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Amended Returns

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Amended Returns

Amended returns 2. Amended returns   Filing Status Table of Contents What's New Introduction Useful Items - You may want to see: Marital StatusDivorced persons. Amended returns Divorce and remarriage. Amended returns Annulled marriages. Amended returns Head of household or qualifying widow(er) with dependent child. Amended returns Considered married. Amended returns Same-sex marriage. Amended returns Spouse died during the year. Amended returns Married persons living apart. Amended returns Single Married Filing JointlyFiling a Joint Return Married Filing SeparatelySpecial Rules Head of HouseholdConsidered Unmarried Keeping Up a Home Qualifying Person Qualifying Widow(er) With Dependent Child What's New Filing status for same-sex married couples. Amended returns  If you have a same-sex spouse whom you legally married in a state (or foreign country) that recognizes same-sex marriage, you and your spouse generally must use the married filing jointly or married filing separately filing status on your 2013 return, even if you and your spouse now live in a state (or foreign country) that does not recognize same-sex marriage. Amended returns See Same-sex marriage under Marital Status, later. Amended returns Introduction This chapter helps you determine which filing status to use. Amended returns There are five filing statuses. Amended returns Single. Amended returns Married Filing Jointly. Amended returns Married Filing Separately. Amended returns Head of Household. Amended returns Qualifying Widow(er) With Dependent Child. Amended returns If more than one filing status applies to you, choose the one that will give you the lowest tax. Amended returns You must determine your filing status before you can determine whether you must file a tax return (chapter 1), your standard deduction (chapter 20), and your tax (chapter 30). Amended returns You also use your filing status to determine whether you are eligible to claim certain deductions and credits. Amended returns Useful Items - You may want to see: Publication 501 Exemptions, Standard Deduction, and Filing Information 519 U. Amended returns S. Amended returns Tax Guide for Aliens 555 Community Property Marital Status In general, your filing status depends on whether you are considered unmarried or married. Amended returns Unmarried persons. Amended returns   You are considered unmarried for the whole year if, on the last day of your tax year, you are unmarried or legally separated from your spouse under a divorce or separate maintenance decree. Amended returns State law governs whether you are married or legally separated under a divorce or separate maintenance decree. Amended returns Divorced persons. Amended returns   If you are divorced under a final decree by the last day of the year, you are considered unmarried for the whole year. Amended returns Divorce and remarriage. Amended returns   If you obtain a divorce for the sole purpose of filing tax returns as unmarried individuals, and at the time of divorce you intend to and do, in fact, remarry each other in the next tax year, you and your spouse must file as married individuals in both years. Amended returns Annulled marriages. Amended returns    If you obtain a court decree of annulment, which holds that no valid marriage ever existed, you are considered unmarried even if you filed joint returns for earlier years. Amended returns You must file Form 1040X, Amended U. Amended returns S. Amended returns Individual Income Tax Return, claiming single or head of household status for all tax years that are affected by the annulment and are not closed by the statute of limitations for filing a tax return. Amended returns Generally, for a credit or refund, you must file Form 1040X within 3 years (including extensions) after the date you filed your original return or within 2 years after the date you paid the tax, whichever is later. Amended returns If you filed your original return early (for example, March 1), your return is considered filed on the due date (generally April 15). Amended returns However, if you had an extension to file (for example, until October 15) but you filed earlier and we received it on July 1, your return is considered filed on July 1. Amended returns Head of household or qualifying widow(er) with dependent child. Amended returns   If you are considered unmarried, you may be able to file as a head of household or as a qualifying widow(er) with a dependent child. Amended returns See Head of Household and Qualifying Widow(er) With Dependent Child to see if you qualify. Amended returns Married persons. Amended returns   If you are considered married, you and your spouse can file a joint return or separate returns. Amended returns Considered married. Amended returns   You are considered married for the whole year if, on the last day of your tax year, you and your spouse meet any one of the following tests. Amended returns You are married and living together as a married couple. Amended returns You are living together in a common law marriage recognized in the state where you now live or in the state where the common law marriage began. Amended returns You are married and living apart, but not legally separated under a decree of divorce or separate maintenance. Amended returns You are separated under an interlocutory (not final) decree of divorce. Amended returns Same-sex marriage. Amended returns   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. Amended returns The term “spouse” includes an individual married to a person of the same sex if the couple is lawfully married under state (or foreign) law. Amended returns However, individuals who have entered into a registered domestic partnership, civil union, or other similar relationship that is not considered a marriage under state (or foreign) law are not considered married for federal tax purposes. Amended returns For more details, see Publication 501. Amended returns Spouse died during the year. Amended returns   If your spouse died during the year, you are considered married for the whole year for filing status purposes. Amended returns   If you did not remarry before the end of the tax year, you can file a joint return for yourself and your deceased spouse. Amended returns For the next 2 years, you may be entitled to the special benefits described later under Qualifying Widow(er) With Dependent Child . Amended returns   If you remarried before the end of the tax year, you can file a joint return with your new spouse. Amended returns Your deceased spouse's filing status is married filing separately for that year. Amended returns Married persons living apart. Amended returns   If you live apart from your spouse and meet certain tests, you may be able to file as head of household even if you are not divorced or legally separated. Amended returns If you qualify to file as head of household instead of married filing separately, your standard deduction will be higher. Amended returns Also, your tax may be lower, and you may be able to claim the earned income credit. Amended returns See Head of Household , later. Amended returns Single Your filing status is single if you are considered unmarried and you do not qualify for another filing status. Amended returns To determine your marital status, see Marital Status , earlier. Amended returns Widow(er). Amended returns   Your filing status may be single if you were widowed before January 1, 2013, and did not remarry before the end of 2013. Amended returns You may, however, be able to use another filing status that will give you a lower tax. Amended returns See Head of Household and Qualifying Widow(er) With Dependent Child , later, to see if you qualify. Amended returns How to file. Amended returns   You can file Form 1040. Amended returns If you have taxable income of less than $100,000, you may be able to file Form 1040A. Amended returns If, in addition, you have no dependents, and are under 65 and not blind, and meet other requirements, you can file Form 1040EZ. Amended returns If you file Form 1040A or Form 1040, show your filing status as single by checking the box on line 1. Amended returns Use the Single column of the Tax Table or Section A of the Tax Computation Worksheet to figure your tax. Amended returns Married Filing Jointly You can choose married filing jointly as your filing status if you are considered married and both you and your spouse agree to file a joint return. Amended returns On a joint return, you and your spouse report your combined income and deduct your combined allowable expenses. Amended returns You can file a joint return even if one of you had no income or deductions. Amended returns If you and your spouse decide to file a joint return, your tax may be lower than your combined tax for the other filing statuses. Amended returns Also, your standard deduction (if you do not itemize deductions) may be higher, and you may qualify for tax benefits that do not apply to other filing statuses. Amended returns If you and your spouse each have income, you may want to figure your tax both on a joint return and on separate returns (using the filing status of married filing separately). Amended returns You can choose the method that gives the two of you the lower combined tax. Amended returns How to file. Amended returns   If you file as married filing jointly, you can use Form 1040. Amended returns If you and your spouse have taxable income of less than $100,000, you may be able to file Form 1040A. Amended returns If, in addition, you and your spouse have no dependents, are both under 65 and not blind, and meet other requirements, you can file Form 1040EZ. Amended returns If you file Form 1040 or Form 1040A, show this filing status by checking