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Free Income Tax Preparation 2007

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Free Income Tax Preparation 2007

Free income tax preparation 2007 Publication 503 - Main Content Table of Contents Tests To Claim the CreditQualifying Person Test Earned Income Test Work-Related Expense Test Joint Return Test Provider Identification Test How To Figure the CreditFiguring Total Work-Related Expenses Earned Income Limit Dollar Limit Amount of Credit How To Claim the CreditTax credit not refundable. Free income tax preparation 2007 Employment Taxes for Household Employers How To Get Tax HelpLow Income Taxpayer Clinics Tests To Claim the Credit To be able to claim the credit for child and dependent care expenses, you must file Form 1040, Form 1040A, or Form 1040NR, not Form 1040EZ or Form 1040NR-EZ, and meet all the following tests. Free income tax preparation 2007 The care must be for one or more qualifying persons who are identified on Form 2441. Free income tax preparation 2007 (See Qualifying Person Test. Free income tax preparation 2007 ) You (and your spouse if filing jointly) must have earned income during the year. Free income tax preparation 2007 (However, see Rule for student-spouse or spouse not able to care for self under Earned Income Test, later. Free income tax preparation 2007 ) You must pay child and dependent care expenses so you (and your spouse if filing jointly) can work or look for work. Free income tax preparation 2007 (See Work-Related Expense Test, later. Free income tax preparation 2007 ) You must make payments for child and dependent care to someone you (and your spouse) cannot claim as a dependent. Free income tax preparation 2007 If you make payments to your child, he or she cannot be your dependent and must be age 19 or older by the end of the year. Free income tax preparation 2007 You cannot make payments to: Your spouse, or The parent of your qualifying person if your qualifying person is your child and under age 13. Free income tax preparation 2007 See Payments to Relatives or Dependents under Work-Related Expense Test, later. Free income tax preparation 2007 Your filing status may be single, head of household, or qualifying widow(er) with dependent child. Free income tax preparation 2007 If you are married, you must file a joint return, unless an exception applies to you. Free income tax preparation 2007 See Joint Return Test, later. Free income tax preparation 2007 You must identify the care provider on your tax return. Free income tax preparation 2007 (See Provider Identification Test, later. Free income tax preparation 2007 ) If you exclude or deduct dependent care benefits provided by a dependent care benefit plan, the total amount you exclude or deduct must be less than the dollar limit for qualifying expenses (generally, $3,000 if one qualifying person was cared for or $6,000 if two or more qualifying persons were cared for). Free income tax preparation 2007 (If two or more qualifying persons were cared for, the amount you exclude or deduct will always be less than the dollar limit, since the total amount you can exclude or deduct is limited to $5,000. Free income tax preparation 2007 See Reduced Dollar Limit under How To Figure the Credit, later. Free income tax preparation 2007 ) These tests are presented in Figure A and are also explained in detail in this publication. Free income tax preparation 2007 Qualifying Person Test Your child and dependent care expenses must be for the care of one or more qualifying persons. Free income tax preparation 2007 A qualifying person is: Your qualifying child who is your dependent and who was under age 13 when the care was provided (but see Child of divorced or separated parents or parents living apart , later), Your spouse who was not physically or mentally able to care for himself or herself and lived with you for more than half the year, or A person who was not physically or mentally able to care for himself or herself, lived with you for more than half the year, and either: Was your dependent, or Would have been your dependent except that: He or she received gross income of $3,900 or more, He or she filed a joint return, or You, or your spouse if filing jointly, could be claimed as a dependent on someone else's 2013 return. Free income tax preparation 2007 Dependent defined. Free income tax preparation 2007   A dependent is a person, other than you or your spouse, for whom you can claim an exemption. Free income tax preparation 2007 To be your dependent, a person must be your qualifying child (or your qualifying relative). Free income tax preparation 2007 Qualifying child. Free income tax preparation 2007   To be your qualifying child, a child must live with you for more than half the year and meet other requirements. Free income tax preparation 2007 More information. Free income tax preparation 2007   For more information about who is a dependent or a qualifying child, see Publication 501. Free income tax preparation 2007 Physically or mentally not able to care for oneself. Free income tax preparation 2007   Persons who cannot dress, clean, or feed themselves because of physical or mental problems are considered not able to care for themselves. Free income tax preparation 2007 Also, persons who must have constant attention to prevent them from injuring themselves or others are considered not able to care for themselves. Free income tax preparation 2007 Person qualifying for part of year. Free income tax preparation 2007   You determine a person's qualifying status each day. Free income tax preparation 2007 For example, if the person for whom you pay child and dependent care expenses no longer qualifies on September 16, count only those expenses through September 15. Free income tax preparation 2007 Also see Yearly limit under Dollar Limit, later. Free income tax preparation 2007 Birth or death of otherwise qualifying person. Free income tax preparation 2007   In determining whether a person is a qualifying person, a person who was born or died in 2013 is treated as having lived with you for more than half of 2013 if your home was the person's home more than half the time he or she was alive in 2013. Free income tax preparation 2007 Taxpayer identification number. Free income tax preparation 2007   You must include on your return the name and taxpayer identification number (generally the social security number) of the qualifying person(s). Free income tax preparation 2007 If the correct information is not shown, the credit may be reduced or disallowed. Free income tax preparation 2007 Individual taxpayer identification number (ITIN) for aliens. Free income tax preparation 2007   If your qualifying person is a nonresident or resident alien who does not have and cannot get a social security number (SSN), use that person's ITIN. Free income tax preparation 2007 The ITIN is entered wherever an SSN is requested on a tax return. Free income tax preparation 2007 If the alien does not have an ITIN, he or she must apply for one. Free income tax preparation 2007 See Form W-7, Application for IRS Individual Taxpayer Identification Number, for details. Free income tax preparation 2007   An ITIN is for tax use only. Free income tax preparation 2007 It does not entitle the holder to social security benefits or change the holder's employment or