File your Taxes for Free!
  • Get your maximum refund*
  • 100% accurate calculations guaranteed*

TurboTax Federal Free Edition - File Taxes Online

Don't let filing your taxes get you down! We'll help make it as easy as possible. With e-file and direct deposit, there's no faster way to get your refund!

Approved TurboTax Affiliate Site. TurboTax and TurboTax Online, among others, are registered trademarks and/or service marks of Intuit Inc. in the United States and other countries. Other parties' trademarks or service marks are the property of the respective owners.


© 2012 - 2018 All rights reserved.

This is an Approved TurboTax Affiliate site. TurboTax and TurboTax Online, among other are registered trademarks and/or service marks of Intuit, Inc. in the United States and other countries. Other parties' trademarks or service marks are the property of the respective owners.
When discussing "Free e-file", note that state e-file is an additional fee. E-file fees do not apply to New York state returns. Prices are subject to change without notice. E-file and get your refund faster
*If you pay an IRS or state penalty or interest because of a TurboTax calculations error, we'll pay you the penalty and interest.
*Maximum Refund Guarantee - or Your Money Back: If you get a larger refund or smaller tax due from another tax preparation method, we'll refund the applicable TurboTax federal and/or state purchase price paid. TurboTax Federal Free Edition customers are entitled to payment of $14.99 and a refund of your state purchase price paid. Claims must be submitted within sixty (60) days of your TurboTax filing date and no later than 6/15/14. E-file, Audit Defense, Professional Review, Refund Transfer and technical support fees are excluded. This guarantee cannot be combined with the TurboTax Satisfaction (Easy) Guarantee. *We're so confident your return will be done right, we guarantee it. Accurate calculations guaranteed. If you pay an IRS or state penalty or interest because of a TurboTax calculations error, we'll pay you the penalty and interest.
https://turbotax.intuit.com/corp/guarantees.jsp

File 2005 Taxes Online Free

Tax Software Reviews1040x OnlineH&r Block File 2012 TaxesEfile H&r BlockFree Turbotax 2011Irs Forms 1040ezFree Turbotax 20121040ez BookletFree Turbo Tax FilingFederal Tax Forms 1040 EzH&rblock Com2012 1040ez FormE File Tax Return2012 Tax SoftwareFile Federal Taxes Online FreeHow To File Taxes For Self Employment IncomeHow Do I Complete A 1040x Forms1040ez Online FilingHow To File Amended Return2011 Irs Forms And PublicationsHow To Fill Out A 1040xEfile Free Federal And StateFile Federal And State Income Tax For FreeAmmend 2010 TaxesHow To Fill Out 1040x Step By StepE File Your State Taxes For FreeIrs 2010 Tax FormsAlabama 40 Tax Forms 2012Tax Act 2012 LoginH&r Block State ReturnH&r Block Key Code Free State Filing2013 Amended Tax ReturnAmended Tax Return FormHow To File An Amended Tax Return OnlineFree Tax Filing For UnemployedFree State Tax E-fileWww Freefilefillableforms Com2008 Amended Tax ReturnFiling Form 1040ezFile 1040x Electronically

File 2005 Taxes Online Free

File 2005 taxes online free 4. File 2005 taxes online free   Foreign Earned Income and Housing: Exclusion – Deduction Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: Who Qualifies for the Exclusions and the Deduction? RequirementsTax Home in Foreign Country Bona Fide Residence Test Physical Presence Test Waiver of Time Requirements U. File 2005 taxes online free S. File 2005 taxes online free Travel Restrictions Foreign Earned Income Foreign Earned Income ExclusionLimit on Excludable Amount Choosing the Exclusion Foreign Housing Exclusion and DeductionHousing Amount Foreign Housing Exclusion Foreign Housing Deduction Married Couples Form 2555 and Form 2555-EZForm 2555-EZ Form 2555 Topics - This chapter discusses: Who qualifies for the foreign earned income exclusion, the foreign housing exclusion, and the foreign housing deduction, The requirements that must be met to claim either exclusion or the deduction, How to figure the foreign earned income exclusion, and How to figure the foreign housing exclusion and the foreign housing deduction. File 2005 taxes online free Useful Items - You may want to see: Publication 519 U. File 2005 taxes online free S. File 2005 taxes online free Tax Guide for Aliens 570 Tax Guide for Individuals With Income from U. File 2005 taxes online free S. File 2005 taxes online free Possessions 596 Earned Income Credit (EIC) Form (and Instructions) 1040X Amended U. File 2005 taxes online free S. File 2005 taxes online free Individual Income Tax Return 2555 Foreign Earned Income 2555-EZ Foreign Earned Income Exclusion See chapter 7 for information about getting these publications and forms. File 2005 taxes online free Who Qualifies for the Exclusions and the Deduction? If you meet certain requirements, you may qualify for the foreign earned income and foreign housing exclusions and the foreign housing deduction. File 2005 taxes online free If you are a U. File 2005 taxes online free S. File 2005 taxes online free citizen or a resident alien of the United States and you live abroad, you are taxed on your worldwide income. File 2005 taxes online free However, you may qualify to exclude from income up to $97,600 of your foreign earnings. File 2005 taxes online free In addition, you can exclude or deduct certain foreign housing amounts. File 2005 taxes online free See Foreign Earned Income Exclusion and Foreign Housing Exclusion and Deduction, later. File 2005 taxes online free You also may be entitled to exclude from income the value of meals and lodging provided to you by your employer. File 2005 taxes online free See Exclusion of Meals and Lodging, later. File 2005 taxes online free Requirements To claim the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction, you must meet all three of the following requirements. File 2005 taxes online free Your tax home must be in a foreign country. File 2005 taxes online free You must have foreign earned income. File 2005 taxes online free You must be one of the following. File 2005 taxes online free A U. File 2005 taxes online free S. File 2005 taxes online free citizen who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year. File 2005 taxes online free A U. File 2005 taxes online free S. File 2005 taxes online free resident alien who is a citizen or national of a country with which the United States has an income tax treaty in effect and who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year. File 2005 taxes online free A U. File 2005 taxes online free S. File 2005 taxes online free citizen or a U. File 2005 taxes online free S. File 2005 taxes online free resident alien who is physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months. File 2005 taxes online free See Publication 519 to find out if you are a U. File 2005 taxes online free S. File 2005 taxes online free resident alien for tax purposes and whether you keep that alien status when you temporarily work abroad. File 2005 taxes online free If you are a nonresident alien married to a U. File 2005 taxes online free S. File 2005 taxes online free citizen or resident alien, and both you and your spouse choose to treat you as a resident alien, you are a resident alien for tax purposes. File 2005 taxes online free For information on making the choice, see the discussion in chapter 1 under Nonresident Alien Spouse Treated as a Resident . File 2005 taxes online free Waiver of minimum time requirements. File 2005 taxes online free   The minimum time requirements for bona fide residence and physical presence can be waived if you must leave a foreign country because of war, civil unrest, or similar adverse conditions in that country. File 2005 taxes online free This is fully explained under Waiver of Time Requirements , later. File 2005 taxes online free   See Figure 4-A and information in this chapter to determine if you are eligible to claim either exclusion or the deduction. File 2005 taxes online free Tax Home in Foreign Country To qualify for the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction, your tax home must be in a foreign country throughout your period of bona fide residence or physical presence abroad. File 2005 taxes online free Bona fide residence and physical presence are explained later. File 2005 taxes online free Tax Home Your tax home is the general area of your main place of business, employment, or post of duty, regardless of where you maintain your family home. File 2005 taxes online free Your tax home is the place where you are permanently or indefinitely engaged to work as an employee or self-employed individual. File 2005 taxes online free Having a “tax home” in a given location does not necessarily mean that the given location is your residence or domicile for tax purposes. File 2005 taxes online free If you do not have a regular or main place of business because of the nature of your work, your tax home may be the place where you regularly live. File 2005 taxes online free If you have neither a regular or main place of business nor a place where you regularly live, you are considered an itinerant and your tax home is wherever you work. File 2005 taxes online free You are not considered to have a tax home in a foreign country for any period in which your abode is in the United States. File 2005 taxes online free However, your abode is not necessarily in the United States while you are temporarily in the United States. File 2005 taxes online free Your abode is also not necessarily in the United States merely because you maintain a dwelling in the United States, whether or not your spouse or dependents use the dwelling. File 2005 taxes online free “Abode” has been variously defined as one's home, habitation, residence, domicile, or place of dwelling. File 2005 taxes online free It does not mean your principal place of business. File 2005 taxes online free “Abode” has a domestic rather than a vocational meaning and does not mean the same as “tax home. File 2005 taxes online free ” The location of your abode often will depend on where you maintain your economic, family, and personal ties. File 2005 taxes online free Example 1. File 2005 taxes online free You are employed on an offshore oil rig in the territorial waters of a foreign country and work a 28-day on/28-day off schedule. File 2005 taxes online free You return to your family residence in the United States during your off periods. File 2005 taxes online free You are considered to have an abode in the United States and do not satisfy the tax home test in the foreign country. File 2005 taxes online free You cannot claim either of the exclusions or the housing deduction. File 2005 taxes online free Example 2. File 2005 taxes online free For several years, you were a marketing executive with a producer of machine tools in Toledo, Ohio. File 2005 taxes online free In November of last year, your employer transferred you to London, England, for a minimum of 18 months to set up a sales operation for Europe. File 2005 taxes online free Before you left, you distributed business cards showing your business and home addresses in London. File 2005 taxes online free You kept ownership of your home in Toledo but rented it to another family. File 2005 taxes online free You placed your car in storage. File 2005 taxes online free In November of last year, you moved your spouse, children, furniture, and family pets to a home your employer rented for you in London. File 2005 taxes online free Shortly after moving, you leased a car and you and your spouse got British driving licenses. File 2005 taxes online free Your entire family got library cards for the local public library. File 2005 taxes online free You and your spouse opened bank accounts with a London bank and secured consumer credit. File 2005 taxes online free You joined a local business league and both you and your spouse became active in the neighborhood civic association and worked with a local charity. File 2005 taxes online free Your abode is in London for the time you live there. File 2005 taxes online free You satisfy the tax home test in the foreign country. File 2005 taxes online free Please click here for the text description of the image. File 2005 taxes online free Figure 4–A Can I Claim the Exclusion or Deduction? Temporary or Indefinite Assignment The location of your tax home often depends on whether your assignment is temporary or indefinite. File 2005 taxes online free If you are temporarily absent from your tax home in the United States on business, you may be able to deduct your away-from-home expenses (for travel, meals, and lodging), but you would not qualify for the foreign earned income exclusion. File 2005 taxes online free If your new work assignment is for an indefinite period, your new place of employment becomes your tax home and you would not be able to deduct any of the related expenses that you have in the general area of this new work assignment. File 2005 taxes online free If your new tax home is in a foreign country and you meet the other requirements, your earnings may qualify for the foreign earned income exclusion. File 2005 taxes online free If you expect your employment away from home in a single location to last, and it does last, for 1 year or less, it is temporary unless facts and circumstances indicate otherwise. File 2005 taxes online free If you expect it to last for more than 1 year, it is indefinite. File 2005 taxes online free If you expect it to last for 1 year or less, but at some later date you expect it to last longer than 1 year, it is temporary (in the absence of facts and circumstances indicating otherwise) until your expectation changes. File 2005 taxes online free Once your expectation changes, it