. 1042nr ez These should be available for IRS review. 1042nr ez Your records should include the following information. 1042nr ez Your employer identification number (EIN). 1042nr ez Amounts and dates of all wage, annuity, and pension payments. 1042nr ez Names, addresses, social security numbers, and occupations of employees and recipients. 1042nr ez Any employee copies of Forms W-2 and W-2c returned to you as undeliverable. 1042nr ez Dates of employment for each employee. 1042nr ez Periods for which employees and recipients were paid while absent due to sickness or injury and the amount and weekly rate of payments you or third-party payers made to them. 1042nr ez Copies of employees' and recipients' income tax withholding allowance certificates (Forms W-4, W-4(SP), W-4P, and W-4S). 1042nr ez Dates and amounts of tax deposits you made and acknowledgment numbers for deposits made by EFTPS. 1042nr ez Copies of returns filed and confirmation numbers. 1042nr ez Records of fringe benefits and expense reimbursements provided to your employees, including substantiation. 1042nr ez If a crew leader furnished you with farmworkers, you must keep a record of the name, permanent mailing address, and EIN of the crew leader. 1042nr ez If the crew leader has no permanent mailing address, record his or her present address. 1042nr ez Private delivery services. 1042nr ez  You can use certain private delivery services designated by the IRS to send tax returns and payments. 1042nr ez The list includes only the following. 1042nr ez DHL Express (DHL): DHL Same Day Service. 1042nr ez Federal Express (FedEx): FedEx Priority Overnight, FedEx Standard Overnight, FedEx 2Day, FedEx International Priority, and FedEx International First. 1042nr ez United Parcel Service (UPS): UPS Next Day Air, UPS Next Day Air Saver, UPS 2nd Day Air, UPS 2nd Day Air A. 1042nr ez M. 1042nr ez , UPS Worldwide Express Plus, and UPS Worldwide Express. 1042nr ez For the IRS mailing address to use if you are using a private delivery service, go to IRS. 1042nr ez gov and enter "private delivery service" in the search box. 1042nr ez Your private delivery service can tell you how to get written proof of the mailing date. 1042nr ez Private delivery services cannot deliver items to P. 1042nr ez O. 1042nr ez boxes. 1042nr ez You must use the U. 1042nr ez S. 1042nr ez Postal Service to mail any item to an IRS P. 1042nr ez O. 1042nr ez box address. 1042nr ez Photographs of missing children. 1042nr ez  The IRS is a proud partner with the National Center for Missing and Exploited Children. 1042nr ez Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. 1042nr ez You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. 1042nr ez Calendar The following are important dates and responsibilities. 1042nr ez See section 7 for information about depositing taxes reported on Forms 941, 943, 944, and 945. 1042nr ez Also see Publication 509, Tax Calendars. 1042nr ez   If any date shown below for filing a return, furnishing a form, or depositing taxes falls on a Saturday, Sunday, or legal holiday, the due date is the next business day. 1042nr ez A statewide legal holiday delays a filing due date only if the IRS office where you are required to file is located in that state. 1042nr ez However, a statewide legal holiday does not delay the due date of federal tax deposits. 1042nr ez See Deposits on Business Days Only in section 7. 1042nr ez For any filing due date, you will meet the “file” or “furnish” requirement if the envelope containing the return or form is properly addressed, contains sufficient postage, and is postmarked by the U. 1042nr ez S. 1042nr ez Postal Service on or before the due date, or sent by an IRS-designated delivery service on or before the due date. 1042nr ez See Private delivery services under Reminders. 1042nr ez By January 31 . 1042nr ez   File Form 943. 1042nr ez See section 8 for more information on Form 943. 1042nr ez If you deposited all Form 943 taxes when due, you have 10 additional calendar days to file. 1042nr ez Furnish each employee with a completed Form W-2. 1042nr ez Furnish each recipient to whom you paid $600 or more in nonemployee compensation with a completed Form 1099 (for example, Form 1099-MISC). 1042nr ez File Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return. 1042nr ez See section 10 for more information on FUTA. 1042nr ez If you deposited all the FUTA tax when due, you have 10 additional calendar days to file. 1042nr ez File Form 945, Annual Return of Withheld Federal Income Tax, to report any nonpayroll federal income tax withheld in 2013. 1042nr ez If you deposited all Form 945 taxes when due, you have 10 additional calendar days to file. 1042nr ez By February 15. 1042nr ez  Ask for a new Form W-4 or Formulario W-4(SP) from each employee who claimed exemption from federal income tax withholding last year. 1042nr ez On February 16. 1042nr ez  Any Form W-4 claiming exemption from withholding for the previous year has now expired. 1042nr ez Begin withholding for any employee who previously claimed exemption from withholding but has not given you a new Form W-4 for the current year. 1042nr ez If the employee does not give you a new Form W-4, withhold tax based on the last valid Form W-4 you have for the employee that does not claim exemption from withholding or, if one does not exist, as if he or she is single with zero withholding allowances. 1042nr ez See section 5 for more information. 1042nr ez If the employee furnishes a new Form W-4 claiming exemption from withholding after February 15, you may apply the exemption to future wages, but do not refund taxes withheld while the exempt status was not in place. 1042nr ez By February 28. 1042nr ez   File paper Forms 1099 and 1096. 1042nr ez File Copy A of all paper Forms 1099 with Form 1096, Annual Summary and Transmittal of U. 1042nr ez S. 1042nr ez Information Returns, with the IRS. 1042nr ez For electronically filed returns, see By March 31 below. 