immigration status under U. Free income tax preparation 2007 S. Free income tax preparation 2007 law. Free income tax preparation 2007 Adoption taxpayer identification number (ATIN). Free income tax preparation 2007   If your qualifying person is a child who was placed in your home for adoption and for whom you do not have an SSN, you must get an ATIN for the child. Free income tax preparation 2007 File Form W-7A, Application for Taxpayer Identification Number for Pending U. Free income tax preparation 2007 S. Free income tax preparation 2007 Adoptions. Free income tax preparation 2007 Child of divorced or separated parents or parents living apart. Free income tax preparation 2007   Even if you cannot claim your child as a dependent, he or she is treated as your qualifying person if: The child was under age 13 or was not physically or mentally able to care for himself or herself, The child received over half of his or her support during the calendar year from one or both parents who are divorced or legally separated under a decree of divorce or separate maintenance, are separated under a written separation agreement, or lived apart at all times during the last 6 months of the calendar year, The child was in the custody of one or both parents for more than half the year, and You were the child's custodial parent. Free income tax preparation 2007   The custodial parent is the parent with whom the child lived for the greater number of nights in 2013. Free income tax preparation 2007 If the child was with each parent for an equal number of nights, the custodial parent is the parent with the higher adjusted gross income. Free income tax preparation 2007 For details and an exception for a parent who works at night, see Publication 501. Free income tax preparation 2007   The noncustodial parent cannot treat the child as a qualifying person even if that parent is entitled to claim the child as a dependent under the special rules for a child of divorced or separated parents. Free income tax preparation 2007 Please click here for the text description of the image. Free income tax preparation 2007 Figure a. Free income tax preparation 2007 Can you claim the credit Earned Income Test To claim the credit, you (and your spouse if filing jointly) must have earned income during the year. Free income tax preparation 2007 Earned income. Free income tax preparation 2007   Earned income includes wages, salaries, tips, other taxable employee compensation, and net earnings from self-employment. Free income tax preparation 2007 A net loss from self-employment reduces earned income. Free income tax preparation 2007 Earned income also includes strike benefits and any disability pay you report as wages. Free income tax preparation 2007   Generally, only taxable compensation is included. Free income tax preparation 2007 However, you can elect to include nontaxable combat pay in earned income. Free income tax preparation 2007 If you are filing a joint return and both you and your spouse received nontaxable combat pay, you can each make your own election. Free income tax preparation 2007 (In other words, if one of you makes the election, the other one can also make it but does not have to. Free income tax preparation 2007 ) Including this income will give you a larger credit only if your (or your spouse's) other earned income is less than the amount entered on line 3 of Form 2441. Free income tax preparation 2007 You should figure your credit both ways and make the election if it gives you a greater tax benefit. Free income tax preparation 2007    You can choose to include your nontaxable combat pay in earned income when figuring your credit for child and dependent care expenses, even if you choose not to include it in earned income for the earned income credit or the exclusion or deduction for dependent care benefits. Free income tax preparation 2007 Members of certain religious faiths opposed to social security. Free income tax preparation 2007   This section is for persons who are members of certain religious faiths that are opposed to participation in Social Security Act programs and have an IRS-approved form that exempts certain income from social security and Medicare taxes. Free income tax preparation 2007 These forms are: Form 4361, Application for Exemption From Self-Employment Tax for Use by Ministers, Members of Religious Orders and Christian Science Practitioners, and Form 4029, Application for Exemption From Social Security and Medicare Taxes and Waiver of Benefits, for use by members of recognized religious groups. Free income tax preparation 2007   Each form is discussed here in terms of what is or is not earned income for purposes of the child and dependent care credit. Free income tax preparation 2007 For information on the use of these forms, see Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers. Free income tax preparation 2007 Form 4361. Free income tax preparation 2007   Whether or not you have an approved Form 4361, amounts you received for performing ministerial duties as an employee are earned income. Free income tax preparation 2007 This includes wages, salaries, tips, and other taxable employee compensation. Free income tax preparation 2007   However, amounts you received for ministerial duties, but not as an employee, do not count as earned income. Free income tax preparation 2007 Examples include fees for performing marriages and honoraria for delivering speeches. Free income tax preparation 2007   Any amount you received for work that is not related to your ministerial duties is earned income. Free income tax preparation 2007 Form 4029. Free income tax preparation 2007   Whether or not you have an approved Form 4029, all wages, salaries, tips, and other taxable employee compensation are earned income. Free income tax preparation 2007   However, amounts you received as a self-employed individual do not count as earned income. Free income tax preparation 2007 What is not earned income?   Earned income does not include: Pensions and annuities, Social security and railroad retirement benefits, Workers' compensation, Interest and dividends, Unemployment compensation, Scholarships or fellowship grants, except for those reported on Form W-2 and paid to you for teaching or other services, Nontaxable workfare payments, Child support payments received, Income of a nonresident alien that is not effectively connected with a U. Free income tax preparation 2007 S. Free income tax preparation 2007 trade or business, or Any amount received for work while an inmate in a penal institution. Free income tax preparation 2007 Rule for student-spouse or spouse not able to care for self. Free income tax preparation 2007   Your spouse is treated as having earned income for any month that he or she is: A full-time student, or Physically or mentally not able to care for himself or herself. Free income tax preparation 2007 (Your spouse also must live with you for more than half the year. Free income tax preparation 2007 )   If you are filing a joint return, this rule also applies to you. Free income tax preparation 2007 You can be treated as having earned income for any month you are a full-time student or not able to care for yourself. Free income tax preparation 2007   Figure the earned income of the nonworking spouse, described under (1) or (2) above, as shown under Earned Income