is indefinite. File 2005 taxes online free Foreign Country To meet the bona fide residence test or the physical presence test, you must live in or be present in a foreign country. File 2005 taxes online free A foreign country includes any territory under the sovereignty of a government other than that of the United States. File 2005 taxes online free The term “foreign country” includes the country's airspace and territorial waters, but not international waters and the airspace above them. File 2005 taxes online free It also includes the seabed and subsoil of those submarine areas adjacent to the country's territorial waters over which it has exclusive rights under international law to explore and exploit the natural resources. File 2005 taxes online free The term “foreign country” does not include Antarctica or U. File 2005 taxes online free S. File 2005 taxes online free possessions such as Puerto Rico, Guam, the Commonwealth of the Northern Mariana Islands, the U. File 2005 taxes online free S. File 2005 taxes online free Virgin Islands, and Johnston Island. File 2005 taxes online free For purposes of the foreign earned income exclusion, the foreign housing exclusion, and the foreign housing deduction, the terms “foreign,” “abroad,” and “overseas” refer to areas outside the United States and those areas listed or described in the previous sentence. File 2005 taxes online free American Samoa, Guam, and the Commonwealth of the Northern Mariana Islands Residence or presence in a U. File 2005 taxes online free S. File 2005 taxes online free possession does not qualify you for the foreign earned income exclusion. File 2005 taxes online free You may, however, qualify for an exclusion of your possession income on your U. File 2005 taxes online free S. File 2005 taxes online free return. File 2005 taxes online free American Samoa. File 2005 taxes online free   There is a possession exclusion available to individuals who are bona fide residents of American Samoa for the entire tax year. File 2005 taxes online free Gross income from sources within American Samoa may be eligible for this exclusion. File 2005 taxes online free Income that is effectively connected with the conduct of a trade or business within American Samoa also may be eligible for this exclusion. File 2005 taxes online free Use Form 4563, Exclusion of Income for Bona Fide Residents of American Samoa, to figure the exclusion. File 2005 taxes online free Guam and the Commonwealth of the Northern Mariana Islands. File 2005 taxes online free   An exclusion will be available to residents of Guam and the Commonwealth of the Northern Mariana Islands if, and when, new implementation agreements take effect between the United States and those possessions. File 2005 taxes online free   For more information, see Publication 570. File 2005 taxes online free Puerto Rico and U. File 2005 taxes online free S. File 2005 taxes online free Virgin Islands Residents of Puerto Rico and the U. File 2005 taxes online free S. File 2005 taxes online free Virgin Islands cannot claim the foreign earned income exclusion or the foreign housing exclusion. File 2005 taxes online free Puerto Rico. File 2005 taxes online free   Generally, if you are a U. File 2005 taxes online free S. File 2005 taxes online free citizen who is a bona fide resident of Puerto Rico for the entire tax year, you are not subject to U. File 2005 taxes online free S. File 2005 taxes online free tax on income from Puerto Rican sources. File 2005 taxes online free This does not include amounts paid for services performed as an employee of the United States. File 2005 taxes online free However, you are subject to U. File 2005 taxes online free S. File 2005 taxes online free tax on your income from sources outside Puerto Rico. File 2005 taxes online free In figuring your U. File 2005 taxes online free S. File 2005 taxes online free tax, you cannot deduct expenses allocable to income not subject to tax. File 2005 taxes online free Bona Fide Residence Test You meet the bona fide residence test if you are a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year. File 2005 taxes online free You can use the bona fide residence test to qualify for the exclusions and the deduction only if you are either: A U. File 2005 taxes online free S. File 2005 taxes online free citizen, or A U. File 2005 taxes online free S. File 2005 taxes online free resident alien who is a citizen or national of a country with which the United States has an income tax treaty in effect. File 2005 taxes online free You do not automatically acquire bona fide resident status merely by living in a foreign country or countries for 1 year. File 2005 taxes online free If you go to a foreign country to work on a particular job for a specified period of time, you ordinarily will not be regarded as a bona fide resident of that country even though you work there for 1 tax year or longer. File 2005 taxes online free The length of your stay and the nature of your job are only two of the factors to be considered in determining whether you meet the bona fide residence test. File 2005 taxes online free Bona fide residence. File 2005 taxes online free   To meet the bona fide residence test, you must have established a bona fide residence in a foreign country. File 2005 taxes online free   Your bona fide residence is not necessarily the same as your domicile. File 2005 taxes online free Your domicile is your permanent home, the place to which you always return or intend to return. File 2005 taxes online free Example. File 2005 taxes online free You could have your domicile in Cleveland, Ohio, and a bona fide residence in Edinburgh, Scotland, if you intend to return eventually to Cleveland. File 2005 taxes online free The fact that you go to Scotland does not automatically make Scotland your bona fide residence. File 2005 taxes online free If you go there as a tourist, or on a short business trip, and return to the United States, you have not established bona fide residence in Scotland. File 2005 taxes online free But if you go to Scotland to work for an indefinite or extended period and you set up permanent quarters there for yourself and your family, you probably have established a bona fide residence in a foreign country, even though you intend to return eventually to the United States. File 2005 taxes online free You are clearly not a resident of Scotland in the first instance. File 2005 taxes online free However, in the second, you are a resident because your stay in Scotland appears to be permanent. File 2005 taxes online free If your residency is not as clearly defined as either of these illustrations, it may be more difficult to decide whether you have established a bona fide residence. File 2005 taxes online free Determination. File 2005 taxes online free   Questions of bona fide residence are determined according to each individual case, taking into account factors such as your intention, the purpose of your trip, and the nature and length of your stay abroad. File 2005 taxes online free   To meet the bona fide residence test, you must show the Internal Revenue Service (IRS) that you have been a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year. File 2005 taxes online free The IRS decides whether you are a bona fide resident of a foreign country largely on the basis of facts you report on Form 2555. File 2005 taxes online free IRS cannot make this determination until you file Form 2555. File 2005 taxes online free Statement to foreign authorities. File 2005 taxes online free   You are not considered a bona fide resident of a foreign country if you make a statement to the authorities of that country that you are not a resident of that country, and the authorities: Hold that you are not subject to their income tax laws as a resident, or Have not made a final decision on your status. File 2005 taxes online free Special agreements and treaties. File 2005 taxes online free   An income tax exemption provided in a treaty or other international agreement will not in itself prevent you from being a bona fide resident of a foreign country. File 2005 taxes online free Whether a treaty prevents you from becoming a bona fide resident of a foreign country is determined under all provisions of the treaty, including specific provisions relating to residence or privileges and immunities. File 2005 taxes online free Example 1. File 2005 taxes online free You are a U. File 2005 taxes online free S. File 2005 taxes online free citizen employed in the United Kingdom by a U. File 2005 taxes online free S. File 2005 taxes online free employer under contract with the U. File 2005 taxes online free S. File 2005 taxes online free Armed Forces. File 2005 taxes online free You are not subject to the North Atlantic Treaty Status of Forces Agreement. File 2005 taxes online free You may be a bona fide resident of the United Kingdom. File 2005 taxes online free Example 2. File 2005 taxes online free You are a U. File 2005 taxes online free S. File 2005 taxes online free citizen in the United Kingdom who qualifies as an “employee” of an armed service or as a member of a “civilian component” under the North Atlantic Treaty Status of Forces Agreement. File 2005 taxes online free You are not a bona fide resident of the United Kingdom. File 2005 taxes online free Example 3. File 2005 taxes online free You are a U. File 2005 taxes online free S. File 2005 taxes online free citizen employed in Japan by a U. File 2005 taxes online free S. File 2005 taxes online free employer under contract with the U. File 2005 taxes online free S. File 2005 taxes online free Armed Forces. File 2005 taxes online free You are subject to the agreement of the Treaty of Mutual Cooperation and Security between the United States and Japan. File 2005 taxes online free Being subject to the agreement does not make you a bona fide resident of Japan. File 2005 taxes online free Example 4. File 2005 taxes online free You are a U. File 2005 taxes online free S. File 2005 taxes online free citizen employed as an “official” by the United Nations in Switzerland. File 2005 taxes online free You are exempt from Swiss taxation on the salary or wages paid to you by the United Nations. File 2005 taxes online free This does not prevent you from being a bona fide resident of Switzerland. File 2005 taxes online free Effect of voting by absentee ballot. File 2005 taxes online free   If you are a U. File 2005 taxes online free S. File 2005 taxes online free citizen living abroad, you can vote by absentee ballot in any election held in the United States without risking your status as a bona fide resident of a foreign country. File 2005 taxes online free   However, if you give information to the local election officials about the nature and length of your stay abroad that does not match the information you give for the bona fide residence test, the information given in connection with absentee voting will be considered in determining your status, but will not necessarily be conclusive. File 2005 taxes online free Uninterrupted period including entire tax year. File 2005 taxes online free   To meet the bona fide residence test, you must reside in a foreign country or countries for an uninterrupted period that includes an entire tax year. File 2005 taxes online free An entire tax year is from January 1 through December 31 for taxpayers who file their income tax returns on a calendar year basis. File 2005 taxes online free   During the period of bona fide residence in a foreign country, you can leave the country for brief or temporary trips back to the United States or elsewhere for vacation or business. File 2005 taxes online free To keep your status as a bona fide resident of a foreign country, you must have a clear intention of returning from such trips, without unreasonable delay, to your foreign residence or to a new bona fide residence in another foreign country. File 2005 taxes online free Example 1. File 2005 taxes online free You arrived with your family in Lisbon, Portugal, on November 1, 2011. File 2005 taxes online free Your assignment is indefinite, and you intend to live there with your family until your company sends you to a new post. File 2005 taxes online free You immediately established residence there. File 2005 taxes online free You spent April of 2012 at a business conference in the United States. File 2005 taxes online free Your family stayed in Lisbon. File 2005 taxes online free Immediately following the conference, you returned to Lisbon and continued living there. File 2005 taxes online free On January 1, 2013, you completed an uninterrupted period of residence for a full tax year (2012), and you meet the bona fide residence test. File 2005 taxes online free Example 2. File 2005 taxes online free Assume the same facts as in Example 1, except that you transferred back to the United States on December 13, 2012. File 2005 taxes online free You would not meet the bona fide residence test because your bona fide residence in the foreign country, although it lasted more than a year, did not include a full tax year. File 2005 taxes online free You may, however, qualify for the foreign earned income exclusion or the housing exclusion or deduction under the physical presence test (discussed later). File 2005 taxes online free Bona fide resident for part of a year. File 2005 taxes online free   Once you have established bona fide residence in a foreign country for an uninterrupted period that includes an entire tax year, you are a bona fide resident of that country for the period starting with the date you actually began the residence and ending with the date you abandon the foreign residence. File 2005 taxes online free Your period of bona fide residence can include an entire tax year plus parts