1042nr ez File paper Forms W-2 and W-3. 1042nr ez File Copy A of all paper Forms W-2 with Form W-3, Transmittal of Wage and Tax Statements, with the SSA. 1042nr ez For electronically filed returns, see By March 31 next. 1042nr ez By March 31. 1042nr ez   File electronic Forms W-2 and 1099. 1042nr ez File electronic Forms W-2 with the SSA and Forms 1099 with the IRS. 1042nr ez For more information on reporting Form W-2 information to the SSA electronically, visit the SSA's Employer W-2 Filing Instructions & Information webpage at www. 1042nr ez socialsecurity. 1042nr ez gov/employer. 1042nr ez For information on filing information returns electronically with the IRS, see Publication 1220, Specifications for Electronic Filing of Forms 1097, 1098, 1099, 3921, 3922, 5498, 8935, and W-2G. 1042nr ez By April 30, July 31, October 31, and January 31. 1042nr ez   Deposit FUTA taxes. 1042nr ez Deposit FUTA tax if the undeposited amount is over $500. 1042nr ez Before December 1. 1042nr ez  Remind employees to submit a new Form W-4 if their marital status or withholding allowances have changed or will change for the next year. 1042nr ez Introduction This publication is for employers of agricultural workers (farmworkers). 1042nr ez It contains information that you may need to comply with the laws for agricultural labor (farmwork) relating to social security and Medicare taxes, FUTA tax, and withheld federal income tax (employment taxes). 1042nr ez Agricultural employers report social security and Medicare taxes and withheld federal income tax on Form 943 and report FUTA tax on Form 940. 1042nr ez If you have nonfarm employees, see Publication 15 (Circular E). 1042nr ez If you have employees in the U. 1042nr ez S. 1042nr ez Virgin Islands, Guam, American Samoa, or the Commonwealth of the Northern Mariana Islands, see Publication 80 (Circular SS). 1042nr ez Publication 15-A, Employer's Supplemental Tax Guide, contains more employment-related information, including information about sick pay and pension income. 1042nr ez Publication 15-B, Employer's Tax Guide to Fringe Benefits, contains information about the employment tax treatment and valuation of various types of noncash compensation. 1042nr ez Comments and suggestions. 1042nr ez   We welcome your comments about this publication and your suggestions for future editions. 1042nr ez   You can write to us at the following address:  Internal Revenue Service Tax Forms and Publications Division  1111 Constitution Ave. 1042nr ez NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. 1042nr ez Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. 1042nr ez   You can also send us comments from www. 1042nr ez irs. 1042nr ez gov/formspubs. 1042nr ez Click on More Information and then click on Comment on Tax Forms and Publications. 1042nr ez   Although we cannot respond individually to each email, we do appreciate your feedback and will consider your comments as we revise our tax forms, instructions, and publications. 1042nr ez COBRA premium assistance credit. 1042nr ez   The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) provides certain former employees, retirees, spouses, former spouses, and dependent children the right to temporary continuation of health coverage at group rates. 1042nr ez COBRA generally covers multiemployer health plans and health plans maintained by private-sector employers (other than churches) with 20 or more full and part-time employees. 1042nr ez Parallel requirements apply to these plans under the Employee Retirement Income Security Act of 1974 (ERISA). 1042nr ez Under the Public Health Service Act, COBRA requirements apply also to health plans covering state or local government employees. 1042nr ez Similar requirements apply under the Federal Employees Health Benefits Program and under some state laws. 1042nr ez For the premium assistance (or subsidy) discussed below, these requirements are all referred to as COBRA requirements. 1042nr ez   Under the American Recovery and Reinvestment Act of 2009 (ARRA), employers are allowed a credit against “payroll taxes” (referred to in this publication as “employment taxes”) for providing COBRA premium assistance to assistance eligible individuals. 1042nr ez For periods of COBRA continuation coverage beginning after February 16, 2009, a group health plan must treat an assistance eligible individual as having paid the required COBRA continuation coverage premium if the individual elects COBRA coverage and pays 35% of the amount of the premium. 1042nr ez   An assistance eligible individual is a qualified beneficiary of an employer's group health plan who is eligible for COBRA continuation coverage during the period beginning September 1, 2008, and ending May 31, 2010, due to the involuntarily termination from employment of a covered employee during the period and elects continuation COBRA coverage. 1042nr ez The assistance for the coverage can last up to 15 months. 1042nr ez   Employees terminated during the period beginning September 1, 2008, and ending May 31, 2010, who received a severance package that delayed the start of the COBRA continuation coverage, may still be eligible for premium assistance for COBRA continuation coverage. 1042nr ez For more information, see Notice 2009-27, 2009-16 I. 1042nr ez R. 1042nr ez B. 1042nr ez 838, available at www. 1042nr ez irs. 1042nr ez gov/irb/2009-16_irb/ar09. 1042nr ez html. 1042nr ez   Administrators of the group health plans (or other entities) that provide or administer COBRA continuation coverage must provide notice to assistance eligible individuals of the COBRA premium assistance. 1042nr ez   The 65% of the premium not paid by the assistance eligible individual is reimbursed to the employer maintaining the group health plan. 1042nr ez The reimbursement is made through a credit against the employer's employment tax liabilities. 