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Free 1040x Filing

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Free 1040x Filing

Free 1040x filing 5. Free 1040x filing   Business Income Table of Contents Introduction Kinds of IncomeBartering for Property or Services Real Estate Rents Personal Property Rents Interest and Dividend Income Canceled Debt Other Income Items That Are Not IncomeAmount you can exclude. Free 1040x filing Short-term lease. Free 1040x filing Retail space. Free 1040x filing Qualified long-term real property. Free 1040x filing Guidelines for Selected Occupations Accounting for Your Income Introduction This chapter primarily explains business income and how to account for it on your tax return, what items are not considered income, and gives guidelines for selected occupations. Free 1040x filing If there is a connection between any income you receive and your business, the income is business income. Free 1040x filing A connection exists if it is clear that the payment of income would not have been made if you did not have the business. Free 1040x filing You can have business income even if you are not involved in the activity on a regular full-time basis. Free 1040x filing Income from work you do on the side in addition to your regular job can be business income. Free 1040x filing You report most business income, such as income from selling your products or services, on Schedule C or C-EZ. Free 1040x filing But you report the income from the sale of business assets, such as land and office buildings, on other forms instead of Schedule C or C-EZ. Free 1040x filing For information on selling business assets, see chapter 3. Free 1040x filing Nonemployee compensation. Free 1040x filing Business income includes amounts you received in your business that were properly shown on Forms 1099-MISC. Free 1040x filing This includes amounts reported as nonemployee compensation in box 7 of the form. Free 1040x filing You can find more information in the instructions on the back of the Form 1099-MISC you received. Free 1040x filing Kinds of Income You must report on your tax return all income you receive from your business unless it is excluded by law. Free 1040x filing In most cases, your business income will be in the form of cash, checks, and credit card charges. Free 1040x filing But business income can be in other forms, such as property or services. Free 1040x filing These and other types of income are explained next. Free 1040x filing If you are a U. Free 1040x filing S. Free 1040x filing citizen who has business income from sources outside the United States (foreign income), you must report that income on your tax return unless it is exempt from tax under U. Free 1040x filing S. Free 1040x filing law. Free 1040x filing If you live outside the United States, you may be able to exclude part or all of your foreign-source business income. Free 1040x filing For details, see Publication 54, Tax Guide for U. Free 1040x filing S. Free 1040x filing Citizens and Resident Aliens Abroad. Free 1040x filing Bartering for Property or Services Bartering is an exchange of property or services. Free 1040x filing You must include in your gross receipts, at the time received, the fair market value of property or services you receive in exchange for something else. Free 1040x filing If you exchange services with another person and you both have agreed ahead of time on the value of the services, that value will be accepted as the fair market value unless the value can be shown to be otherwise. Free 1040x filing Example 1. Free 1040x filing You are a self-employed lawyer. Free 1040x filing You perform legal services for a client, a small corporation. Free 1040x filing In payment for your services, you receive shares of stock in the corporation. Free 1040x filing You must include the fair market value of the shares in income. Free 1040x filing Example 2. Free 1040x filing You are an artist and create a work of art to compensate your landlord for the rent-free use of your apartment. Free 1040x filing You must include the fair rental value of the apartment in your gross receipts. Free 1040x filing Your landlord must include the fair market value of the work of art in his or her rental income. Free 1040x filing Example 3. Free 1040x filing You are a self-employed accountant. Free 1040x filing Both you and a house painter are members of a barter club, an organization that each year gives its members a directory of members and the services each member provides. Free 1040x filing Members get in touch with other members directly and bargain for the value of the services to be performed. Free 1040x filing In return for accounting services you provided for the house painter's business, the house painter painted your home. Free 1040x filing You must include in gross receipts the fair market value of the services you received from the house painter. Free 1040x filing The house painter must include the fair market value of your accounting services in his or her gross receipts. Free 1040x filing Example 4. Free 1040x filing You are a member of a barter club that uses credit units to credit or debit members' accounts for goods or services provided or received. Free 1040x filing As soon as units are credited to your account, you can use them to buy goods or services or sell or transfer the units to other members. Free 1040x filing You must include the value of credit units you received in your gross receipts for the tax year in which the units are credited to your account. Free 1040x filing The dollar value of units received for services by an employee of the club, who can use the units in the same manner as other members, must be included in the employee's gross income for the tax year in which received. Free 1040x filing It is wages subject to social security and Medicare taxes (FICA), federal unemployment taxes (FUTA), and income tax withholding. Free 1040x filing See Publication 15 (Circular E), Employer's Tax Guide. Free 1040x filing Example 5. Free 1040x filing You operate a plumbing business and use the cash method of accounting. Free 1040x filing You join a barter club and agree to provide plumbing services to any member for a specified number of hours. Free 1040x filing Each member has access to a directory that lists the members of the club and the services available. Free 1040x filing Members contact each other directly and request services to be performed. Free 1040x filing You are not required to provide services unless requested by another member, but you can use as many of the offered services as you wish without paying a fee. Free 1040x filing You must include the fair market value of any services you receive from club members in your gross receipts when you receive them even if you have not provided any services to club members. Free 1040x filing Information returns. Free 1040x filing   If you are involved in a bartering transaction, you may have to file either of the following forms. Free 1040x filing Form 1099-B, Proceeds From Broker and Barter Exchange Transactions. Free 1040x filing Form 1099-MISC, Miscellaneous Income. Free 1040x filing For information about these forms, see the General Instructions for Certain Information Returns. Free 1040x filing Real Estate Rents If you are a real estate dealer who receives income from renting real property or an owner of a hotel, motel, etc. Free 1040x filing , who provides services (maid services, etc. Free 1040x filing ) for guests, report the rental income and expenses on Schedule C or C-EZ. Free 1040x filing If you are not a real estate dealer or the kind of owner described in the preceding sentence, report the rental income and expenses on Schedule E. Free 1040x filing For more information, see Publication 527, Residential Rental Property (Including Rental of Vacation Homes). Free 1040x filing Real estate dealer. Free 1040x filing   You are a real estate dealer if you are engaged in the business of selling real estate to customers with the purpose of making a profit from those sales. Free 1040x filing Rent you receive from real estate held for sale to customers is subject to SE tax. Free 1040x filing However, rent you receive from real estate held for speculation or investment is not subject to SE tax. Free 1040x filing Trailer park owner. Free 1040x filing   Rental income from a trailer park is subject to SE tax if you are a self-employed trailer park owner who provides trailer lots and facilities and substantial services for the convenience of your tenants. Free 1040x filing    You generally are considered to provide substantial services for tenants if they are primarily for the tenants' convenience and normally are not provided to maintain the lots in a condition for occupancy. Free 1040x filing Services are substantial if the compensation for the services makes up a material part of the tenants' rental payments. Free 1040x filing   Examples of services that are not normally provided for the tenants' convenience include supervising and maintaining a recreational hall provided by the park, distributing a monthly newsletter to tenants, operating a laundry facility, and helping tenants buy or sell their trailers. Free 1040x filing   Examples of services that are normally provided to maintain the lots in a condition for tenant occupancy include city sewerage, electrical connections, and roadways. Free 1040x filing Hotels, boarding houses, and apartments. Free 1040x filing   Rental income you receive for the use or occupancy of hotels, boarding houses, or apartment houses is subject to SE tax if you provide services for the occupants. Free 1040x filing   Generally, you are considered to provide services for the occupants if the services are primarily for their convenience and are not services normally provided with the rental of rooms for occupancy only. Free 1040x filing An example of a service that is not normally provided for the convenience of the occupants is maid service. Free 1040x filing However, providing heat and light, cleaning stairways and lobbies, and collecting trash are services normally provided for the occupants' convenience. Free 1040x filing Prepaid rent. Free 1040x filing   Advance payments received under a lease that does not put any restriction on their use or enjoyment are income in the year you receive them. Free 1040x filing This is true no matter what accounting method or period you use. Free 1040x filing Lease bonus. Free 1040x filing   A bonus you receive from a lessee for granting a lease is an addition to the rent. Free 1040x filing Include it in your gross receipts in the year received. Free 1040x filing Lease cancellation payments. Free 1040x filing   Report payments you receive from your lessee for canceling a lease in your gross receipts in the year received. Free 1040x filing Payments to third parties. Free 1040x filing   If your lessee makes payments to someone else under an agreement to pay your debts or obligations, include the payments in your gross receipts when the lessee makes the payments. Free 1040x filing A common example of this kind of income is a lessee's payment of your property taxes on leased real property. Free 1040x filing Settlement payments. Free 1040x filing   Payments you receive in settlement of a lessee's obligation to restore the leased property to its original condition are income in the amount that the payments exceed the adjusted basis of the leasehold improvements destroyed, damaged, removed, or disconnected by the lessee. Free 1040x filing Personal Property Rents If you are in the business of renting personal property (equipment, vehicles, formal wear, etc. Free 1040x filing ), include the rental amount you receive in your gross receipts on Schedule C or C-EZ. Free 1040x filing Prepaid rent and other payments described in the preceding Real Estate Rents discussion can also be received for renting personal property. Free 1040x filing If you receive any of those payments, include them in your gross receipts as explained in that discussion. Free 1040x filing Interest and Dividend Income Interest and dividends may be considered business income. Free 1040x filing Interest. Free 1040x filing   Interest received on notes receivable that you have accepted in the ordinary course of business is business income. Free 1040x filing Interest received on loans is business income if you are in the business of lending money. Free 1040x filing Uncollectible loans. Free 1040x filing   If a loan payable to you becomes uncollectible during the tax year and you use an accrual method of accounting, you must include in gross income interest accrued up to the time the loan became uncollectible. Free 1040x filing If the accrued interest later becomes uncollectible, you may be able to take a bad debt deduction. Free 1040x filing See Bad Debts in chapter 8. Free 1040x filing Unstated interest. Free 1040x filing   If little or no interest is charged on an installment sale, you may have to treat a part of each payment as unstated interest. Free 1040x filing See Unstated Interest and Original Issue Discount (OID) in Publication 537, Installment Sales. Free 1040x filing Dividends. Free 1040x filing   Generally, dividends are business income to dealers in securities. Free 1040x filing For most sole proprietors and statutory employees, however, dividends are nonbusiness income. Free 1040x filing If you hold stock as a personal investment separately from your business activity, the dividends from the stock are nonbusiness income. Free 1040x filing   If you receive dividends from business insurance premiums you deducted in an earlier year, you must report all or part of the dividend as business income on your return. Free 1040x filing To find out how much you have to report, see   Recovery of items previously deducted under Other Income, later. Free 1040x filing Canceled Debt The following explains the general rule for including canceled debt in income and the exceptions to the general rule. Free 1040x filing General Rule Generally, if your debt is canceled or forgiven, other than as a gift or bequest to you, you must include the canceled amount in your gross income for tax purposes. Free 1040x filing Report the canceled amount on line 6 of Schedule C if you incurred the debt in your business. Free 1040x filing If the debt is a nonbusiness debt, report the canceled amount on line 21 of Form 1040. Free 1040x filing Exceptions The following discussion covers some exceptions to the general rule for canceled debt. Free 1040x filing Price reduced after