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Free Federal 1040ez Efile

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Free Federal 1040ez Efile

Free federal 1040ez efile 3. Free federal 1040ez efile   Rent Expense Table of Contents Introduction Topics - This chapter discusses: RentConditional sales contract. Free federal 1040ez efile Leveraged leases. Free federal 1040ez efile Leveraged leases of limited-use property. Free federal 1040ez efile Taxes on Leased Property Cost of Getting a Lease Improvements by Lessee Capitalizing Rent Expenses Introduction This chapter discusses the tax treatment of rent or lease payments you make for property you use in your business but do not own. Free federal 1040ez efile It also discusses how to treat other kinds of payments you make that are related to your use of this property. Free federal 1040ez efile These include payments you make for taxes on the property. Free federal 1040ez efile Topics - This chapter discusses: The definition of rent Taxes on leased property The cost of getting a lease Improvements by the lessee Capitalizing rent expenses Rent Rent is any amount you pay for the use of property you do not own. Free federal 1040ez efile In general, you can deduct rent as an expense only if the rent is for property you use in your trade or business. Free federal 1040ez efile If you have or will receive equity in or title to the property, the rent is not deductible. Free federal 1040ez efile Unreasonable rent. Free federal 1040ez efile   You cannot take a rental deduction for unreasonable rent. Free federal 1040ez efile Ordinarily, the issue of reasonableness arises only if you and the lessor are related. Free federal 1040ez efile Rent paid to a related person is reasonable if it is the same amount you would pay to a stranger for use of the same property. Free federal 1040ez efile Rent is not unreasonable just because it is figured as a percentage of gross sales. Free federal 1040ez efile For examples of related persons, see Related persons in chapter 2, Publication 544. Free federal 1040ez efile Rent on your home. Free federal 1040ez efile   If you rent your home and use part of it as your place of business, you may be able to deduct the rent you pay for that part. Free federal 1040ez efile You must meet the requirements for business use of your home. Free federal 1040ez efile For more information, see Business use of your home in chapter 1. Free federal 1040ez efile Rent paid in advance. Free federal 1040ez efile   Generally, rent paid in your trade or business is deductible in the year paid or accrued. Free federal 1040ez efile If you pay rent in advance, you can deduct only the amount that applies to your use of the rented property during the tax year. Free federal 1040ez efile You can deduct the rest of your payment only over the period to which it applies. Free federal 1040ez efile Example 1. Free federal 1040ez efile You are a calendar year taxpayer and you leased a building for 5 years beginning July 1. Free federal 1040ez efile Your rent is $12,000 per year. Free federal 1040ez efile You paid the first year's rent ($12,000) on June 30. Free federal 1040ez efile You can deduct only $6,000 (6/12 × $12,000) for the rent that applies to the first year. Free federal 1040ez efile Example 2. Free federal 1040ez efile You are a calendar year taxpayer. Free federal 1040ez efile Last January you leased property for 3 years for $6,000 a year. Free federal 1040ez efile You paid the full $18,000 (3 × $6,000) during the first year of the lease. Free federal 1040ez efile Each year you can deduct only $6,000, the part of the lease that applies to that year. Free federal 1040ez efile Canceling a lease. Free federal 1040ez efile   You generally can deduct as rent an amount you pay to cancel a business lease. Free federal 1040ez efile Lease or purchase. Free federal 1040ez efile   There may be instances in which you must determine whether your payments are for rent or for the purchase of the property. Free federal 1040ez efile You must first determine whether your agreement is a lease or a conditional sales contract. Free federal 1040ez efile Payments made under a conditional sales contract are not deductible as rent expense. Free federal 1040ez efile Conditional sales contract. Free federal 1040ez efile   Whether an agreement is a conditional sales contract depends on the intent of the parties. Free federal 1040ez efile Determine intent based on the provisions of the agreement and the facts and circumstances that exist when you make the agreement. Free federal 1040ez efile No single test, or special combination of tests, always applies. Free federal 1040ez efile However, in general, an agreement may be considered a conditional sales contract rather than a lease if any of the following is true. Free federal 1040ez efile The agreement applies part of each payment toward an equity interest you will receive. Free federal 1040ez efile You get title to the property after you make a stated amount of required payments. Free federal 1040ez efile The amount you must pay to use the property for a short time is a large part of the amount you would pay to get title to the property. Free federal 1040ez efile You pay much more than the current fair rental value of the property. Free federal 1040ez efile You have an option to buy the property at a nominal price compared to the value of the property when you may exercise the option. Free federal 1040ez efile Determine this value when you make the agreement. Free federal 1040ez efile