1042nr ez For information on how to claim the credit, see the Instructions for Form 943. 1042nr ez The credit is treated as a deposit made on the first day of the return period. 1042nr ez In the case of a multiemployer plan, the credit is claimed by the plan, rather than the employer. 1042nr ez In the case of an insured plan subject to state law continuation coverage requirements, the credit is claimed by the insurance company, rather than the employer. 1042nr ez   Anyone claiming the credit for COBRA premium assistance payments must maintain the following information to support their claim, including the following. 1042nr ez Information on the receipt of the assistance eligible individuals' 35% share of the premium including dates and amounts. 1042nr ez In the case of an insurance plan, a copy of invoice or other supporting statement from the insurance carrier and proof of timely payment of the full premium to the insurance carrier required under COBRA. 1042nr ez In the case of a self-insured plan, proof of the premium amount and proof of the coverage provided to the assistance eligible individuals. 1042nr ez Attestation of involuntary termination, including the date of the involuntary termination for each covered employee whose involuntary termination is the basis for eligibility for the subsidy. 1042nr ez Proof of each assistance eligible individual's eligibility for COBRA coverage and the election of COBRA coverage. 1042nr ez A record of the social security numbers (SSNs) of all covered employees, the amount of the subsidy reimbursed with respect to each covered employee, and whether the subsidy was for one individual or two or more individuals. 1042nr ez   For more information, visit IRS. 1042nr ez gov and enter “COBRA” in the search box. 1042nr ez Useful Items - You may want to see: Publication 15 (Circular E), Employer's Tax Guide 15-A Employer's Supplemental Tax Guide 15-B Employer's Tax Guide to Fringe Benefits 225 Farmer's Tax Guide 535 Business Expenses 583 Starting a Business and Keeping Records 1635 Employer Identification Number: Understanding Your EIN 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The 1042nr Ez

1042nr ez 1. 1042nr ez   Bona Fide Residence Table of Contents Presence TestDays of Presence in the United States or Relevant Possession Significant Connection Tax HomeExceptions Closer ConnectionException for Year of Move Special Rules in the Year of a MoveYear of Moving to a Possession Year of Moving From a Possession Reporting a Change in Bona Fide ResidenceWho Must File Penalty for Not Filing Form 8898 In order to qualify for certain tax benefits (see chapter 3), you must be a bona fide resident of American Samoa, the CNMI, Guam, Puerto Rico, or the USVI for the entire tax year. 1042nr ez Generally, you are a bona fide resident of one of these possessions (the relevant possession) if, during the tax year, you: Meet the presence test, Do not have a tax home outside the relevant possession, and Do not have a closer connection to the United States or to a foreign country than to the relevant possession. 1042nr ez Special rule for members of the U. 1042nr ez S. 1042nr ez Armed Forces. 1042nr ez   If you are a member of the U. 1042nr ez S. 1042nr ez Armed Forces who qualified as a bona fide resident of the relevant possession in an earlier tax year, your absence from that possession during the current tax year in compliance with military orders will not affect your status as a bona fide resident. 1042nr ez Likewise, being in a possession solely in compliance with military orders will not qualify you for bona fide residency. 1042nr ez Also see the special income source rule for members of the U. 1042nr ez S. 1042nr ez Armed Forces in chapter 2, under Compensation for Labor or Personal Services . 1042nr ez Special rule for civilian spouse of active duty member of the U. 1042nr ez S. 1042nr ez Armed Forces. 1042nr ez   If you are the civilian spouse of an active duty servicemember, under Military Spouses Residency Relief Act (MSRRA) you can choose to keep your prior residence or domicile for tax purposes (tax residence) when accompanying the servicemember spouse, who is relocating under military orders, to a new military duty station in one of the 50 states, the District of Columbia, or a U. 1042nr ez S. 1042nr ez possession. 1042nr ez Before relocating, you and your spouse must have the same tax residence. 1042nr ez If you are a civilian spouse and choose to keep your prior tax residence after such relocation, the source of income for services performed (for example, wages, salaries, tips, or self-employment) by you is considered to be (the jurisdiction of) the prior tax residence. 1042nr ez As a result, the amount of income tax withholding (from Form(s) W-2, Wage and Tax Statement) that you are able to claim on your federal return, as well as the need to file a state or U. 1042nr ez S. 1042nr ez possession return, may be affected. 1042nr ez For more information, consult with state, local, or U. 1042nr ez S. 1042nr ez possession tax authorities regarding your tax obligations under MSRRA. 1042nr ez Presence Test If you are a U. 1042nr ez S. 1042nr ez citizen or resident alien, you will satisfy the presence test for the entire tax year if you meet one of the following conditions. 1042nr ez You were present in the relevant possession for at least 183 days during the tax year. 1042nr ez You were present in the relevant possession for at least 549 days during the 3-year period that includes the current tax year and the 2 immediately preceding tax years. 