Limit under How To Figure the Credit, later. Free income tax preparation 2007   This rule applies to only one spouse for any one month. Free income tax preparation 2007 If, in the same month, both you and your spouse do not work and are either full-time students or not physically or mentally able to care for yourselves, only one of you can be treated as having earned income in that month. Free income tax preparation 2007 Full-time student. Free income tax preparation 2007    You are a full-time student if you are enrolled at a school for the number of hours or classes that the school considers full time. Free income tax preparation 2007 You must have been a full-time student for some part of each of 5 calendar months during the year. Free income tax preparation 2007 (The months need not be consecutive. Free income tax preparation 2007 ) School. Free income tax preparation 2007   The term “school” includes high schools, colleges, universities, and technical, trade, and mechanical schools. Free income tax preparation 2007 A school does not include an on-the-job training course, correspondence school, or school offering courses only through the Internet. Free income tax preparation 2007 Work-Related Expense Test Child and dependent care expenses must be work-related to qualify for the credit. Free income tax preparation 2007 Expenses are considered work-related only if both of the following are true. Free income tax preparation 2007 They allow you (and your spouse if filing jointly) to work or look for work. Free income tax preparation 2007 They are for a qualifying person's care. Free income tax preparation 2007 Working or Looking for Work To be work-related, your expenses must allow you to work or look for work. Free income tax preparation 2007 If you are married, generally both you and your spouse must work or look for work. Free income tax preparation 2007 One spouse is treated as working during any month he or she is a full-time student or is not physically or mentally able to care for himself or herself. Free income tax preparation 2007 Your work can be for others or in your own business or partnership. Free income tax preparation 2007 It can be either full time or part time. Free income tax preparation 2007 Work also includes actively looking for work. Free income tax preparation 2007 However, if you do not find a job and have no earned income for the year, you cannot take this credit. Free income tax preparation 2007 See Earned Income Test, earlier. Free income tax preparation 2007 An expense is not considered work-related merely because you had it while you were working. Free income tax preparation 2007 The purpose of the expense must be to allow you to work. Free income tax preparation 2007 Whether your expenses allow you to work or look for work depends on the facts. Free income tax preparation 2007 Example 1. Free income tax preparation 2007 The cost of a babysitter while you and your spouse go out to eat is not normally a work-related expense. Free income tax preparation 2007 Example 2. Free income tax preparation 2007 You work during the day. Free income tax preparation 2007 Your spouse works at night and sleeps during the day. Free income tax preparation 2007 You pay for care of your 5-year-old child during the hours when you are working and your spouse is sleeping. Free income tax preparation 2007 Your expenses are considered work-related. Free income tax preparation 2007 Volunteer work. Free income tax preparation 2007   For this purpose, you are not considered to be working if you do unpaid volunteer work or volunteer work for a nominal salary. Free income tax preparation 2007 Work for part of year. Free income tax preparation 2007   If you work or actively look for work during only part of the period covered by the expenses, then you must figure your expenses for each day. Free income tax preparation 2007 For example, if you work all year and pay care expenses of $250 a month ($3,000 for the year), all the expenses are work related. Free income tax preparation 2007 However, if you work or look for work for only 2 months and 15 days during the year and pay expenses of $250 a month, your work-related expenses are limited to $625 (2½ months × $250). Free income tax preparation 2007 Temporary absence from work. Free income tax preparation 2007   You do not have to figure your expenses for each day during a short, temporary absence from work, such as for vacation or a minor illness, if you have to pay for care anyway. Free income tax preparation 2007 Instead, you can figure your credit including the expenses you paid for the period of absence. Free income tax preparation 2007   An absence of 2 weeks or less is a short, temporary absence. Free income tax preparation 2007 An absence of more than 2 weeks may be considered a short, temporary absence, depending on the circumstances. Free income tax preparation 2007 Example. Free income tax preparation 2007 You pay a nanny to care for your 2-year-old son and 4-year-old daughter so you can work. Free income tax preparation 2007 You become ill and miss 4 months of work but receive sick pay. Free income tax preparation 2007 You continue to pay the nanny to care for the children while you are ill. Free income tax preparation 2007 Your absence is not a short, temporary absence, and your expenses are not considered work-related. Free income tax preparation 2007 Part-time work. Free income tax preparation 2007   If you work part-time, you generally must figure your expenses for each day. Free income tax preparation 2007 However, if you have to pay for care weekly, monthly, or in another way that includes both days worked and days not worked, you can figure your credit including the expenses you paid for days you did not work. Free income tax preparation 2007 Any day when you work at least 1 hour is a day of work. Free income tax preparation 2007 Example 1. Free income tax preparation 2007 You work 3 days a week. Free income tax preparation 2007 While you work, your 6-year-old child attends a dependent care center, which complies with all state and local regulations. Free income tax preparation 2007 You can pay the center $150 for any 3 days a week or $250 for 5 days a week. Free income tax preparation 2007 Your child attends the center 5 days a week. Free income tax preparation 2007 Your work-related expenses are limited to $150 a week. Free income tax preparation 2007 Example 2. Free income tax preparation 2007 The facts are the same as in Example 1 except the center does not offer a 3-day option. Free income tax preparation 2007 The entire $250 weekly fee may be a work-related expense. Free income tax preparation 2007 Care of a Qualifying Person To be work-related, your expenses must be to provide care for a qualifying person. Free income tax preparation 2007 You do not have to choose the least expensive way of providing the care. Free income tax preparation 2007 The cost of a paid care provider may be an expense for the care of a qualifying person even if another care provider is available at no cost. Free income tax preparation 2007 Expenses are for the care of a qualifying person only if their main purpose is the person's well-being and protection. Free income tax preparation 2007 Expenses for household services qualify if part of the services is for the care of qualifying persons. Free income tax preparation 