the box on line 2. Amended returns Use the Married filing jointly column of the Tax Table or Section B of the Tax Computation Worksheet to figure your tax. Amended returns Spouse died. Amended returns   If your spouse died during the year, you are considered married for the whole year and can choose married filing jointly as your filing status. Amended returns See Spouse died during the year under Marital Status, earlier, for more information. Amended returns   If your spouse died in 2014 before filing a 2013 return, you can choose married filing jointly as your filing status on your 2013 return. Amended returns Divorced persons. Amended returns   If you are divorced under a final decree by the last day of the year, you are considered unmarried for the whole year and you cannot choose married filing jointly as your filing status. Amended returns Filing a Joint Return Both you and your spouse must include all of your income, exemptions, and deductions on your joint return. Amended returns Accounting period. Amended returns   Both of you must use the same accounting period, but you can use different accounting methods. Amended returns See Accounting Periods and Accounting Methods in chapter 1. Amended returns Joint responsibility. Amended returns   Both of you may be held responsible, jointly and individually, for the tax and any interest or penalty due on your joint return. Amended returns This means that if one spouse does not pay the tax due, the other may have to. Amended returns Or, if one spouse does not report the correct tax, both spouses may be responsible for any additional taxes assessed by the IRS. Amended returns One spouse may be held responsible for all the tax due even if all the income was earned by the other spouse. Amended returns You may want to file separately if: You believe your spouse is not reporting all of his or her income, or You do not want to be responsible for any taxes due if your spouse does not have enough tax withheld or does not pay enough estimated tax. Amended returns Divorced taxpayer. Amended returns   You may be held jointly and individually responsible for any tax, interest, and penalties due on a joint return filed before your divorce. Amended returns This responsibility may apply even if your divorce decree states that your former spouse will be responsible for any amounts due on previously filed joint returns. Amended returns Relief from joint responsibility. Amended returns   In some cases, one spouse may be relieved of joint responsibility for tax, interest, and penalties on a joint return for items of the other spouse that were incorrectly reported on the joint return. Amended returns You can ask for relief no matter how small the liability. Amended returns   There are three types of relief available. Amended returns Innocent spouse relief. Amended returns Separation of liability (available only to joint filers who are divorced, widowed, legally separated, or have not lived together for the 12 months ending on the date the election for this relief is filed). Amended returns Equitable relief. Amended returns    You must file Form 8857, Request for Innocent Spouse Relief, to request relief from joint responsibility. Amended returns Publication 971, Innocent Spouse Relief, explains these kinds of relief and who may qualify for them. Amended returns Signing a joint return. Amended returns   For a return to be considered a joint return, both spouses generally must sign the return. Amended returns Spouse died before signing. Amended returns   If your spouse died before signing the return, the executor or administrator must sign the return for your spouse. Amended returns If neither you nor anyone else has yet been appointed as executor or administrator, you can sign the return for your spouse and enter “Filing as surviving spouse” in the area where you sign the return. Amended returns Spouse away from home. Amended returns   If your spouse is away from home, you should prepare the return, sign it, and send it to your spouse to sign so that it can be filed on time. Amended returns Injury or disease prevents signing. Amended returns   If your spouse cannot sign because of disease or injury and tells you to sign for him or her, you can sign your spouse's name in the proper space on the return followed by the words “By (your name), Husband (or Wife). Amended returns ” Be sure to also sign in the space provided for your signature. Amended returns Attach a dated statement, signed by you, to the return. Amended returns The statement should include the form number of the return you are filing, the tax year, and the reason your spouse cannot sign, and should state that your spouse has agreed to your signing for him or her. Amended returns Signing as guardian of spouse. Amended returns   If you are the guardian of your spouse who is mentally incompetent, you can sign the return for your spouse as guardian. Amended returns Spouse in combat zone. Amended returns   You can sign a joint return for your spouse if your spouse cannot sign because he or she is serving in a combat zone (such as the Persian Gulf Area, Serbia, Montenegro, Albania, or Afghanistan), even if you do not have a power of attorney or other statement. Amended returns Attach a signed statement to your return explaining that your spouse is serving in a combat zone. Amended returns For more information on special tax rules for persons who are serving in a combat zone, or who are in missing status as a result of serving in a combat zone, see Publication 3, Armed Forces' Tax Guide. Amended returns Other reasons spouse cannot sign. Amended returns    If your spouse cannot sign the joint return for any other reason, you can sign for your spouse only if you are given a valid power of attorney (a legal document giving you permission to act for your spouse). Amended returns Attach the power of attorney (or a copy of it) to your tax return. Amended returns You can use Form 2848, Power of Attorney and Declaration of Representative. Amended returns Nonresident alien or dual-status alien. Amended returns   Generally, a married couple cannot file a joint return if either one is a nonresident alien at any time during the tax year. Amended returns However, if one spouse was a nonresident alien or dual-status alien who was married to a U. Amended returns S. Amended returns citizen or resident alien at the end of the year, the spouses can choose to file a joint return. Amended returns If you do file a joint return, you and your spouse are both treated as U. Amended returns S. Amended returns residents for the entire tax year. Amended returns See chapter 1 of Publication 519. Amended returns Married Filing Separately You can choose married filing separately as your filing status if you are married. Amended returns This filing status may benefit you if you want to be responsible only for your own tax or if it results in less tax than filing a joint return. Amended returns If you and your spouse do not agree to file a joint return, you must use this filing status unless you qualify for head of household status, discussed later. Amended returns You may be able to choose head of household filing status if you are considered unmarried because you live apart from your spouse and meet certain tests (explained later, under Head of Household ). Amended returns This can apply to you even if you are not divorced or legally separated. Amended returns If you qualify to file as head of household, instead of as married filing separately, your tax may be lower, you may be able to claim the earned income credit and certain other credits, and your standard deduction will be higher. Amended returns The head of household filing status allows you to choose the standard deduction even if your spouse chooses to itemize deductions. Amended returns See Head of Household , later, for more information. Amended returns You will generally pay more combined tax on separate returns than you would on a joint return for the reasons listed under Special Rules, later. Amended returns However, unless you are required to file separately, you should figure your tax both ways (on a joint return and on separate returns). Amended returns This way you can make sure you are using the filing status that results in the lowest combined tax. Amended returns When figuring the combined tax of a married couple, you may want to consider state taxes as well as federal taxes. Amended returns How to file. Amended returns   If you file a separate return, you generally report only your own income, exemptions, credits, and deductions. Amended returns You can claim an exemption for your spouse only if your spouse had no gross income, is not filing a return, and was not the dependent of another person. Amended returns You can file Form 1040. Amended returns If your taxable income is less than $100,000, you may be able to file Form 1040A. Amended returns Select this filing status by checking the box on line 3 of either form. Amended returns Enter your spouse's full name and SSN or ITIN in the spaces provided. Amended returns If your spouse does not have and is not required to have an SSN or ITIN, enter “NRA” in the space for your spouse's SSN. Amended returns Use the Married filing separately column of the Tax Table or Section C of the Tax Computation Worksheet to figure your tax. Amended returns Special Rules If you choose married filing separately as your filing status, the following special rules apply. Amended returns Because of these special rules, you usually pay more tax on a separate return than if you use another filing status you qualify for. Amended returns   Your tax rate generally is higher than on a joint return. Amended returns Your exemption amount for figuring the alternative minimum tax is half that allowed on a joint return. Amended returns You cannot take the credit for child