of 2 other tax years. File 2005 taxes online free Example. File 2005 taxes online free You were a bona fide resident of Singapore from March 1, 2011, through September 14, 2013. File 2005 taxes online free On September 15, 2013, you returned to the United States. File 2005 taxes online free Since you were a bona fide resident of a foreign country for all of 2012, you were also a bona fide resident of a foreign country from March 1, 2011, through the end of 2011 and from January 1, 2013, through September 14, 2013. File 2005 taxes online free Reassignment. File 2005 taxes online free   If you are assigned from one foreign post to another, you may or may not have a break in foreign residence between your assignments, depending on the circumstances. File 2005 taxes online free Example 1. File 2005 taxes online free You were a resident of Pakistan from October 1, 2012, through November 30, 2013. File 2005 taxes online free On December 1, 2013, you and your family returned to the United States to wait for an assignment to another foreign country. File 2005 taxes online free Your household goods also were returned to the United States. File 2005 taxes online free Your foreign residence ended on November 30, 2013, and did not begin again until after you were assigned to another foreign country and physically entered that country. File 2005 taxes online free Since you were not a bona fide resident of a foreign country for the entire tax year of 2012 or 2013 you do not meet the bona fide residence test in either year. File 2005 taxes online free You may, however, qualify for the foreign earned income exclusion or the housing exclusion or deduction under the physical presence test, discussed later. File 2005 taxes online free Example 2. File 2005 taxes online free Assume the same facts as in Example 1, except that upon completion of your assignment in Pakistan you were given a new assignment to Turkey. File 2005 taxes online free On December 1, 2013, you and your family returned to the United States for a month's vacation. File 2005 taxes online free On January 2, 2014, you arrived in Turkey for your new assignment. File 2005 taxes online free Because you did not interrupt your bona fide residence abroad, you meet the bona fide residence test. File 2005 taxes online free Physical Presence Test You meet the physical presence test if you are physically present in a foreign country or countries 330 full days during a period of 12 consecutive months. File 2005 taxes online free The 330 days do not have to be consecutive. File 2005 taxes online free Any U. File 2005 taxes online free S. File 2005 taxes online free citizen or resident alien can use the physical presence test to qualify for the exclusions and the deduction. File 2005 taxes online free The physical presence test is based only on how long you stay in a foreign country or countries. File 2005 taxes online free This test does not depend on the kind of residence you establish, your intentions about returning, or the nature and purpose of your stay abroad. File 2005 taxes online free 330 full days. File 2005 taxes online free   Generally, to meet the physical presence test, you must be physically present in a foreign country or countries for at least 330 full days during a 12-month period. File 2005 taxes online free You can count days you spent abroad for any reason. File 2005 taxes online free You do not have to be in a foreign country only for employment purposes. File 2005 taxes online free You can be on vacation. File 2005 taxes online free   You do not meet the physical presence test if illness, family problems, a vacation, or your employer's orders cause you to be present for less than the required amount of time. File 2005 taxes online free Exception. File 2005 taxes online free   You can be physically present in a foreign country or countries for less than 330 full days and still meet the physical presence test if you are required to leave a country because of war or civil unrest. File 2005 taxes online free See Waiver of Time Requirements, later. File 2005 taxes online free Full day. File 2005 taxes online free   A full day is a period of 24 consecutive hours, beginning at midnight. File 2005 taxes online free Travel. File 2005 taxes online free    When you leave the United States to go directly to a foreign country or when you return directly to the United States from a foreign country, the time you spend on or over international waters does not count toward the 330-day total. File 2005 taxes online free Example. File 2005 taxes online free You leave the United States for France by air on June 10. File 2005 taxes online free You arrive in France at 9:00 a. File 2005 taxes online free m. File 2005 taxes online free on June 11. File 2005 taxes online free Your first full day of physical presence in France is June 12. File 2005 taxes online free Passing over foreign country. File 2005 taxes online free   If, in traveling from the United States to a foreign country, you pass over a foreign country before midnight of the day you leave, the first day you can count toward the 330-day total is the day following the day you leave the United States. File 2005 taxes online free Example. File 2005 taxes online free You leave the United States by air at 9:30 a. File 2005 taxes online free m. File 2005 taxes online free on June 10 to travel to Kenya. File 2005 taxes online free You pass over western Africa at 11:00 p. File 2005 taxes online free m. File 2005 taxes online free on June 10 and arrive in Kenya at 12:30 a. File 2005 taxes online free m. File 2005 taxes online free on June 11. File 2005 taxes online free Your first full day in a foreign country is June 11. File 2005 taxes online free Change of location. File 2005 taxes online free   You can move about from one place to another in a foreign country or to another foreign country without losing full days. File 2005 taxes online free If any part of your travel is not within any foreign country and takes less than 24 hours, you are considered to be in a foreign country during that part of travel. File 2005 taxes online free Example 1. File 2005 taxes online free You leave Ireland by air at 11:00 p. File 2005 taxes online free m. File 2005 taxes online free on July 6 and arrive in Sweden at 5:00 a. File 2005 taxes online free m. File 2005 taxes online free on July 7. File 2005 taxes online free Your trip takes less than 24 hours and you lose no full days. File 2005 taxes online free Example 2. File 2005 taxes online free You leave Norway by ship at 10:00 p. File 2005 taxes online free m. File 2005 taxes online free on July 6 and arrive in Portugal at 6:00 a. File 2005 taxes online free m. File 2005 taxes online free on July 8. File 2005 taxes online free Since your travel is not within a foreign country or countries and the trip takes more than 24 hours, you lose as full days July 6, 7, and 8. File 2005 taxes online free If you remain in Portugal, your next full day in a foreign country is July 9. File 2005 taxes online free In United States while in transit. File 2005 taxes online free   If you are in transit between two points outside the United States and are physically present in the United States for less than 24 hours, you are not treated as present in the United States during the transit. File 2005 taxes online free You are treated as traveling over areas not within any foreign country. File 2005 taxes online free    Please click here for the text description of the image. File 2005 taxes online free Figure 4-B How to figure the 12-month period. File 2005 taxes online free   There are four rules you should know when figuring the 12-month period. File 2005 taxes online free Your 12-month period can begin with any day of the month. File 2005 taxes online free It ends the day before the same calendar day, 12 months later. File 2005 taxes online free Your 12-month period must be made up of consecutive months. File 2005 taxes online free Any 12-month period can be used if the 330 days in a foreign country fall within that period. File 2005 taxes online free You do not have to begin your 12-month period with your first full day in a foreign country or end it with the day you leave. File 2005 taxes online free You can choose the 12-month period that gives you the greatest exclusion. File 2005 taxes online free In determining whether the 12-month period falls within a longer stay in the foreign country, 12-month periods can overlap one another. File 2005 taxes online free Example 1. File 2005 taxes online free You are a construction worker who works on and off in a foreign country over a 20-month period. File 2005 taxes online free You might pick up the 330 full days in a 12-month period only during the middle months of the time you work in the foreign country because the first few and last few months of the 20-month period are broken up by long visits to the United States. File 2005 taxes online free Example 2. File 2005 taxes online free You work in New Zealand for a 20-month period from January 1, 2012, through August 31, 2013, except that you spend 28 days in February 2012 and 28 days in February 2013 on vacation in the United States. File 2005 taxes online free You are present in New Zealand for at least 330 full days during each of the following two 12-month periods: January 1, 2012 – December 31, 2012 and September 1, 2012 – August 31, 2013. File 2005 taxes online free By overlapping the 12-month periods in this way, you meet the physical presence test for the whole 20-month period. File 2005 taxes online free See Figure 4-B, on the previous page. File 2005 taxes online free Waiver of Time Requirements Both the bona fide residence test and the physical presence test contain minimum time requirements. File 2005 taxes online free The minimum time requirements can be waived, however, if you must leave a foreign country because of war, civil unrest, or similar adverse conditions in that country. File 2005 taxes online free You must be able to show that you reasonably could have expected to meet the minimum time requirements if not for the adverse conditions. File 2005 taxes online free To qualify for the waiver, you must actually have your tax home in the foreign country and be a bona fide resident of, or be physically present in, the foreign country on or before the beginning date of the waiver. File 2005 taxes online free Early in 2014, the IRS will publish in the Internal Revenue Bulletin a list of the only countries that qualify for the waiver for 2013 and the effective dates. File 2005 taxes online free If you left one of the countries on or after the date listed for each country, you can meet the bona fide residence test or physical presence test for 2013 without meeting the minimum time requirement. File 2005 taxes online free However, in figuring your exclusion, the number of your qualifying days of bona fide residence or physical presence includes only days of actual residence or presence within the country. File 2005 taxes online free U. File 2005 taxes online free S. File 2005 taxes online free Travel Restrictions If you are present in a foreign country in violation of U. File 2005 taxes online free S. File 2005 taxes online free law, you will not be treated as a bona fide resident of a foreign country or as physically present in a foreign country while you are in violation of the law. File 2005 taxes online free Income that you earn from sources within such a country for services performed during a period of violation does not qualify as foreign earned income. File 2005 taxes online free Your housing expenses within that country (or outside that country for housing your spouse or dependents) while you are in violation of the law cannot be included in figuring your foreign housing amount. File 2005 taxes online free For 2013, the only country to which travel restrictions applied was Cuba. File 2005 taxes online free The restrictions applied for the entire year. File 2005 taxes online free However, individuals working at the U. File 2005 taxes online free S. File 2005 taxes online free Naval Base at Guantanamo Bay in Cuba are not in violation of U. File 2005 taxes online free S. File 2005 taxes online free law. File 2005 taxes online free Personal service income earned by individuals at the base is eligible for the foreign earned income exclusion provided the other requirements are met. File 2005 taxes online free Foreign Earned Income To claim the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction, you must have foreign earned income. File 2005 taxes online free Foreign earned income generally is income you receive for services you perform during a period in which you meet both of the following requirements. File 2005 taxes online free Your tax home is in a foreign country. File 2005 taxes online free You meet either the bona fide residence test or the physical presence test. File 2005 taxes online free To determine whether your tax home is in a foreign country, see Tax Home in Foreign Country, earlier. File 2005 taxes online free To determine whether you meet either the bona fide residence test or the physical presence test, see Bona Fide Residence Test and Physical Presence Test, earlier. File 2005 taxes online free Foreign earned income does not include the following amounts. File 2005 taxes online free The value of meals and lodging that you exclude from your income because the meals and lodging were furnished for the convenience of your employer. File 2005 taxes online free Pension or annuity payments you receive, including social security benefits (see Pensions and annuities, later). File 2005 taxes online free Pay you receive as an employee of the U. File 2005 taxes online free S. File 2005 taxes online free Government. File 2005 taxes online free (See U. File 2005 taxes