You have an option to buy the property at a nominal price compared to the total amount you have to pay under the agreement. Free federal 1040ez efile The agreement designates part of the payments as interest, or that part is easy to recognize as interest. Free federal 1040ez efile Leveraged leases. Free federal 1040ez efile   Leveraged lease transactions may not be considered leases. Free federal 1040ez efile Leveraged leases generally involve three parties: a lessor, a lessee, and a lender to the lessor. Free federal 1040ez efile Usually the lease term covers a large part of the useful life of the leased property, and the lessee's payments to the lessor are enough to cover the lessor's payments to the lender. Free federal 1040ez efile   If you plan to take part in what appears to be a leveraged lease, you may want to get an advance ruling. Free federal 1040ez efile Revenue Procedure 2001-28 on page 1156 of Internal Revenue Bulletin 2001-19 contains the guidelines the IRS will use to determine if a leveraged lease is a lease for federal income tax purposes. Free federal 1040ez efile Revenue Procedure 2001-29 on page 1160 of the same Internal Revenue Bulletin provides the information required to be furnished in a request for an advance ruling on a leveraged lease transaction. Free federal 1040ez efile Internal Revenue Bulletin 2001-19 is available at www. Free federal 1040ez efile irs. Free federal 1040ez efile gov/pub/irs-irbs/irb01-19. Free federal 1040ez efile pdf. Free federal 1040ez efile   In general, Revenue Procedure 2001-28 provides that, for advance ruling purposes only, the IRS will consider the lessor in a leveraged lease transaction to be the owner of the property and the transaction to be a valid lease if all the factors in the revenue procedure are met, including the following. Free federal 1040ez efile The lessor must maintain a minimum unconditional “at risk” equity investment in the property (at least 20% of the cost of the property) during the entire lease term. Free federal 1040ez efile The lessee may not have a contractual right to buy the property from the lessor at less than fair market value when the right is exercised. Free federal 1040ez efile The lessee may not invest in the property, except as provided by Revenue Procedure 2001-28. Free federal 1040ez efile The lessee may not lend any money to the lessor to buy the property or guarantee the loan used by the lessor to buy the property. Free federal 1040ez efile The lessor must show that it expects to receive a profit apart from the tax deductions, allowances, credits, and other tax attributes. Free federal 1040ez efile   The IRS may charge you a user fee for issuing a tax ruling. Free federal 1040ez efile For more information, see Revenue Procedure 2014-1 available at  www. Free federal 1040ez efile irs. Free federal 1040ez efile gov/irb/2014-1_IRB/ar05. Free federal 1040ez efile html. Free federal 1040ez efile Leveraged leases of limited-use property. Free federal 1040ez efile   The IRS will not issue advance rulings on leveraged leases of so-called limited-use property. Free federal 1040ez efile Limited-use property is property not expected to be either useful to or usable by a lessor at the end of the lease term except for continued leasing or transfer to a lessee. Free federal 1040ez efile See Revenue Procedure 2001-28 for examples of limited-use property and property that is not limited-use property. Free federal 1040ez efile Leases over $250,000. Free federal 1040ez efile   Special rules are provided for certain leases of tangible property. Free federal 1040ez efile The rules apply if the lease calls for total payments of more than $250,000 and any of the following apply. Free federal 1040ez efile Rents increase during the lease. Free federal 1040ez efile Rents decrease during the lease. Free federal 1040ez efile Rents are deferred (rent is payable after the end of the calendar year following the calendar year in which the use occurs and the rent is allocated). Free federal 1040ez efile Rents are prepaid (rent is payable before the end of the calendar year preceding the calendar year in which the use occurs and the rent is allocated). Free federal 1040ez efile These rules do not apply if your lease specifies equal amounts of rent for each month in the lease term and all rent payments are due in the calendar year to which the rent relates (or in the preceding or following calendar year). Free federal 1040ez efile   Generally, if the special rules apply, you must use an accrual method of accounting (and time value of money principles) for your rental expenses, regardless of your overall method of accounting. Free federal 1040ez efile In addition, in certain cases in which the IRS has determined that a lease was designed to achieve tax avoidance, you must take rent and stated or imputed interest into account under a constant rental accrual method in which the rent is treated as accruing ratably over the entire lease term. Free federal 1040ez efile For details, see section 467 of the Internal Revenue Code. Free federal 1040ez efile Taxes on Leased Property If you lease business property, you can deduct as additional rent any taxes you have to pay to or for the lessor. Free federal 1040ez efile When you can deduct these taxes as additional rent depends on your accounting method. Free federal 1040ez efile Cash method. Free federal 1040ez efile   If you use the cash method of accounting, you can deduct the taxes as additional rent only for the tax year in which you pay them. Free federal 