and dependent care expenses in most cases, and the amount you can exclude from income under an employer's dependent care assistance program is limited to $2,500 (instead of $5,000). Amended returns If you are legally separated or living apart from your spouse, you may be able to file a separate return and still take the credit. Amended returns For more information about these expenses, the credit, and the exclusion, see chapter 32. Amended returns You cannot take the earned income credit. Amended returns You cannot take the exclusion or credit for adoption expenses in most cases. Amended returns You cannot take the education credits (the American opportunity credit and lifetime learning credit), the deduction for student loan interest, or the tuition and fees deduction. Amended returns You cannot exclude any interest income from qualified U. Amended returns S. Amended returns savings bonds you used for higher education expenses. Amended returns If you lived with your spouse at any time during the tax year: You cannot claim the credit for the elderly or the disabled, and You must include in income a greater percentage (up to 85%) of any social security or equivalent railroad retirement benefits you received. Amended returns The following credits and deductions are reduced at income levels half those for a joint return: The child tax credit, The retirement savings contributions credit, The deduction for personal exemptions, and Itemized deductions. Amended returns Your capital loss deduction limit is $1,500 (instead of $3,000 on a joint return). Amended returns If your spouse itemizes deductions, you cannot claim the standard deduction. Amended returns If you can claim the standard deduction, your basic standard deduction is half the amount allowed on a joint return. Amended returns Adjusted gross income (AGI) limits. Amended returns   If your AGI on a separate return is lower than it would have been on a joint return, you may be able to deduct a larger amount for certain deductions that are limited by AGI, such as medical expenses. Amended returns Individual retirement arrangements (IRAs). Amended returns   You may not be able to deduct all or part of your contributions to a traditional IRA if you or your spouse were covered by an employee retirement plan at work during the year. Amended returns Your deduction is reduced or eliminated if your income is more than a certain amount. Amended returns This amount is much lower for married individuals who file separately and lived together at any time during the year. Amended returns For more information, see How Much Can You Deduct in chapter 17. Amended returns Rental activity losses. Amended returns   If you actively participated in a passive rental real estate activity that produced a loss, you generally can deduct the loss from your nonpassive income, up to $25,000. Amended returns This is called a special allowance. Amended returns However, married persons filing separate returns who lived together at any time during the year cannot claim this special allowance. Amended returns Married persons filing separate returns who lived apart at all times during the year are each allowed a $12,500 maximum special allowance for losses from passive real estate activities. Amended returns See Limits on Rental Losses in chapter 9. Amended returns Community property states. Amended returns   If you live in Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, or Wisconsin and file separately, your income may be considered separate income or community income for income tax purposes. Amended returns See Publication 555. Amended returns Joint Return After Separate Returns You can change your filing status from a separate return to a joint return by filing an amended return using Form 1040X. Amended returns You generally can change to a joint return any time within 3 years from the due date of the separate return or returns. Amended returns This does not include any extensions. Amended returns A separate return includes a return filed by you or your spouse claiming married filing separately, single, or head of household filing status. Amended returns Separate Returns After Joint Return Once you file a joint return, you cannot choose to file separate returns for that year after the due date of the return. Amended returns Exception. Amended returns   A personal representative for a decedent can change from a joint return elected by the surviving spouse to a separate return for the decedent. Amended returns The personal representative has 1 year from the due date of the return (including extensions) to make the change. Amended returns See Publication 559, Survivors, Executors, and Administrators, for more information on filing a return for a decedent. Amended returns Head of Household You may be able to file as head of household if you meet all the following requirements. Amended returns You are unmarried or “considered unmarried” on the last day of the year. Amended returns See Marital Status , earlier, and Considered Unmarried , later. Amended returns You paid more than half the cost of keeping up a home for the year. Amended returns A qualifying person lived with you in the home for more than half the year (except for temporary absences, such as school). Amended returns However, if the qualifying person is your dependent parent, he or she does not have to live with you. Amended returns See Special rule for parent , later, under Qualifying Person. Amended returns If you qualify to file as head of household, your tax rate usually will be lower than the rates for single or married filing separately. Amended returns You will also receive a higher standard deduction than if you file as single or married filing separately. Amended returns Kidnapped child. Amended returns   A child may qualify you to file as head of household even if the child has been kidnapped. Amended returns For more information, see Publication 501. Amended returns How to file. Amended returns   If you file as head of household, you can use Form 1040. Amended returns If your taxable income is less than $100,000, you may be able to file Form 1040A. Amended returns Indicate your choice of this filing status by checking the box on line 4 of either form. Amended returns Use the Head of a household column of the Tax Table or Section D of the Tax Computation Worksheet to figure your tax. Amended returns Considered Unmarried To qualify for head of household status, you must be either unmarried or considered unmarried on the last day of the year. Amended returns You are considered unmarried on the last day of the tax year if you meet all the following tests. Amended returns You file a separate return (defined earlier under Joint Return After Separate Returns ). Amended returns You paid more than half the cost of keeping up your home for the tax year. Amended returns Your spouse did not live in your home during the last 6 months of the tax year. Amended returns Your spouse is considered to live in your home even if he or she is temporarily absent due to special circumstances. Amended returns See Temporary absences , under Qualifying Person, later. Amended returns Your home was the main home of your child, stepchild, or foster child for more than half the year. Amended returns (See Home of qualifying person , under Qualifying Person, later, for rules applying to a child's birth, death, or temporary absence during the year. Amended returns ) You must be able to claim an exemption for the child. Amended returns However, you meet this test if you cannot claim the exemption only because the noncustodial parent can claim the child using the rules described in Children of divorced or separated parents (or parents who live apart) under Qualifying Child in chapter 3, or in Support Test for Children of Divorced or Separated Parents (or Parents Who Live Apart) under Qualifying Relative in chapter 3. Amended returns The general rules for claiming an exemption for a dependent are explained under Exemptions for Dependents in chapter 3. Amended returns If you were considered married for part of the year and lived in a community property state (listed earlier under Married Filing Separately), special rules may apply in determining your income and expenses. Amended returns See Publication 555 for more information. Amended returns Nonresident alien spouse. Amended returns   You are considered unmarried for head of household purposes if your spouse was a nonresident alien at any time during the year and you do not choose to treat your nonresident spouse as a resident alien. Amended returns However, your spouse is not a qualifying person for head of household purposes. Amended returns You must have another qualifying person and meet the other tests to be eligible to file as a head of household. Amended returns Choice to treat spouse as resident. Amended returns   You are considered married if you choose to treat your spouse as a resident alien. Amended returns See Publication 519. Amended returns Keeping Up a Home To qualify for head of household status, you must pay more than half of the cost of keeping up a home for the year. Amended returns You can determine whether you paid more than half of the cost of keeping up a home by using Worksheet 2–1. Amended returns Worksheet 2-1. Amended returns Cost of Keeping Up a Home   Amount You Paid Total Cost Property taxes $ $ Mortgage interest expense     Rent     Utility charges     Repairs/maintenance     Property insurance     Food consumed on the premises     Other household expenses     Totals $ $ Minus total amount you paid   () Amount others paid   $ If the total amount you paid is more than the amount others paid, you meet the requirement of paying more than half the cost of keeping up the home. Amended returns Costs you include. Amended returns   Include in the cost of keeping up a home