1042nr ez During each year of the 3-year period, you must be present in the relevant possession for at least 60 days. 1042nr ez You were present in the United States for no more than 90 days during the tax year. 1042nr ez You had earned income in the United States of no more than a total of $3,000 and were present for more days in the relevant possession than in the United States during the tax year. 1042nr ez Earned income is pay for personal services performed, such as wages, salaries, or professional fees. 1042nr ez You had no significant connection to the United States during the tax year. 1042nr ez Special rule for nonresident aliens. 1042nr ez   Conditions (1) through (5) above do not apply to nonresident aliens of the United States. 1042nr ez Instead, nonresident aliens must meet the substantial presence test discussed in chapter 1 of Publication 519. 1042nr ez In that discussion, substitute the name of the possession for “United States” and “U. 1042nr ez S. 1042nr ez ” wherever they appear. 1042nr ez Disregard the discussion in that chapter about a Closer Connection to a Foreign Country. 1042nr ez Days of Presence in the United States or Relevant Possession Generally, you are treated as being present in the United States or in the relevant possession on any day that you are physically present in that location at any time during the day. 1042nr ez Days of presence in a possession. 1042nr ez   You are considered to be present in the relevant possession on any of the following days. 1042nr ez Any day you are physically present in that possession at any time during the day. 1042nr ez Any day you are outside of the relevant possession in order to receive, or to accompany any of the following family members to receive, qualifying medical treatment (see Qualifying Medical Treatment , later). 1042nr ez Your parent. 1042nr ez Your spouse. 1042nr ez Your child, who is your son, daughter, stepson, or stepdaughter. 1042nr ez This includes an adopted child or child lawfully placed with you for legal adoption. 1042nr ez This also includes a foster child who is placed with you by an authorized placement agency or by judgment, decree, or other order of any court of competent jurisdiction. 1042nr ez Any day you are outside the relevant possession because you leave or are unable to return to the relevant possession during any: 14-day period within which a major disaster occurs in the relevant possession for which a Federal Emergency Management Agency (FEMA) notice of a federal declaration of a major disaster is issued in the Federal Register, or Period for which a mandatory evacuation order is in effect for the geographic area in the relevant possession in which your main home is located. 1042nr ez   If, during a single day, you are physically present: In the United States and in the relevant possession, that day is considered a day of presence in the relevant possession; or In two possessions, that day is considered a day of presence in the possession where your tax home is located (see Tax Home , later). 1042nr ez Days of presence in the United States. 1042nr ez   You are considered to be present in the United States on any day that you are physically present in the United States at any time during the day. 1042nr ez However, do not count the following days as days of presence in the United States. 1042nr ez Any day you are temporarily present in the United States in order to receive, or to accompany a parent, spouse, or child who is receiving, qualifying medical treatment. 1042nr ez “Child” is defined under item 2c earlier. 1042nr ez “Qualifying medical treatment” is defined later. 1042nr ez Any day you are temporarily present in the United States because you leave or are unable to return to the relevant possession during any: 14-day period within which a major disaster occurs in the relevant possession for which a Federal Emergency Management Agency (FEMA) notice of a federal declaration of a major disaster is issued in the Federal Register, or Period for which a mandatory evacuation order is in effect for the geographic area in the relevant possession in which your main home is located. 1042nr ez Any day you are in the United States for less than 24 hours when you are traveling between two places outside the United States. 1042nr ez Any day you are temporarily present in the United States as a professional athlete to compete in a charitable sports event (defined later). 1042nr ez Any day you are temporarily in the United States as a student (defined later). 1042nr ez Any day you are in the United States serving as an elected representative of the relevant possession, or serving full time as an elected or appointed official or employee of the government of that possession (or any of its political subdivisions). 1042nr ez Qualifying Medical Treatment Such treatment is generally provided by (or under the supervision of) a physician for an illness, injury, impairment, or physical or mental condition. 1042nr ez The treatment generally involves: Any period of inpatient care that requires an overnight stay in a hospital or hospice, and any period immediately before or after that inpatient care to the extent it is medically necessary, or Any temporary period of inpatient care in a residential medical care facility for medically necessary rehabilitation services. 1042nr ez With respect to each qualifying medical treatment, you must prepare (or obtain) and maintain documentation supporting your claim that such treatment meets the criteria to be considered days of presence in the relevant possession. 1042nr ez You must be able to produce this documentation within 30 days if requested by the IRS or tax administrator for the relevant possession. 1042nr ez You must keep the following documentation. 1042nr ez Records that provide: The patient's name and relationship to you (if the medical treatment is provided to a person you accompany); The name and address of the hospital, hospice, or residential medical care facility where the medical treatment was provided; The name, address, and telephone number of the physician who provided the medical treatment; The date(s) on which the medical treatment was provided; and Receipt(s) of payment for the medical treatment. 