1040ez efile Accrual method. Free federal 1040ez efile   If you use an accrual method of accounting, you can deduct taxes as additional rent for the tax year in which you can determine all the following. Free federal 1040ez efile That you have a liability for taxes on the leased property. Free federal 1040ez efile How much the liability is. Free federal 1040ez efile That economic performance occurred. Free federal 1040ez efile   The liability and amount of taxes are determined by state or local law and the lease agreement. Free federal 1040ez efile Economic performance occurs as you use the property. Free federal 1040ez efile Example 1. Free federal 1040ez efile Oak Corporation is a calendar year taxpayer that uses an accrual method of accounting. Free federal 1040ez efile Oak leases land for use in its business. Free federal 1040ez efile Under state law, owners of real property become liable (incur a lien on the property) for real estate taxes for the year on January 1 of that year. Free federal 1040ez efile However, they do not have to pay these taxes until July 1 of the next year (18 months later) when tax bills are issued. Free federal 1040ez efile Under the terms of the lease, Oak becomes liable for the real estate taxes in the later year when the tax bills are issued. Free federal 1040ez efile If the lease ends before the tax bill for a year is issued, Oak is not liable for the taxes for that year. Free federal 1040ez efile Oak cannot deduct the real estate taxes as rent until the tax bill is issued. Free federal 1040ez efile This is when Oak's liability under the lease becomes fixed. Free federal 1040ez efile Example 2. Free federal 1040ez efile The facts are the same as in Example 1 except that, according to the terms of the lease, Oak becomes liable for the real estate taxes when the owner of the property becomes liable for them. Free federal 1040ez efile As a result, Oak will deduct the real estate taxes as rent on its tax return for the earlier year. Free federal 1040ez efile This is the year in which Oak's liability under the lease becomes fixed. Free federal 1040ez efile Cost of Getting a Lease You may either enter into a new lease with the lessor of the property or get an existing lease from another lessee. Free federal 1040ez efile Very often when you get an existing lease from another lessee, you must pay the previous lessee money to get the lease, besides having to pay the rent on the lease. Free federal 1040ez efile If you get an existing lease on property or equipment for your business, you generally must amortize any amount you pay to get that lease over the remaining term of the lease. Free federal 1040ez efile For example, if you pay $10,000 to get a lease and there are 10 years remaining on the lease with no option to renew, you can deduct $1,000 each year. Free federal 1040ez efile The cost of getting an existing lease of tangible property is not subject to the amortization rules for section 197 intangibles discussed in chapter 8. Free federal 1040ez efile Option to renew. Free federal 1040ez efile   The term of the lease for amortization includes all renewal options plus any other period for which you and the lessor reasonably expect the lease to be renewed. Free federal 1040ez efile However, this applies only if less than 75% of the cost of getting the lease is for the term remaining on the purchase date (not including any period for which you may choose to renew, extend, or continue the lease). Free federal 1040ez efile Allocate the lease cost to the original term and any option term based on the facts and circumstances. Free federal 1040ez efile In some cases, it may be appropriate to make the allocation using a present value computation. Free federal 1040ez efile For more information, see Regulations section 1. Free federal 1040ez efile 178-1(b)(5). Free federal 1040ez efile Example 1. Free federal 1040ez efile You paid $10,000 to get a lease with 20 years remaining on it and two options to renew for 5 years each. Free federal 1040ez efile Of this cost, you paid $7,000 for the original lease and $3,000 for the renewal options. Free federal 1040ez efile Because $7,000 is less than 75% of the total $10,000 cost of the lease (or $7,500), you must amortize the $10,000 over 30 years. Free federal 1040ez efile That is the remaining life of your present lease plus the periods for renewal. Free federal 1040ez efile Example 2. Free federal 1040ez efile The facts are the same as in Example 1, except that you paid $8,000 for the original lease and $2,000 for the renewal options. Free federal 1040ez efile You can amortize the entire $10,000 over the 20-year remaining life of the original lease. Free federal 1040ez efile The $8,000 cost of getting the original lease was not less than 75% of the total cost of the lease (or $7,500). Free federal 1040ez efile Cost of a modification agreement. Free federal 1040ez efile   You may have to pay an additional “rent” amount over part of the lease period to change certain provisions in your lease. Free federal 1040ez efile You must capitalize these payments and amortize them over the remaining period of the lease. Free federal 1040ez efile You cannot deduct the payments as additional rent, even if they are described as rent in the agreement. Free federal 1040ez efile Example. Free federal 1040ez efile You are a calendar year taxpayer and sign a 20-year lease to rent part of a building starting on January 1. Free federal 1040ez efile However, before you occupy it, you decide that you really need less space. Free