2007 See Household Services, later. Free income tax preparation 2007 Expenses not for care. Free income tax preparation 2007   Expenses for care do not include amounts you pay for food, lodging, clothing, education, and entertainment. Free income tax preparation 2007 However, you can include small amounts paid for these items if they are incidental to and cannot be separated from the cost of caring for the qualifying person. Free income tax preparation 2007 Otherwise, see the discussion of Expenses partly work-related, later. Free income tax preparation 2007   Child support payments are not for care and do not qualify for the credit. Free income tax preparation 2007 Education. Free income tax preparation 2007   Expenses for a child in nursery school, preschool, or similar programs for children below the level of kindergarten are expenses for care. Free income tax preparation 2007   Expenses to attend kindergarten or a higher grade are not expenses for care. Free income tax preparation 2007 Do not use these expenses to figure your credit. Free income tax preparation 2007   However, expenses for before- or after-school care of a child in kindergarten or a higher grade may be expenses for care. Free income tax preparation 2007   Summer school and tutoring programs are not for care. Free income tax preparation 2007 Example 1. Free income tax preparation 2007 You take your 3-year-old child to a nursery school that provides lunch and a few educational activities as part of its preschool childcare service. Free income tax preparation 2007 The lunch and educational activities are incidental to the childcare, and their cost cannot be separated from the cost of care. Free income tax preparation 2007 You can count the total cost when you figure the credit. Free income tax preparation 2007 Example 2. Free income tax preparation 2007 You place your 10-year-old child in a boarding school so you can work full time. Free income tax preparation 2007 Only the part of the boarding school expense that is for the care of your child is a work-related expense. Free income tax preparation 2007 You can count that part of the expense in figuring your credit if it can be separated from the cost of education. Free income tax preparation 2007 You cannot count any part of the amount you pay the school for your child's education. Free income tax preparation 2007 Care outside your home. Free income tax preparation 2007   You can count the cost of care provided outside your home if the care is for your dependent under age 13 or any other qualifying person who regularly spends at least 8 hours each day in your home. Free income tax preparation 2007 Dependent care center. Free income tax preparation 2007   You can count care provided outside your home by a dependent care center only if the center complies with all state and local regulations that apply to these centers. Free income tax preparation 2007   A dependent care center is a place that provides care for more than six persons (other than persons who live there) and receives a fee, payment, or grant for providing services for any of those persons, even if the center is not run for profit. Free income tax preparation 2007 Camp. Free income tax preparation 2007   The cost of sending your child to an overnight camp is not considered a work-related expense. Free income tax preparation 2007    The cost of sending your child to a day camp may be a work-related expense, even if the camp specializes in a particular activity, such as computers or soccer. Free income tax preparation 2007 Transportation. Free income tax preparation 2007   If a care provider takes a qualifying person to or from a place where care is provided, that transportation is for the care of the qualifying person. Free income tax preparation 2007 This includes transportation by bus, subway, taxi, or private car. Free income tax preparation 2007 However, transportation not provided by a care provider is not for the care of a qualifying person. Free income tax preparation 2007 Also, if you pay the transportation cost for the care provider to come to your home, that expense is not for care of a qualifying person. Free income tax preparation 2007 Fees and deposits. Free income tax preparation 2007   Fees you paid to an agency to get the services of a care provider, deposits you paid to an agency or preschool, application fees, and other indirect expenses are work-related expenses if you have to pay them to get care, even though they are not directly for care. Free income tax preparation 2007 However, a forfeited deposit is not for the care of a qualifying person if care is not provided. Free income tax preparation 2007 Example 1. Free income tax preparation 2007 You paid a fee to an agency to get the services of the nanny who cares for your 2-year-old daughter while you work. Free income tax preparation 2007 The fee you paid is a work-related expense. Free income tax preparation 2007 Example 2. Free income tax preparation 2007 You placed a deposit with a preschool to reserve a place for your 3-year-old child. Free income tax preparation 2007 You later sent your child to a different preschool and forfeited the deposit. Free income tax preparation 2007 The forfeited deposit is not for care and so is not a work-related expense. Free income tax preparation 2007 Household Services Expenses you pay for household services meet the work-related expense test if they are at least partly for the well-being and protection of a qualifying person. Free income tax preparation 2007 Definition. Free income tax preparation 2007   Household services are ordinary and usual services done in and around your home that are necessary to run your home. Free income tax preparation 2007 They include the services of a housekeeper, maid, or cook. Free income tax preparation 2007 However, they do not include the services of a chauffeur, bartender, or gardener. Free income tax preparation 2007 Housekeeper. Free income tax preparation 2007   In this publication, the term housekeeper refers to any household employee whose services include the care of a qualifying person. Free income tax preparation 2007 Expenses partly work-related. Free income tax preparation 2007   If part of an expense is work-related (for either household services or the care of a qualifying person) and part is for other purposes, you have to divide the expense. Free income tax preparation 2007 To figure your credit, count only the part that is work-related. Free income tax preparation 2007 However, you do not have to divide the expense if only a small part is for other purposes. Free income tax preparation 2007 Example. Free income tax preparation 2007 You pay a housekeeper to care for your 9-year-old and 15-year-old children so you can work. Free income tax preparation 2007 The housekeeper spends most of the time doing normal household work and spends 30 minutes a day driving you to and from work. Free income tax preparation 2007 You do not have to divide the expenses. Free income tax preparation 2007 You can treat the entire expense of the housekeeper as work-related because the time spent driving is minimal. Free income tax preparation 2007 Nor do you have to divide the expenses between the two children, even though the expenses are partly for the 15-year-old child who is not a qualifying person, because the expense is also partly for the