1042nr ez Signed certification by the providing or supervising physician that the medical treatment met the requirements for being qualified medical treatment, and setting forth: The patient's name, A reasonably detailed description of the medical treatment provided by (or under the supervision of) the physician, The dates on which the medical treatment was provided, and The medical facts that support the physician's certification and determination that the treatment was medically necessary. 1042nr ez Charitable Sports Event A charitable sports event is one that meets all of the following conditions. 1042nr ez The main purpose is to benefit a qualified charitable organization. 1042nr ez The entire net proceeds go to charity. 1042nr ez Volunteers perform substantially all the work. 1042nr ez In figuring the days of presence in the United States, you can exclude only the days on which you actually competed in the charitable sports event. 1042nr ez You cannot exclude the days on which you were in the United States to practice for the event, to perform promotional or other activities related to the event, or to travel between events. 1042nr ez Student To qualify as a student, you must be, during some part of each of any 5 calendar months during the calendar year: A full-time student at a school that has a regular teaching staff, course of study, and regularly enrolled body of students in attendance, or A student taking a full-time, on-farm training course given by a school described in (1) above or by a state, county, or local government agency. 1042nr ez The 5 calendar months do not have to be consecutive. 1042nr ez Full-time student. 1042nr ez   A full-time student is a person who is enrolled for the number of hours or courses the school considers to be full-time attendance. 1042nr ez However, school attendance exclusively at night is not considered full-time attendance. 1042nr ez School. 1042nr ez   The term “school” includes elementary schools, middle schools, junior and senior high schools, colleges, universities, and technical, trade, and mechanical schools. 1042nr ez It does not include on-the-job training courses, correspondence schools, and schools offering courses only through the Internet. 1042nr ez Significant Connection One way in which you can meet the presence test is to have no significant connection to the United States during the tax year. 1042nr ez This section looks at the factors that determine if a significant connection exists. 1042nr ez You are treated as having a significant connection to the United States if you: Have a permanent home in the United States, Are currently registered to vote in any political subdivision of the United States, or Have a spouse or child (see item 2c under Days of presence in a possession , earlier) who is under age 18 whose main home is in the United States, other than: A child who is in the United States because he or she is the child of divorced or legally separated parents and is living with a custodial parent under a custodial decree or multiple support agreement, or A child who is in the United States as a student. 1042nr ez For the purpose of determining if you have a significant connection to the United States, the term “spouse” does not include a spouse from whom you are legally separated under a decree of divorce or separate maintenance. 1042nr ez Permanent home. 1042nr ez   A permanent home generally includes an accommodation such as a house, an apartment, or a furnished room that is either owned or rented by you or your spouse. 1042nr ez The dwelling unit must be available at all times, continuously, not only for short stays. 1042nr ez Exception for rental property. 1042nr ez   If you or your spouse own the dwelling unit and at any time during the tax year it is rented to someone else at fair rental value, it will be considered your permanent home only if you or your spouse use that property for personal purposes for more than the greater of: 14 days, or 10% of the number of days during that tax year that the property is rented to others at a fair rental value. 1042nr ez   You are treated as using rental property for personal purposes on any day the property is not being rented to someone else at fair rental value for the entire day. 1042nr ez   A day of personal use of a dwelling unit is also any day that the unit is used by any of the following persons. 1042nr ez You or any other person who has an interest in it, unless you rent it to another owner as his or her main home under a shared equity financing agreement. 1042nr ez A member of your family or a member of the family of any other person who has an interest in it, unless the family member uses the dwelling unit as his or her main home and pays a fair rental price. 1042nr ez Family includes only brothers and sisters, half-brothers and half-sisters, spouses, ancestors (parents, grandparents, etc. 1042nr ez ), and lineal descendants (children, grandchildren, etc. 1042nr ez ). 1042nr ez Anyone under an arrangement that lets you use some other dwelling unit. 1042nr ez Anyone at less than a fair rental price. 1042nr ez   However, any day you spend working substantially full time repairing and maintaining (not improving) your property is not counted as a day of personal use. 1042nr ez Whether your property is used mainly for this purpose is determined in light of all the facts and circumstances, such as: The amount of time you devote to repair and maintenance work, How often during the tax year you perform repair and maintenance work on this property, and The presence and activities of companions. 1042nr ez   See Publication 527, Residential Rental Property, for more information about personal use of a dwelling unit. 1042nr ez Example—significant connection. 