federal 1040ez efile The lessor agrees to reduce your rent from $7,000 to $6,000 per year and to release the excess space from the original lease. Free federal 1040ez efile In exchange, you agree to pay an additional rent amount of $3,000, payable in 60 monthly installments of $50 each. Free federal 1040ez efile   You must capitalize the $3,000 and amortize it over the 20-year term of the lease. Free federal 1040ez efile Your amortization deduction each year will be $150 ($3,000 ÷ 20). Free federal 1040ez efile You cannot deduct the $600 (12 × $50) that you will pay during each of the first 5 years as rent. Free federal 1040ez efile Commissions, bonuses, and fees. Free federal 1040ez efile   Commissions, bonuses, fees, and other amounts you pay to get a lease on property you use in your business are capital costs. Free federal 1040ez efile You must amortize these costs over the term of the lease. Free federal 1040ez efile Loss on merchandise and fixtures. Free federal 1040ez efile   If you sell at a loss merchandise and fixtures that you bought solely to get a lease, the loss is a cost of getting the lease. Free federal 1040ez efile You must capitalize the loss and amortize it over the remaining term of the lease. Free federal 1040ez efile Improvements by Lessee If you add buildings or make other permanent improvements to leased property, depreciate the cost of the improvements using the modified accelerated cost recovery system (MACRS). Free federal 1040ez efile Depreciate the property over its appropriate recovery period. Free federal 1040ez efile You cannot amortize the cost over the remaining term of the lease. Free federal 1040ez efile If you do not keep the improvements when you end the lease, figure your gain or loss based on your adjusted basis in the improvements at that time. Free federal 1040ez efile For more information, see the discussion of MACRS in Publication 946, How To Depreciate Property. Free federal 1040ez efile Assignment of a lease. Free federal 1040ez efile   If a long-term lessee who makes permanent improvements to land later assigns all lease rights to you for money and you pay the rent required by the lease, the amount you pay for the assignment is a capital investment. Free federal 1040ez efile If the rental value of the leased land increased since the lease began, part of your capital investment is for that increase in the rental value. Free federal 1040ez efile The rest is for your investment in the permanent improvements. Free federal 1040ez efile   The part that is for the increased rental value of the land is a cost of getting a lease, and you amortize it over the remaining term of the lease. Free federal 1040ez efile You can depreciate the part that is for your investment in the improvements over the recovery period of the property as discussed earlier, without regard to the lease term. Free federal 1040ez efile Capitalizing Rent Expenses Under the uniform capitalization rules, you must capitalize the direct costs and part of the indirect costs for certain production or resale activities. Free federal 1040ez efile Include these costs in the basis of property you produce or acquire for resale, rather than claiming them as a current deduction. Free federal 1040ez efile You recover the costs through depreciation, amortization, or cost of goods sold when you use, sell, or otherwise dispose of the property. Free federal 1040ez efile Indirect costs include amounts incurred for renting or leasing equipment, facilities, or land. Free federal 1040ez efile Uniform capitalization rules. Free federal 1040ez efile   You may be subject to the uniform capitalization rules if you do any of the following, unless the property is produced for your use other than in a business or an activity carried on for profit. Free federal 1040ez efile Produce real property or tangible personal property. Free federal 1040ez efile For this purpose, tangible personal property includes a film, sound recording, video tape, book, or similar property. Free federal 1040ez efile Acquire property for resale. Free federal 1040ez efile However, these rules do not apply to the following property. Free federal 1040ez efile Personal property you acquire for resale if your average annual gross receipts are $10 million or less for the 3 prior tax years. Free federal 1040ez efile Property you produce if you meet either of the following conditions. Free federal 1040ez efile Your indirect costs of producing the property are $200,000 or less. Free federal 1040ez efile You use the cash method of accounting and do not account for inventories. Free federal 1040ez efile Example 1. Free federal 1040ez efile You rent construction equipment to build a storage facility. Free federal 1040ez efile If you are subject to the uniform capitalization rules, you must capitalize as part of the cost of the building the rent you paid for the equipment. Free federal 1040ez efile You recover your cost by claiming a deduction for depreciation on the building. Free federal 1040ez efile Example 2. Free federal 1040ez efile You rent space in a facility to conduct your business of manufacturing tools. Free federal 1040ez efile If you are subject to the uniform capitalization rules, you must include the rent you paid to occupy the facility in the cost of the tools you produce. Free federal 1040ez efile More information. Free federal 1040ez efile   For more information on these rules, see Uniform Capitalization Rules in Publication 538 and the regulations under Internal Revenue Code section 263A. Free federal 1040ez efile Prev  Up  Next   Home   More Online Publications