expenses such as rent, mortgage interest, real estate taxes, insurance on the home, repairs, utilities, and food eaten in the home. Amended returns   If you used payments you received under Temporary Assistance for Needy Families (TANF) or other public assistance programs to pay part of the cost of keeping up your home, you cannot count them as money you paid. Amended returns However, you must include them in the total cost of keeping up your home to figure if you paid over half the cost. Amended returns Costs you do not include. Amended returns   Do not include the costs of clothing, education, medical treatment, vacations, life insurance, or transportation. Amended returns Also, do not include the rental value of a home you own or the value of your services or those of a member of your household. Amended returns Qualifying Person See Table 2-1 to see who is a qualifying person. Amended returns Any person not described in Table 2-1 is not a qualifying person. Amended returns Table 2-1. Amended returns Who Is a Qualifying Person Qualifying You To File as Head of Household?1 Caution. Amended returns See the text of this chapter for the other requirements you must meet to claim head of household filing status. Amended returns IF the person is your . Amended returns . Amended returns . Amended returns   AND . Amended returns . Amended returns . Amended returns   THEN that person is . Amended returns . Amended returns . Amended returns qualifying child (such as a son, daughter, or grandchild who lived with you more than half the year and meets certain other tests)2   he or she is single   a qualifying person, whether or not you can claim an exemption for the person. Amended returns   he or she is married and you can claim an exemption for him or her   a qualifying person. Amended returns   he or she is married and you cannot claim an exemption for him or her   not a qualifying person. Amended returns 3 qualifying relative4 who is your father or mother   you can claim an exemption for him or her5   a qualifying person. Amended returns 6   you cannot claim an exemption for him or her   not a qualifying person. Amended returns qualifying relative4 other than your father or mother (such as a grandparent, brother, or sister who meets certain tests)   he or she lived with you more than half the year, and he or she is related to you in one of the ways listed under Relatives who do not have to live with you in chapter 3 and you can claim an exemption for him or her5   a qualifying person. Amended returns   he or she did not live with you more than half the year   not a qualifying person. Amended returns   he or she is not related to you in one of the ways listed under Relatives who do not have to live with you in chapter 3 and is your qualifying relative only because he or she lived with you all year as a member of your household   not a qualifying person. Amended returns   you cannot claim an exemption for him or her   not a qualifying person. Amended returns 1A person cannot qualify more than one taxpayer to use the head of household filing status for the year. Amended returns 2The term “qualifying child” is defined in chapter 3. Amended returns Note. Amended returns If you are a noncustodial parent, the term “qualifying child” for head of household filing status does not include a child who is your qualifying child for exemption purposes only because of the rules described under Children of divorced or separated parents (or parents who live apart) under Qualifying Child in chapter 3. Amended returns If you are the custodial parent and those rules apply, the child generally is your qualifying child for head of household filing status even though the child is not a qualifying child for whom you can claim an exemption. Amended returns 3This person is a qualifying person if the only reason you cannot claim the exemption is that you can be claimed as a dependent on someone else's return. Amended returns 4The term “ qualifying relative ” is defined in chapter 3. Amended returns 5If you can claim an exemption for a person only because of a multiple support agreement, that person is not a qualifying person. Amended returns See Multiple Support Agreement in chapter 3. Amended returns 6See Special rule for parent . Amended returns Example 1—child. Amended returns Your unmarried son lived with you all year and was 18 years old at the end of the year. Amended returns He did not provide more than half of his own support and does not meet the tests to be a qualifying child of anyone else. Amended returns As a result, he is your qualifying child (see Qualifying Child in chapter 3) and, because he is single, your qualifying person for you to claim head of household filing status. Amended returns Example 2—child who is not qualifying person. Amended returns The facts are the same as in Example 1 except your son was 25 years old at the end of the year and his gross income was $5,000. Amended returns Because he does not meet the age test (explained under Qualifying Child in chapter 3), your son is not your qualifying child. Amended returns Because he does not meet the gross income test (explained later under Qualifying Relative in chapter 3), he is not your qualifying relative. Amended returns As a result, he is not your qualifying person for head of household purposes. Amended returns Example 3—girlfriend. Amended returns Your girlfriend lived with you all year. Amended returns Even though she may be your qualifying relative if the gross income and support tests (explained in chapter 3) are met, she is not your qualifying person for head of household purposes because she is not related to you in one of the ways listed under Relatives who do not have to live with you in chapter 3. Amended returns See Table 2-1. Amended returns Example 4—girlfriend's child. Amended returns The facts are the same as in Example 3 except your girlfriend's 10-year-old son also lived with you all year. Amended returns He is not your qualifying child and, because he is your girlfriend's qualifying child, he is not your qualifying relative (see Not a Qualifying Child Test in chapter 3). Amended returns As a result, he is not your qualifying person for head of household purposes. Amended returns Home of qualifying person. Amended returns   Generally, the qualifying person must live with you for more than half of the year. Amended returns Special rule for parent. Amended returns   If your qualifying person is your father or mother, you may be eligible to file as head of household even if your father or mother does not live with you. Amended returns However, you must be able to claim an exemption for your father or mother. Amended returns Also, you must pay more than half the cost of keeping up a home that was the main home for the entire year for your father or mother. Amended returns   You are keeping up a main home for your father or mother if you pay more than half the cost of keeping your parent in a rest home or home for the elderly. Amended returns Death or birth. Amended returns   You may be eligible to file as head of household even if the individual who qualifies you for this filing status is born or dies during the year. Amended returns If the individual is your qualifying child, the child must have lived with you for more than half the part of the year he or she was alive. Amended returns If the individual is anyone else, see Publication 501. Amended returns Temporary absences. Amended returns   You and your qualifying person are considered to live together even if one or both of you are temporarily absent from your home due to special circumstances such as illness, education, business, vacation, or military service. Amended returns It must be reasonable to assume the absent person will return to the home after the temporary absence. Amended returns You must continue to keep up the home during the absence. Amended returns Qualifying Widow(er) With Dependent Child If your spouse died in 2013, you can use married filing jointly as your filing status for 2013 if you otherwise qualify to use that status. Amended returns The year of death is the last year for which you can file jointly with your deceased spouse. Amended returns See Married Filing Jointly , earlier. Amended returns You may be eligible to use qualifying widow(er) with dependent child as your filing status for 2 years following the year your spouse died. Amended returns For example, if your spouse died in 2012, and you have not remarried, you may be able to use this filing status for 2013 and 2014. Amended returns This filing status entitles you to use joint return tax rates and the highest standard deduction amount (if you do not itemize deductions). Amended returns It does not entitle you to file a joint return. Amended returns How to file. Amended returns   If you file as qualifying widow(er) with dependent child, you can use Form 1040. Amended returns If you also have taxable income of less than $100,000 and meet certain other conditions, you may be able to file Form 1040A. Amended returns Check the box on line 5 of either form. Amended returns Use the Married filing jointly column of the Tax Table or Section B of the Tax Computation Worksheet to figure your tax. Amended returns Eligibility rules. Amended returns   You are eligible to file your 2013 return as a qualifying widow(er) with dependent child if you meet all of the following tests. Amended returns You were entitled to file a joint return with your spouse for the year your spouse died. Amended returns It does not matter whether you actually filed a joint return. Amended returns Your spouse died in 2011 or 2012 and you did not remarry before the end of 2013. Amended returns You have a child or stepchild for whom you can claim an exemption. Amended returns This does not include a foster child. Amended returns This child lived in your