care of your 9-year-old child, who is a qualifying person. Free income tax preparation 2007 However, the dollar limit (discussed later) is based on one qualifying person, not two. Free income tax preparation 2007 Meals and lodging provided for housekeeper. Free income tax preparation 2007   If you have expenses for meals that your housekeeper eats in your home because of his or her employment, count these as work-related expenses. Free income tax preparation 2007 If you have extra expenses for providing lodging in your home to the housekeeper, count these as work-related expenses also. Free income tax preparation 2007 Example. Free income tax preparation 2007 To provide lodging to the housekeeper, you move to an apartment with an extra bedroom. Free income tax preparation 2007 You can count the extra rent and utility expenses for the housekeeper's bedroom as work-related. Free income tax preparation 2007 However, if your housekeeper moves into an existing bedroom in your home, you can count only the extra utility expenses as work-related. Free income tax preparation 2007 Taxes paid on wages. Free income tax preparation 2007   The taxes you pay on wages for qualifying child and dependent care services are work-related expenses. Free income tax preparation 2007 For more information on a household employer's tax responsibilities, see Employment Taxes for Household Employers, later. Free income tax preparation 2007 Payments to Relatives or Dependents You can count work-related payments you make to relatives who are not your dependents, even if they live in your home. Free income tax preparation 2007 However, do not count any amounts you pay to: A dependent for whom you (or your spouse if filing jointly) can claim an exemption, Your child who was under age 19 at the end of the year, even if he or she is not your dependent, A person who was your spouse any time during the year, or The parent of your qualifying person if your qualifying person is your child and under age 13. Free income tax preparation 2007 Joint Return Test Generally, married couples must file a joint return to take the credit. Free income tax preparation 2007 However, if you are legally separated or living apart from your spouse, you may be able to file a separate return and still take the credit. Free income tax preparation 2007 Legally separated. Free income tax preparation 2007   You are not considered married if you are legally separated from your spouse under a decree of divorce or separate maintenance. Free income tax preparation 2007 You may be eligible to take the credit on your return using head of household filing status. Free income tax preparation 2007 Married and living apart. Free income tax preparation 2007   You are not considered married and are eligible to take the credit if all the following apply. Free income tax preparation 2007 You file a return apart from your spouse. Free income tax preparation 2007 Your home is the home of a qualifying person for more than half the year. Free income tax preparation 2007 You pay more than half the cost of keeping up your home for the year. Free income tax preparation 2007 Your spouse does not live in your home for the last 6 months of the year. Free income tax preparation 2007 Costs of keeping up a home. Free income tax preparation 2007   The costs of keeping up a home normally include property taxes, mortgage interest, rent, utility charges, home repairs, insurance on the home, and food eaten at home. Free income tax preparation 2007   The costs of keeping up a home do not include payments for clothing, education, medical treatment, vacations, life insurance, transportation, or mortgage principal. Free income tax preparation 2007   They also do not include the purchase, permanent improvement, or replacement of property. Free income tax preparation 2007 For example, you cannot include the cost of replacing a water heater. Free income tax preparation 2007 However, you can include the cost of repairing a water heater. Free income tax preparation 2007 Death of spouse. Free income tax preparation 2007   If your spouse died during the year and you do not remarry before the end of the year, you generally must file a joint return to take the credit. Free income tax preparation 2007 If you do remarry before the end of the year, the credit can be claimed on your deceased spouse's own return. Free income tax preparation 2007 Provider Identification Test You must identify all persons or organizations that provide care for your child or dependent. Free income tax preparation 2007 Use Form 2441, Part I, to show the information. Free income tax preparation 2007 If you do not have any care providers and you are filing Form 2441 only to report taxable income in Part III, enter “none” in line 1, column (a). Free income tax preparation 2007 Information needed. Free income tax preparation 2007   To identify the care provider, you must give the provider's: Name, Address, and Taxpayer identification number. Free income tax preparation 2007    If the care provider is an individual, the taxpayer identification number is his or her social security number or individual taxpayer identification number. Free income tax preparation 2007 If the care provider is an organization, then it is the employer identification number (EIN). Free income tax preparation 2007   You do not have to show the taxpayer identification number if the care provider is a tax-exempt organization (such as a church or school). Free income tax preparation 2007 In this case, enter “Tax-Exempt” in the space where Form 2441 asks for the number. Free income tax preparation 2007   If you cannot provide all of the information or the information is incorrect, you must be able to show that you used due diligence (discussed later) in trying to furnish the necessary information. Free income tax preparation 2007 Getting the information. Free income tax preparation 2007    You can use Form W-10, Dependent Care Provider's Identification and Certification, to request the required information from the care provider. Free income tax preparation 2007 If you do not use Form W-10, you can get the information from one of the other sources listed in the instructions for Form W-10, including: A copy of the provider's social security card, A copy of the provider's completed Form W-4, Employee's Withholding Allowance Certificate, if he or she is your household employee, A copy of the statement furnished by your employer if the provider is your employer's dependent care plan, or A letter or invoice from the provider if it shows the necessary information. Free income tax preparation 2007    You should keep this information with your tax records. Free income tax preparation 2007 Do not send Form W-10 (or other document containing this information) to the Internal Revenue Service. Free income tax preparation 2007 Due diligence. Free income tax preparation 2007   If the care provider information you give is incorrect or incomplete, your credit may not be allowed. Free income tax preparation 2007 However, if you can show that you used due diligence in trying to supply the information, you can still claim the credit. Free income tax preparation 2007   You can show due diligence by getting and keeping the provider's completed Form W-10 or one of the other sources of information just listed. Free income tax preparation 2007 Care providers