purchase. Free 1040x filing   If you owe a debt to the seller for property you bought and the seller reduces the amount you owe, you generally do not have income from the reduction. Free 1040x filing Unless you are bankrupt or insolvent, treat the amount of the reduction as a purchase price adjustment and reduce your basis in the property. Free 1040x filing Deductible debt. Free 1040x filing   You do not realize income from a canceled debt to the extent the payment of the debt would have led to a deduction. Free 1040x filing Example. Free 1040x filing You get accounting services for your business on credit. Free 1040x filing Later, you have trouble paying your business debts, but you are not bankrupt or insolvent. Free 1040x filing Your accountant forgives part of the amount you owe for the accounting services. Free 1040x filing How you treat the canceled debt depends on your method of accounting. Free 1040x filing Cash method — You do not include the canceled debt in income because payment of the debt would have been deductible as a business expense. Free 1040x filing Accrual method — You include the canceled debt in income because the expense was deductible when you incurred the debt. Free 1040x filing   For information on the cash and accrual methods of accounting, see chapter 2. Free 1040x filing Exclusions Do not include canceled debt in income in the following situations. Free 1040x filing However, you may be required to file Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness. Free 1040x filing For more information, see Form 982. Free 1040x filing The cancellation takes place in a bankruptcy case under title 11 of the U. Free 1040x filing S. Free 1040x filing Code (relating to bankruptcy). Free 1040x filing See Publication 908, Bankruptcy Tax Guide. Free 1040x filing The cancellation takes place when you are insolvent. Free 1040x filing You can exclude the canceled debt to the extent you are insolvent. Free 1040x filing See Publication 908. Free 1040x filing The canceled debt is a qualified farm debt owed to a qualified person. Free 1040x filing See chapter 3 in Publication 225, Farmer's Tax Guide. Free 1040x filing The canceled debt is a qualified real property business debt. Free 1040x filing This situation is explained later. Free 1040x filing The canceled debt is qualified principal residence indebtedness which is discharged after 2006. Free 1040x filing See Form 982. Free 1040x filing If a canceled debt is excluded from income because it takes place in a bankruptcy case, the exclusions in situations 2 through 5 do not apply. Free 1040x filing If it takes place when you are insolvent, the exclusions in situations 3 and 4 do not apply to the extent you are insolvent. Free 1040x filing Debt. Free 1040x filing   For purposes of this discussion, debt includes any debt for which you are liable or which attaches to property you hold. Free 1040x filing Qualified real property business debt. Free 1040x filing   You can elect to exclude (up to certain limits) the cancellation of qualified real property business debt. Free 1040x filing If you make the election, you must reduce the basis of your depreciable real property by the amount excluded. Free 1040x filing Make this reduction at the beginning of your tax year following the tax year in which the cancellation occurs. Free 1040x filing However, if you dispose of the property before that time, you must reduce its basis immediately before the disposition. Free 1040x filing Cancellation of qualified real property business debt. Free 1040x filing   Qualified real property business debt is debt (other than qualified farm debt) that meets all the following conditions. Free 1040x filing It was incurred or assumed in connection with real property used in a trade or business. Free 1040x filing It was secured by such real property. Free 1040x filing It was incurred or assumed at either of the following times. Free 1040x filing Before January 1, 1993. Free 1040x filing After December 31, 1992, if incurred or assumed to acquire, construct, or substantially improve the real property. Free 1040x filing It is debt to which you choose to apply these rules. Free 1040x filing   Qualified real property business debt includes refinancing of debt described in (3) earlier, but only to the extent it does not exceed the debt being refinanced. Free 1040x filing   You cannot exclude more than either of the following amounts. Free 1040x filing The excess (if any) of: The outstanding principal of qualified real property business debt (immediately before the cancellation), over The fair market value (immediately before the cancellation) of the business real property that is security for the debt, reduced by the outstanding principal amount of any other qualified real property business debt secured by this property immediately before the cancellation. Free 1040x filing The total adjusted bases of depreciable real property held by you immediately before the cancellation. Free 1040x filing These adjusted bases are determined after any basis reduction due to a cancellation in bankruptcy, insolvency, or of qualified farm debt. Free 1040x filing Do not take into account depreciable real property acquired in contemplation of the cancellation. Free 1040x filing Election. Free 1040x filing   To make this election, complete Form 982 and attach it to your income tax return for the tax year in which the cancellation occurs. Free 1040x filing You must file your return by the due date (including extensions). Free 1040x filing If you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). Free 1040x filing For more information, see When To File in the form instructions. Free 1040x filing Other Income The following discussion explains how to treat other types of business income you may receive. Free 1040x filing Restricted property. Free 1040x filing   Restricted property is property that has certain restrictions that affect its value. Free 1040x filing If you receive restricted stock or other property for services performed, the fair market value of the property in excess of your cost is included in your income on Schedule C or C-EZ when the restriction is lifted. Free 1040x filing However, you can choose to be taxed in the year you receive the property. Free 1040x filing For more information on including restricted property in income, see Publication 525, Taxable and Nontaxable Income. Free 1040x filing Gains and losses. Free 1040x filing   Do not report on Schedule C or C-EZ a gain or loss from the disposition of property that is neither stock in trade nor held primarily for sale to customers. Free 1040x filing Instead, you must report these gains and losses on other forms. Free 1040x filing For more information, see chapter 3. Free 1040x filing Promissory notes. Free 1040x filing   Report promissory notes and other evidences of debt issued to you in a sale or exchange of property that is stock in trade or held primarily for sale to customers on Schedule C or C-EZ. Free 1040x filing In general, you report them at their stated principal amount (minus any unstated interest) when you receive them. Free 1040x filing Lost income payments. Free 1040x filing   If you reduce or stop your business activities, report on Schedule C or C-EZ any payment you receive for the lost income of your business from insurance or other sources. Free 1040x filing Report it on Schedule C or C-EZ even if your business is inactive when you receive the payment. Free 1040x filing Damages. Free 1040x filing   You must include in gross income compensation you receive during the tax year as a result of any of the following injuries connected with your business. Free 1040x filing Patent infringement. Free 1040x filing Breach of contract or fiduciary duty. Free 1040x filing Antitrust injury. Free 1040x filing Economic injury. Free 1040x filing   You may be entitled to a deduction against the income if it compensates you for actual economic injury. Free 1040x filing Your deduction is the smaller of the following amounts. Free 1040x filing The amount you receive or accrue for damages in the tax year reduced by the amount you pay or incur in the tax year to recover that amount. Free 1040x filing Your loss from the injury that you have not yet deducted. Free 1040x filing Punitive damages. Free 1040x filing   You must also include punitive damages in income. Free 1040x filing Kickbacks. Free 1040x filing   If you receive any kickbacks, include them in your income on Schedule C or C-EZ. Free 1040x filing However, do not include them if you properly treat them as a reduction of a related expense item, a capital expenditure, or cost of goods sold. Free 1040x filing Recovery of items previously deducted. Free 1040x filing   If you recover a bad debt or any other item deducted in a previous year, include the recovery in income on Schedule C or C-EZ. Free 1040x filing However, if all or part of the deduction in earlier years did not reduce your tax, you can exclude the part that did not reduce your tax. Free 1040x filing If you exclude part of the recovery from income, you must include with your return a computation showing how you figured the exclusion. Free 1040x filing Example. Free 1040x filing Joe Smith, a sole proprietor, had gross income of $8,000, a bad debt deduction of $300, and other allowable deductions of $7,700. Free 1040x filing He also had 2 personal exemptions for a total of $7,800. Free 1040x filing He would not pay income tax even if he did not deduct the bad debt. Free 1040x filing Therefore, he will not report as income any part of the $300 he may recover in any future year. Free 1040x filing Exception for depreciation. Free 1040x filing   This rule does not apply to depreciation. Free 1040x filing You recover depreciation using the rules explained next. Free 1040x filing Recapture of depreciation. Free 1040x filing   In the following situations, you have to recapture the depreciation deduction. Free 1040x filing This means you include in income part or all of the depreciation you deducted in previous years. Free 1040x filing Listed property. Free 1040x filing   If your business use of listed property (explained in chapter 8 under Depreciation ) falls to 50% or less in a tax year after the tax year you placed the property in service, you may have to recapture part of the depreciation deduction. Free 1040x filing You do this by including in income on Schedule C part of the depreciation you deducted in previous years. Free 1040x filing Use Part IV of Form 4797, Sales of Business Property, to figure the amount to include on Schedule C. Free 1040x filing For more information, see What is the Business-Use Requirement? in chapter 5 of Publication 946, How To Depreciate Property. Free 1040x filing That chapter explains how to determine whether property is used more than 50% in your business. Free 1040x filing Section 179 property. Free 1040x filing   If you take a section 179 deduction (explained in chapter 8 under Depreciation ) for an asset and before the end of the asset's recovery period the percentage of business use drops to 50% or less, you must recapture part of the section 179 deduction. Free 1040x filing You do this by including in income on Schedule C part of the deduction you took. Free 1040x filing Use Part IV of Form 4797 to figure the amount to include on Schedule C. Free 1040x filing See chapter 2 in Publication 946 to find out when you recapture the deduction. Free 1040x filing Sale or exchange of depreciable property. Free 1040x filing   If you sell or exchange depreciable property at a gain, you may have to treat all or part of the gain due to depreciation as ordinary income. Free 1040x filing You figure the income due to depreciation recapture in Part III of Form 4797. Free 1040x filing For more information, see chapter 4 in Publication 544, Sales and Other Dispositions of Assets. Free 1040x filing Items That Are Not Income In some cases the property or money you receive is not income. Free 1040x filing Appreciation. Free 1040x filing   Increases in value of your property are not income until you realize the increases through a sale or other taxable disposition. Free 1040x filing Consignments. Free 1040x filing   Consignments of merchandise to others to sell for you are not sales. Free 1040x filing The title of merchandise remains with you, the consignor, even after the consignee possesses the merchandise. Free 1040x filing Therefore, if you ship goods on consignment, you have no profit or loss until the consignee sells the merchandise. Free 1040x filing Merchandise you have shipped out on consignment is included in your inventory until it is sold. Free 1040x filing   Do not include merchandise you receive on consignment in your inventory. Free 1040x filing Include your profit or commission on merchandise consigned to you in your income when you sell the merchandise or when you receive your profit or commission, depending upon the method of accounting you use. Free 1040x filing Construction allowances. Free 1040x filing   If you enter into a lease after August 5, 1997, you can exclude from income the construction allowance you receive (in cash or as a rent reduction) from your landlord if you receive it under both the following conditions. Free 1040x filing Under a short-term lease of retail space. Free 1040x filing For the purpose of constructing or improving qualified long-term real property for use in your business at that retail space. Free 1040x filing Amount you can exclude. Free 1040x filing   You can exclude the construction allowance to the extent it does not exceed the amount you spent for construction or improvements. Free 1040x filing Short-term lease. Free 1040x filing   A short-term lease is a lease (or other agreement for occupancy or use) of retail space for 15 years or less. Free 1040x filing The following rules apply in determining whether the lease is for 15 years or less. Free 1040x filing Take into account options to renew when figuring whether the lease is for 15 years or less. Free 1040x filing But do not take into account any option to renew at fair market value determined at the time of renewal. Free 1040x filing Two or more successive leases that are part of the same transaction (or a series of related transactions) for the same or substantially similar retail space are treated as one lease. Free 1040x filing Retail space. Free 1040x filing   Retail space is real property leased, occupied, or otherwise used by you as a tenant in your business of selling tangible personal property or services to the