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The Free Federal 1040ez Efile

Free federal 1040ez efile 6. Free federal 1040ez efile   Dual-Status Tax Year Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Tax Year Income Subject to Tax Restrictions for Dual-Status Taxpayers Exemptions How To Figure TaxIncome Tax Credits and Payments Forms To File When and Where To File Introduction You have a dual-status tax year when you have been both a resident alien and a nonresident alien in the same year. Free federal 1040ez efile Dual status does not refer to your citizenship; it refers only to your resident status in the United States. Free federal 1040ez efile In determining your U. Free federal 1040ez efile S. Free federal 1040ez efile income tax liability for a dual-status tax year, different rules apply for the part of the year you are a resident of the United States and the part of the year you are a nonresident. Free federal 1040ez efile The most common dual-status tax years are the years of arrival and departure. Free federal 1040ez efile See Dual-Status Aliens in chapter 1. Free federal 1040ez efile If you are married and choose to be treated as a U. Free federal 1040ez efile S. Free federal 1040ez efile resident for the entire year, as explained in chapter 1, the rules of this chapter do not apply to you for that year. Free federal 1040ez efile Topics - This chapter discusses: Income subject to tax, Restrictions for dual-status taxpayers, Exemptions, How to figure the tax, Forms to file, When and where to file, and How to fill out a dual-status return. Free federal 1040ez efile Useful Items - You may want to see: Publication 503 Child and Dependent Care Expenses 514 Foreign Tax Credit for Individuals 575 Pension and Annuity Income Form (and Instructions) 1040 U. Free federal 1040ez efile S. Free federal 1040ez efile Individual Income Tax Return 1040-C U. Free federal 1040ez efile S. Free federal 1040ez efile Departing Alien Income Tax Return 1040-ES Estimated Tax for Individuals 1040-ES (NR) U. Free federal 1040ez efile S. Free federal 1040ez efile Estimated Tax for Nonresident Alien Individuals 1040NR U. Free federal 1040ez efile S. Free federal 1040ez efile Nonresident Alien Income Tax Return 1116 Foreign Tax Credit See chapter 12 for information about getting these publications and forms. Free federal 1040ez efile Tax Year You must file your tax return on the basis of an annual accounting period called a tax year. Free federal 1040ez efile If you have not previously established a fiscal tax year, your tax year is the calendar year. Free federal 1040ez efile A calendar year is 12 consecutive months ending on December 31. Free federal 1040ez efile If you have previously established a regular fiscal year (12 consecutive months ending on the last day of a month other than December, or a 52–53 week year) and are considered to be a U. Free federal 1040ez efile S. Free federal 1040ez efile resident for any calendar year, you will be treated as a U. Free federal 1040ez efile S. Free federal 1040ez efile resident for any part of your fiscal year that falls within that calendar year. Free federal 1040ez efile Income Subject to Tax For the part of the year you are a resident alien, you are taxed on income from all sources. Free federal 1040ez efile Income from sources outside the United States is taxable if you receive it while you are a resident alien. Free federal 1040ez efile The income is taxable even if you earned it while you were a nonresident alien or if you became a nonresident alien after receiving it and before the end of the year. Free federal 1040ez efile For the part of the year you are a nonresident alien, you are taxed on income from U. Free federal 1040ez efile S. Free federal 1040ez efile sources and on certain foreign source income treated as effectively connected with a U. Free federal 1040ez efile S. Free federal 1040ez efile trade or business. Free federal 1040ez efile (The rules for treating foreign source income as effectively connected are discussed in chapter 4 under Foreign Income. Free federal 1040ez efile ) Income from sources outside the United States that is not effectively connected with a trade or business in the United States is not taxable if you receive it while you are a nonresident alien. Free federal 1040ez efile The income is not taxable even if you earned it while you were a resident alien or if you became a resident alien or a U. Free federal 1040ez efile S. Free federal 1040ez efile citizen after receiving it and before the end of the year. Free federal 1040ez efile Income from U. Free federal 1040ez efile S. Free federal 1040ez efile sources is taxable whether you receive it while a nonresident alien or a resident alien unless specifically exempt under the Internal Revenue Code or a tax treaty provision. Free federal 1040ez efile Generally, tax treaty provisions apply only to the part of the year you were a nonresident. Free federal 1040ez efile In certain cases, however, treaty provisions may apply while you were a resident alien. Free federal 1040ez efile See chapter 9 for more information. Free federal 1040ez efile When determining what income is taxed in the United States, you must consider exemptions under U. Free federal 1040ez efile S. Free federal 1040ez efile tax law as well as the reduced tax rates and exemptions provided by tax treaties between the United States and certain foreign countries. Free federal 1040ez efile For a further discussion