can be penalized if they do not provide this information to you or if they provide incorrect information. Free income tax preparation 2007 Provider refusal. Free income tax preparation 2007    If the provider refuses to give you the identifying information, you should report on Form 2441 whatever information you have (such as the name and address). Free income tax preparation 2007 Enter “See Attached Statement” in the columns calling for the information you do not have. Free income tax preparation 2007 Then attach a statement explaining that you requested the information from the care provider, but the provider did not give you the information. Free income tax preparation 2007 Be sure to write your name and social security number on this statement. Free income tax preparation 2007 The statement will show that you used due diligence in trying to furnish the necessary information. Free income tax preparation 2007 U. Free income tax preparation 2007 S. Free income tax preparation 2007 citizens and resident aliens living abroad. Free income tax preparation 2007   If you are living abroad, your care provider may not have, and may not be required to get, a U. Free income tax preparation 2007 S. Free income tax preparation 2007 taxpayer identification number (for example, an SSN or an EIN). Free income tax preparation 2007 If so, enter “LAFCP” (Living Abroad Foreign Care Provider) in the space for the care provider's taxpayer identification number. Free income tax preparation 2007 How To Figure the Credit Your credit is a percentage of your work-related expenses. Free income tax preparation 2007 Your expenses are subject to the earned income limit and the dollar limit. Free income tax preparation 2007 The percentage is based on your adjusted gross income. Free income tax preparation 2007 Figuring Total Work-Related Expenses To figure the credit for 2013 work-related expenses, count only those you paid by December 31, 2013. Free income tax preparation 2007 Expenses prepaid in an earlier year. Free income tax preparation 2007   If you pay for services before they are provided, you can count the prepaid expenses only in the year the care is received. Free income tax preparation 2007 Claim the expenses for the later year as if they were actually paid in that later year. Free income tax preparation 2007 Expenses not paid until the following year. Free income tax preparation 2007   Do not count 2012 expenses that you paid in 2013 as work-related expenses for 2013. Free income tax preparation 2007 You may be able to claim an additional credit for them on your 2013 return, but you must figure it separately. Free income tax preparation 2007 See Payments for prior year's expenses under Amount of Credit, later. Free income tax preparation 2007 If you had expenses in 2013 that you did not pay until 2014, you cannot count them when figuring your 2013 credit. Free income tax preparation 2007 You may be able to claim a credit for them on your 2014 return. Free income tax preparation 2007 Expenses reimbursed. Free income tax preparation 2007   If a state social services agency pays you a nontaxable amount to reimburse you for some of your child and dependent care expenses, you cannot count the expenses that are reimbursed as work-related expenses. Free income tax preparation 2007 Example. Free income tax preparation 2007 You paid work-related expenses of $3,000. Free income tax preparation 2007 You are reimbursed $2,000 by a state social services agency. Free income tax preparation 2007 You can use only $1,000 to figure your credit. Free income tax preparation 2007 Medical expenses. Free income tax preparation 2007   Some expenses for the care of qualifying persons who are not able to care for themselves may qualify as work-related expenses and also as medical expenses. Free income tax preparation 2007 You can use them either way, but you cannot use the same expenses to claim both a credit and a medical expense deduction. Free income tax preparation 2007   If you use these expenses to figure the credit and they are more than the earned income limit or the dollar limit, discussed later, you can add the excess to your medical expenses. Free income tax preparation 2007 However, if you use your total expenses to figure your medical expense deduction, you cannot use any part of them to figure your credit. Free income tax preparation 2007 For information on medical expenses, see Publication 502, Medical and Dental Expenses. Free income tax preparation 2007    Amounts excluded from your income under your employer's dependent care benefits plan cannot be used to claim a medical expense deduction. Free income tax preparation 2007 Dependent Care Benefits If you receive dependent care benefits, your dollar limit for purposes of the credit may be reduced. Free income tax preparation 2007 See Reduced Dollar Limit, later. Free income tax preparation 2007 But, even if you cannot take the credit, you may be able to take an exclusion or deduction for the dependent care benefits. Free income tax preparation 2007 Dependent care benefits. Free income tax preparation 2007    Dependent care benefits include: Amounts your employer paid directly to either you or your care provider for the care of your qualifying person while you work, The fair market value of care in a daycare facility provided or sponsored by your employer, and Pre-tax contributions you made under a dependent care flexible spending arrangement. Free income tax preparation 2007 Your salary may have been reduced to pay for these benefits. Free income tax preparation 2007 If you received benefits as an employee, they should be shown in box 10 of your Form W-2, Wage and Tax Statement. Free income tax preparation 2007 See Statement for employee, later. Free income tax preparation 2007 Benefits you received as a partner should be shown in box 13 of your Schedule K-1 (Form 1065) with code O. Free income tax preparation 2007   Enter the amount of these benefits on Form 2441, Part III, line 12. Free income tax preparation 2007 Exclusion or deduction. Free income tax preparation 2007   If your employer provides dependent care benefits under a qualified plan, you may be able to exclude these benefits from your income. Free income tax preparation 2007 Your employer can tell you whether your benefit plan qualifies. Free income tax preparation 2007 To claim the exclusion, you must complete Part III of Form 2441. Free income tax preparation 2007 You cannot use Form 1040EZ. Free income tax preparation 2007   If you are self-employed and receive benefits from a qualified dependent care benefit plan, you are treated as both employer and employee. Free income tax preparation 2007 Therefore, you would not get an exclusion from wages. Free income tax preparation 2007 Instead, you would get a deduction on Form 1040, Schedule C, line 14; Schedule E, line 19 or 28; or Schedule F, line 15. Free income tax preparation 2007 To claim the deduction, you must use Form 2441. Free income tax preparation 2007   The amount you can exclude or deduct is limited to the smallest of: The total amount of dependent care benefits you received during the year, The total amount of qualified expenses you incurred during the year, Your earned income, Your spouse's earned income, or $5,000 ($2,500 if married filing separately). Free income tax preparation 2007   The definition of