general public. Free 1040x filing Qualified long-term real property. Free 1040x filing   Qualified long-term real property is nonresidential real property that is part of, or otherwise present at, your retail space and that reverts to the landlord when the lease ends. Free 1040x filing Exchange of like-kind property. Free 1040x filing   If you exchange your business property or property you hold for investment solely for property of a like kind to be used in your business or to be held for investment, no gain or loss is recognized. Free 1040x filing This means that the gain is not taxable and the loss is not deductible. Free 1040x filing A common type of nontaxable exchange is the trade-in of a business automobile for another business automobile. Free 1040x filing For more information, see Form 8824. Free 1040x filing Leasehold improvements. Free 1040x filing   If a tenant erects buildings or makes improvements to your property, the increase in the value of the property due to the improvements is not income to you. Free 1040x filing However, if the facts indicate that the improvements are a payment of rent to you, then the increase in value would be income. Free 1040x filing Loans. Free 1040x filing   Money borrowed through a bona fide loan is not income. Free 1040x filing Sales tax. Free 1040x filing   State and local sales taxes imposed on the buyer, which you were required to collect and pay over to state or local governments, are not income. Free 1040x filing Guidelines for Selected Occupations This section provides information to determine whether your earnings should be reported on Schedule C (Form 1040) or C-EZ (Form 1040). Free 1040x filing Direct seller. Free 1040x filing   You must report all income you receive as a direct seller on Schedule C or C-EZ. Free 1040x filing This includes any of the following. Free 1040x filing Income from sales—payments you receive from customers for products they buy from you. Free 1040x filing Commissions, bonuses, or percentages you receive for sales and the sales of others who work under you. Free 1040x filing Prizes, awards, and gifts you receive from your selling business. Free 1040x filing You must report this income regardless of whether it is reported to you on an information return. Free 1040x filing   You are a direct seller if you meet all the following conditions. Free 1040x filing You are engaged in one of the following trades or businesses. Free 1040x filing Selling or soliciting the sale of consumer products either in a home or other place that is not a permanent retail establishment, or to any buyer on a buy-sell basis or a deposit-commission basis for resale in a home or other place of business that is not a permanent retail establishment. Free 1040x filing Delivering or distributing newspapers or shopping news (including any services directly related to that trade or business). Free 1040x filing Substantially all your pay (whether paid in cash or not) for services described above is directly related to sales or other output (including performance of services) rather than to the number of hours worked. Free 1040x filing Your services are performed under a written contract between you and the person for whom you perform the services, and the contract provides that you will not be treated as an employee for federal tax purposes. Free 1040x filing Executor or administrator. Free 1040x filing   If you administer a deceased person's estate, your fees are reported on Schedule C or C-EZ if you are one of the following: A professional fiduciary. Free 1040x filing A nonprofessional fiduciary (personal representative) and both of the following apply. Free 1040x filing The estate includes an active trade or business in which you actively participate. Free 1040x filing Your fees are related to the operation of that trade or business. Free 1040x filing A nonprofessional fiduciary of a single estate that requires extensive managerial activities on your part for a long period of time, provided these activities are enough to be considered a trade or business. Free 1040x filing    If the fees do not meet the above requirements, report them on line 21 of Form 1040. Free 1040x filing Fishing crew member. Free 1040x filing    If you are a member of the crew that catches fish or other water life, your earnings are reported on Schedule C or C-EZ if you meet all the requirements shown in chapter 10 under Fishing crew member . Free 1040x filing Insurance agent, former. Free 1040x filing   Termination payments you receive as a former self-employed insurance agent from an insurance company because of services you performed for that company are not reported on Schedule C or C-EZ if all the following conditions are met. Free 1040x filing You received payments after your agreement to perform services for the company ended. Free 1040x filing You did not perform any services for the company after your service agreement ended and before the end of the year in which you received the payment. Free 1040x filing You entered into a covenant not to compete against the company for at least a 1-year period beginning on the date your service agreement ended. Free 1040x filing The amount of the payments depended primarily on policies sold by you or credited to your account during the last year of your service agreement or the extent to which those policies remain in force for some period after your service agreement ended, or both. Free 1040x filing The amount of the payment did not depend to any extent on length of service or overall earnings from services performed for the company (regardless of whether eligibility for the payments depended on length of service). Free 1040x filing Insurance agent, retired. Free 1040x filing   Income paid by an insurance company to a retired self-employed insurance agent based on a percentage of commissions received before retirement is reported on Schedule C or C-EZ. Free 1040x filing Also, renewal commissions and deferred commissions for sales made before retirement are generally reported on Schedule C or C-EZ. Free 1040x filing   However, renewal commissions paid to the survivor of an insurance agent are not reported on Schedule C or C-EZ. Free 1040x filing Newspaper carrier or distributor. Free 1040x filing   You are a direct seller and your earnings are reported on Schedule C or C-EZ if all the following conditions apply. Free 1040x filing You are in the business of delivering or distributing newspapers or shopping news (including directly related services such as soliciting customers and collecting receipts). Free 1040x filing Substantially all your pay for these services directly relates to your sales or other output rather than to the number of hours you work. Free 1040x filing You perform the services under a written contract that says you will not be treated as an employee for federal tax purposes. Free 1040x filing   This rule applies whether or not you hire others to help you make deliveries. Free 1040x filing It also applies whether you buy the papers from the publisher or are paid based on the number of papers you deliver. Free 1040x filing Newspaper or magazine vendor. Free 1040x filing   If you are 18 or older and you sell newspapers or magazines, your earnings are reported on Schedule C or C-EZ if all the following conditions apply. Free 1040x filing You sell newspapers or magazines to ultimate consumers. Free 1040x filing You sell them at a fixed price. Free 1040x filing Your earnings are based on the difference between the sales price and your cost of goods sold. Free 1040x filing   This rule applies whether or not you are guaranteed a minimum amount of earnings. Free 1040x filing It also applies whether or not you receive credit for unsold newspapers or magazines you return to your supplier. Free 1040x filing Notary public. Free 1040x filing   Fees you receive for services you perform as a notary public are reported on Schedule C or C-EZ. Free 1040x filing These payments are not subject to self-employment tax (see the instructions for Schedule SE (Form 1040)). Free 1040x filing Public official. Free 1040x filing   Public officials generally do not report what they earn for serving in public office on Schedule C or C-EZ. Free 1040x filing This rule applies to payments received by an elected tax collector from state funds on the basis of a fixed percentage of the taxes collected. Free 1040x filing Public office includes any elective or appointive office of the United States or its possessions, the District of Columbia, a state or its political subdivisions, or a wholly owned instrumentality of any of these. Free 1040x filing   Public officials of state or local governments report their fees on Schedule C or C-EZ if they are paid solely on a fee basis and if their services are eligible for, but not covered by, social security under a federal-state agreement. Free 1040x filing Real estate agent or direct seller. Free 1040x filing   If you are a licensed real estate agent or a direct seller, your earnings are reported on Schedule C or C-EZ if both the following apply. Free 1040x filing Substantially all your pay for services as a real estate agent or direct seller directly relates to your sales or other output rather than to the number of hours you work. Free 1040x filing You perform the services under a written contract that says you will not be treated as an employee for federal tax purposes. Free 1040x filing Securities dealer. Free 1040x filing   If you are a dealer in options or commodities, your gains and losses from dealing or trading in section 1256 contracts (regulated futures contracts, foreign currency contracts, nonequity options, dealer equity options, and dealer securities futures contracts) or property related to those contracts (such as stock used to hedge options) are reported on Schedule C or C-EZ. Free 1040x filing For more information, see sections 1256 and 1402(i). Free 1040x filing Securities trader. Free 1040x filing   You are a trader in securities if you are engaged in the business of buying and selling securities for your own account. Free 1040x filing As a trader in securities, your gain or loss from the disposition of securities is not reported on Schedule C or C-EZ. Free 1040x filing However, see Securities dealer , earlier, for an exception that applies to section 1256 contracts. Free 1040x filing For more information about securities traders, see Publication 550, Investment Income and Expenses. Free 1040x filing Accounting for Your Income Accounting for your income for income tax purposes differs at times from accounting for financial purposes. Free 1040x filing This section discusses some of the more common differences that may affect business transactions. Free 1040x filing Figure your business income on the basis of a tax year and according to your regular method of accounting (see chapter 2). Free 1040x filing If the sale of a product is an income-producing factor in your business, you usually have to use inventories to clearly show your income. Free 1040x filing Dealers in real estate are not allowed to use inventories. Free 1040x filing For more information on inventories, see chapter 2. Free 1040x filing Income paid to a third party. Free 1040x filing   All income you earn is taxable to you. Free 1040x filing You cannot avoid tax by having the income paid to a third party. Free 1040x filing Example. Free 1040x filing You rent out your property and the rental agreement directs the lessee to pay the rent to your son. Free 1040x filing The amount paid to your son is gross income to you. Free 1040x filing Cash discounts. Free 1040x filing   These are amounts the seller permits you to deduct from the invoice price for prompt payment. Free 1040x filing For income tax purposes, you can use either of the following two methods to account for cash discounts. Free 1040x filing Deduct the cash discount from purchases (see Line 36, Purchases Less Cost of Items Withdrawn for Personal Use in chapter 6). Free 1040x filing Credit the cash discount to a discount income account. Free 1040x filing You must use the chosen method every year for all your purchase discounts. Free 1040x filing   If you use the second method, the credit balance in the account at the end of your tax year is business income. Free 1040x filing Under this method, you do not reduce the cost of goods sold by the cash discounts you received. Free 1040x filing When valuing your closing inventory, you cannot reduce the invoice price of merchandise on hand at the close of the tax year by the average or estimated discounts received on the merchandise. Free 1040x filing Trade discounts. Free 1040x filing   These are reductions from list or catalog prices and usually are not written into the invoice or charged to the customer. Free 1040x filing Do not enter these discounts on your books of account. Free 1040x filing Instead, use only the net amount as the cost of the merchandise purchased. Free 1040x filing For more information, see Trade discounts in chapter 6. Free 1040x filing Payment placed in escrow. Free 1040x filing   If the buyer of your property places part or all of the purchase price in escrow, you do not include any part of it in gross sales until you actually or constructively receive it. Free 1040x filing However, upon completion of the terms of the contract and the escrow agreement, you will have taxable income, even if you do not accept the money until the next year. Free 1040x filing Sales returns and allowances. Free 1040x filing   Credits you allow customers for returned merchandise and any other allowances you make on sales are deductions from gross sales in figuring net sales. Free 1040x filing Advance payments. Free 1040x filing   Special rules dealing with an accrual method of accounting for payments received in advance are discussed in chapter 2 under Accrual Method. Free 1040x filing Insurance proceeds. Free 1040x filing   If you receive insurance or another type of reimbursement for a casualty or theft loss, you must subtract it from the loss when you figure your deduction. Free 1040x filing You cannot deduct the reimbursed part of a casualty or theft loss. Free 1040x filing   For information on casualty or theft losses, see Publication 547, Casualties, Disasters, and Thefts. Free 1040x filing Prev  Up  Next   Home   More Online Publications
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Rural Development

Through various programs, the Department of Agriculture's Rural Development works to improve the economy and quality of life of rural America.