1042nr ez Ann Green, a U. 1042nr ez S. 1042nr ez citizen, is a sales representative for a company based in Guam. 1042nr ez Ann lives with her spouse and young children in their house in Guam, where she is also registered to vote. 1042nr ez Her business travel requires her to spend 120 days in the United States and another 120 days in foreign countries. 1042nr ez When traveling on business, Ann generally stays at hotels but sometimes stays with her brother, who lives in the United States. 1042nr ez Ann's stays are always of short duration and she asks her brother's permission to stay with him. 1042nr ez Her brother's house is not her permanent home, nor does she have any other accommodations in the United States that would be considered her permanent home. 1042nr ez Ann satisfies the presence test because she has no significant connection to the United States. 1042nr ez Example—presence test. 1042nr ez Eric and Wanda Brown live for part of the year in a condominium, which they own, in the CNMI. 1042nr ez They also own a house in Maine where they live for 120 days every year to be near their grown children and grandchildren. 1042nr ez The Browns are retired and their only income is from pension payments, dividends, interest, and social security benefits. 1042nr ez In 2013, they spent only 175 days in the CNMI because of a 70-day vacation to Europe and Asia. 1042nr ez Thus, in 2013, the Browns were not present in the CNMI for at least 183 days, were present in the United States for more than 90 days, and had a significant connection to the United States because of their permanent home. 1042nr ez However, the Browns still satisfied the presence test with respect to the CNMI because they had no earned income in the United States and were physically present for more days in the CNMI than in the United States. 1042nr ez Tax Home You will have met the tax home test if you did not have a tax home outside the relevant possession during any part of the tax year. 1042nr ez Your tax home is your regular or main place of business, employment, or post of duty regardless of where you maintain your family home. 1042nr ez If you do not have a regular or main place of business because of the nature of your work, then your tax home is the place where you regularly live. 1042nr ez If you do not fit either of these categories, you are considered an itinerant and your tax home is wherever you work. 1042nr ez Exceptions There are some special rules regarding tax home that provide exceptions to the general rule stated above. 1042nr ez Students and Government Officials Disregard the following days when determining whether you have a tax home outside the relevant possession. 1042nr ez Days you were temporarily in the United States as a student (see Student under Days of Presence in the United States or Relevant Possession, earlier). 1042nr ez Days you were in the United States serving as an elected representative of the relevant possession, or serving full time as an elected or appointed official or employee of the government of that possession (or any of its political subdivisions). 1042nr ez Seafarers You will not be considered to have a tax home outside the relevant possession solely because you are employed on a ship or other seafaring vessel that is predominantly used in local and international waters. 1042nr ez For this purpose, a vessel is considered to be predominantly used in local and international waters if, during the tax year, the total amount of time it is used in international waters and in the waters within 3 miles of the relevant possession exceeds the total amount of time it is used in the territorial waters of the United States, another possession, or any foreign country. 1042nr ez Example. 1042nr ez In 2013, Sean Silverman, a U. 1042nr ez S. 1042nr ez citizen, was employed by a fishery and spent 250 days at sea on a fishing vessel. 1042nr ez When not at sea, Sean lived with his spouse at a house they own in American Samoa. 1042nr ez The fishing vessel on which Sean works departs and arrives at various ports in American Samoa, other possessions, and foreign countries, but was in international or American Samoa's local waters for 225 days. 1042nr ez For purposes of determining bona fide residency of American Samoa, Sean will not be considered to have a tax home outside that possession solely because of his employment on board the fishing vessel. 1042nr ez Year of Move If you are moving to or from a possession during the year, you may still be able to meet the tax home test for that year. 1042nr ez See Special Rules in the Year of a Move , later in this chapter. 1042nr ez Closer Connection You will have met the closer connection test if, during any part of the tax year, you do not have a closer connection to the United States or a foreign country than to the relevant U. 1042nr ez S. 1042nr ez possession. 1042nr ez You will be considered to have a closer connection to a possession than to the United States or to a foreign country if you have maintained more significant contacts with the possession(s) than with the United States or foreign country. 1042nr ez In determining if you have maintained more significant contacts with the relevant possession, the facts and circumstances to be considered include, but are not limited to, the following. 1042nr ez The location of your permanent home. 1042nr ez The location of your family. 1042nr ez The location of personal belongings, such as automobiles, furniture, clothing, and jewelry owned by you and your family. 1042nr ez The location of social, political, cultural, professional, or religious organizations with which you have a current relationship. 1042nr ez The location where you conduct your routine personal banking activities. 