online free S. File 2005 taxes online free Government Employees, later. File 2005 taxes online free ) Amounts you include in your income because of your employer's contributions to a nonexempt employee trust or to a nonqualified annuity contract. File 2005 taxes online free Any unallowable moving expense deduction that you choose to recapture as explained under Moving Expense Attributable to Foreign Earnings in 2 Years in chapter 5. File 2005 taxes online free Payments you receive after the end of the tax year following the tax year in which you performed the services that earned the income. File 2005 taxes online free Earned income. File 2005 taxes online free   This is pay for personal services performed, such as wages, salaries, or professional fees. File 2005 taxes online free The list that follows classifies many types of income into three categories. File 2005 taxes online free The column headed Variable Income lists income that may fall into either the earned income category, the unearned income category, or partly into both. File 2005 taxes online free For more information on earned and unearned income, see Earned and Unearned Income, later. File 2005 taxes online free Earned Income Unearned Income Variable Income Salaries and wages Dividends Business profits Commissions Interest Royalties Bonuses Capital gains Rents Professional fees Gambling winnings Scholarships and fellowships Tips Alimony     Social security benefits     Pensions     Annuities     In addition to the types of earned income listed, certain noncash income and allowances or reimbursements are considered earned income. File 2005 taxes online free Noncash income. File 2005 taxes online free   The fair market value of property or facilities provided to you by your employer in the form of lodging, meals, or use of a car is earned income. File 2005 taxes online free Allowances or reimbursements. File 2005 taxes online free   Earned income includes allowances or reimbursements you receive, such as the following amounts. File 2005 taxes online free    Cost-of-living allowances. File 2005 taxes online free Overseas differential. File 2005 taxes online free Family allowance. File 2005 taxes online free Reimbursement for education or education allowance. File 2005 taxes online free Home leave allowance. File 2005 taxes online free Quarters allowance. File 2005 taxes online free Reimbursement for moving or moving allowance (unless excluded from income as discussed later in Reimbursement of employee expenses under Earned and Unearned Income). File 2005 taxes online free Source of Earned Income The source of your earned income is the place where you perform the services for which you received the income. File 2005 taxes online free Foreign earned income is income you receive for working in a foreign country. File 2005 taxes online free Where or how you are paid has no effect on the source of the income. File 2005 taxes online free For example, income you receive for work done in Austria is income from a foreign source even if the income is paid directly to your bank account in the United States and your employer is located in New York City. File 2005 taxes online free Example. File 2005 taxes online free You are a U. File 2005 taxes online free S. File 2005 taxes online free citizen, a bona fide resident of Canada, and working as a mining engineer. File 2005 taxes online free Your salary is $76,800 per year. File 2005 taxes online free You also receive a $6,000 cost-of-living allowance, and a $6,000 education allowance. File 2005 taxes online free Your employment contract did not indicate that you were entitled to these allowances only while outside the United States. File 2005 taxes online free Your total income is $88,800. File 2005 taxes online free You work a 5-day week, Monday through Friday. File 2005 taxes online free After subtracting your vacation, you have a total of 240 workdays in the year. File 2005 taxes online free You worked in the United States during the year for 6 weeks (30 workdays). File 2005 taxes online free The following shows how to figure the part of your income that is for work done in Canada during the year. File 2005 taxes online free   Number of days worked in Canada during the year (210) × Total income ($88,800) = $77,700     Number of days of work during the year for which payment was made (240)   Your foreign source earned income is $77,700. File 2005 taxes online free Earned and Unearned Income Earned income was defined earlier as pay for personal services performed. File 2005 taxes online free Some types of income are not easily identified as earned or unearned income. File 2005 taxes online free Some of these types of income are further explained here. File 2005 taxes online free Income from a sole proprietorship or partnership. File 2005 taxes online free   Income from a business in which capital investment is an important part of producing the income may be unearned income. File 2005 taxes online free If you are a sole proprietor or partner and your personal services are also an important part of producing the income, the part of the income that represents the value of your personal services will be treated as earned income. File 2005 taxes online free Capital a factor. File 2005 taxes online free   If capital investment is an important part of producing income, no more than 30% of your share of the net profits of the business is earned income. File 2005 taxes online free   If you have no net profits, the part of your gross profit that represents a reasonable allowance for personal services actually performed is considered earned income. File 2005 taxes online free Because you do not have a net profit, the 30% limit does not apply. File 2005 taxes online free Example 1. File 2005 taxes online free You are a U. File 2005 taxes online free S. File 2005 taxes online free citizen and meet the bona fide residence test. File 2005 taxes online free You invest in a partnership based in Cameroon that is engaged solely in selling merchandise outside the United States. File 2005 taxes online free You perform no services for the partnership. File 2005 taxes online free At the end of the tax year, your share of the net profits is $80,000. File 2005 taxes online free The entire $80,000 is unearned income. File 2005 taxes online free Example 2. File 2005 taxes online free Assume that in Example 1 you spend time operating the business. File 2005 taxes online free Your share of the net profits is $80,000; 30% of your share of the profits is $24,000. File 2005 taxes online free If the value of your services for the year is $15,000, your earned income is limited to the value of your services, $15,000. File 2005 taxes online free Capital not a factor. File 2005 taxes online free   If capital is not an income-producing factor and personal services produce the business income, the 30% rule does not apply. File 2005 taxes online free The entire amount of business income is earned income. File 2005 taxes online free Example. File 2005 taxes online free You and Lou Green are management consultants and operate as equal partners in performing services outside the United States. File 2005 taxes online free Because capital is not an income- producing factor, all the income from the partnership is considered earned income. File 2005 taxes online free Income from a corporation. File 2005 taxes online free   The salary you receive from a corporation is earned income only if it represents a reasonable allowance as compensation for work you do for the corporation. File 2005 taxes online free Any amount over what is considered a reasonable salary is unearned income. File 2005 taxes online free Example 1. File 2005 taxes online free You are a U. File 2005 taxes online free S. File 2005 taxes online free citizen and an officer and stockholder of a corporation in Honduras. File 2005 taxes online free You perform no work or service of any kind for the corporation. File 2005 taxes online free During the tax year you receive a $10,000 “salary” from the corporation. File 2005 taxes online free The $10,000 clearly is not for personal services and is unearned income. File 2005 taxes online free Example 2. File 2005 taxes online free You are a U. File 2005 taxes online free S. File 2005 taxes online free citizen and work full time as secretary-treasurer of your corporation. File 2005 taxes online free During the tax year you receive $100,000 as salary from the corporation. File 2005 taxes online free If $80,000 is a reasonable allowance as pay for the work you did, then $80,000 is earned income. File 2005 taxes online free Stock options. File 2005 taxes online free   You may have earned income if you disposed of stock that you got by exercising a stock option granted to you under an employee stock purchase plan. File 2005 taxes online free   If your gain on the disposition of stock you got by exercising an option is treated as capital gain, your gain is unearned income. File 2005 taxes online free   However, if you disposed of the stock less than 2 years after you were granted the option or less than 1 year after you got the stock, part of the gain on the disposition may be earned income. File 2005 taxes online free It is considered received in the year you disposed of the stock and earned in the year you performed the services for which you were granted the option. File 2005 taxes online free Any part of the earned income that is due to work you did outside the United States is foreign earned income. File 2005 taxes online free   See Publication 525, Taxable and Nontaxable Income, for a discussion of the treatment of stock options. File 2005 taxes online free Pensions and annuities. File 2005 taxes online free    For purposes of the foreign earned income exclusion, the foreign housing exclusion, and the foreign housing deduction, amounts received as pensions or annuities are unearned income. File 2005 taxes online free Royalties. File 2005 taxes online free   Royalties from the leasing of oil and mineral lands and patents generally are a form of rent or dividends and are unearned income. File 2005 taxes online free   Royalties received by a writer are earned income if they are received: For the transfer of property rights of the writer in the writer's product, or Under a contract to write a book or series of articles. File 2005 taxes online free Rental income. File 2005 taxes online free   Generally, rental income is unearned income. File 2005 taxes online free If you perform personal services in connection with the production of rent, up to 30% of your net rental income can be considered earned income. File 2005 taxes online free Example. File 2005 taxes online free Larry Smith, a U. File 2005 taxes online free S. File 2005 taxes online free citizen living in Australia, owns and operates a rooming house in Sydney. File 2005 taxes online free If he is operating the rooming house as a business that requires capital and personal services, he can consider up to 30% of net rental income as earned income. File 2005 taxes online free On the other hand, if he just owns the rooming house and performs no personal services connected with its operation, except perhaps making minor repairs and collecting rents, none of his net income from the house is considered earned income. File 2005 taxes online free It is all unearned income. File 2005 taxes online free Professional fees. File 2005 taxes online free   If you are engaged in a professional occupation (such as a doctor or lawyer), all fees received in the performance of these services are earned income. File 2005 taxes online free Income of an artist. File 2005 taxes online free   Income you receive from the sale of paintings you created is earned income. File 2005 taxes online free Scholarships and fellowships. File 2005 taxes online free   Any portion of a scholarship or fellowship grant that is paid to you for teaching, research or other services is considered earned income if you must include it in your gross income. File 2005 taxes online free If the payer of the grant is required to provide you with a Form W-2, Wage and Tax Statement, these amounts will be listed as wages. File 2005 taxes online free    Certain scholarship and fellowship income may be exempt under other provisions. File 2005 taxes online free See Publication 970, Tax Benefits for Education, chapter 1. File 2005 taxes online free Use of employer's property or facilities. File 2005 taxes online free   If you receive fringe benefits in the form of the right to use your employer's property or facilities, the fair market value of that right is earned income. File 2005 taxes online free Fair market value is the price at which the property would change hands between a willing buyer and a willing seller, neither being required to buy or sell, and both having reasonable knowledge of all the necessary facts. File 2005 taxes online free Example. File 2005 taxes online free You are privately employed and live in Japan all year. File 2005 taxes online free You are paid a salary of $6,000 a month. File 2005 taxes online free You live rent-free in a house provided by your employer that has a fair rental value of $3,000 a month. File 2005 taxes online free The house is not provided for your employer's convenience. File 2005 taxes online free You report on the calendar-year, cash basis. File 2005 taxes online free You received $72,000 salary from foreign sources plus $36,000 fair rental value of the house, or a total of $108,000 of earned income. File 2005 taxes online free Reimbursement of employee expenses. File 2005 taxes online free   If you are reimbursed under an accountable plan (defined below) for expenses you incur on your employer's behalf and you have adequately accounted to your employer for the expenses, do not include the reimbursement