of tax treaties, see chapter 9. Free federal 1040ez efile Restrictions for Dual-Status Taxpayers The following restrictions apply if you are filing a tax return for a dual-status tax year. Free federal 1040ez efile 1) Standard deduction. Free federal 1040ez efile   You cannot use the standard deduction allowed on Form 1040. Free federal 1040ez efile However, you can itemize any allowable deductions. Free federal 1040ez efile 2) Exemptions. Free federal 1040ez efile   Your total deduction for the exemptions for your spouse and allowable dependents cannot be more than your taxable income (figured without deducting personal exemptions) for the period you are a resident alien. Free federal 1040ez efile 3) Head of household. Free federal 1040ez efile   You cannot use the head of household Tax Table column or Tax Computation Worksheet. Free federal 1040ez efile 4) Joint return. Free federal 1040ez efile   You cannot file a joint return. Free federal 1040ez efile However, see Choosing Resident Alien Status under Dual-Status Aliens in chapter 1. Free federal 1040ez efile 5) Tax rates. Free federal 1040ez efile   If you are married and a nonresident of the United States for all or part of the tax year and you do not choose to file jointly as discussed in chapter 1, you must use the Tax Table column or Tax Computation Worksheet for married filing separately to figure your tax on income effectively connected with a U. Free federal 1040ez efile S. Free federal 1040ez efile trade or business. Free federal 1040ez efile You cannot use the Tax Table column or Tax Computation Worksheet for married filing jointly or single. Free federal 1040ez efile However, you may be able to file as single if you lived apart from your spouse during the last 6 months of the year and you are a: Married resident of Canada, Mexico, or South Korea, or Married U. Free federal 1040ez efile S. Free federal 1040ez efile national. Free federal 1040ez efile  See the instructions for Form 1040NR to see if you qualify. Free federal 1040ez efile    A U. Free federal 1040ez efile S. Free federal 1040ez efile national is an individual who, although not a U. Free federal 1040ez efile S. Free federal 1040ez efile citizen, owes his or her allegiance to the United States. Free federal 1040ez efile U. Free federal 1040ez efile S. Free federal 1040ez efile nationals include American Samoans and Northern Mariana Islanders who chose to become U. Free federal 1040ez efile S. Free federal 1040ez efile nationals instead of U. Free federal 1040ez efile S. Free federal 1040ez efile citizens. Free federal 1040ez efile 6) Tax credits. Free federal 1040ez efile   You cannot claim the education credits, the earned income credit, or the credit for the elderly or the disabled unless: You are married, and You choose to be treated as a resident for all of 2013 by filing a joint return with your spouse who is a U. Free federal 1040ez efile S. Free federal 1040ez efile citizen or resident, as discussed in chapter 1. Free federal 1040ez efile Exemptions As a dual-status taxpayer, you usually will be able to claim your own personal exemption. Free federal 1040ez efile Subject to the general rules for qualification, you can claim exemptions for your spouse and dependents when you figure taxable income for the part of the year you are a resident alien. Free federal 1040ez efile The amount you can claim for these exemptions is limited to your taxable income (figured before subtracting exemptions) for the part of the year you are a resident alien. Free federal 1040ez efile You cannot use exemptions (other than your own) to reduce taxable income to less than zero for that period. Free federal 1040ez efile Special rules apply to exemptions for the part of the tax year you are a nonresident alien if you are a: Resident of Canada, Mexico, or South Korea, U. Free federal 1040ez efile S. Free federal 1040ez efile national, or Student or business apprentice from India. Free federal 1040ez efile For more information, see Exemptions in chapter 5. Free federal 1040ez efile How To Figure Tax When you figure your U. Free federal 1040ez efile S. Free federal 1040ez efile tax for a dual-status year, you are subject to different rules for the part of the year you are a resident and the part of the year you are a nonresident. Free federal 1040ez efile Income All income for your period of residence and all income that is effectively connected with a trade or business in the United States for your period of nonresidence, after allowable deductions, is added and taxed at the rates that apply to U. Free federal 1040ez efile S. Free federal 1040ez efile citizens and residents. Free federal 1040ez efile Income that is not connected with a trade or business in the United States for your period of nonresidence is subject to the flat 30% rate or lower treaty rate. Free federal 1040ez efile You cannot take any deductions against this income. Free federal 1040ez efile Social security and railroad retirement benefits. Free federal 1040ez efile   During the part of the year you are a nonresident alien, 85% of any U. Free federal 1040ez efile S. Free federal 1040ez efile social security benefits (and the equivalent portion of tier 1 railroad retirement benefits) you receive is subject to the flat 30% tax, unless exempt, or subject to a lower treaty rate. Free federal 1040ez efile (See The 30% Tax in chapter 4. Free federal 1040ez efile )   During the part of the year you are a resident alien, part of the social security and the equivalent portion of tier 1 railroad