1042nr ez The location where you conduct business activities (other than those that go into determining your tax home). 1042nr ez The location of the jurisdiction in which you hold a driver's license. 1042nr ez The location of the jurisdiction in which you vote. 1042nr ez The location of charitable organizations to which you contribute. 1042nr ez The country of residence you designate on forms and documents. 1042nr ez The types of official forms and documents you file, such as Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting (Individuals), or Form W-9, Request for Taxpayer Identification Number and Certification. 1042nr ez Your connections to the relevant possession will be compared to the total of your connections with the United States and foreign countries. 1042nr ez Your answers to the questions on Form 8898, Part III, will help establish the jurisdiction to which you have a closer connection. 1042nr ez Example—closer connection to the United States. 1042nr ez Marcos Reyes, a U. 1042nr ez S. 1042nr ez citizen, moved to Puerto Rico in 2013 to start an investment consulting and venture capital business. 1042nr ez His spouse and two teenage children remained in California to allow the children to complete high school. 1042nr ez He traveled back to the United States regularly to see his spouse and children, to engage in business activities, and to take vacations. 1042nr ez Marcos had an apartment available for his full-time use in Puerto Rico, but remained a joint owner of the residence in California where his spouse and children lived. 1042nr ez Marcos and his family had automobiles and personal belongings such as furniture, clothing, and jewelry located at both residences. 1042nr ez Although Marcos was a member of the Puerto Rico Chamber of Commerce, he also belonged to and had current relationships with social, political, cultural, and religious organizations in California. 1042nr ez Marcos received mail in California, including bank and brokerage statements and credit card bills. 1042nr ez He conducted his personal banking activities in California. 1042nr ez He held a California driver's license and was also registered to vote there. 1042nr ez Based on all of the particular facts and circumstances pertaining to Marcos, he was not a bona fide resident of Puerto Rico in 2013 because he had a closer connection to the United States than to Puerto Rico. 1042nr ez Closer connection to another possession. 1042nr ez   Generally, possessions are not treated as foreign countries. 1042nr ez Therefore, a closer connection to a possession other than the relevant possession will not be treated as a closer connection to a foreign country. 1042nr ez Example—tax home and closer connection to possession. 1042nr ez Pearl Blackmon, a U. 1042nr ez S. 1042nr ez citizen, is a permanent employee of a hotel in Guam, but works only during the tourist season. 1042nr ez For the remainder of each year, Pearl lives with her spouse and children in the CNMI, where she has no outside employment. 1042nr ez Most of Pearl's personal belongings, including her automobile, are located in the CNMI. 1042nr ez She is registered to vote in, and has a driver's license issued by, the CNMI. 1042nr ez She does her personal banking in the CNMI and routinely lists her CNMI address as her permanent address on forms and documents. 1042nr ez Pearl satisfies the presence test with respect to both Guam and the CNMI. 1042nr ez She satisfies the tax home test with respect to Guam, because her regular place of business is in Guam. 1042nr ez Pearl satisfies the closer connection test with respect to both Guam and the CNMI, because she does not have a closer connection to the United States or to any foreign country. 1042nr ez Pearl is considered a bona fide resident of Guam, the location of her tax home. 1042nr ez Exception for Year of Move If you are moving to or from a possession during the year, you may still be able to meet the closer connection test for that year. 1042nr ez See Special Rules in the Year of a Move , next. 1042nr ez Special Rules in the Year of a Move If you are moving to or from a possession during the year, you may still be able to meet the tax home and closer connection tests for that year. 1042nr ez Year of Moving to a Possession You will satisfy the tax home and closer connection tests in the tax year of changing your residence to the relevant possession if you meet all of the following. 1042nr ez You have not been a bona fide resident of the relevant possession in any of the 3 tax years immediately preceding your move. 1042nr ez In the year of the move, you do not have a tax home outside the relevant possession or a closer connection to the United States or a foreign country than to the relevant possession during any of the last 183 days of the tax year. 1042nr ez You are a bona fide resident of the relevant possession for each of the 3 tax years immediately following your move. 1042nr ez Example. 1042nr ez Dwight Wood, a U. 1042nr ez S. 1042nr ez citizen, files returns on a calendar year basis. 1042nr ez He lived in the United States from January 2007 through May 2013. 1042nr ez In June 2013 he moved to the USVI, purchased a house, and accepted a permanent job with a local employer. 1042nr ez From July 1 through December 31, 2013 (more than 183 days), Dwight's principal place of business was in the USVI and, during that time, he did not have a closer connection to the United States or a foreign country than to the USVI. 1042nr ez If he is a bona fide resident of the USVI during all of 2014 through 2016, he will satisfy the tax home and closer connection tests for 2013. 1042nr ez If Dwight also satisfies the presence test in 2013, he will be considered a bona fide resident of the USVI for the entire 2013 tax year. 1042nr ez Year of Moving From a Possession In the year you cease to be a bona fide resident of American Samoa, the CNMI, Guam, or the USVI, you will satisfy the tax home and closer connection tests with respect to the relevant possession if you meet all of the following. 