for those expenses in your earned income. File 2005 taxes online free   The expenses for which you are reimbursed are not considered allocable (related) to your earned income. File 2005 taxes online free If expenses and reimbursement are equal, there is nothing to allocate to excluded income. File 2005 taxes online free If expenses are more than the reimbursement, the unreimbursed expenses are considered to have been incurred in producing earned income and must be divided between your excluded and included income in determining the amount of unreimbursed expenses you can deduct. File 2005 taxes online free (See chapter 5. File 2005 taxes online free ) If the reimbursement is more than the expenses, no expenses remain to be divided between excluded and included income and the excess reimbursement must be included in earned income. File 2005 taxes online free   These rules do not apply to the following individuals. File 2005 taxes online free Straight-commission salespersons. File 2005 taxes online free Employees who have arrangements with their employers under which taxes are not withheld on a percentage of the commissions because the employers consider that percentage to be attributable to the employees' expenses. File 2005 taxes online free Accountable plan. File 2005 taxes online free   An accountable plan is a reimbursement or allowance arrangement that includes all three of the following rules. File 2005 taxes online free The expenses covered under the plan must have a business connection. File 2005 taxes online free The employee must adequately account to the employer for these expenses within a reasonable period of time. File 2005 taxes online free The employee must return any excess reimbursement or allowance within a reasonable period of time. File 2005 taxes online free Reimbursement of moving expenses. File 2005 taxes online free   Reimbursement of moving expenses may be earned income. File 2005 taxes online free You must include as earned income: Any reimbursements of, or payments for, nondeductible moving expenses, Reimbursements that are more than your deductible expenses and that you do not return to your employer, Any reimbursements made (or treated as made) under a nonaccountable plan (any plan that does not meet the rules listed above for an accountable plan), even if they are for deductible expenses, and Any reimbursement of moving expenses you deducted in an earlier year. File 2005 taxes online free This section discusses reimbursements that must be included in earned income. File 2005 taxes online free Publication 521, Moving Expenses, discusses additional rules that apply to moving expense deductions and reimbursements. File 2005 taxes online free   The rules for determining when the reimbursement is considered earned or where the reimbursement is considered earned may differ somewhat from the general rules previously discussed. File 2005 taxes online free   Although you receive the reimbursement in one tax year, it may be considered earned for services performed, or to be performed, in another tax year. File 2005 taxes online free You must report the reimbursement as income on your return in the year you receive it, even if it is considered earned during a different year. File 2005 taxes online free Move from U. File 2005 taxes online free S. File 2005 taxes online free to foreign country. File 2005 taxes online free   If you move from the United States to a foreign country, your moving expense reimbursement is generally considered pay for future services to be performed at the new location. File 2005 taxes online free The reimbursement is considered earned solely in the year of the move if you qualify for the exclusion for a period that includes at least 120 days during that tax year. File 2005 taxes online free   If you are neither a bona fide resident of nor physically present in a foreign country or countries for a period that includes 120 days during the year of the move, a portion of the reimbursement is considered earned in the year of the move and a portion is considered earned in the year following the year of the move. File 2005 taxes online free To figure the amount earned in the year of the move, multiply the reimbursement by a fraction. File 2005 taxes online free The numerator (top number) is the number of days in your qualifying period that fall within the year of the move, and the denominator (bottom number) is the total number of days in the year of the move. File 2005 taxes online free   The difference between the total reimbursement and the amount considered earned in the year of the move is the amount considered earned in the year following the year of the move. File 2005 taxes online free The part earned in each year is figured as shown in the following example. File 2005 taxes online free Example. File 2005 taxes online free You are a U. File 2005 taxes online free S. File 2005 taxes online free citizen working in the United States. File 2005 taxes online free You were told in October 2012 that you were being transferred to a foreign country. File 2005 taxes online free You arrived in the foreign country on December 15, 2012, and you are a bona fide resident for the remainder of 2012 and all of 2013. File 2005 taxes online free Your employer reimbursed you $2,000 in January 2013 for the part of the moving expense that you were not allowed to deduct. File 2005 taxes online free Because you did not qualify for the exclusion under the bona fide residence test for at least 120 days in 2012 (the year of the move), the reimbursement is considered pay for services performed in the foreign country for both 2012 and 2013. File 2005 taxes online free You figure the part of the reimbursement for services performed in the foreign country in 2012 by multiplying the total reimbursement by a fraction. File 2005 taxes online free The fraction is the number of days during which you were a bona fide resident in 2012 (the year of the move) divided by 366. File 2005 taxes online free The remaining part of the reimbursement is for services performed in the foreign country in 2013. File 2005 taxes online free This computation is used only to determine when the reimbursement is considered earned. File 2005 taxes online free You would include the amount of the reimbursement in income in 2013, the year you received it. File 2005 taxes online free Move between foreign countries. File 2005 taxes online free   If you move between foreign countries, any moving expense reimbursement that you must include in income will be considered earned in the year of the move if you qualify for the foreign earned income exclusion for a period that includes at least 120 days in the year of the move. File 2005 taxes online free Move to U. File 2005 taxes online free S. File 2005 taxes online free   If you move to the United States, the moving expense reimbursement that you must include in income is generally considered to be U. File 2005 taxes online free S. File 2005 taxes online free source income. File 2005 taxes online free   However, if under either an agreement between you and your employer or a statement of company policy that is reduced to writing before your move to the foreign country, your employer will reimburse you for your move back to the United States regardless of whether you continue to work for the employer, the includible reimbursement is considered compensation for past services performed in the foreign country. File 2005 taxes online free The includible reimbursement is considered earned in the year of the move if you qualify for the foreign earned income exclusion for a period that includes at least 120 days during that year. File 2005 taxes online free Otherwise, you treat the includible reimbursement as received for services performed in the foreign country in the year of the move and the year immediately before the year of the move. File 2005 taxes online free   See the discussion under Move from U. File 2005 taxes online free S. File 2005 taxes online free to foreign country , earlier, to figure the amount of the includible reimbursement considered earned in the year of the move. File 2005 taxes online free The amount earned in the year before the year of the move is the difference between the total includible reimbursement and the amount earned in the year of the move. File 2005 taxes online free Example. File 2005 taxes online free You are a U. File 2005 taxes online free S. File 2005 taxes online free citizen employed in a foreign country. File 2005 taxes online free You retired from employment with your employer on March 31, 2013, and returned to the United States after having been a bona fide resident of the foreign country for several years. File 2005 taxes online free A written agreement with your employer entered into before you went abroad provided that you would be reimbursed for your move back to the United States. File 2005 taxes online free In April 2013, your former employer reimbursed you $4,000 for the part of the cost of your move back to the United States that you were not allowed to deduct. File 2005 taxes online free Because you were not a bona fide resident of a foreign country or countries for a period that included at least 120 days in 2013 (the year of the move), the includible reimbursement is considered pay for services performed in the foreign country for both 2013 and 2012. File 2005 taxes online free You figure the part of the moving expense reimbursement for services performed in the foreign country for 2013 by multiplying the total includible reimbursement by a fraction. File 2005 taxes online free The fraction is the number of days of foreign residence during the year (90) divided by the number of days in the year (365). File 2005 taxes online free The remaining part of the includible reimbursement is for services performed in the foreign country in 2012. File 2005 taxes online free You report the amount of the includible reimbursement in 2013, the year you received it. File 2005 taxes online free    In this example, if you met the physical presence test for a period that included at least 120 days in 2013, the moving expense reimbursement would be considered earned entirely in the year of the move. File 2005 taxes online free Storage expense reimbursements. File 2005 taxes online free   If you are reimbursed for storage expenses, the reimbursement is for services you perform during the period of time for which the storage expenses are incurred. File 2005 taxes online free U. File 2005 taxes online free S. File 2005 taxes online free Government Employees For purposes of the foreign earned income exclusion, the foreign housing exclusion, and the foreign housing deduction, foreign earned income does not include any amounts paid by the United States or any of its agencies to its employees. File 2005 taxes online free This includes amounts paid from both appropriated and nonappropriated funds. File 2005 taxes online free The following organizations (and other organizations similarly organized and operated under United States Army, Navy, or Air Force regulations) are integral parts of the Armed Forces, agencies, or instrumentalities of the United States. File 2005 taxes online free United States Armed Forces exchanges. File 2005 taxes online free Commissioned and noncommissioned officers' messes. File 2005 taxes online free Armed Forces motion picture services. File 2005 taxes online free Kindergartens on foreign Armed Forces installations. File 2005 taxes online free Amounts paid by the United States or its agencies to persons who are not their employees may qualify for exclusion or deduction. File 2005 taxes online free If you are a U. File 2005 taxes online free S. File 2005 taxes online free Government employee paid by a U. File 2005 taxes online free S. File 2005 taxes online free agency that assigned you to a foreign government to perform specific services for which the agency is reimbursed by the foreign government, your pay is from the U. File 2005 taxes online free S. File 2005 taxes online free Government and does not qualify for exclusion or deduction. File 2005 taxes online free If you have questions about whether you are an employee or an independent contractor, get Publication 15-A, Employer's Supplemental Tax Guide. File 2005 taxes online free American Institute in Taiwan. File 2005 taxes online free   Amounts paid by the American Institute in Taiwan are not foreign earned income for purposes of the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction. File 2005 taxes online free If you are an employee of the American Institute in Taiwan, allowances you receive are exempt from U. File 2005 taxes online free S. File 2005 taxes online free tax up to the amount that equals tax-exempt allowances received by civilian employees of the U. File 2005 taxes online free S. File 2005 taxes online free Government. File 2005 taxes online free Allowances. File 2005 taxes online free   Cost-of-living and foreign-area allowances paid under certain acts of Congress to U. File 2005 taxes online free S. File 2005 taxes online free civilian officers and employees stationed in Alaska and Hawaii or elsewhere outside the 48 contiguous states and the District of Columbia can be excluded from gross income. File 2005 taxes online free Post differentials are wages that must be included in gross income, regardless of the act of Congress under which they are paid. File 2005 taxes online free More information. File 2005 taxes online free   Publication 516, U. File 2005 taxes online free S. File 2005 taxes online free Government Civilian Employees Stationed Abroad, has more information for U. File 2005 taxes online free S. File 2005 taxes online free Government employees abroad. File 2005 taxes online free Exclusion of Meals and Lodging You do not include