earned income for the exclusion or deduction is the same as the definition used when figuring the credit except that earned income for the exclusion or deduction does not include any dependent care benefits you receive. Free income tax preparation 2007    You can choose to include your nontaxable combat pay in earned income when figuring your exclusion or deduction, even if you choose not to include it in earned income for the earned income credit or the credit for child and dependent care expenses. Free income tax preparation 2007 Statement for employee. Free income tax preparation 2007   Your employer must give you a Form W-2 (or similar statement), showing in box 10 the total amount of dependent care benefits provided to you during the year under a qualified plan. Free income tax preparation 2007 Your employer will also include any dependent care benefits over $5,000 in your wages shown on your Form W-2 in box 1. Free income tax preparation 2007 Effect of exclusion on credit. Free income tax preparation 2007   If you exclude dependent care benefits from your income, the amount of the excluded benefits: Is not included in your work-related expenses, and Reduces the dollar limit, discussed later. Free income tax preparation 2007 Earned Income Limit The amount of work-related expenses you use to figure your credit cannot be more than: Your earned income for the year, if you are single at the end of the year, or The smaller of your or your spouse's earned income for the year if you are married at the end of the year. Free income tax preparation 2007 Earned income for the purpose of figuring the credit is defined under Earned Income Test, earlier. Free income tax preparation 2007 For purposes of item (2), use your spouse's earned income for the entire year, even if you were married for only part of the year. Free income tax preparation 2007 Example. Free income tax preparation 2007 You remarried on December 3. Free income tax preparation 2007 Your earned income for the year was $18,000. Free income tax preparation 2007 Your new spouse's earned income for the year was $2,000. Free income tax preparation 2007 You paid work-related expenses of $3,000 for the care of your 5-year-old child and qualified to claim the credit. Free income tax preparation 2007 The amount of expenses you use to figure your credit cannot be more than $2,000 (the smaller of your earned income or that of your spouse). Free income tax preparation 2007 Separated spouse. Free income tax preparation 2007   If you are legally separated or married and living apart from your spouse (as described under Joint Return Test, earlier), you are not considered married for purposes of the earned income limit. Free income tax preparation 2007 Use only your income in figuring the earned income limit. Free income tax preparation 2007 Surviving spouse. Free income tax preparation 2007   If your spouse died during the year and you file a joint return as a surviving spouse, you may, but are not required to, take into account the earned income of your spouse who died during the year. Free income tax preparation 2007 Community property laws. Free income tax preparation 2007   Disregard community property laws when you figure earned income for this credit. Free income tax preparation 2007 Self-employment earnings. Free income tax preparation 2007   If you are self-employed, include your net earnings in earned income. Free income tax preparation 2007 For purposes of the child and dependent care credit, net earnings from self-employment generally means the amount from Schedule SE (either Section A or Section B), line 3, minus any deduction for self-employment tax on Form 1040 or Form 1040NR, line 27. Free income tax preparation 2007 Include your self-employment earnings in earned income, even if they are less than $400 and you did not file Schedule SE. Free income tax preparation 2007 Clergy or church employee. Free income tax preparation 2007   If you are a member of the clergy or a church employee, see the Instructions for Form 2441 for details. Free income tax preparation 2007 Statutory employee. Free income tax preparation 2007   If you filed Schedule C (Form 1040) or C-EZ (Form 1040) to report income as a statutory employee, also include as earned income the amount from line 1 of that Schedule C (Form 1040) or C-EZ (Form 1040). Free income tax preparation 2007 Net loss. Free income tax preparation 2007   You must reduce your earned income by any net loss from self-employment. Free income tax preparation 2007 Optional method if earnings are low or a net loss. Free income tax preparation 2007   If your net earnings from self-employment are low or you have a net loss, you may be able to figure your net earnings by using an optional method instead of the regular method. Free income tax preparation 2007 Get Publication 334, Tax Guide for Small Business, for details. Free income tax preparation 2007 If you use an optional method to figure net earnings for self-employment tax purposes, include those net earnings in your earned income for this credit. Free income tax preparation 2007 In this case, subtract any deduction you claimed on Form 1040 or Form 1040NR, line 27, from the total of the amounts on Schedule SE, Section B, lines 3 and 4b, to figure your net earnings. Free income tax preparation 2007 You or your spouse is a student or not able to care for self. Free income tax preparation 2007   Your spouse who is either a full-time student or not able to care for himself or herself is treated as having earned income. Free income tax preparation 2007 His or her earned income for each month is considered to be at least $250 if there is one qualifying person in your home, or at least $500 if there are two or more. Free income tax preparation 2007 Spouse works. Free income tax preparation 2007   If your spouse works during that month, use the higher of $250 (or $500) or his or her actual earned income for that month. Free income tax preparation 2007 Spouse qualifies for part of month. Free income tax preparation 2007   If your spouse is a full-time student or not able to care for himself or herself for only part of a month, the full $250 (or $500) still applies for that month. Free income tax preparation 2007 You are a student or not able to care for self. Free income tax preparation 2007   These rules also apply if you are a student or not able to care for yourself and are filing a joint return. Free income tax preparation 2007 For each month or part of a month you are a student or not able to care for yourself, your earned income is considered to be at least $250 (or $500). Free income tax preparation 2007 If you also work during that month, use the higher of $250 (or $500) or your actual earned income for that month. Free income tax preparation 2007 Both spouses qualify. Free income tax preparation 2007   If, in the same month, both you and your spouse are either full-time students or not able to care for yourselves, only one spouse can be considered to have this earned income of $250 (or $500) for that month. Free income tax preparation 2007 Example. Free income tax preparation 2007 Jim works and keeps up a home for himself and his wife Sharon. Free income tax preparation 2007 Because of an accident, Sharon is not able to care for herself for 11 months during the tax year. Free income tax preparation 2007 During the 11 