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Phone Number: (202) 720-4581

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The Free 1040x Filing

Free 1040x filing Publication 516 - Main Content Table of Contents U. Free 1040x filing S. Free 1040x filing Tax ReturnFiling Information Foreign Bank Accounts U. Free 1040x filing S. Free 1040x filing Government Payments Foreign Earned Income Exclusion Tax Treaty Benefits Allowances, Differentials, and Special Pay Other Income Deductions and Credits — Business Expenses Deductions and Credits — Nonbusiness Expenses Foreign Taxes Local (Foreign) Tax ReturnTax Treaty Benefits Other Agreements Double Withholding How To Get Tax HelpLow Income Taxpayer Clinics (LITCs). Free 1040x filing U. Free 1040x filing S. Free 1040x filing Tax Return Filing Information If you are a U. Free 1040x filing S. Free 1040x filing citizen or green card holder living or traveling outside the United States, you are generally required to file income tax returns in the same way as those residing in the United States. Free 1040x filing However, the special rules explained in the following discussions may apply to you. Free 1040x filing See also Tax Treaty Benefits, later. Free 1040x filing When To File and Pay Most individual tax returns cover a calendar year, January through December. Free 1040x filing The regular due date for these tax returns is April 15 of the following year. Free 1040x filing If April 15 falls on a Saturday, Sunday, or legal holiday, your tax return is considered timely filed if it is filed by the next business day that is not a Saturday, Sunday, or legal holiday. Free 1040x filing If you get an extension, you are allowed additional time to file and, in some circumstances, pay your tax. Free 1040x filing You must pay interest on any tax not paid by the regular due date. Free 1040x filing Your return is considered filed on time if it is mailed from and officially postmarked in a foreign country on or before the due date (including extensions), or given to a designated international private delivery service before midnight of the last date prescribed for filing. Free 1040x filing See your tax form instructions for a list of private delivery services that have been designated by the IRS to meet this “timely mailing as timely filing/paying” rule for tax returns and payments. Free 1040x filing If your return is filed late, the postmark or delivery service date does not determine the date of filing. Free 1040x filing In that case, your return is considered filed when it is received by the IRS. Free 1040x filing Extensions You may be able to get an extension of time to file your return and pay your tax. Free 1040x filing Automatic 2-month extension. Free 1040x filing   You can get an automatic 2-month extension (to June 15, for a calendar year return) to file your return and pay your tax if you are a U. Free 1040x filing S. Free 1040x filing citizen or resident and, on the regular due date of your return, you are living outside the United States and Puerto Rico and your main place of business or post of duty is outside the United States and Puerto Rico. Free 1040x filing To get this extension, you must attach a statement to your return explaining how you qualified. Free 1040x filing You will owe interest on any tax not paid by the regular due date of your return. Free 1040x filing Married taxpayers. Free 1040x filing   If you file a joint return, either you or your spouse can qualify for the automatic extension. Free 1040x filing If you and your spouse file separate returns, the extension applies only to the spouse who qualifies. Free 1040x filing Additional extension. Free 1040x filing   You can apply for an additional extension of time to file your return by filing Form 4868. Free 1040x filing You must file Form 4868 by the due date for your income tax return. Free 1040x filing   Generally, you must file it by April 15. Free 1040x filing However, if you qualify for the automatic 2-month extension, you generally must file Form 4868 by June 15. Free 1040x filing Check the box on line 8 of Form 4868. Free 1040x filing Payment of tax. Free 1040x filing   You should estimate and pay any additional tax you owe when you file Form 4868 to avoid being charged a late-payment penalty. Free 1040x filing The late-payment penalty applies if, through withholding, etc. Free 1040x filing , you paid less than 90% of your actual tax liability by the original due date of your income tax return. Free 1040x filing Even if the late-payment penalty does not apply, you will be charged interest on any unpaid tax liability from the original due date of the return until the tax is paid. Free 1040x filing Electronic filing. Free 1040x filing   You can file for the additional extension by phone, using your home computer, or through a tax professional. Free 1040x filing See Form 4868 for more information. Free 1040x filing Limit on additional extensions. Free 1040x filing   You generally cannot get a total extension of more than 6 months. Free 1040x filing However, if you are outside the United States and meet certain tests, you may be able to get a longer extension. Free 1040x filing   For more information, see Publication 54. Free 1040x filing Foreign Bank Accounts You must file Form TD F 90-22. Free 1040x filing 1 if at any time during the year you had an interest in, or signature or other authority over, a bank account, securities account, or other financial account in a foreign country. Free 1040x filing This applies if the combined assets in the account(s) were more than $10,000. Free 1040x filing Do not include accounts in a U. Free 1040x filing S. Free 1040x filing military banking facility operated by a U. Free 1040x filing S. Free 1040x filing financial institution. Free 1040x filing File the completed form by June 30 of the following year with the Department of the Treasury at the address shown on that form. Free 1040x filing Do not attach it to Form 1040. Free 1040x filing If you are required to file Form TD F 90-22. Free 1040x filing 1 but do not do so, you may have to pay a penalty of up to $10,000 (more if the failure to file is willful). Free 1040x filing You also may be required to file Form 8938 with your U. Free 1040x filing S. Free 1040x filing income tax return to report your interest in foreign bank accounts and other specified foreign financial assets. Free 1040x filing For taxpayers living abroad, you generally do not have to file Form 8938 unless the total value of your specified foreign financial assets is more than $200,000 ($400,000 if married filing jointly) on the last day of the tax year or more than $300,000 ($600,000 if married filing jointly) at any time during the tax year. Free 1040x filing For more information, see Form 8938 and its instructions. Free 1040x filing U. Free 1040x filing S. Free 1040x filing Government Payments Wages earned for performing services outside the United States is foreign income, regardless of your employer. Free 1040x filing If you are a U. Free 1040x filing S. Free 1040x filing citizen or resident alien, you must report all income from worldwide sources on your tax return unless it is exempt by U. Free 1040x filing S. Free 1040x filing law. Free 1040x filing This applies to earned income (such as wages) as well as unearned income (such as interest, dividends, and capital gains). Free 1040x filing If you are a nonresident alien, your income from sources outside the United States is not subject to U. Free 1040x filing S. Free 1040x filing tax. Free 1040x filing Foreign Earned Income Exclusion Employees of the U. Free 1040x filing S. Free 1040x filing Government are not entitled to the foreign earned income exclusion or the foreign housing exclusion/deduction under section 911 because “foreign earned income ”does not include amounts paid by the U. Free 1040x filing S. Free 1040x filing Government as an employee. Free 1040x filing But see Other Employment, later. Free 1040x filing Special Situations In the following two situations, your pay is from the U. Free 1040x filing S. Free 1040x filing Government and does not qualify for the foreign earned income exclusion. Free 1040x filing U. Free 1040x filing S. Free 1040x filing agency reimbursed by foreign country. Free 1040x filing   If you are a U. Free 1040x filing S. Free 1040x filing Government employee paid by a U. Free 1040x filing S. Free 1040x filing agency to perform services in a foreign country, your pay is from the U. Free 1040x filing S. Free 1040x filing Government and does not qualify the foreign earned income exclusion or the foreign housing exclusion/deduction. Free 1040x filing This is true even if the U. Free 1040x filing S. Free 1040x filing agency is reimbursed by the foreign government. Free 1040x filing Employees of post exchanges, etc. Free 1040x filing   If you are an employee of an Armed Forces post exchange, officers' and enlisted personnel club, Embassy commissary, or similar instrumentality of the U. Free 1040x filing S. Free 1040x filing Government, the earnings you receive are paid by the U. Free 1040x filing S. Free 1040x filing Government. Free 1040x filing This is true whether they are paid from appropriated or nonappropriated funds. Free 1040x filing These earnings are not eligible for the foreign earned income exclusion or the foreign housing exclusion/deduction. Free 1040x filing Tax Treaty Benefits Most income tax treaties contain an article relating to remuneration from government services. Free 1040x filing Even if you are working in a foreign country with which the United States has an income tax treaty in force and the treaty article that applies to government services says that your government pay is taxable only in the foreign country, the treaty will likely contain a “saving clause”, which provides that the United States may tax its citizens and its residents as if the treaty had not come into effect. Free 1040x filing In some treaties, the government service article is an exception to the saving clause, but often only for individuals who are not U. Free 1040x filing S. Free 1040x filing citizens or green card holders. Free 1040x filing Consequently, if you are a U. Free 1040x filing S. Free 1040x filing citizen or green card holder, you will generally not be entitled to reduce your U. Free 1040x filing S. Free 1040x filing tax on your government pay. Free 1040x filing If you are neither a U. Free 1040x filing S. Free 1040x filing citizen nor green card holder, and you are treated as a resident of the treaty country under the treaty residence article (after application of the so-called “tie-breaker” rule), then you may be entitled to benefits under the government service article. Free 1040x filing Review the treaty text carefully. Free 1040x filing U. Free 1040x filing S. Free 1040x filing citizens must always file Form 1040. Free 1040x filing Non-U. Free 1040x filing S. Free 1040x filing citizens who are treated as a resident of a treaty country under the treaty residence article (after application of the so-called “tie-breaker” rule) may file Form 1040NR and attach Form 8833. Free 1040x filing If you pay or accrue taxes to the foreign country on your pay, you may be able to relieve double taxation with a foreign tax credit. Free 1040x filing Most income tax treaties contain an article providing relief from double taxation. Free 1040x filing Many treaties contain special foreign tax credit rules for U. Free 1040x filing S. Free 1040x filing citizens who are residents of a treaty country. Free 1040x filing For more information on the mechanics of the foreign tax credit, see Foreign Taxes, later. Free 1040x filing Allowances, Differentials, and Special Pay Most payments received by U. Free 1040x filing S. Free 1040x filing Government civilian employees for working abroad, including pay differentials, are taxable. Free 1040x filing However, certain foreign areas allowances, cost of living allowances, and travel allowances are tax free. Free 1040x filing The following discussions explain the tax treatment of allowances, differentials, and other special pay you receive for employment abroad. Free 1040x filing Pay differentials. Free 1040x filing   Pay differentials you receive as financial incentives for employment abroad are taxable. Free 1040x filing Your employer should have included these differentials as wages on your Form W-2, Wage and Tax Statement. Free 1040x filing   Generally, pay differentials are given for employment under adverse conditions (such as severe climate) or because the post of duty is located in a hazardous or isolated area that may be outside the United States. Free 1040x filing The area does not have to be a qualified hazardous duty area as discussed in Publication 3. Free 1040x filing Pay differentials include: Post differentials, Special incentive differentials, and Danger pay. Free 1040x filing Foreign areas allowances. Free 1040x filing   Certain foreign areas allowances are tax free. Free 1040x filing Your employer should not have included these allowances as wages on your Form W-2. Free 1040x filing   Tax-free foreign areas allowances are allowances (other than post differentials) received under the following laws. Free 1040x filing Title I, chapter 9, of the Foreign Service Act of 1980. Free 1040x filing Section 4 of the Central Intelligence Agency Act of 1949, as amended. Free 1040x filing Title II of the Overseas Differentials and Allowances Act. Free 1040x filing Subsection (e) or (f) of the first section of the Administrative Expenses Act of 1946, as amended, or section 22 of that Act. Free 1040x filing These allowances cover such expenses as: Certain repairs to a leased home, Education of dependents in special situations, Motor vehicle shipment, Separate maintenance for dependents, Temporary quarters, Transportation for medical treatment, and Travel, moving, and storage. Free 1040x filing Allowances received by foreign service employees for representation expenses are also tax free under the above provisions. Free 1040x filing Cost-of-living allowances. Free 1040x filing   If you are stationed outside the continental United States or in Alaska, your gross income does not include cost-of-living allowances (other than amounts received under Title II of the Overseas Differentials and Allowances Act) granted by regulations approved by the President of the United States. Free 1040x filing The cost-of-living portion of any other allowance (for example, a living and quarters allowance) is not included even if the underlying allowance is included in gross income. Free 