1042nr ez You have been a bona fide resident of the relevant possession for each of the 3 tax years immediately preceding your change of residence. 1042nr ez In the year of the move, you do not have a tax home outside the relevant possession or a closer connection to the United States or a foreign country than to the relevant possession during any of the first 183 days of the tax year. 1042nr ez You are not a bona fide resident of the relevant possession for any of the 3 tax years immediately following your move. 1042nr ez Example. 1042nr ez Jean Aspen, a U. 1042nr ez S. 1042nr ez citizen, files returns on a calendar year basis. 1042nr ez From January 2010 through December 2012, Jean was a bona fide resident of American Samoa. 1042nr ez Jean continued to live there until September 6, 2013, when she accepted new employment and moved to Hawaii. 1042nr ez Jean's principal place of business from January 1 through September 5, 2013 (more than 183 days), was in American Samoa, and during that period Jean did not have a closer connection to the United States or a foreign country than to American Samoa. 1042nr ez If Jean continues to live and work in Hawaii for the rest of 2013 and throughout years 2014 through 2016, she will satisfy the tax home and closer connection tests for 2013 with respect to American Samoa. 1042nr ez If Jean also satisfies the presence test in 2013, she will be considered a bona fide resident for the entire 2013 tax year. 1042nr ez Puerto Rico You will be considered a bona fide resident of Puerto Rico for the part of the tax year preceding the date on which you move if you: Are a U. 1042nr ez S. 1042nr ez citizen, Are a bona fide resident of Puerto Rico for at least 2 tax years immediately preceding the tax year of the move, Cease to be a bona fide resident of Puerto Rico during the tax year, Cease to have a tax home in Puerto Rico during the tax year, and Have a closer connection to Puerto Rico than to the United States or a foreign country throughout the part of the tax year preceding the date on which you cease to have a tax home in Puerto Rico. 1042nr ez Example. 1042nr ez Randy White, a U. 1042nr ez S. 1042nr ez citizen, files returns on a calendar year basis. 1042nr ez For all of 2011 and 2012, Randy was a bona fide resident of Puerto Rico. 1042nr ez From January through April 2013, Randy continued to reside and maintain his principal place of business in and closer connection to Puerto Rico. 1042nr ez On May 5, 2013, Randy moved and changed his tax home to Nevada. 1042nr ez Later that year he established a closer connection to the United States than to Puerto Rico. 1042nr ez Randy did not satisfy the presence test for 2013 with respect to Puerto Rico, nor the tax home or closer connection tests. 1042nr ez However, because Randy was a bona fide resident of Puerto Rico for at least 2 tax years before he moved to Nevada in 2013, he was a bona fide resident of Puerto Rico from January 1 through May 4, 2013. 1042nr ez Reporting a Change in Bona Fide Residence If you became or ceased to be a bona fide resident of a U. 1042nr ez S. 1042nr ez possession, you may need to file Form 8898. 1042nr ez This applies to the U. 1042nr ez S. 1042nr ez possessions of American Samoa, the CNMI, Guam, Puerto Rico, and the USVI. 1042nr ez Who Must File You must file Form 8898 for the tax year in which you meet both of the following conditions. 1042nr ez Your worldwide gross income (defined below) in that tax year is more than $75,000. 1042nr ez You meet one of the following. 1042nr ez You take a position for U. 1042nr ez S. 1042nr ez tax purposes that you became a bona fide resident of a U. 1042nr ez S. 1042nr ez possession after a tax year for which you filed a U. 1042nr ez S. 1042nr ez income tax return as a citizen or resident alien of the United States but not as a bona fide resident of the possession. 1042nr ez You are a citizen or resident alien of the United States who takes the position for U. 1042nr ez S. 1042nr ez tax purposes that you ceased to be a bona fide resident of a U. 1042nr ez S. 1042nr ez possession after a tax year for which you filed an income tax return (with the IRS, the possession tax authority, or both) as a bona fide resident of the possession. 1042nr ez You take the position for U. 1042nr ez S. 1042nr ez tax purposes that you became a bona fide resident of Puerto Rico or American Samoa after a tax year for which you were required to file an income tax return as a bona fide resident of the CNMI, Guam, or the USVI. 1042nr ez Worldwide gross income. 1042nr ez   Worldwide gross income means all income you received in the form of money, goods, property, and services, including any income from sources outside the United States (even if you can exclude part or all of it) and before any deductions, credits, or rebates. 1042nr ez Example. 1042nr ez You are a U. 1042nr ez S. 1042nr ez citizen who moved to the CNMI in December 2012, but did not become a bona fide resident of that possession until the 2013 tax year. 1042nr ez You must file Form 8898 for the 2013 tax year if your worldwide gross income for that year was more than $75,000. 1042nr ez Penalty for Not Filing Form 8898 If you are required to file Form 8898 for any tax year and you fail to file it, you may owe a penalty of $1,000. 1042nr ez You may also owe this penalty if you do not include all the information required by the form or the form includes incorrect information. 1042nr ez In either case, you will not owe this penalty if you can show that such failure is due to reasonable cause and not willful neglect. 1042nr ez This is in addition to any criminal penalty that may be imposed. 1042nr ez Prev  Up  Next   Home   More Online Publications