home all year, except for temporary absences. Amended returns See Temporary absences , earlier, under Head of Household. Amended returns There are also exceptions, described later, for a child who was born or died during the year and for a kidnapped child. Amended returns You paid more than half the cost of keeping up a home for the year. Amended returns See Keeping Up a Home , earlier, under Head of Household. Amended returns Example. Amended returns John's wife died in 2011. Amended returns John has not remarried. Amended returns During 2012 and 2013, he continued to keep up a home for himself and his child, who lives with him and for whom he can claim an exemption. Amended returns For 2011 he was entitled to file a joint return for himself and his deceased wife. Amended returns For 2012 and 2013, he can file as qualifying widower with a dependent child. Amended returns After 2013 he can file as head of household if he qualifies. Amended returns Death or birth. Amended returns    You may be eligible to file as a qualifying widow(er) with dependent child if the child who qualifies you for this filing status is born or dies during the year. Amended returns You must have provided more than half of the cost of keeping up a home that was the child's main home during the entire part of the year he or she was alive. Amended returns Kidnapped child. Amended returns   A child may qualify you for qualifying widow(er) with dependent child, even if the child has been kidnapped. Amended returns See Publication 501. Amended returns    As mentioned earlier, this filing status is available for only 2 years following the year your spouse died. Amended returns Prev  Up  Next   Home   More Online Publications
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The Amended Returns

Amended returns 2. Amended returns   Source of Income Table of Contents Introduction Topics - This chapter discusses: Resident Aliens Nonresident AliensInterest Income Dividends Guarantee of Indebtedness Personal Services Transportation Income Scholarships, Grants, Prizes, and Awards Pensions and Annuities Rents or Royalties Real Property Personal Property Community Income Introduction After you have determined your alien status, you must determine the source of your income. Amended returns This chapter will help you determine the source of different types of income you may receive during the tax year. Amended returns This chapter also discusses special rules for married individuals who are domiciled in a country with community property laws. Amended returns Topics - This chapter discusses: Income source rules, and Community income. Amended returns Resident Aliens A resident alien's income is generally subject to tax in the same manner as a U. Amended returns S. Amended returns citizen. Amended returns If you are a resident alien, you must report all interest, dividends, wages, or other compensation for services, income from rental property or royalties, and other types of income on your U. Amended returns S. Amended returns tax return. Amended returns You must report these amounts from sources within and outside the United States. Amended returns Nonresident Aliens A nonresident alien usually is subject to U. Amended returns S. Amended returns income tax only on U. Amended returns S. Amended returns source income. Amended returns Under limited circumstances, certain foreign source income is subject to U. Amended returns S. Amended returns tax. Amended returns See Foreign Income in chapter 4. Amended returns The general rules for determining U. Amended returns S. Amended returns source income that apply to most nonresident aliens are shown in Table 2-1. Amended returns The following discussions cover the general rules as well as the exceptions to these rules. Amended returns Not all items of U. Amended returns S. Amended returns source income are taxable. Amended returns See chapter 3. Amended returns Interest Income Generally, U. Amended returns S. Amended returns source interest income includes the following items. Amended returns Interest on bonds, notes, or other interest-bearing obligations of U. Amended returns S. Amended returns residents or domestic corporations. Amended returns Interest paid by a domestic or foreign partnership or foreign corporation engaged in a U. Amended returns S. Amended returns trade or business at any time during the tax year. Amended returns Original issue discount. Amended returns Interest from a state, the District of Columbia, or the U. Amended returns S. Amended returns Government. Amended returns The place or manner of payment is immaterial in determining the source of the income. Amended returns A substitute interest payment made to the transferor of a security in a securities lending transaction or a sale-repurchase transaction is sourced in the same manner as the interest on the transferred security. Amended returns Exceptions. Amended returns   U. Amended returns S. Amended returns source interest income does not include the following items. Amended returns Interest paid by a resident alien or a domestic corporation on obligations issued before August 10, 2010, if for the 3-year period ending with the close of the payer's tax year preceding the interest payment, at least 80% of the payer's total gross income: Is from sources outside the United States, and Is attributable to the active conduct of a trade or business by the individual or corporation in a foreign country or a U. Amended returns S. Amended returns possession. Amended returns However, the interest will be considered U. Amended returns S. Amended returns source interest income if either of the following apply. Amended returns The recipient of the interest is related to the resident alien or domestic corporation. Amended returns See section 954(d)(3) for the definition of related person. Amended returns The terms of the obligation are significantly modified after August 9, 2010. Amended returns Any extension of the term of the obligation is considered a significant modification. Amended returns Interest paid by a foreign branch of a domestic corporation or a domestic partnership on deposits or withdrawable accounts with mutual savings banks, cooperative banks, credit unions, domestic building and loan associations, and other savings institutions chartered and supervised as savings and loan or similar associations under federal or state law if the interest paid or credited can be deducted by the association. Amended returns Interest on deposits with a foreign branch of a domestic corporation or domestic partnership, but only if the branch is in the commercial banking business. Amended returns Dividends In most cases, dividend income received from domestic corporations is U. Amended returns S. Amended returns source income. Amended returns Dividend income from foreign corporations is usually foreign source income. Amended returns Exceptions to both of these rules are discussed below. Amended returns A substitute dividend payment made to the transferor of a security in a securities lending transaction or a sale-repurchase transaction is sourced in the same manner as a distribution on the transferred security. Amended returns Dividend equivalent payments. Amended returns   U. Amended returns S. Amended returns source dividends also include all dividend equivalent payments. Amended returns Dividend equivalent payments include substitute dividends, payments made pursuant to a specified notional principal contract, and all similar payments that, directly or indirectly, are contingent on or determined by reference to, the payment of a dividend from U. Amended returns S. Amended returns sources. Amended returns    The Internal Revenue Service has issued final regulations that would affect the treatment of dividend equivalent payments and specified notional principal contracts. Amended returns You can view this regulation at www. Amended returns irs. Amended returns gov/irb/2013-52_IRB/ar08. Amended returns html. Amended returns First exception. Amended returns   Dividends received from a domestic corporation are not U. Amended returns S. Amended returns source income if the corporation elects to take the American Samoa economic development credit. Amended returns Second exception. Amended returns   Part of the dividends received from a foreign corporation is U. Amended returns S. Amended returns source income if 25% or more of its total gross income for the 3-year period ending with the close of its tax year preceding the declaration of dividends was effectively connected with a trade or business in the United States. Amended returns If the corporation was formed less than 3 years before the declaration, use its total gross income from the time it was formed. Amended returns Determine the part that is U. Amended returns S. Amended returns source income by multiplying the dividend by the following fraction. Amended returns   Foreign corporation's gross income connected with a U. Amended returns S. Amended returns trade or business for the 3-year period     Foreign corporation's gross income from all sources for that period   Guarantee of Indebtedness Certain amounts received directly or indirectly, for the provision of a guarantee of indebtedness issued after September 27, 2010, are U. Amended returns S. Amended returns source income. Amended returns They must be paid by a noncorporate resident or U. Amended returns S. Amended returns corporation or by any foreign person if the amounts are effectively connected with the conduct of a U. Amended returns S. Amended returns trade or business. Amended returns For more information, see Internal Revenue Code sections 861(a)(9) and 862(a)(9). Amended returns Personal Services All wages and any other compensation for services performed in the United States are considered to be from sources in the United States. Amended