1040x filing Cost-of-living allowances are not included on your Form W-2. Free 1040x filing Federal court employees. Free 1040x filing   If you are a federal court employee, the preceding paragraph also applies to you. Free 1040x filing The cost-of-living allowance must be granted by rules similar to regulations approved by the President. Free 1040x filing American Institute in Taiwan. Free 1040x filing   If you are an employee of the American Institute in Taiwan, allowances you receive are exempt from U. Free 1040x filing S. Free 1040x filing tax if they are equivalent to tax-exempt allowances received by civilian employees of the U. Free 1040x filing S. Free 1040x filing Government. Free 1040x filing Federal reemployment payments after serving with an international organization. Free 1040x filing   If you are a federal employee who is reemployed by a federal agency after serving with an international organization, you must include in income any reemployment payments you receive. Free 1040x filing These payments are equal to the difference between the pay, allowances, post differential, and other monetary benefits paid by the international organization and the pay and other benefits that would have been paid by the federal agency had you been detailed to the international agency. Free 1040x filing Allowances or reimbursements for travel and transportation expenses. Free 1040x filing   See How To Report Business Expenses, later, for a discussion on whether a reimbursement or allowance for travel or transportation is included in your income. Free 1040x filing Lodging furnished to a principal representative of the United States. Free 1040x filing   If you are a principal representative of the United States stationed in a foreign country, you do not have to include in income the value of lodging (including utilities) provided to you as an official residence. Free 1040x filing However, amounts paid by the U. Free 1040x filing S. Free 1040x filing government for your usual costs of operating and maintaining your household are taxable. Free 1040x filing If amounts are withheld from your pay to cover these expenses, you cannot exclude or deduct those amounts from your income. Free 1040x filing Peace Corps. Free 1040x filing   If you are a Peace Corps volunteer or volunteer leader, some allowances you receive are taxable and others are not. Free 1040x filing Taxable allowances. Free 1040x filing   The following allowances must be included on your Form W-2 and reported on your return as wages. Free 1040x filing If you are a volunteer leader, allowances paid to your spouse and minor children while you are training in the United States. Free 1040x filing The part of living allowances designated by the Director of the Peace Corps as basic compensation. Free 1040x filing This is the part for personal items such as domestic help, laundry and clothing maintenance, entertainment and recreation, transportation, and other miscellaneous expenses. Free 1040x filing Leave allowances. Free 1040x filing Readjustment allowances or “termination payments. Free 1040x filing ” Taxable allowances are considered received by you when credited to your account. Free 1040x filing Example. Free 1040x filing Gary Carpenter, a Peace Corps volunteer, gets $175 a month during his period of service, to be paid to him in a lump sum at the end of his tour of duty. Free 1040x filing Although the allowance is not available to him until the end of his service, Gary must include it in his income on a monthly basis as it is credited to his account. Free 1040x filing Nontaxable allowances. Free 1040x filing   These generally include travel allowances and the part of living allowances for housing, utilities, food, clothing, and household supplies. Free 1040x filing These allowances should not be included on your Form W-2. Free 1040x filing These allowances are tax free whether paid by the U. Free 1040x filing S. Free 1040x filing Government or the foreign country in which you are stationed. Free 1040x filing Other Income Other employment. Free 1040x filing   If, in addition to your U. Free 1040x filing S. Free 1040x filing government pay, you receive income from a private employer or self-employment, you may qualify to claim the foreign earned income exclusion and the foreign housing exclusion and deduction under section 911 based on this other income provided you meet either the bona fide residence test or the physical presence test. Free 1040x filing In addition, if your spouse is a U. Free 1040x filing S. Free 1040x filing citizen or resident alien who earns income in a foreign country that is paid by a private employer or is from self-employment, he or she may also qualify for the exclusion or the deduction. Free 1040x filing For more information, see Publication 54. Free 1040x filing The tax treaty rules relating to income from personal services generally apply to income from private employment. Free 1040x filing As discussed above, the saving clause applies to you if you are a U. Free 1040x filing S. Free 1040x filing citizen or if you are a resident of the United States under the treaty residence article (after application of the so-called “tie-breaker” rule). Free 1040x filing Sale of personal property. Free 1040x filing   If you have a gain from the sale of your personal property (such as an automobile or a home appliance), whether directly or through a favorable exchange rate in converting the proceeds to U. Free 1040x filing S. Free 1040x filing dollars, the excess of the amount received in U. Free 1040x filing S. Free 1040x filing dollars over the cost or other basis of the property is a capital gain. Free 1040x filing Capital gains are reported on Schedule D (Form 1040), Capital Gains and Losses. Free 1040x filing However, losses from sales of your personal property, whether directly or through an unfavorable exchange rate, are not deductible. Free 1040x filing Sale of your home. Free 1040x filing   All or part of the gain on the sale of your main home, within or outside the United States, may be taxable. Free 1040x filing Losses are not deductible. Free 1040x filing   You may be able to exclude from income any gain up to $250,000 ($500,000 on a joint return). Free 1040x filing Generally, you must have owned and used the home as your main residence for two of the five years preceding the date of sale. Free 1040x filing   You can choose to have the 5-year test period for ownership and use suspended during any period you or your spouse is serving on qualified official extended duty as a member of the Foreign Service of the United States, as an employee of the intelligence community, or as an employee or volunteer of the Peace Corps. Free 1040x filing   For detailed information on selling your home, see Publication 523. Free 1040x filing Deductions and Credits — Business Expenses You may deduct certain expenses such as travel expenses, transportation expenses, and other expenses connected to your employment. Free 1040x filing Travel Expenses Subject to certain limits, you can deduct your unreimbursed ordinary and necessary expenses of traveling away from home in connection with the performance of your official duties. Free 1040x filing These expenses include such items as travel costs, meals, lodging, baggage charges, local transportation costs (such as taxi fares), tips, and dry cleaning and laundry fees. Free 1040x filing Your home for tax purposes (tax home) is your regular post of duty regardless of where you maintain your family home. Free 1040x filing Your tax home is not limited to the Embassy, consulate, or duty station. Free 1040x filing It includes the entire city or general area in which your principal place of employment is located. Free 1040x filing Traveling away from home. Free 1040x filing   You are traveling away from home if you meet both of the following requirements. Free 1040x filing Your duties require you to be away from the general area of your tax home substantially longer than an ordinary day's work. Free 1040x filing You need to get sleep or rest to meet the demands of your work while away from home. Free 1040x filing This requirement is not satisfied by merely napping in your car. Free 1040x filing You do not have to be away from your tax home for a whole day or from dusk to dawn as long as your relief from duty is long enough to get necessary sleep or rest. Free 1040x filing Temporary assignment. Free 1040x filing   If your assignment or job away from your tax home is temporary, your tax home does not change. Free 1040x filing You are considered to be away from home for the whole period, and your travel expenses are deductible. Free 1040x filing Generally, a temporary assignment in a single location is one that is realistically expected to last (and does in fact last) for one year or less. Free 1040x filing   However, if your assignment or job is indefinite, the location of the assignment or job becomes your new tax home and you cannot deduct your travel expenses while there. Free 1040x filing An assignment or job in a single location is considered indefinite if it is realistically expected to last for more than one year, whether or not it actually lasts for more than one year. Free 1040x filing   You must determine whether your assignment is temporary or indefinite when you start work. Free 1040x filing If you expect employment to last for one year or less, it is temporary unless there are facts and circumstances that indicate otherwise. Free 1040x filing Employment that is initially temporary may become indefinite due to changed circumstances. Free 1040x filing A series of assignments to the same location, all for short periods but that together cover a long period, may be considered an indefinite assignment. Free 1040x filing Exception for federal crime investigations or prosecutions. Free 1040x filing   If you are a federal employee participating in a federal crime investigation or prosecution, you may be able to deduct travel expenses even if you are away from your tax home for more than one year. Free 1040x filing This exception to the one-year rule applies if the Attorney General certifies that you are traveling for the federal government in a temporary duty status to prosecute, or provide support services for the investigation or prosecution of, a federal crime. Free 1040x filing Limit on meals and entertainment. Free 1040x filing   You can generally deduct only 50% of the cost of your unreimbursed business-related meals and entertainment. Free 1040x filing However, the limit does not apply to expenses reimbursed under a U. Free 1040x filing S. Free 1040x filing Government expense allowance arrangement. Free 1040x filing Individuals subject to hours of service limits. Free 1040x filing   You can deduct 80% of your unreimbursed business-related meal expenses if the meals take place during or incident to any period subject to the Department of Transportation's hours of service limits. Free 1040x filing   Individuals subject to the Department of Transportation's “hours of service” limits include the following. Free 1040x filing Certain air transportation workers (such as pilots, crew, dispatchers, mechanics, and control tower operators) who are under Federal Aviation Administration regulations. Free 1040x filing Interstate truck operators and bus drivers who are under Department of Transportation regulations. Free 1040x filing Certain railroad employees (such as engineers, conductors, train crews, dispatchers, and control operations personnel) who are under Federal Railroad Administration regulations. Free 1040x filing Certain merchant mariners who are under Coast Guard regulations. Free 1040x filing Primary purpose of trip must be for business. Free 1040x filing   If your trip was entirely for business, your unreimbursed travel expenses are generally deductible. Free 1040x filing However, if you spend some of your time on nonbusiness activities, part of your expenses may not be deductible. Free 1040x filing   If your trip was mainly personal, you cannot deduct your travel expenses to and from your destination. Free 1040x filing This applies even if you engage in business activities while there. Free 1040x filing However, you can deduct any expenses while at your destination that are directly related to your business. Free 1040x filing Expenses paid for others. Free 1040x filing   You generally cannot deduct travel expenses of your spouse, dependents, or other individuals who go with you on a trip. Free 1040x filing Home leave. Free 1040x filing   The Foreign Service Act requires U. Free 1040x filing S. Free 1040x filing citizens who are members of the foreign service to take a leave of absence after completing 3 years of continuous service abroad. Free 1040x filing This period is called “home leave” and can be used to take care of certain personal matters such as medical and dental checkups, buying a new wardrobe, and visiting relatives. Free 1040x filing   The amounts paid for your travel, meals, and lodging while on home leave are deductible as travel or business expenses subject to the rules and limits discussed earlier. Free 1040x filing You must be able to verify these amounts in order to claim them. Free 1040x filing Amounts paid on behalf of your family while on home leave are personal living expenses and are not deductible. Free 1040x filing More information. Free 1040x filing   See chapter 1 of Publication 463 for more information on travel expenses. Free 1040x filing Transportation Expenses You can deduct allowable transportation expenses that are directly related to your official duties. Free 1040x filing Transportation expenses include the cost of transportation by air, rail, bus, or taxi, and the cost of driving and maintaining your car. Free 1040x filing They do not include expenses you have when traveling away from home overnight. Free 1040x filing Those expenses are deductible as travel expenses and are discussed earlier. Free 1040x filing Commuting. Free 1040x filing   You cannot deduct your transportation costs of going between your home and your regular business location. Free 1040x filing These costs are personal commuting expenses. Free 1040x filing   If you have one or more regular business locations but must work at a temporary location, you can deduct the costs of commuting to that temporary place of work. Free 1040x filing   If you work at two or more places in the same day, you can deduct your expenses of getting from one place of work to the other. Free 1040x filing More information. Free 1040x filing   For more information on transportation