in your income the value of meals and lodging provided to you and your family by your employer at no charge if the following conditions are met. File 2005 taxes online free The meals are furnished: On the business premises of your employer, and For the convenience of your employer. File 2005 taxes online free The lodging is furnished: On the business premises of your employer, For the convenience of your employer, and As a condition of your employment. File 2005 taxes online free If these conditions are met, do not include the value of the meals or lodging in your income, even if a law or your employment contract says that they are provided as compensation. File 2005 taxes online free Amounts you do not include in income because of these rules are not foreign earned income. File 2005 taxes online free If you receive a Form W-2, excludable amounts should not be included in the total reported in box 1 as wages. File 2005 taxes online free Family. File 2005 taxes online free   Your family, for this purpose, includes only your spouse and your dependents. File 2005 taxes online free Lodging. File 2005 taxes online free   The value of lodging includes the cost of heat, electricity, gas, water, sewer service, and similar items needed to make the lodging fit to live in. File 2005 taxes online free Business premises of employer. File 2005 taxes online free   Generally, the business premises of your employer is wherever you work. File 2005 taxes online free For example, if you work as a housekeeper, meals and lodging provided in your employer's home are provided on the business premises of your employer. File 2005 taxes online free Similarly, meals provided to cowhands while herding cattle on land leased or owned by their employer are considered provided on the premises of their employer. File 2005 taxes online free Convenience of employer. File 2005 taxes online free   Whether meals or lodging are provided for your employer's convenience must be determined from all the facts and circumstances. File 2005 taxes online free Meals furnished at no charge are considered provided for your employer's convenience if there is a good business reason for providing them, other than to give you more pay. File 2005 taxes online free   On the other hand, if your employer provides meals to you or your family as a means of giving you more pay, and there is no other business reason for providing them, their value is extra income to you because they are not furnished for the convenience of your employer. File 2005 taxes online free Condition of employment. File 2005 taxes online free   Lodging is provided as a condition of employment if you must accept the lodging to properly carry out the duties of your job. File 2005 taxes online free You must accept lodging to properly carry out your duties if, for example, you must be available for duty at all times or you could not perform your duties if the lodging was not furnished. File 2005 taxes online free Foreign camps. File 2005 taxes online free   If the lodging is in a camp located in a foreign country, the camp is considered part of your employer's business premises. File 2005 taxes online free The camp must be: Provided for your employer's convenience because the place where you work is in a remote area where satisfactory housing is not available to you on the open market within a reasonable commuting distance, Located as close as reasonably possible in the area where you work, and Provided in a common area or enclave that is not available to the general public for lodging or accommodations and that normally houses at least ten employees. File 2005 taxes online free Foreign Earned Income Exclusion If your tax home is in a foreign country and you meet the bona fide residence test or the physical presence test, you can choose to exclude from your income a limited amount of your foreign earned income. File 2005 taxes online free Foreign earned income was defined earlier in this chapter. File 2005 taxes online free You also can choose to exclude from your income a foreign housing amount. File 2005 taxes online free This is explained later under Foreign Housing Exclusion. File 2005 taxes online free If you choose to exclude a foreign housing amount, you must figure the foreign housing exclusion before you figure the foreign earned income exclusion. File 2005 taxes online free Your foreign earned income exclusion is limited to your foreign earned income minus your foreign housing exclusion. File 2005 taxes online free If you choose to exclude foreign earned income, you cannot deduct, exclude, or claim a credit for any item that can be allocated to or charged against the excluded amounts. File 2005 taxes online free This includes any expenses, losses, and other normally deductible items allocable to the excluded income. File 2005 taxes online free For more information about deductions and credits, see chapter 5 . File 2005 taxes online free Limit on Excludable Amount You may be able to exclude up to $97,600 of your foreign earned income in 2013. File 2005 taxes online free You cannot exclude more than the smaller of: $97,600, or Your foreign earned income (discussed earlier) for the tax year minus your foreign housing exclusion (discussed later). File 2005 taxes online free If both you and your spouse work abroad and each of you meets either the bona fide residence test or the physical presence test, you can each choose the foreign earned income exclusion. File 2005 taxes online free You do not both need to meet the same test. File 2005 taxes online free Together, you and your spouse can exclude as much as $195,200. File 2005 taxes online free Paid in year following work. File 2005 taxes online free   Generally, you are considered to have earned income in the year in which you do the work for which you receive the income, even if you work in one year but are not paid until the following year. File 2005 taxes online free If you report your income on a cash basis, you report the income on your return for the year you receive it. File 2005 taxes online free If you work one year, but are not paid for that work until the next year, the amount you can exclude in the year you are paid is the amount you could have excluded in the year you did the work if you had been paid in that year. File 2005 taxes online free For an exception to this general rule, see Year-end payroll period, later. File 2005 taxes online free Example. File 2005 taxes online free You were a bona fide resident of Brazil for all of 2012 and 2013. File 2005 taxes online free You report your income on the cash basis. File 2005 taxes online free In 2012, you were paid $84,200 for work you did in Brazil during that year. File 2005 taxes online free You excluded all of the $84,200 from your income in 2012. File 2005 taxes online free In 2013, you were paid $117,300 for your work in Brazil. File 2005 taxes online free $18,800 was for work you did in 2012 and $98,500 was for work you did in 2013. File 2005 taxes online free You can exclude $10,900 of the $18,800 from your income in 2013. File 2005 taxes online free This is the $95,100 maximum exclusion in 2012 minus the $84,200 actually excluded that year. File 2005 taxes online free You must include the remaining $7,900 in income in 2013 because you could not have excluded that income in 2012 if you had received it that year. File 2005 taxes online free You can exclude $97,600 of the $98,500 you were paid for work you did in 2013 from your 2013 income. File 2005 taxes online free Your total foreign earned income exclusion for 2013 is $108,500 ($10,900 for work you did in 2012 and $97,600 for work you did in 2013). File 2005 taxes online free You would include in your 2013 income $8,800 ($7,900 for the work you did in 2012 and $900 for the work you did in 2013). File 2005 taxes online free Year-end payroll period. File 2005 taxes online free   There is an exception to the general rule that income is considered earned in the year you do the work for which you receive the income. File 2005 taxes online free If you are a cash-basis taxpayer, any salary or wage payment you receive after the end of the year in which you do the work for which you receive the pay is considered earned entirely in the year you receive it if all four of the following apply. File 2005 taxes online free The period for which the payment is made is a normal payroll period of your employer that regularly applies to you. File 2005 taxes online free The payroll period includes the last day of your tax year (December 31 if you figure your taxes on a calendar-year basis). File 2005 taxes online free The payroll period is not longer than 16 days. File 2005 taxes online free The payday comes at the same time in relation to the payroll period that it would normally come and it comes before the end of the next payroll period. File 2005 taxes online free Example. File 2005 taxes online free You are paid twice a month. File 2005 taxes online free For the normal payroll period that begins on the first of the month and ends on the fifteenth of the month, you are paid on the sixteenth day of the month. File 2005 taxes online free For the normal payroll period that begins on the sixteenth of the month and ends on the last day of the month, you are paid on the first day of the following month. File 2005 taxes online free Because all of the above conditions are met, the pay you received on January 1, 2013, is considered earned in 2013. File 2005 taxes online free Income earned over more than 1 year. File 2005 taxes online free   Regardless of when you actually receive income, you must apply it to the year in which you earned it in figuring your excludable amount for that year. File 2005 taxes online free For example, a bonus may be based on work you did over several years. File 2005 taxes online free You determine the amount of the bonus that is considered earned in a particular year in two steps. File 2005 taxes online free Divide the bonus by the number of calendar months in the period when you did the work that resulted in the bonus. File 2005 taxes online free Multiply the result of (1) by the number of months you did the work during the year. File 2005 taxes online free This is the amount that is subject to the exclusion limit for that tax year. File 2005 taxes online free Income received more than 1 year after it was earned. File 2005 taxes online free   You cannot exclude income you receive after the end of the year following the year you do the work to earn it. File 2005 taxes online free Example. File 2005 taxes online free   You were a bona fide resident of Sweden for 2011, 2012, and 2013. File 2005 taxes online free You report your income on the cash basis. File 2005 taxes online free In 2011, you were paid $69,000 for work you did in Sweden that year and in 2012 you were paid $74,000 for that year's work in Sweden. File 2005 taxes online free You excluded all the income on your 2011 and 2012 returns. File 2005 taxes online free   In 2013, you were paid $92,000; $82,000 for your work in Sweden during 2013, and $10,000 for work you did in Sweden in 2011. File 2005 taxes online free You cannot exclude any of the $10,000 for work done in 2011 because you received it after the end of the year following the year in which you earned it. File 2005 taxes online free You must include the $10,000 in income. File 2005 taxes online free You can exclude all of the $82,000 received for work you did in 2013. File 2005 taxes online free Community income. File 2005 taxes online free   The maximum exclusion applies separately to the earnings of spouses. File 2005 taxes online free Ignore any community property laws when you figure your limit on the foreign earned income exclusion. File 2005 taxes online free Part-year exclusion. File 2005 taxes online free   If the period for which you qualify for the foreign earned income exclusion includes only part of the year, you must adjust the maximum limit based on the number of qualifying days in the year. File 2005 taxes online free The number of qualifying days is the number of days in the year within the period on which you both: Have your tax home in a foreign country, and Meet either the bona fide residence test or the physical presence test. File 2005 taxes online free   For this purpose, you can count as qualifying days all days within a period of 12 consecutive months once you are physically present and have your tax home in a foreign country for 330 full days. File 2005 taxes online free To figure your maximum exclusion, multiply the maximum excludable amount for the year by the number of your qualifying days in the year, and then divide the result by the number of days in the year. File 2005 taxes online free Example. File 2005 taxes online free You report your income on the calendar-year basis and you qualified for the foreign earned income exclusion under the bona fide residence test for 75 days in 2013. File 2005 taxes online free You can exclude a maximum of 75/365 of $97,600, or $20,055, of your foreign earned income for 2013. File 2005 taxes online free If you qualify under the bona fide residence test for all of 2014, you can exclude your foreign earned income up to the 2014 limit. File 2005 taxes online free Physical presence test. File 2005 taxes online free   Under the physical presence test, a 12-month period can be any period of 12 consecutive months that includes 330 full days. File 2005 taxes online free If you qualify for the foreign earned income exclusion under the physical presence test for part of a year, it is important to carefully choose the 12-month period that will allow the maximum exclusion for that year. File 2005 taxes online free Example. File 2005 taxes online free You are physically present and have your tax home in a foreign country for a 16-month