returns The only exceptions to this rule are discussed in chapter 3 under Employees of foreign persons, organizations, or offices, and under Crew members. Amended returns If you are an employee and receive compensation for labor or personal services performed both inside and outside the United States, special rules apply in determining the source of the compensation. Amended returns Compensation (other than certain fringe benefits) is sourced on a time basis. Amended returns Certain fringe benefits (such as housing and education) are sourced on a geographical basis. Amended returns Or, you may be permitted to use an alternative basis to determine the source of compensation. Amended returns See Alternative Basis , later. Amended returns Multi-level marketing. Amended returns   Certain companies sell products through a multi-level marketing arrangement, such that an upper-tier distributor, who has sponsored a lower-tier distributor, is entitled to a payment from the company based on certain activities of that lower-tier distributor. Amended returns Generally, depending on the facts, payments from such multi-level marketing companies to independent (non-employee) distributors (upper-tier distributors) that are based on the sales or purchases of persons whom they have sponsored (lower-tier distributors) constitute income for the performance of personal services in recruiting, training, and supporting the lower-tier distributors. Amended returns The source of such income is generally based on where the services of the upper-tier distributor are performed, and may, depending on the facts, be considered multi-year compensation, with the source of income determined over the period to which such compensation is attributable. Amended returns Self-employed individuals. Amended returns   If you are self-employed, you determine the source of compensation for labor or personal services from self-employment on the basis that most correctly reflects the proper source of that income under the facts and circumstances of your particular case. Amended returns In many cases, the facts and circumstances will call for an apportionment on a time basis as explained next. Amended returns Time Basis Use a time basis to figure your U. Amended returns S. Amended returns source compensation (other than the fringe benefits discussed later). Amended returns Do this by multiplying your total compensation (other than the fringe benefits discussed later) by the following fraction:   Number of days you performed services in the United States during the year     Total number of days you performed services during the year   You can use a unit of time less than a day in the above fraction, if appropriate. Amended returns The time period for which the compensation is made does not have to be a year. Amended returns Instead, you can use another distinct, separate, and continuous time period if you can establish to the satisfaction of the IRS that this other period is more appropriate. Amended returns Example 1. Amended returns Christina Brooks, a resident of the Netherlands, worked 240 days for a U. Amended returns S. Amended returns company during the tax year. Amended returns She received $80,000 in compensation. Amended returns None of it was for fringe benefits. Amended returns Christina performed services in the United States for 60 days and performed services in the Netherlands for 180 days. Amended returns Using the time basis for determining the source of compensation, $20,000 ($80,000 × 60/240) is her U. Amended returns S. Amended returns source income. Amended returns Example 2. Amended returns Rob Waters, a resident of South Africa, is employed by a corporation. Amended returns His annual salary is $100,000. Amended returns None of it is for fringe benefits. Amended returns During the first quarter of the year he worked entirely within the United States. Amended returns On April 1, Rob was transferred to Singapore for the remainder of the year. Amended returns Rob is able to establish that the first quarter of the year and the last 3 quarters of the year are two separate, distinct, and continuous periods of time. Amended returns Accordingly, $25,000 of Rob's annual salary is attributable to the first quarter of the year (. Amended returns 25 × $100,000). Amended returns All of it is U. Amended returns S. Amended returns source income because he worked entirely within the United States during that quarter. Amended returns The remaining $75,000 is attributable to the last three quarters of the year. Amended returns During those quarters, he worked 150 days in Singapore and 30 days in the United States. Amended returns His periodic performance of services in the United States did not result in distinct, separate, and continuous periods of time. Amended returns Of this $75,000, $12,500 ($75,000 × 30/180) is U. Amended returns S. Amended returns source income. Amended returns Multi-year compensation. Amended returns   The source of multi-year compensation is generally determined on a time basis over the period to which the compensation is attributable. Amended returns Multi-year compensation is compensation that is included in your income in one tax year but that is attributable to a period that includes two or more tax years. Amended returns   You determine the period to which the compensation is attributable based on the facts and circumstances of your case. Amended returns For example, an amount of compensation that specifically relates to a period of time that includes several calendar years is attributable to the entire multi-year period. Amended returns   The amount of compensation treated as from U. Amended returns S. Amended returns sources is figured by multiplying the total multi-year compensation by a fraction. Amended returns The numerator of the fraction is the number of days (or unit of time less than a day, if appropriate) that you performed labor or personal services in the United States in connection with the project. Amended returns The denominator of the fraction is the total number of days (or unit of time less than a day, if appropriate) that you performed labor or personal services in connection with the project. Amended returns Geographical Basis Compensation you receive as an employee in the form of the following fringe benefits is sourced on a geographical basis. Amended returns Housing. Amended returns Education. Amended returns Local transportation. Amended returns Tax reimbursement. Amended returns Hazardous or hardship duty pay as defined in Regulations section 1. Amended returns 861-4(b)(2)(ii)(D)(5). Amended returns Moving expense reimbursement. Amended returns The amount of fringe benefits must be reasonable and you must substantiate them by adequate records or by sufficient evidence. Amended returns Principal place of work. Amended returns   The above fringe benefits, except for tax reimbursement and hazardous or hardship duty pay, are sourced based on your principal place of work. Amended returns Your principal place of work is usually the place where you spend most of your working time. Amended returns This could be your office, plant, store, shop, or other location. Amended returns If there is no one place where you spend most of your working time, your main job location is the place where your work is centered, such as where you report for work or are otherwise required to “base” your work. Amended returns   If you have more than one job at any time, your main job location depends on the facts in each case. Amended returns The more important factors to be considered are: The total time you spend at each place, The amount of work you do at each place, and How much money you earn at each place. Amended returns Housing. Amended returns   The source of a housing fringe benefit is determined based on the location of your principal place of work. Amended returns A housing fringe benefit includes payments to you or on your behalf (and your family's if your family resides with you) only for the following. Amended returns Rent. Amended returns Utilities (except telephone charges). Amended returns Real and personal property insurance. Amended returns Occupancy taxes not deductible under section 164 or 216(a). Amended returns Nonrefundable fees for securing a leasehold. Amended returns Rental of furniture and accessories. Amended returns Household repairs. Amended returns Residential parking. Amended returns Fair rental value of housing provided in kind by your employer. Amended returns   A housing fringe benefit does not include: Deductible interest and taxes (including deductible interest and taxes of a tenant-stockholder in a cooperative housing corporation), The cost of buying property, including principal payments on a mortgage, The cost of domestic labor (maids, gardeners, etc. Amended returns ), Pay television subscriptions, Improvements and other expenses that increase the value or appreciably prolong the life of property, Purchased furniture or accessories, Depreciation or amortization of property or improvements, The value of meals or lodging that you exclude from gross income, or The value of meals or lodging that you deduct as moving expenses. Amended returns Education. Amended returns   The source of an education fringe benefit for the education expenses of your dependents is determined based on the location of your principal place of work. Amended returns An education fringe benefit includes payments only for the following expenses for education at an elementary or secondary school. Amended returns Tuition, fees, academic tutoring, special needs services for a special needs student, books, supplies, and other equipment. Amended returns Room and board and uniforms that are required or provided by the school in connection with enrollment or attendance. Amended returns Local transportation. Amended returns   