expenses, see chapter 4 of Publication 463. Free 1040x filing Other Employee Business Expenses You may be able to deduct other unreimbursed expenses that are connected with your employment. Free 1040x filing Membership dues. Free 1040x filing   You can deduct membership dues you pay to professional societies that relate to your business or profession. Free 1040x filing Subscriptions. Free 1040x filing   You can deduct subscriptions to professional publications that relate to your business or profession. Free 1040x filing Educational expenses. Free 1040x filing   Generally, educational expenses are considered to be personal expenses and are not deductible. Free 1040x filing However, under some circumstances, educational expenses are deductible as business expenses. Free 1040x filing   You can deduct educational expenses as business expenses if the education: Maintains or improves skills needed in your present position, or Meets the express requirements of your agency to keep your present position, salary, or status. Free 1040x filing   You cannot deduct educational expenses as business expenses if the education: Is needed to enable you to meet minimum educational requirements for qualification in your present position, Is a part of a program of study that can qualify you for a new position, or Is for travel as a form of education. Free 1040x filing These rules apply even if the education is required by your agency or it maintains or improves skills required in your work. Free 1040x filing   See Publication 970, Tax Benefits for Education, for more information on educational expenses. Free 1040x filing    Educational expenses that are not work related, such as costs of sending children to college, are personal expenses that you cannot deduct. Free 1040x filing However, you may be eligible for other tax benefits such as the American opportunity and lifetime learning credits; contributions to a Coverdell education savings account or qualified tuition program; deduction for student loan interest; and exclusion from income of certain savings bond interest. Free 1040x filing These benefits are explained in Publication 970. Free 1040x filing Foreign service representation expenses. Free 1040x filing   If you are an employee of the U. Free 1040x filing S. Free 1040x filing Foreign Service and your position requires you to establish and maintain favorable relations in foreign countries, you may receive a nontaxable allowance for representation expenses. Free 1040x filing If your expenses are more than the allowance you receive, you can deduct the excess expenses as an itemized deduction on Schedule A (Form 1040) if you meet one of the following conditions. Free 1040x filing You have a certificate from the Secretary of State attesting that the expenses were incurred for the benefit of the United States, and would be reimbursable under appropriate legislation if the agency had sufficient funds for these reimbursements. Free 1040x filing The expenses, while specifically not reimbursable under State Department regulations, were ordinary and necessary business expenses incurred in the performance of your official duties. Free 1040x filing    To deduct any expenses for travel, entertainment, and gifts, including those certified by the Secretary of State, you must meet the rules for recordkeeping and accounting to your employer. Free 1040x filing These rules are explained in Publication 463. Free 1040x filing Representation expenses. Free 1040x filing   These are expenses that further the interest of the United States abroad. Free 1040x filing They include certain entertainment, gifts, costs of official functions, and rental of ceremonial dress. Free 1040x filing They generally do not include costs of passenger vehicles (such as cars or aircraft), printing or engraving, membership fees, or amounts a principal representative must pay personally to cover the usual costs of operating and maintaining an official residence. Free 1040x filing   Chapters 300 and 400 of the Standardized Regulations (Government Civilians, Foreign Area) provide more detail on what expenses are allowable as representation expenses. Free 1040x filing These regulations are available on the Internet at www. Free 1040x filing state. Free 1040x filing gov/m/a/als. Free 1040x filing Look under “Standardized Regulations (DSSR)” and click on “DSSR Table of Contents. Free 1040x filing ” Publication 463 and Publication 529, Miscellaneous Deductions, provide more detail on what expenses are allowable as ordinary and necessary business expenses. Free 1040x filing Impairment-related work expenses. Free 1040x filing   If you are an employee with a physical or mental disability, you can deduct attendant-care services at your place of work and other expenses in connection with work that are necessary for you to be able to work. Free 1040x filing Attendant care includes a reader for a blind person and a helper for a person with a physical disability. Free 1040x filing These expenses are reported on Form 2106 or 2106-EZ and carried to Schedule A (Form 1040). Free 1040x filing They are not subject to the 2%-of-adjusted- gross-income limit on miscellaneous itemized deductions. Free 1040x filing Loss on conversion of U. Free 1040x filing S. Free 1040x filing dollars into foreign currency. Free 1040x filing   The conversion of U. Free 1040x filing S. Free 1040x filing dollars into foreign currency at an official rate of exchange that is not as favorable as the free market rate does not result in a deductible loss. Free 1040x filing Recordkeeping Rules If you claim a deduction for unreimbursed business expenses, you must keep timely and adequate records of all your business expenses. Free 1040x filing For example, you must keep records and supporting evidence to prove the following elements about deductions for travel expenses (including meals and lodging while away from home). Free 1040x filing The amount of each separate expense for travel away from home, such as the cost of your transportation, lodging, or meals. Free 1040x filing You may total your incidental expenses if you list them in reasonable categories such as daily meals, gasoline and oil, and taxi fares. Free 1040x filing For each trip away from home, the dates you left and returned and the number of days spent on business. Free 1040x filing The destination or area of your travel, described by the name of the city, town, or similar designation. Free 1040x filing The business reason for your travel or the business benefit gained or expected to be gained from your travel. Free 1040x filing How to record your expenses. Free 1040x filing   Records for proof of your expenses should be kept in an account book, diary, statement of expense, or similar record. Free 1040x filing They should be supported by other records, such as receipts or canceled checks, in sufficient detail to establish the elements for these expenses. Free 1040x filing You do not need to duplicate information in an account book or diary that is shown on a receipt as long as your records and receipts complement each other in an orderly manner. Free 1040x filing   Each expense should be recorded separately in your records. Free 1040x filing However, some items can be totaled in reasonable categories. Free 1040x filing You can make one daily entry for categories such as taxi fares, telephone calls, meals while away from home, gas and oil, and other incidental costs of travel. Free 1040x filing You may record tips separately or with the cost of the service. Free 1040x filing    Documentary evidence generally is required to support all lodging expenses while traveling away from home. Free 1040x filing It is also required for any other expense of $75 or more, except transportation charges if the evidence is not readily available. Free 1040x filing Documentary evidence is a receipt, paid bill, or similar proof sufficient to support an expense. Free 1040x filing It ordinarily will be considered adequate if it shows the amount, date, place, and essential business character of the expense. Free 1040x filing    A canceled check by itself does not prove a business cost. Free 1040x filing You must have other evidence to show that the check was used for a business purpose. Free 1040x filing Your records must be timely. Free 1040x filing   Record the elements for the expense in your account book or other record at or near the time of the expense. Free 1040x filing A timely-kept record has more value than statements prepared later when, generally, there is a lack of accurate recall. Free 1040x filing Confidential information. Free 1040x filing   You do not need to put confidential information relating to an element of a deductible expense (such as the place, business purpose, or business relationship) in your account book, diary, or other record. Free 1040x filing However, you do have to record the information elsewhere at or near the time of the expense and have it available to fully prove that element of the expense. Free 1040x filing How To Report Business Expenses As a U. Free 1040x filing S. Free 1040x filing Government employee, your business expense reimbursements are generally paid under an accountable plan and are not included in your wages on your Form W-2. Free 1040x filing If your expenses are not more than the reimbursements, you do not need to show your expenses or reimbursements on your return. Free 1040x filing However, if you do not account to your employer for a travel advance or if you do not return any excess advance within a reasonable period of time, the advance (or excess) will be included in your wages on your Form W-2. Free 1040x filing If you are entitled to a reimbursement from your employer but you do not claim it, you cannot deduct the expenses to which that unclaimed reimbursement applies. Free 1040x filing Form 2106 or Form 2106-EZ. Free 1040x filing   You must complete Form 2106 or 2106-EZ to deduct your expenses. Free 1040x filing Also, if your actual expenses are more than your reimbursements, you can complete Form 2106 or 2106-EZ to deduct your excess expenses. Free 1040x filing Generally, you must include all of your expenses and reimbursements on Form 2106 or 2106-EZ and carry your allowable expense to Schedule A (Form 1040). Free 1040x filing Your allowable expense is then generally subject to the 2%-of-adjusted-gross-income limit. Free 1040x filing Form 2106-EZ. Free 1040x filing   You may be able to use Form 2106-EZ instead of the more complex Form 2106 for reporting unreimbursed employee business expenses. Free 1040x filing You can use Form 2106-EZ if you meet both of the following conditions. Free 1040x filing You are not reimbursed by your employer for any expenses. Free 1040x filing (Amounts your employer included in your wages on your Form W-2 are not considered reimbursements. Free 1040x filing ) If you claim car expenses, you use the standard mileage rate. Free 1040x filing Deductions and Credits — Nonbusiness Expenses In addition to deductible business expenses, you may be entitled to deduct certain other expenses. Free 1040x filing Moving Expenses If you changed job locations or started a new job, you may be able to deduct the reasonable expenses of moving yourself, your family, and your household goods and personal effects to your new home. Free 1040x filing However, you cannot deduct any expenses for which you received a tax-free allowance as a U. Free 1040x filing S. Free 1040x filing Government employee. Free 1040x filing To deduct moving expenses, your move must be closely related to the start of work and you must meet the distance test and the time test. Free 1040x filing Closely related to the start of work. Free 1040x filing   The move must be closely related, both in time and in place, to the start of work at the new location. Free 1040x filing In general, you must have incurred your moving expenses within one year from the time you first report to your new job or business. Free 1040x filing   A move generally is not considered closely related in place to the start of work if the distance from your new home to the new job location is more than the distance from your former home to the new job location. Free 1040x filing A move that does not meet this requirement may qualify if you can show that you must live at the new home as a condition of employment, or you will spend less time or money commuting from the new home to the new job. Free 1040x filing Distance test. Free 1040x filing   Your new main job location must be at least 50 miles farther from your former home than your old main job location was. Free 1040x filing If you did not have an old job location, your new job location must be at least 50 miles from your former home. Free 1040x filing Time test. Free 1040x filing   If you are an employee, you must work full time for at least 39 weeks during the first 12 months after you arrive in the general area of your new job location. Free 1040x filing Deductible moving expenses. Free 1040x filing   Moving expenses that can be deducted include the reasonable costs of: Moving household goods and personal effects (including packing, crating, in-transit storage, and insurance) of both you and members of your household, and Transportation and lodging for yourself and members of your household for one trip from your former home to your new home (including costs of getting passports). Free 1040x filing    The cost of your meals is not a deductible moving expense. Free 1040x filing   The costs of moving household goods include the reasonable expenses of moving household goods and personal effects to and from storage. Free 1040x filing For a foreign move, the costs also include expenses of storing the goods and effects for part or all of the period that your new job location abroad continues to be your main job location. Free 1040x filing Expenses must be reasonable. Free 1040x filing   You can deduct only those expenses that are reasonable for the circumstances of your move. Free 1040x filing For example, the costs of traveling from your former home to your new one should be by the shortest, most direct route available by conventional transportation. Free 1040x filing Members of your household. Free 1040x filing   A member of your household includes anyone who has both your former home and new home as his or her home. Free 1040x filing It does not include a tenant or employee unless you can claim that person as a dependent. Free 1040x filing Retirees. Free 1040x filing   You can deduct the costs of moving to the United States when you permanently retire if both