period from June 1, 2012, through September 30, 2013, except for 16 days in December 2012 when you were on vacation in the United States. File 2005 taxes online free You figure the maximum exclusion for 2012 as follows. File 2005 taxes online free Beginning with June 1, 2012, count forward 330 full days. File 2005 taxes online free Do not count the 16 days you spent in the United States. File 2005 taxes online free The 330th day, May 12, 2013, is the last day of a 12-month period. File 2005 taxes online free Count backward 12 months from May 11, 2013, to find the first day of this 12-month period, May 12, 2012. File 2005 taxes online free This 12-month period runs from May 12, 2012, through May 11, 2013. File 2005 taxes online free Count the total days during 2012 that fall within this 12-month period. File 2005 taxes online free This is 234 days (May 12, 2012 – December 31, 2012). File 2005 taxes online free Multiply $95,100 (the maximum exclusion for 2012) by the fraction 234/366 to find your maximum exclusion for 2012 ($60,802). File 2005 taxes online free You figure the maximum exclusion for 2013 in the opposite manner. File 2005 taxes online free Beginning with your last full day, September 30, 2013, count backward 330 full days. File 2005 taxes online free Do not count the 16 days you spent in the United States. File 2005 taxes online free That day, October 20, 2012, is the first day of a 12-month period. File 2005 taxes online free Count forward 12 months from October 20, 2012, to find the last day of this 12-month period, October 19, 2013. File 2005 taxes online free This 12-month period runs from October 20, 2012, through October 19, 2013. File 2005 taxes online free Count the total days during 2013 that fall within this 12-month period. File 2005 taxes online free This is 292 days (January 1, 2013 – October 19, 2013). File 2005 taxes online free Multiply $97,600, the maximum limit, by the fraction 292/365 to find your maximum exclusion for 2013 ($78,080). File 2005 taxes online free Choosing the Exclusion The foreign earned income exclusion is voluntary. File 2005 taxes online free You can choose the exclusion by completing the appropriate parts of Form 2555. File 2005 taxes online free When You Can Choose the Exclusion Your initial choice of the exclusion on Form 2555 or Form 2555-EZ generally must be made with one of the following returns. File 2005 taxes online free A return filed by the due date (including any extensions). File 2005 taxes online free A return amending a timely-filed return. File 2005 taxes online free Amended returns generally must be filed by the later of 3 years after the filing date of the original return or 2 years after the tax is paid. File 2005 taxes online free A return filed within 1 year from the original due date of the return (determined without regard to any extensions). File 2005 taxes online free Filing after the above periods. File 2005 taxes online free   You can choose the exclusion on a return filed after the periods described above if you owe no federal income tax after taking into account the exclusion. File 2005 taxes online free If you owe federal income tax after taking into account the exclusion, you can choose the exclusion on a return filed after the periods described earlier if you file before the IRS discovers that you failed to choose the exclusion. File 2005 taxes online free Whether or not you owe federal income tax after taking the exclusion into account, if you file your return after the periods described earlier, you must type or legibly print at the top of the first page of the Form 1040 “Filed pursuant to section 1. File 2005 taxes online free 911-7(a)(2)(i)(D). File 2005 taxes online free ” If you owe federal income tax after taking into account the foreign earned income exclusion and the IRS discovered that you failed to choose the exclusion, you may still be able to choose the exclusion. File 2005 taxes online free You must request a private letter ruling under Income Tax Regulation 301. File 2005 taxes online free 9100-3 and Revenue Procedure 2013-1, 2013-1 I. File 2005 taxes online free R. File 2005 taxes online free B. File 2005 taxes online free 1, available at www. File 2005 taxes online free irs. File 2005 taxes online free gov/irb/2013-01_IRB/ar06. File 2005 taxes online free html. File 2005 taxes online free Effect of Choosing the Exclusion Once you choose to exclude your foreign earned income, that choice remains in effect for that year and all later years unless you revoke it. File 2005 taxes online free Foreign tax credit or deduction. File 2005 taxes online free  
Español

Health Podcasts from the U.S. Government

Government podcasts on topics such as health care, research, and patient safety.

Health Podcasts

The File 2005 Taxes Online Free

File 2005 taxes online free 4. File 2005 taxes online free   Special Situations Table of Contents Condominiums CooperativesDepreciation Property Changed to Rental UseBasis of Property Changed to Rental Use Figuring the Depreciation Deduction Renting Part of Property Not Rented for ProfitPostponing decision. File 2005 taxes online free Example—Property Changed to Rental Use This chapter discusses some rental real estate activities that are subject to additional rules. File 2005 taxes online free Condominiums A condominium is most often a dwelling unit in a multi-unit building, but can also take other forms, such as a townhouse or garden apartment. File 2005 taxes online free If you own a condominium, you also own a share of the common elements, such as land, lobbies, elevators, and service areas. File 2005 taxes online free You and the other condominium owners may pay dues or assessments to a special corporation that is organized to take care of the common elements. File 2005 taxes online free Special rules apply if you rent your condominium to others. File 2005 taxes online free You can deduct as rental expenses all the expenses discussed in chapters 1 and 2. File 2005 taxes online free In addition, you can deduct any dues or assessments paid for maintenance of the common elements. File 2005 taxes online free You cannot deduct special assessments you pay to a condominium management corporation for improvements. File 2005 taxes online free However, you may be able to recover your share of the cost of any improvement by taking depreciation. File 2005 taxes online free Cooperatives If you live in a cooperative, you do not own your apartment. File 2005 taxes online free Instead, a corporation owns the apartments and you are a tenant-stockholder in the cooperative housing corporation. File 2005 taxes online free If you rent your apartment to others, you usually can deduct, as a rental expense, all the maintenance fees you pay to the cooperative housing corporation. File 2005 taxes online free In addition to the maintenance fees paid to the cooperative housing corporation, you can deduct your direct payments for repairs, upkeep, and other rental expenses, including interest paid on a loan used to buy your stock in the corporation. File 2005 taxes online free Depreciation You will be depreciating your stock in the corporation rather than the apartment itself. File 2005 taxes online free Figure your depreciation deduction as follows. File 2005 taxes online free Figure the depreciation for all the depreciable real property owned by the corporation. File 2005 taxes online free (Depreciation methods are discussed in chapter 2 of this publication and Publication 946. File 2005 taxes online free ) If you bought your cooperative stock after its first offering, figure the depreciable basis of this property as follows. File 2005 taxes online free Multiply your cost per share by the total number of outstanding shares. File 2005 taxes online free Add to the amount figured in (a) any mortgage debt on the property on the date you bought the stock. File 2005 taxes online free Subtract from the amount figured in (b) any mortgage debt that is not for the depreciable real property, such as the part for the land. File 2005 taxes online free Subtract from the amount figured in (1) any depreciation for space owned by the corporation that can be rented but cannot be lived in by tenant-stockholders. File 2005 taxes online free Divide the number of your shares of stock by the total number of shares outstanding, including any shares held by the corporation. File 2005 taxes online free Multiply the result of (2) by the percentage you figured in (3). File 2005 taxes online free This is your depreciation on the stock. File 2005 taxes online free Your depreciation deduction for the year cannot be more than the part of your adjusted basis (defined in chapter 2) in the stock of the corporation that is allocable to your rental property. File 2005 taxes online free Payments added to capital account. File 2005 taxes online free   Payments earmarked for a capital asset or improvement, or otherwise charged to the corporation's capital account are added to the basis of your stock in the corporation. File 2005 taxes online free For example, you cannot deduct a payment used to pave a community parking lot, install a new roof, or pay the principal of the corporation's mortgage. File 2005 taxes online free   Treat as a capital cost the amount you were assessed for capital items. File 2005 taxes online free This cannot be more than the amount by which your payments to the corporation exceeded your share of the corporation's mortgage interest and real estate taxes. File 2005 taxes online free   Your share of interest and taxes is the amount the corporation elected to allocate to you, if it reasonably reflects those expenses for your apartment. File 2005 taxes online free Otherwise, figure your share in the following manner. File 2005 taxes online free Divide the number of your shares of stock by the total number of shares outstanding, including any shares held by the corporation. File 2005 taxes online free Multiply the corporation's deductible interest by the number you figured in (1). File 2005 taxes online free This is your share of the interest. File 2005 taxes online free Multiply the corporation's deductible taxes by the number you figured in (1). File 2005 taxes online free This is your share of the taxes. File 2005 taxes online free Property Changed to Rental Use If you change your home or other property (or a part of it) to rental use at any time other than the beginning of your tax year, you must divide yearly expenses, such as taxes and insurance, between rental use and personal use. File 2005 taxes online free You can deduct as rental expenses only the part of the expense that is for the part of the year the property was used or held for rental purposes. File 2005 taxes online free You cannot deduct depreciation or insurance for the part of the year the property was held for personal use. File 2005 taxes online free However, you can include the home mortgage interest, qualified mortgage insurance premiums, and real estate tax expenses for the part of the year the property was held for personal use as an itemized deduction on Schedule A (Form 1040). File 2005 taxes online free Example. File 2005 taxes online free Your tax year is the calendar year. File 2005 taxes online free You moved from your home in May and started renting it out on June 1. File 2005 taxes online free You can deduct as rental expenses seven-twelfths of your yearly expenses, such as taxes and insurance. File 2005 taxes online free Starting with June, you can deduct as rental expenses the amounts you pay for items generally billed monthly, such as utilities. File 2005 taxes online free When figuring depreciation, treat the property as placed in service on June 1. File 2005 taxes online free Basis of Property Changed to Rental Use When you change property you held for personal use to rental use (for example, you rent your former home), the basis for depreciation will be the lesser of fair market value or adjusted basis on the date of conversion. File 2005 taxes online free Fair market value. File 2005 taxes online free   This is the price at which the property would change hands between a willing buyer and a willing seller, neither having to buy or sell, and both having reasonable knowledge of all the relevant facts. File 2005 taxes online free Sales of similar property, on or about the same date, may be helpful in figuring the fair market value of the property. File 2005 taxes online free Figuring the basis. File 2005 taxes online free   The basis for depreciation is the lesser of: The fair market value of the property on the date you changed it to rental use, or Your adjusted basis on the date of the change—that is, your original cost or other basis of the property, plus the cost of permanent additions or improvements since you acquired it, minus deductions for any casualty or theft losses claimed on earlier years' income tax returns and other decreases to basis. File 2005 taxes online free For other increases and decreases to basis, see Adjusted Basis in chapter 2. File 2005 taxes online free Example. File 2005 taxes online free Several years ago you built your home for $140,000 on a lot that cost you $14,000. File 2005 taxes online free Before changing the property to rental use this year, you added $28,000 of permanent improvements to the house and claimed a $3,500 casualty loss deduction for damage to the house. File 2005 taxes online free Part of the improvements qualified for a $500 residential energy credit, which you claimed on your 2010 tax return. File 2005 taxes online free Because land is not depreciable, you can only include the cost of the house when figuring the basis for depreciation. File 2005 taxes online free The adjusted basis of the house at the time of the change in its use was $164,000 ($140,000 + $28,000 − $3,500 − $500). File 2005 taxes online free On the date of the change in use, your property had a fair market value of $168,000, of which $21,000 was for the land and $147,000 was for the house. File 2005 taxes online free The basis for depreciation on the house is the fair market value on the date of the change ($147,000), because it is less than your adjusted basis ($164,000). File 2005 taxes online free Cooperatives If you change your cooperative apartment to rental use, figure your allowable depreciation as explained earlier. File 2005 taxes online free (Depreciation methods are discussed in chapter 2 of this publication and Publication 946. File 2005 taxes online free ) The basis of all the depreciable real property owned by the cooperative housing corporation is the smaller of the following amounts. File 2005 taxes online free The fair market value of the property on the date you change your apartment to rental use. File 2005 taxes online free This is considered to be the same as the corporation's adjusted basis minus straight line depreciation, unless this value is unrealistic. File 2005 taxes online free The corporation's adjusted basis in the property on that date. File 2005 taxes online free Do not subtract depreciation when figuring the corporation's adjusted basis. File 2005 taxes online free If you bought the stock after its first offering, the corporation's adjusted basis in the property is the amount figured in (1) under Depreciation (under Cooperatives, near the beginning of this chapter). File 2005 taxes online free The fair market value of the property is considered to be the same as the corporation's adjusted basis figured in this way minus straight line depreciation, unless the value is unrealistic. File 2005 taxes online free Figuring the Depreciation Deduction To figure the deduction, use the depreciation system in effect when you convert your residence to rental use. File 2005 taxes online free Generally, that will be MACRS for any conversion after 1986. File 2005 taxes online free Treat the property as placed in service on the conversion date. File 2005 taxes online free Example. File 2005 taxes online free Your converted residence (see previous example under Figuring the basis) was available for rent on August 1. File 2005 taxes online free Using Table 2-2d (see chapter 2), the percentage for Year 1 beginning in August is 1. File 2005 taxes online free 364% and the depreciation deduction for Year 1 is $2,005 ($147,000 × . File 2005 taxes online free 01364). File 2005 taxes online free Renting Part of Property If you rent part of your property, you must divide certain expenses between the part of the property used for rental purposes and the part of the property used for personal purposes, as though you actually had two separate pieces of property. File 2005 taxes online free You can deduct the expenses related to the part of the property used for rental purposes, such as home mortgage interest, qualified mortgage insurance premiums, and real estate taxes, as rental expenses on Schedule E (Form 1040). File 2005 taxes online free You can also deduct as rental expenses a portion of other expenses that normally are nondeductible personal expenses, such as expenses for electricity, or painting the outside of the house. File 2005 taxes online free There is no change in the types of expenses deductible for the personal-use part of your property. File 2005 taxes online free Generally, these expenses may be deducted only if you itemize your deductions on Schedule A (Form 1040). File 2005 taxes online free You cannot deduct any part of the cost of the first phone line even if your tenants have unlimited use of it. File 2005 taxes online free You do not have to divide the expenses that belong only to the rental part of your property. File 2005 taxes online free For example, if you paint a room that you rent, or if you pay premiums for liability insurance in connection with renting a room in your home, your entire cost is a rental expense. File 2005 taxes online free If you install a second phone line strictly for your tenant's use, all of the cost of the second line is deductible as a rental expense. File 2005 taxes online free You can deduct depreciation on the part of the house used for rental purposes as well as on the furniture and equipment you use for rental purposes. File 2005 taxes online free How to divide expenses. File 2005 taxes online free   If an expense is for both rental use and personal use, such as mortgage interest or heat for the entire house, you must divide the expense between rental use and personal use. File 2005 taxes online free You can use any reasonable method for dividing the expense. File 2005 taxes online free It may be reasonable to divide the cost of some items (for example, water) based on the number of people using them. File 2005 taxes online free The two most common methods for dividing an expense are (1) the number of rooms in your home, and (2) the square footage of your home. File 2005 taxes online free Example. File 2005 taxes online free You rent a room in your house. File 2005 taxes online free The room is 12 × 15 feet, or 180 square feet. File 2005 taxes online free Your entire house has 1,800 square feet of floor space. File 2005 taxes online free You can deduct as a rental expense 10% of any expense that must be divided between rental use and personal use. File 2005 taxes online free If your heating bill for the year for the entire house was $600, $60 ($600 × . File 2005 taxes online free 10) is a rental expense. File 2005 taxes online free The balance, $540, is a personal expense that you cannot deduct. File 2005 taxes online free Duplex. File 2005 taxes online free   A common situation is the duplex where you live in one unit and rent out the other. File 2005 taxes online free Certain expenses apply to the entire property, such as mortgage interest and real estate taxes, and must be split to determine rental and personal expenses. File 2005 taxes online free Example. File 2005 taxes online free You own a duplex and live in one half, renting the other half. File 2005 taxes online free Both units are approximately the same size. File 2005 taxes online free Last year, you paid a total of $10,000 mortgage interest and $2,000 real estate taxes for the entire property. File 2005 taxes online free You can deduct $5,000 mortgage interest and $1,000 real estate taxes on Schedule E (Form 1040), and if you itemize your deductions, you can deduct the other $5,000 mortgage interest and $1,000 real estate taxes on Schedule A (Form 1040). File 2005 taxes online free Not Rented for Profit If you do not rent your property to make a profit, you can deduct your rental expenses only up to the amount of your rental income. File 2005 taxes online free You cannot deduct a loss or carry forward to the next year any rental expenses that are more than your rental income for the year. File 2005 taxes online free Where to report. File 2005 taxes online free   Report your not-for-profit rental income on Form 1040 or 1040NR, line 21. File 2005 taxes online free For example, if you are filing Form 1040, you can include your mortgage interest and any qualified mortgage insurance premiums (if you use the property as your main home or second home), real estate taxes, and casualty losses on the appropriate lines of Schedule A (Form 1040) if you itemize your deductions. File 2005 taxes online free   If you itemize your deductions, claim your other rental expenses, subject to the rules explained in chapter 1 of Publication 535, as miscellaneous itemized deductions on Schedule A (Form 1040), line 23, or Schedule A (Form 1040NR), line 9. File 2005 taxes online free You can deduct these expenses only if they, together with certain other miscellaneous itemized deductions, total more than 2% of your adjusted gross income. File 2005 taxes online free Presumption of profit. File 2005 taxes online free   If your rental income is more than your rental expenses for at least 3 years out of a period of 5 consecutive years, you are presumed to be renting your property to make a profit. File 2005 taxes online free Postponing decision. File 2005 taxes online free   If you are starting your rental activity and do not have 3 years showing a profit, you can elect to have the presumption made after you have the 5 years of experience required by the test. File 2005 taxes online free You may choose to postpone the decision of whether the rental is for profit by filing Form 5213. File 2005 taxes online free You must file Form 5213 within 3 years after the due date of your return (determined without extensions) for the year in which you first carried on the activity or, if earlier, within 60 days after receiving written notice from the Internal Revenue Service proposing to disallow deductions attributable to the activity. File 2005 taxes online free More information. File 2005 taxes online free   For more information about the rules for an activity not engaged in for profit, see Not-for-Profit Activities in chapter 1 of Publication 535. File 2005 taxes online free Example—Property Changed to Rental Use In January, Eileen Johnson bought a condominium apartment to live in. File 2005 taxes online free Instead of selling the house she had been living in, she decided to change it to rental property. File 2005 taxes online free Eileen selected a tenant and started renting the house on February 1. File 2005 taxes online free Eileen charges $750 a month for rent and collects it herself. File 2005 taxes online free Eileen also received a $750 security deposit from her tenant. File 2005 taxes online free Because she plans to return it to her tenant at the end of the lease, she does not include it in her income. File 2005 taxes online free Her rental expenses for the year are as follows. File 2005 taxes online free   Mortgage interest $1,800     Fire insurance (1-year policy) 100     Miscellaneous repairs (after renting) 297     Real estate taxes imposed and paid 1,200   Eileen must divide the real estate taxes, mortgage interest, and fire insurance between the personal use of the property and the rental use of the property. File 2005 taxes online free She can deduct eleven-twelfths of these expenses as rental expenses. File 2005 taxes online free She can include the balance of the allowable taxes and mortgage interest on Schedule A (Form 1040) if she itemizes. File 2005 taxes online free She cannot deduct the balance of the fire insurance because it is a personal expense. File 2005 taxes online free Eileen bought this house in 1984 for $35,000. File 2005 taxes online free Her property tax was based on assessed values of $10,000 for the land and $25,000 for the house. File 2005 taxes online free Before changing it to rental property, Eileen added several improvements to the house. File 2005 taxes online free She figures her adjusted basis as follows:   Improvements Cost     House $25,000     Remodeled kitchen 4,200     Recreation room 5,800     New roof 1,600     Patio and deck 2,400     Adjusted basis $39,000   On February 1, when Eileen changed her house to rental property, the property had a fair market value of $152,000. File 2005 taxes online free Of this amount, $35,000 was for the land and $117,000 was for the house. File 2005 taxes online free Because Eileen's adjusted basis is less than the fair market value on the date of the change, Eileen uses $39,000 as her basis for depreciation. File 2005 taxes online free As specified for residential rental property, Eileen must use the straight line method of depreciation over the GDS or ADS recovery period. File 2005 taxes online free She chooses the GDS recovery period of 27. File 2005 taxes online free 5 years. File 2005 taxes online free She uses Table 2-2d to find her depreciation percentage. File 2005 taxes online free Since she placed the property in service in February, the percentage is 3. File 2005 taxes online free 182%. File 2005 taxes online free On April 1, Eileen bought a new dishwasher for the rental property at a cost of $425. File 2005 taxes online free The dishwasher is personal property used in a rental real estate activity, which has a 5-year recovery period. File 2005 taxes online free She uses Table 2-2a to find the percentage for Year 1 under “Half-year convention” (20%) to figure her depreciation deduction. File 2005 taxes online free On May 1, Eileen paid $4,000 to have a furnace installed in the house. File 2005 taxes online free The furnace is residential rental property. File 2005 taxes online free Because she placed the property in service in May, the percentage from Table 2-2d is 2. File 2005 taxes online free 273%. File 2005 taxes online free Eileen figures her net rental income or loss for the house as follows: Total rental income received  ($750 × 11) $8,250 Minus: Expenses     Mortgage interest ($1,800 × 11/12) $1,650   Fire insurance ($100 × 11/12) 92   Miscellaneous repairs 297   Real estate taxes ($1,200 × 11/12) 1,100   Total expenses 3,139 Balance $5,111 Minus: Depreciation     House ($39,000 × . File 2005 taxes online free 03182) $1,241   Dishwasher ($425 × . File 2005 taxes online free 20) 85   Furnace ($4,000 × . File 2005 taxes online free 02273) 91   Total depreciation 1,417 Net rental income for house   $3,694       Eileen uses Schedule E, Part I, to report her rental income and expenses. File 2005 taxes online free She enters her income, expenses, and depreciation for the house in the column for Property A. File 2005 taxes online free Since all property was placed in service this year, Eileen must use Form 4562 to figure the depreciation. File 2005 taxes online free See the Instructions for Form 4562 for more information on preparing the form. File 2005 taxes online free Prev  Up  Next   Home   More Online Publications