The source of a local transportation fringe benefit is determined based on the location of your principal place of work. Amended returns Your local transportation fringe benefit is the amount that you receive as compensation for local transportation for you or your spouse or dependents at the location of your principal place of work. Amended returns The amount treated as a local transportation fringe benefit is limited to actual expenses incurred for local transportation and the fair rental value of any employer-provided vehicle used predominantly by you, your spouse, or your dependents for local transportation. Amended returns Actual expenses do not include the cost (including interest) of any vehicle purchased by you or on your behalf. Amended returns Tax reimbursement. Amended returns   The source of a tax reimbursement fringe benefit is determined based on the location of the jurisdiction that imposed the tax for which you are reimbursed. Amended returns Moving expense reimbursement. Amended returns   The source of a moving expense reimbursement is generally based on the location of your new principal place of work. Amended returns However, the source is determined based on the location of your former principal place of work if you provide sufficient evidence that such determination of source is more appropriate under the facts and circumstances of your case. Amended returns Sufficient evidence generally requires an agreement between you and your employer, or a written statement of company policy, which is reduced to writing before the move and which is entered into or established to induce you or other employees to move to another country. Amended returns The written statement or agreement must state that your employer will reimburse you for moving expenses that you incur to return to your former principal place of work regardless of whether you continue to work for your employer after returning to that location. Amended returns It may contain certain conditions upon which the right to reimbursement is determined as long as those conditions set forth standards that are definitely ascertainable and can only be fulfilled prior to, or through completion of, your return move to your former principal place of work. Amended returns Alternative Basis If you are an employee, you can determine the source of your compensation under an alternative basis if you establish to the satisfaction of the IRS that, under the facts and circumstances of your case, the alternative basis more properly determines the source of your compensation than the time or geographical basis. Amended returns If you use an alternative basis, you must keep (and have available for inspection) records to document why the alternative basis more properly determines the source of your compensation. Amended returns Also, if your total compensation from all sources is $250,000 or more, check “Yes” to both questions on line K on page 5 of Form 1040NR, and attach a written statement to your tax return that sets forth all of the following. Amended returns Your name and social security number (written across the top of the statement). Amended returns The specific compensation income, or the specific fringe benefit, for which you are using the alternative basis. Amended returns For each item in (2), the alternative basis of allocation of source used. Amended returns For each item in (2), a computation showing how the alternative allocation was computed. Amended returns A comparison of the dollar amount of the U. Amended returns S. Amended returns compensation and foreign compensation sourced under both the alternative basis and the time or geographical basis discussed earlier. Amended returns Transportation Income Transportation income is income from the use of a vessel or aircraft or for the performance of services directly related to the use of any vessel or aircraft. Amended returns This is true whether the vessel or aircraft is owned, hired, or leased. Amended returns The term “vessel or aircraft” includes any container used in connection with a vessel or aircraft. Amended returns All income from transportation that begins and ends in the United States is treated as derived from sources in the United States. Amended returns If the transportation begins or ends in the United States, 50% of the transportation income is treated as derived from sources in the United States. Amended returns For transportation income from personal services, 50% of the income is U. Amended returns S. Amended returns source income if the transportation is between the United States and a U. Amended returns S. Amended returns possession. Amended returns For nonresident aliens, this only applies to income derived from, or in connection with, an aircraft. Amended returns For information on how U. Amended returns S. Amended returns source transportation income is taxed, see chapter 4. Amended returns Scholarships, Grants, Prizes, and Awards Generally, the source of scholarships, fellowship grants, grants, prizes, and awards is the residence of the payer regardless of who actually disburses the funds. Amended returns However, see Activities to be performed outside the United States , later. Amended returns For example, payments for research or study in the United States made by the United States, a noncorporate U. Amended returns S. Amended returns resident, or a domestic corporation, are from U. Amended returns S. Amended returns sources. Amended returns Similar payments from a foreign government or foreign corporation are foreign source payments even though the funds may be disbursed through a U. Amended returns S. Amended returns agent. Amended returns Payments made by an entity designated as a public international organization under the International Organizations Immunities Act are from foreign sources. Amended returns Activities to be performed outside the United States. Amended returns   Scholarships, fellowship grants, targeted grants, and achievement awards received by nonresident aliens for activities performed, or to be performed, outside the United States are not U. Amended returns S. Amended returns source income. Amended returns    These rules do not apply to amounts paid as salary or other compensation for services. Amended returns See Personal Services, earlier, for the source rules that apply. Amended returns Pensions and Annuities If you receive a pension from a domestic trust for services performed both in and outside the United States, part of the pension payment is from U. Amended returns S. Amended returns sources. Amended returns That part is the amount attributable to earnings of the pension plan and the employer contributions made for services performed in the United States. Amended returns This applies whether the distribution is made under a qualified or nonqualified stock bonus, pension, profit-sharing, or annuity plan (whether or not funded). Amended returns If you performed services as an employee of the United States, you may receive a distribution from the U. Amended returns S. Amended returns Government under a plan, such as the Civil Service Retirement System, that is treated as a qualified pension plan. Amended returns Your U. Amended returns S. Amended returns source income is the otherwise taxable amount of the distribution that is attributable to your total U. Amended returns S. Amended returns Government basic pay other than tax-exempt pay for services performed outside the United States. Amended returns Rents or Royalties Your U. Amended returns S. Amended returns source income includes rent and royalty income received during the tax year from property located in the United States or from any interest in that property. Amended returns U. Amended returns S. Amended returns source income also includes rents or royalties for the use of, or for the privilege of using, in the United States, intangible property such as patents, copyrights, secret processes and formulas, goodwill, trademarks, franchises, and similar property. Amended returns Real Property Real property is land and buildings and generally anything built on, growing on, or attached to land. Amended returns Gross income from sources in the United States includes gains, profits, and income from the sale or other disposition of real property located in the United States. Amended returns Natural resources. Amended returns   The income from the sale of products of any farm, mine, oil or gas well, other natural deposit, or timber located in the United States and sold in a foreign country, or located in a foreign country and sold in the United States, is partly from sources in the United States. Amended returns For information on determining that part, see section 1. Amended returns 863-1(b) of the regulations. Amended returns Table 2-1. Amended returns Summary of Source Rules for Income of Nonresident Aliens Item of income Factor determining source Salaries, wages, other compensation Where services performed Business income:   Personal services Where services performed Sale of inventory—purchased Where sold Sale of inventory—produced Allocation Interest Residence of payer Dividends Whether a U. Amended returns S. Amended returns or foreign corporation* Rents Location of property Royalties:   Natural resources Location of property Patents, copyrights, etc. Amended returns Where property is used Sale of real property Location of property Sale of personal property Seller's tax home (but see Personal Property , later, for exceptions) Pension distributions attributable to contributions Where services were performed that earned the pension Investment earnings on pension contributions Location of pension trust Sale of natural resources Allocation based on fair market value of product at export terminal. Amended returns For more information, see section 1. Amended returns 863-1(b) of the