your former main job location and former home were outside the United States and its possessions. Free 1040x filing You do not have to meet the time test described earlier. Free 1040x filing Survivors. Free 1040x filing   You can deduct moving expenses for a move to the United States if you are the spouse or dependent of a person whose main job location at the time of death was outside the United States and its possessions. Free 1040x filing The move must begin within 6 months after the decedent's death. Free 1040x filing It must be from the decedent's former home outside the United States, and that home must also have been your home. Free 1040x filing You do not have to meet the time test described earlier. Free 1040x filing How to report moving expenses. Free 1040x filing   Use Form 3903 to report your moving expenses and figure your allowable deduction. Free 1040x filing Claim the deduction as an adjustment to income on Form 1040. Free 1040x filing (You cannot deduct moving expenses on Form 1040A or Form 1040EZ. Free 1040x filing ) Reimbursements. Free 1040x filing   Generally, you must include reimbursements of, or payments for, nondeductible moving expenses in gross income for the year paid. Free 1040x filing You also must include in gross income reimbursements paid to you under a nonaccountable plan. Free 1040x filing However, there is an exception for the tax-free foreign areas allowances described earlier under Allowances, Differentials, and Special Pay. Free 1040x filing Additional information. Free 1040x filing   For additional information about moving expenses, see Publication 521. Free 1040x filing Other Itemized Deductions You may be able to claim other itemized deductions not connected to your employment. Free 1040x filing Contributions. Free 1040x filing   You can deduct contributions to qualified organizations created or organized in or under the laws of the United States or its possessions. Free 1040x filing You cannot deduct contributions you make directly to foreign organizations (except for certain Canadian, Israeli, and Mexican charities), churches, and governments. Free 1040x filing For more information, see Publication 526, Charitable Contributions. Free 1040x filing Real estate tax and home mortgage interest. Free 1040x filing   If you receive a tax-free housing allowance, your itemized deductions for real estate taxes and home mortgage interest are limited. Free 1040x filing You must reduce the amount of each deduction that would otherwise be allowable by the amount of each expense that is related to the tax-free allowance. Free 1040x filing Example. Free 1040x filing Adam is an IRS employee working overseas who receives a $6,300 tax-free housing and utility allowance. Free 1040x filing During the year, Adam used the allowance, with other funds, to provide a home for himself. Free 1040x filing His expenses for this home totaled $8,400 and consisted of mortgage principal ($500), insurance ($400), real estate taxes ($1,400), mortgage interest ($4,000), and utility costs ($2,100). Free 1040x filing Adam did not have any other expenses related to providing a home for himself. Free 1040x filing Adam must reduce his deductions for home mortgage interest and real estate taxes. Free 1040x filing He figures a reasonable way to reduce them is to multiply them by a fraction: its numerator is $6,300 (the total housing and utility allowance) and its denominator is $8,400 (the total of all payments to which the housing and utility allowance applies). Free 1040x filing The result is 3/4. Free 1040x filing Adam reduces his otherwise allowable home mortgage interest deduction by $3,000 (the $4,000 he paid ×3/4) and his otherwise allowable real estate tax deduction by $1,050 (the $1,400 he paid × 3/4). Free 1040x filing He can deduct $1,000 of his mortgage interest ($4,000 − $3,000) and $350 of his real estate taxes ($1,400 − $1,050) when he itemizes his deductions. Free 1040x filing Exception to the reduction. Free 1040x filing   If you receive a tax-free housing allowance as a member of the military or the clergy, you do not have to reduce your deductions for real estate tax and home mortgage interest expenses you are otherwise entitled to deduct. Free 1040x filing Required statement. Free 1040x filing   If you receive a tax-free housing allowance and have real estate tax or home mortgage interest expenses, attach a statement to your tax return. Free 1040x filing The statement must contain all of the following information. Free 1040x filing The amount of each type of tax-free income you received, such as a tax-free housing allowance or tax-free representation allowance. Free 1040x filing The amount of otherwise deductible expenses attributable to each type of tax-free income. Free 1040x filing The amount attributable to each type of tax-free income that was not directly attributable to that type of tax-free income. Free 1040x filing An explanation of how you determined the amounts not directly attributable to each type of tax-free income. Free 1040x filing   The statement must also indicate that none of the amounts deducted on your return are in any way attributable to tax-free income. Free 1040x filing Foreign Taxes If you pay or accrue taxes to a foreign government, you generally can choose to either claim them as a credit against your U. Free 1040x filing S. Free 1040x filing income tax liability or deduct them as an itemized deduction when figuring your taxable income. Free 1040x filing Do not include the foreign taxes paid or accrued as withheld income taxes in the Payments section of Form 1040. Free 1040x filing Foreign tax credit. Free 1040x filing   Your foreign tax credit is subject to a limit based on your taxable income from foreign sources. Free 1040x filing If you choose to figure a credit against your U. Free 1040x filing S. Free 1040x filing tax liability for the foreign taxes, you generally must complete Form 1116 and attach it to your U. Free 1040x filing S. Free 1040x filing income tax return. Free 1040x filing    You cannot claim a credit for foreign taxes paid on amounts excluded from gross income under the foreign earned income or housing exclusions. Free 1040x filing If all your foreign income is exempt from U. Free 1040x filing S. Free 1040x filing tax, you will not be able to claim a foreign tax credit. Free 1040x filing   If, because of the limit on the credit, you cannot use the full amount of qualified foreign taxes paid or accrued in the tax year, you are allowed to carry the excess back 1 year and then forward 10 years. Free 1040x filing Exemption from limit. Free 1040x filing   You can elect to not be subject to the foreign tax limit if you meet all the following conditions. Free 1040x filing Your only foreign income is passive income, such as interest, dividends, and royalties. Free 1040x filing The total of all your foreign taxes is not more than $300 ($600 for joint tax returns). Free 1040x filing The foreign income and taxes are reported to you on a payee statement, such as Form 1099-DIV, Dividends and Distributions, or 1099-INT, Interest Income. Free 1040x filing If you make the election, you can claim a foreign tax credit without filing Form 1116. Free 1040x filing However, you cannot carry back or carry over any unused foreign tax to or from this year. Free 1040x filing See the instructions for the appropriate line in the Tax and Credits section of Form 1040. Free 1040x filing Foreign tax deduction. Free 1040x filing   If you choose to deduct all foreign income taxes on your U. Free 1040x filing S. Free 1040x filing income tax return, itemize the deduction on Schedule A (Form 1040). Free 1040x filing You cannot deduct foreign taxes paid on income you exclude under the foreign earned income or housing exclusions. Free 1040x filing Example. Free 1040x filing Dennis and Christina are married and live and work in Country X. Free 1040x filing Dennis works for the U. Free 1040x filing S. Free 1040x filing Government and Christina is employed by a private company. Free 1040x filing They pay income tax to Country X on Christina's income only. Free 1040x filing Dennis and Christina file a joint tax return and exclude all of Christina's income. Free 1040x filing They cannot claim a foreign tax credit or take a deduction for the taxes paid to Country X. Free 1040x filing Deduction for other foreign taxes. Free 1040x filing   The deduction for foreign taxes other than foreign income taxes is not related to the foreign tax credit. Free 1040x filing You can take deductions for these miscellaneous foreign taxes and also claim the foreign tax credit for income taxes paid to a foreign country. Free 1040x filing   You can deduct real property taxes you pay that are imposed on you by a foreign country. Free 1040x filing You take this deduction on Schedule A (Form 1040). Free 1040x filing You cannot deduct other foreign taxes, such as personal property taxes, unless you incurred the expenses in a trade or business or in the production of income. Free 1040x filing More information. Free 1040x filing   The foreign tax credit and deduction, their limits, and carryback and carryover provisions are discussed in detail in Publication 514. Free 1040x filing Local (Foreign) Tax Return As a U. Free 1040x filing S. Free 1040x filing Government employee, you are expected to observe and fulfill all tax obligations imposed by the host country government. Free 1040x filing Check with local tax authorities to determine whether you are considered a tax resident of your host country, whether you are required to file a host country tax return and whether you owe taxes to the host country. Free 1040x filing Tax Treaty Benefits As discussed earlier, most income tax treaties contain an article relating to remuneration from government services. Free 1040x filing Review the treaty text carefully to determine whether your U. Free 1040x filing S. Free 1040x filing Government remuneration is taxable in the host country. Free 1040x filing You will first have to determine whether you are a resident of your host country under the treaty residence article (after application of the so-called “tie-breaker” rule). Free 1040x filing If you or your spouse receives income from a private employer or self-employment, review the tax treaty rules relating to income from personal services to determine whether that income is taxable in the host country. Free 1040x filing If you pay or accrue taxes to both the host country and the United States, you may be able to relieve double taxation with a foreign tax credit. Free 1040x filing Most income tax treaties contain an article providing relief from double taxation. Free 1040x filing Many treaties contain special foreign tax credit rules for U. Free 1040x filing S. Free 1040x filing citizens who are residents of a treaty country. Free 1040x filing For more information about the foreign tax credit, see Foreign Taxes, earlier. Free 1040x filing Other Agreements The United States may be a party to agreements other than income tax treaties that may affect your tax obligations to the host country. Free 1040x filing For example, consular employees may be exempt from host country tax under the Vienna Convention on Consular Relations or bilateral consular agreements. Free 1040x filing Similarly, certain diplomatic staff may be exempt from host country tax under the Vienna Convention on Diplomatic Relations. Free 1040x filing Check with the appropriate U. Free 1040x filing S. Free 1040x filing Embassy for more information. Free 1040x filing Double Withholding If your U. Free 1040x filing S. Free 1040x filing government pay is subject to withholding in both the United States and the foreign country, you may reduce the amount of U. Free 1040x filing S. Free 1040x filing tax that is withheld from your pay if you expect to be entitled to a foreign tax credit on your U. Free 1040x filing S. Free 1040x filing income tax return on this income. Free 1040x filing Complete Worksheet 1-6 in Publication 505, Tax Withholding and Estimated Tax, to determine how to revise Form W-4, Employee’s Withholding Allowance Certificate. Free 1040x filing How To Get Tax Help You can get help with unresolved tax issues, order free publications and forms, ask tax questions, and get information from the IRS in several ways. Free 1040x filing By selecting the method that is best for you, you will have quick and easy access to tax help. Free 1040x filing Free help with your tax return. Free 1040x filing   Free help in preparing your return is available nationwide from IRS-certified volunteers. Free 1040x filing The Volunteer Income Tax Assistance (VITA) program is designed to help low-moderate income, elderly, disabled, and limited English proficient taxpayers. Free 1040x filing The Tax Counseling for the Elderly (TCE) program is designed to assist taxpayers age 60 and older with their tax returns. Free 1040x filing Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. Free 1040x filing Some VITA and TCE sites provide taxpayers the opportunity to prepare their return with the assistance of an IRS-certified volunteer. Free 1040x filing To find the nearest VITA or TCE site, visit IRS. Free 1040x filing gov or call 1-800-906-9887 or 1-800-829-1040. Free 1040x filing   As part of the TCE program, AARP offers the Tax-Aide counseling program. Free 1040x filing To find the nearest AARP Tax-Aide site, visit AARP's website at www. Free 1040x filing aarp. Free 1040x filing org/money/taxaide or call 1-888-227-7669. Free 1040x filing   For more information on these programs, go to IRS. Free 1040x filing gov and enter “VITA” in the search box. Free 1040x filing Internet. Free 1040x filing You can access the IRS website at IRS. Free 1040x filing gov 24 hours a day, 7 days a week to: E-file your return. Free 1040x filing Find out about commercial tax preparation and e-file services available free to eligible taxpayers. Free 1040x filing Check the status of your 2012 refund. Free 1040x filing Go to IRS. Free 1040x filing gov and click on Where’s My Refund. Free 1040x filing Information about your return will generally be available within 24 hours after the IRS receives your e-filed return, or 4 weeks after you mail your paper return. Free 1040x filing If you filed Form 8379 with your return, wait 14 weeks (11 weeks if you filed electronically). Free 1040x filing Have your 2012 tax return handy so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund. Free 1040x filing Where's My Refund? has a new look this year! The tool will include a tracker that displays progress through three