retirement benefits will be taxed at graduated rates if your modified adjusted gross income plus half of these benefits is more than a certain base amount. Free federal 1040ez efile Use the Social Security Benefits Worksheet in the Form 1040 instructions to help you figure the taxable part of your social security and equivalent tier 1 railroad retirement benefits for the part of the year you were a resident alien. Free federal 1040ez efile If you received U. Free federal 1040ez efile S. Free federal 1040ez efile social security benefits while you were a nonresident alien, the Social Security Administration will send you Form SSA-1042S showing your combined benefits for the entire year and the amount of tax withheld. Free federal 1040ez efile You will not receive separate statements for the benefits received during your periods of U. Free federal 1040ez efile S. Free federal 1040ez efile residence and nonresidence. Free federal 1040ez efile Therefore, it is important for you to keep careful records of these amounts. Free federal 1040ez efile You will need this information to properly complete your return and determine your tax liability. Free federal 1040ez efile If you received railroad retirement benefits while you were a nonresident alien, the U. Free federal 1040ez efile S. Free federal 1040ez efile Railroad Retirement Board (RRB) will send you Form RRB-1042S, Statement for Nonresident Alien Recipients of Payments by the Railroad Retirement Board, and/or Form RRB-1099-R, Annuities or Pensions by the Railroad Retirement Board. Free federal 1040ez efile If your country of legal residence changed or your rate of tax changed during the tax year, you may receive more than one form. Free federal 1040ez efile Tax Credits and Payments This discussion covers tax credits and payments for dual-status aliens. Free federal 1040ez efile Credits As a dual-status alien, you generally can claim tax credits using the same rules that apply to resident aliens. Free federal 1040ez efile There are certain restrictions that may apply. Free federal 1040ez efile These restrictions are discussed here, along with a brief explanation of credits often claimed by individuals. Free federal 1040ez efile Foreign tax credit. Free federal 1040ez efile   If you have paid or are liable for the payment of income tax to a foreign country on income from foreign sources, you may be able to claim a credit for the foreign taxes. Free federal 1040ez efile   If you claim the foreign tax credit, you generally must file Form 1116 with your income tax return. Free federal 1040ez efile For more information, see the Instructions for Form 1116 and Publication 514. Free federal 1040ez efile Child and dependent care credit. Free federal 1040ez efile   You may qualify for this credit if you pay someone to care for your qualifying child who is under age 13, or your disabled dependent or disabled spouse so that you can work or look for work. Free federal 1040ez efile Generally, you must be able to claim an exemption for your dependent. Free federal 1040ez efile   Married dual-status aliens can claim the credit only if they choose to file a joint return as discussed in chapter 1, or if they qualify as certain married individuals living apart. Free federal 1040ez efile   The amount of your child and dependent care expense that qualifies for the credit in any tax year cannot be more than your earned income for that tax year. Free federal 1040ez efile   For more information, get Publication 503 and Form 2441. Free federal 1040ez efile Retirement savings contributions credit. Free federal 1040ez efile   You may qualify for this credit (also known as the saver's credit) if you made eligible contributions to an employer-sponsored retirement plan or to an individual retirement arrangement (IRA) in 2013. Free federal 1040ez efile You cannot claim this credit if: You were born after January 1, 1996, You were a full-time student, Your exemption is claimed by someone else on his or her 2013 tax return, or Your adjusted gross income is more than $29,500. Free federal 1040ez efile Use Form 8880 to figure the credit. Free federal 1040ez efile For more information, see Publication 590. Free federal 1040ez efile Child tax credit. Free federal 1040ez efile   You may be able to take this credit if you have a qualifying child. Free federal 1040ez efile   A qualifying child for purposes of the child tax credit is a child who: Was under age 17 at the end of 2013. Free federal 1040ez efile Is your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, half brother, half sister, or a descendant of any of them (for example, your grandchild, niece, or nephew). Free federal 1040ez efile Is a U. Free federal 1040ez efile S. Free federal 1040ez efile citizen, a U. Free federal 1040ez efile S. Free federal 1040ez efile national, or a resident alien. Free federal 1040ez efile Did not provide over half of his or her own support for 2013. Free federal 1040ez efile Lived with you more than half of 2013. Free federal 1040ez efile Temporary absences, such as for school, vacation, or medical care, count as time lived in the home. Free federal 1040ez efile Is claimed as a dependent on your return. Free federal 1040ez efile An adopted child is always treated as your own child. Free federal 1040ez efile An adopted child includes a child lawfully placed with you for legal adoption. Free federal 1040ez efile   See your form instructions for additional details. Free federal 1040ez efile Adoption credit. Free federal 1040ez efile   You may qualify to take a tax