regulations. Amended returns *Exceptions include: a) Dividends paid by a U. Amended returns S. Amended returns corporation are foreign source if the corporation elects the  American Samoa economic development credit. Amended returns  b) Part of a dividend paid by a foreign corporation is U. Amended returns S. Amended returns source if at least 25% of the  corporation's gross income is effectively connected with a U. Amended returns S. Amended returns trade or business for the  3 tax years before the year in which the dividends are declared. Amended returns Personal Property Personal property is property, such as machinery, equipment, or furniture, that is not real property. Amended returns Gain or loss from the sale or exchange of personal property generally has its source in the United States if you have a tax home in the United States. Amended returns If you do not have a tax home in the United States, the gain or loss generally is considered to be from sources outside the United States. Amended returns Tax home. Amended returns   Your tax home is the general area of your main place of business, employment, or post of duty, regardless of where you maintain your family home. Amended returns Your tax home is the place where you permanently or indefinitely work as an employee or a self-employed individual. Amended returns 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. Amended returns If you do not fit either of these categories, you are considered an itinerant and your tax home is wherever you work. Amended returns Inventory property. Amended returns   Inventory property is personal property that is stock in trade or that is held primarily for sale to customers in the ordinary course of your trade or business. Amended returns Income from the sale of inventory that you purchased is sourced where the property is sold. Amended returns Generally, this is where title to the property passes to the buyer. Amended returns For example, income from the sale of inventory in the United States is U. Amended returns S. Amended returns source income, whether you purchased it in the United States or in a foreign country. Amended returns   Income from the sale of inventory property that you produced in the United States and sold outside the United States (or vice versa) is partly from sources in the United States and partly from sources outside the United States. Amended returns For information on making this allocation, see section 1. Amended returns 863-3 of the regulations. Amended returns   These rules apply even if your tax home is not in the United States. Amended returns Depreciable property. Amended returns   To determine the source of any gain from the sale of depreciable personal property, you must first figure the part of the gain that is not more than the total depreciation adjustments on the property. Amended returns You allocate this part of the gain to sources in the United States based on the ratio of U. Amended returns S. Amended returns depreciation adjustments to total depreciation adjustments. Amended returns The rest of this part of the gain is considered to be from sources outside the United States. Amended returns   For this purpose, “U. Amended returns S. Amended returns depreciation adjustments” are the depreciation adjustments to the basis of the property that are allowable in figuring taxable income from U. Amended returns S. Amended returns sources. Amended returns However, if the property is used predominantly in the United States during a tax year, all depreciation deductions allowable for that year are treated as U. Amended returns S. Amended returns depreciation adjustments. Amended returns But there are some exceptions for certain transportation, communications, and other property used internationally. Amended returns   Gain from the sale of depreciable property that is more than the total depreciation adjustments on the property is sourced as if the property were inventory property, as discussed above. Amended returns   A loss is sourced in the same way as the depreciation deductions were sourced. Amended returns However, if the property was used predominantly in the United States, the entire loss reduces U. Amended returns S. Amended returns source income. Amended returns   The basis of property usually means the cost (money plus the fair market value of other property or services) of property you acquire. Amended returns Depreciation is an amount deducted to recover the cost or other basis of a trade or business asset. Amended returns The amount you can deduct depends on the property's cost, when you began using the property, how long it will take to recover your cost, and which depreciation method you use. Amended returns A depreciation deduction is any deduction for depreciation or amortization or any other allowable deduction that treats a capital expenditure as a deductible expense. Amended returns Intangible property. Amended returns   Intangible property includes patents, copyrights, secret processes or formulas, goodwill, trademarks, trade names, or other like property. Amended returns The gain from the sale of amortizable or depreciable intangible property, up to the previously allowable amortization or depreciation deductions, is sourced in the same way as the original deductions were sourced. Amended returns This is the same as the source rule for gain from the sale of depreciable property. Amended returns See Depreciable property , earlier, for details on how to apply this rule. Amended returns   Gain in excess of the amortization or depreciation deductions is sourced in the country where the property is used if the income from the sale is contingent on the productivity, use, or disposition of that property. Amended returns If the income is not contingent on the productivity, use, or disposition of the property, the income is sourced according to your tax home as discussed earlier. Amended returns If payments for goodwill do not depend on its productivity, use, or disposition, their source is the country in which the goodwill was generated. Amended returns Sales through offices or fixed places of business. Amended returns   Despite any of the earlier rules, if you do not have a tax home in the United States, but you maintain an office or other fixed place of business in the United States, treat the income from any sale of personal property (including inventory property) that is attributable to that office or place of business as U. Amended returns S. Amended returns source income. Amended returns However, this rule does not apply to sales of inventory property for use, disposition, or consumption outside the United States if your office or other fixed place of business outside the United States materially participated in the sale. Amended returns   If you have a tax home in the United States but maintain an office or other fixed place of business outside the United States, income from sales of personal property, other than inventory, depreciable property, or intangibles, that is attributable to that foreign office or place of business may be treated as U. Amended returns S. Amended returns source income. Amended returns The income is treated as U. Amended returns S. Amended returns source income if an income tax of less than 10% of the income from the sale is paid to a foreign country. Amended returns This rule also applies to losses if the foreign country would have imposed an income tax of less than 10% had the sale resulted in a gain. Amended returns Community Income If you are married and you or your spouse is subject to the community property laws of a foreign country, a U. Amended returns S. Amended returns state, or a U. Amended returns S. Amended returns possession, you generally must follow those laws to determine the income of yourself and your spouse for U. Amended returns S. Amended returns tax purposes. Amended returns But you must disregard certain community property laws if: Both you and your spouse are nonresident aliens, or One of you is a nonresident alien and the other is a U. Amended returns S. Amended returns citizen or resident and you do not both choose to be treated as U. Amended returns S. Amended returns residents as explained in chapter 1. Amended returns In these cases, you and your spouse must report community income as explained later. Amended returns Earned income. Amended returns   Earned income of a spouse, other than trade or business income and a partner's distributive share of partnership income, is treated as the income of the spouse whose services produced the income. Amended returns That spouse must report all of it on his or her separate return. Amended returns Trade or business income. Amended returns   Trade or business income, other than a partner's distributive share of partnership income, is treated as the income of the spouse carrying on the trade or business. Amended returns That spouse must report all of it on his or her separate return. Amended returns Partnership income (or loss). Amended returns   A partner's distributive share of partnership income (or loss) is treated as the income (or loss) of the partner. Amended returns The partner must report all of it on his or her separate return. Amended returns Separate property income. Amended returns   Income derived from the separate property of one spouse (and which is not earned income, trade or business income, or partnership distributive share income) is treated as the income of that spouse. Amended returns That spouse must report all of it on his or her separate return. Amended returns Use the appropriate community property law to determine what is separate property. Amended returns Other community income. Amended returns   All other community income is treated as provided by the applicable community property laws. Amended returns Prev  Up  Next   Home   More Online Publications