stages: (1) return received, (2) refund approved, and (3) refund sent. Free 1040x filing Where's My Refund? will provide an actual personalized refund date as soon as the IRS processes your tax return and approves your refund. Free 1040x filing So in a change from previous filing seasons, you won't get an estimated refund date right away. Free 1040x filing Where's My Refund? includes information for the most recent return filed in the current year and does not include information about amended returns. Free 1040x filing You can obtain a free transcript online at IRS. Free 1040x filing gov by clicking on Order a Return or Account Transcript under “Tools. Free 1040x filing ” For a transcript by phone, call 1-800-908-9946 and follow the prompts in the recorded message. Free 1040x filing You will be prompted to provide your SSN or Individual Taxpayer Identification Number (ITIN), date of birth, street address and ZIP code. Free 1040x filing Download forms, including talking tax forms, instructions, and publications. Free 1040x filing Order IRS products. Free 1040x filing Research your tax questions. Free 1040x filing Search publications by topic or keyword. Free 1040x filing Use the Internal Revenue Code, regulations, or other official guidance. Free 1040x filing View Internal Revenue Bulletins (IRBs) published in the last few years. Free 1040x filing Figure your withholding allowances using the IRS Withholding Calculator at www. Free 1040x filing irs. Free 1040x filing gov/individuals. Free 1040x filing Determine if Form 6251 (Alternative Minimum Tax— Individuals), must be filed by using our Alternative Minimum Tax (AMT) Assistant available at IRS. Free 1040x filing gov by typing Alternative Minimum Tax Assistant in the search box. Free 1040x filing Sign up to receive local and national tax news by email. Free 1040x filing Get information on starting and operating a small business. Free 1040x filing Phone. Free 1040x filing Many services are available by phone. Free 1040x filing   Ordering forms, instructions, and publications. Free 1040x filing Call 1-800-TAX-FORM (1-800-829-3676) to order current-year forms, instructions, and publications, and prior-year forms and instructions (limited to 5 years). Free 1040x filing You should receive your order within 10 days. Free 1040x filing Asking tax questions. Free 1040x filing Call the IRS with your tax questions at 1-800-829-1040. Free 1040x filing Solving problems. Free 1040x filing You can get face-to-face help solving tax problems most business days in IRS Taxpayer Assistance Centers (TAC). Free 1040x filing An employee can explain IRS letters, request adjustments to your account, or help you set up a payment plan. Free 1040x filing Call your local Taxpayer Assistance Center for an appointment. Free 1040x filing To find the number, go to www. Free 1040x filing irs. Free 1040x filing gov/localcontacts or look in the phone book under United States Government, Internal Revenue Service. Free 1040x filing TTY/TDD equipment. Free 1040x filing If you have access to TTY/TDD equipment, call 1-800-829-4059 to ask tax questions or to order forms and publications. Free 1040x filing The TTY/TDD telephone number is for individuals who are deaf, hard of hearing, or have a speech disability. Free 1040x filing These individuals can also access the IRS through relay services such as the Federal Relay Service at www. Free 1040x filing gsa. Free 1040x filing gov/fedrelay. Free 1040x filing TeleTax topics. Free 1040x filing Call 1-800-829-4477 to listen to pre-recorded messages covering various tax topics. Free 1040x filing Checking the status of your 2012 refund. Free 1040x filing To check the status of your 2012 refund, call 1-800-829-1954 or 1-800-829-4477 (automated Where's My Refund? information 24 hours a day, 7 days a week). Free 1040x filing Information about your return will generally be available within 24 hours after the IRS receives your e-filed return, or 4 weeks after you mail your paper return. Free 1040x filing If you filed Form 8379 with your return, wait 14 weeks (11 weeks if you filed electronically). Free 1040x filing Have your 2012 tax return handy so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund. Free 1040x filing Where's My Refund? will provide an actual personalized refund date as soon as the IRS processes your tax return and approves your refund. Free 1040x filing Where's My Refund? includes information for the most recent return filed in the current year and does not include information about amended returns. Free 1040x filing Outside the U. Free 1040x filing S. Free 1040x filing If you are outside the United States, taxpayer assistance is available at the following U. Free 1040x filing S Embassies or consulate. Free 1040x filing Beijing, China (86) (10) 8531-3983 Frankfurt, Germany (49) (69) 7535-3834 London, England (44) (20) 7894-0476 Paris, France (33) (1) 4312-2555 Please contact the office for times when assistance will be available. Free 1040x filing If you cannot get to one of these offices, taxpayer assistance is available at (267) 941-1000 (not a toll free call). Free 1040x filing If you are in a U. Free 1040x filing S. Free 1040x filing territory (American Samoa, Guam, Northern Mariana Islands, Puerto Rico, and U. Free 1040x filing S. Free 1040x filing Virgin Islands) and have a tax question, you can call 1-800-829-1040. Free 1040x filing Evaluating the quality of our telephone services. Free 1040x filing To ensure IRS representatives give accurate, courteous, and professional answers, we use several methods to evaluate the quality of our telephone services. Free 1040x filing One method is for a second IRS representative to listen in on or record random telephone calls. Free 1040x filing Another is to ask some callers to complete a short survey at the end of the call. Free 1040x filing Walk-in. Free 1040x filing Some products and services are available on a walk-in basis. Free 1040x filing   Products. Free 1040x filing You can walk in to some post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. Free 1040x filing Some IRS offices, libraries, and city and county government offices have a collection of products available to photocopy from reproducible proofs. Free 1040x filing Also, some IRS offices and libraries have the Internal Revenue Code, regulations, Internal Revenue Bulletins, and Cumulative Bulletins available for research purposes. Free 1040x filing Services. Free 1040x filing You can walk in to your local TAC most business days for personal, face-to-face tax help. Free 1040x filing An employee can explain IRS letters, request adjustments to your tax account, or help you set up a payment plan. Free 1040x filing If you need to resolve a tax problem, have questions about how the tax law applies to your individual tax return, or you are more comfortable talking with someone in person, visit your local TAC where you can talk with an IRS representative face-to-face. Free 1040x filing No appointment is necessary—just walk in. Free 1040x filing Before visiting, check www. Free 1040x filing irs. Free 1040x filing gov/localcontacts for hours of operation and services provided. Free 1040x filing If you have an ongoing, complex tax account problem or a special need, such as a disability, an appointment can be requested by calling your local TAC. Free 1040x filing You can leave a message and a representative will call you back within 2 business days. Free 1040x filing All other issues will be handled without an appointment. Free 1040x filing To call your local TAC, go to  www. Free 1040x filing irs. Free 1040x filing gov/localcontacts or look in the phone book under United States Government, Internal Revenue Service. Free 1040x filing Outside the U. Free 1040x filing S. Free 1040x filing If you are outside the United States during the filing period (January to mid-June), you can get the necessary federal tax forms and publications from most U. Free 1040x filing S. Free 1040x filing Embassies and consulates. Free 1040x filing Mail. Free 1040x filing You can send your order for forms, instructions, and publications to the address below. Free 1040x filing You should receive a response within 10 days after your request is received. Free 1040x filing  Internal Revenue Service 1201 N. Free 1040x filing Mitsubishi Motorway Bloomington, IL 61705-6613 Outside the U. Free 1040x filing S. Free 1040x filing If you are outside the United States, you can get tax assistance by writing to the address below. Free 1040x filing  Internal Revenue Service International Accounts Philadelphia, PA 19255-0725 Taxpayer Advocate Service. Free 1040x filing   The Taxpayer Advocate Service (TAS) is your voice at the IRS. Free 1040x filing Its job is to ensure that every taxpayer is treated fairly, and that you know and understand your rights. Free 1040x filing TAS offers free help to guide you through the often-confusing process of resolving tax problems that you haven’t been able to solve on your own. Free 1040x filing Remember, the worst thing you can do is nothing at all. Free 1040x filing   TAS can help if you can’t resolve your problem with the IRS and: Your problem is causing financial difficulties for you, your family, or your business. Free 1040x filing You face (or your business is facing) an immediate threat of adverse action. Free 1040x filing You have tried repeatedly to contact the IRS but no one has responded, or the IRS has not responded to you by the date promised. Free 1040x filing   If you qualify for help, they will do everything they can to get your problem resolved. Free 1040x filing You will be assigned to one advocate who will be with you at every turn. Free 1040x filing TAS has offices in every state, the District of Columbia, and Puerto Rico. Free 1040x filing Although TAS is independent within the IRS, their advocates know how to work with the IRS to get your problems resolved. Free 1040x filing And its services are always free. Free 1040x filing   As a taxpayer, you have rights that the IRS must abide by in its dealings with you. Free 1040x filing The TAS tax toolkit at www. Free 1040x filing TaxpayerAdvocate. Free 1040x filing irs. Free 1040x filing gov can help you understand these rights. Free 1040x filing   If you think TAS might be able to help you, call your local advocate, whose number is in your phone book and on our website at www. Free 1040x filing irs. Free 1040x filing gov/advocate. Free 1040x filing You can also call the toll-free number at 1-877-777-4778. Free 1040x filing Deaf and hard of hearing individuals who have access to TTY/TDD equipment can call 1-800-829-4059. Free 1040x filing These individuals can also access the IRS through relay services such as the Federal Relay Service at www. Free 1040x filing gsa. Free 1040x filing gov/fedrelay. Free 1040x filing   TAS also handles large-scale or systemic problems that affect many taxpayers. Free 1040x filing If you know of one of these broad issues, please report it through the Systemic Advocacy Management System at www. Free 1040x filing irs. Free 1040x filing gov/advocate. Free 1040x filing    Outside the U. Free 1040x filing S. Free 1040x filing If you live outside of the United States, you can call the Taxpayer Advocate at (787) 522-8601 in English or (787) 522-8600 in Spanish. Free 1040x filing You can contact the Taxpayer Advocate at: Internal Revenue Service Taxpayer Advocate Service City View Plaza, 48 Carr 165, Suite 2000 Guaynabo, P. Free 1040x filing R. Free 1040x filing 00968-8000 Low Income Taxpayer Clinics (LITCs). Free 1040x filing   Low Income Taxpayer Clinics (LITCs) are independent from the IRS. Free 1040x filing Some clinics serve individuals whose income is below a certain level and who need to resolve a tax problem. Free 1040x filing These clinics provide professional representation before the IRS or in court on audits, appeals, tax collection disputes, and other issues for free or for a small fee. Free 1040x filing Some clinics can provide information about taxpayer rights and responsibilities in many different languages for individuals who speak English as a second language. Free 1040x filing For more information and to find a clinic near you, see the LITC page on www. Free 1040x filing irs. Free 1040x filing gov/advocate or IRS Publication 4134, Low Income Taxpayer Clinic List. Free 1040x filing This publication is also available by calling 1-800-TAX-FORM (1-800-829-3676) or at your local IRS office. Free 1040x filing Free tax services. Free 1040x filing   Publication 910, IRS Guide to Free Tax Services, is your guide to IRS services and resources. Free 1040x filing Learn about free tax information from the IRS, including publications, services, and education and assistance programs. Free 1040x filing The publication also has an index of over 100 TeleTax topics (recorded tax information) you can listen to on the telephone. Free 1040x filing The majority of the information and services listed in this publication are available to you free of charge. Free 1040x filing If there is a fee associated with a resource or service, it is listed in the publication. Free 1040x filing   Accessible versions of IRS published products are available on request in a variety of alternative formats for people with disabilities. Free 1040x filing DVD for tax products. Free 1040x filing You can order Publication 1796, IRS Tax Products DVD, and obtain: Current-year forms, instructions, and publications. Free 1040x filing Prior-year forms, instructions, and publications. Free 1040x filing Tax Map: an electronic research tool and finding aid. Free 1040x filing Tax law frequently asked questions. Free 1040x filing Tax Topics from the IRS telephone response system. Free 1040x filing Internal Revenue Code—Title 26 of the U. Free 1040x filing S. Free 1040x filing Code. Free 1040x filing Links to other Internet-based tax research materials. Free 1040x filing Fill-in, print, and save features for most tax forms. Free 1040x filing Internal Revenue Bulletins. Free 1040x filing Toll-free and email technical support. Free 1040x filing Two releases during the year. Free 1040x filing  – The first release will ship the beginning of January 2013. Free 1040x filing  – The final release will ship the beginning of March 2013. Free 1040x filing Purchase the DVD from National Technical Information Service (NTIS) at www. Free 1040x filing irs. Free 1040x filing gov/cdorders for $30 (no handling fee) or call 1-877-233-6767 toll free to buy the DVD for $30 (plus a $6 handling fee). Free 1040x filing Prev  Up  Next   Home   More Online Publications