credit of up to $12,970 for qualifying expenses paid to adopt an eligible child. Free federal 1040ez efile This amount may be allowed for the adoption of a child with special needs regardless of whether you have qualifying expenses. Free federal 1040ez efile To claim the adoption credit, file Form 8839 with the U. Free federal 1040ez efile S. Free federal 1040ez efile income tax return that you file. Free federal 1040ez efile   Married dual-status aliens can claim the credit only if they choose to file a joint return with a U. Free federal 1040ez efile S. Free federal 1040ez efile citizen or resident spouse as discussed in chapter 1, or if they qualify as certain married individuals living apart (see Married Persons Not Filing Jointly in the Form 8839 instructions). Free federal 1040ez efile Payments You can report as payments against your U. Free federal 1040ez efile S. Free federal 1040ez efile income tax liability certain taxes you paid, are considered to have paid, or that were withheld from your income. Free federal 1040ez efile These include: Tax withheld from wages earned in the United States, Taxes withheld at the source from various items of income from U. Free federal 1040ez efile S. Free federal 1040ez efile sources other than wages, Estimated tax paid with Form 1040-ES or Form 1040-ES (NR), and Tax paid with Form 1040-C, at the time of departure from the United States. Free federal 1040ez efile Forms To File The U. Free federal 1040ez efile S. Free federal 1040ez efile income tax return you must file as a dual-status alien depends on whether you are a resident alien or a nonresident alien at the end of the tax year. Free federal 1040ez efile Resident at end of year. Free federal 1040ez efile   You must file Form 1040 if you are a dual-status taxpayer who becomes a resident during the year and who is a U. Free federal 1040ez efile S. Free federal 1040ez efile resident on the last day of the tax year. Free federal 1040ez efile Write “Dual-Status Return” across the top of the return. Free federal 1040ez efile Attach a statement to your return to show the income for the part of the year you are a nonresident. Free federal 1040ez efile You can use Form 1040NR or Form 1040NR-EZ as the statement, but be sure to mark “Dual-Status Statement” across the top. Free federal 1040ez efile Nonresident at end of year. Free federal 1040ez efile   You must file Form 1040NR or Form 1040NR-EZ if you are a dual-status taxpayer who gives up residence in the United States during the year and who is not a U. Free federal 1040ez efile S. Free federal 1040ez efile resident on the last day of the tax year. Free federal 1040ez efile Write “Dual-Status Return” across the top of the return. Free federal 1040ez efile Attach a statement to your return to show the income for the part of the year you are a resident. Free federal 1040ez efile You can use Form 1040 as the statement, but be sure to mark “Dual-Status Statement” across the top. Free federal 1040ez efile   If you expatriated or terminated your residency in 2013, you may be required to file an expatriation statement (Form 8854) with your tax return. Free federal 1040ez efile For more information, see Expatriation Tax in chapter 4. Free federal 1040ez efile Statement. Free federal 1040ez efile   Any statement must have your name, address, and taxpayer identification number on it. Free federal 1040ez efile You do not need to sign a separate statement or schedule accompanying your return, because your signature on the return also applies to the supporting statements and schedules. Free federal 1040ez efile When and Where To File If you are a resident alien on the last day of your tax year and report your income on a calendar year basis, you must file no later than April 15 of the year following the close of your tax year. Free federal 1040ez efile If you report your income on other than a calendar year basis, file your return no later than the 15th day of the 4th month following the close of your tax year. Free federal 1040ez efile In either case, file your return with the address for dual-status aliens shown on the back page of the Form 1040 instructions. Free federal 1040ez efile If you are a nonresident alien on the last day of your tax year and you report your income on a calendar year basis, you must file no later than April 15 of the year following the close of your tax year if you receive wages subject to withholding. Free federal 1040ez efile If you report your income on other than a calendar year basis, file your return no later than the 15th day of the 4th month following the close of your tax year. Free federal 1040ez efile If you did not receive wages subject to withholding and you report your income on a calendar year basis, you must file no later than June 15 of the year following the close of your tax year. Free federal 1040ez efile If you report your income on other than a calendar year basis, file your return no later than the 15th day of the 6th month following the close of your tax year. Free federal 1040ez efile In any case, mail your return to:  Department of the Treasury Internal Revenue Service  Austin, TX 73301-0215 If enclosing a payment, mail your return to:  Internal Revenue Service  P. Free federal 1040ez efile O. Free federal 1040ez efile Box 1303 Charlotte, NC 28201-1303 If the regular due date for filing falls on a Saturday, Sunday, or legal holiday, the due date is the next day that is not a Saturday, Sunday, or legal holiday. Free federal 1040ez efile Prev  Up  Next   Home   More Online Publications