months, Jim pays $3,300 of work-related expenses for Sharon's care. Free income tax preparation 2007 These expenses also qualify as medical expenses. Free income tax preparation 2007 Their adjusted gross income is $29,000 and the entire amount is Jim's earned income. Free income tax preparation 2007 Jim and Sharon's earned income limit is the smallest of the following amounts. Free income tax preparation 2007   Jim and Sharon's Earned Income Limit   1) Work-related expenses Jim paid $   3,300   2) Jim's earned income $   29,000   3) Income considered earned by Sharon (11 × $250) $    2,750   Jim and Sharon can use $2,750 to figure the credit and treat the balance of $550 ($3,300 − $2,750) as a medical expense. Free income tax preparation 2007 However, if they use the $3,300 first as a medical expense, they cannot use any part of that amount to figure the credit. Free income tax preparation 2007 Dollar Limit There is a dollar limit on the amount of your work-related expenses you can use to figure the credit. Free income tax preparation 2007 This limit is $3,000 for one qualifying person, or $6,000 for two or more qualifying persons. Free income tax preparation 2007 If you paid work-related expenses for the care of two or more qualifying persons, the applicable dollar limit is $6,000. Free income tax preparation 2007 This limit does not need to be divided equally among them. Free income tax preparation 2007 For example, if your work-related expenses for the care of one qualifying person are $3,200 and your work-related expenses for another qualifying person are $2,800, you can use the total, $6,000, when figuring the credit. Free income tax preparation 2007 Yearly limit. Free income tax preparation 2007   The dollar limit is a yearly limit. Free income tax preparation 2007 The amount of the dollar limit remains the same no matter how long, during the year, you have a qualifying person in your household. Free income tax preparation 2007 Use the $3,000 limit if you paid work-related expenses for the care of one qualifying person at any time during the year. Free income tax preparation 2007 Use $6,000 if you paid work-related expenses for the care of more than one qualifying person at any time during the year. Free income tax preparation 2007 Example 1. Free income tax preparation 2007 You pay $500 a month for after-school care for your son. Free income tax preparation 2007 He turned 13 on May 1 and is no longer a qualifying person. Free income tax preparation 2007 You can use the $2,000 of expenses for his care January through April to figure your credit because it is not more than the $3,000 yearly limit. Free income tax preparation 2007 Example 2. Free income tax preparation 2007 In July of this year, to permit your spouse to begin a new job, you enrolled your 3-year-old daughter in a nursery school that provides preschool childcare. Free income tax preparation 2007 You paid $300 per month for the childcare. Free income tax preparation 2007 You can use the full $1,800 you paid ($300 × 6 months) as qualified expenses because it is not more than the $3,000 yearly limit. Free income tax preparation 2007 Reduced Dollar Limit If you received dependent care benefits that you exclude or deduct from your income, you must subtract that amount from the dollar limit that applies to you. Free income tax preparation 2007 Your reduced dollar limit is figured on Form 2441, Part III. Free income tax preparation 2007 See Dependent Care Benefits, earlier, for information on excluding or deducting these benefits. Free income tax preparation 2007 Example 1. Free income tax preparation 2007 George is a widower with one child and earns $24,000 a year. Free income tax preparation 2007 He pays work-related expenses of $2,900 for the care of his 4-year-old child and qualifies to claim the credit for child and dependent care expenses. Free income tax preparation 2007 His employer pays an additional $1,000 under a qualified dependent care benefit plan. Free income tax preparation 2007 This $1,000 is excluded from George's income. Free income tax preparation 2007 Although the dollar limit for his work-related expenses is $3,000 (one qualifying person), George figures his credit on only $2,000 of the $2,900 work-related expenses he paid. Free income tax preparation 2007 This is because his dollar limit is reduced as shown next. Free income tax preparation 2007   George's Reduced Dollar Limit 1) Maximum allowable expenses for one qualifying person $3,000 2) Minus: Dependent care benefits George excludes from income −1,000 3) Reduced dollar limit on expenses George can use for the credit $2,000 Example 2. Free income tax preparation 2007 Randall is married and both he and his wife are employed. Free income tax preparation 2007 Each has earned income in excess of $6,000. Free income tax preparation 2007 They have two children, Anne and Andy, ages 2 and 4, who attend a daycare facility licensed and regulated by the state. Free income tax preparation 2007 Randall's work-related expenses are $6,000 for the year. Free income tax preparation 2007 Randall's employer has a dependent care assistance program as part of its cafeteria plan, which allows employees to make pre-tax contributions to a dependent care flexible spending arrangement. Free income tax preparation 2007 Randall has elected to take the maximum $5,000 exclusion from his salary to cover dependent care expenses through this program. Free income tax preparation 2007 Although the dollar limit for his work-related expenses is $6,000 (two or more qualifying persons), Randall figures his credit on only $1,000 of the $6,000 work-related expense paid. Free income tax preparation 2007 This is because his dollar limit is reduced as shown next. Free income tax preparation 2007   Randall's Reduced Dollar Limit 1) Maximum allowable expenses for two qualifying persons $6,000 2) Minus: Dependent care benefits selected from employer's cafeteria plan and  excluded from Randall's income −5,000 3) Reduced dollar limit on work-related expenses Randall can use for the credit $1,000 Amount of Credit To determine the amount of your credit, multiply your work-related expenses (after applying the earned income and dollar limits) by a percentage. Free income tax preparation 2007 This percentage depends on your adjusted gross income shown on Form 1040, line 38; Form 1040A, line 22; or Form 1040NR, line 37. Free income tax preparation 2007 The following table shows the percentage to use based on adjusted gross income. Free income tax preparation 2007   IF your adjusted gross income is: THEN the       Over:       But not over:   percentage is:       $0   —   $15,000   35%       15,000   —   17,000   34%       17,000   —   19,000   33%       19,000   —   21,000   32%       21,000   —   23,000   31%       23,000   —   25,000   30%       25,000   —   27,000   29%       27,000   —   29,000   28%       29,000   —   31,000   27%       31,000   —   33,000   26%       33,000   —   35,000   25%       35,000   —   37,000   24%       37,000   —   39,000   23%       39,000   —   41,000   22%       41,000   —   43,000   21%       43,000   —   No limit   20%   To qualify for the credit, you must have one or more qualifying persons. Free income tax preparation 2007 You should show the expenses for each person on Form 2441, line 2, column (c). Free income tax preparation 2007 However, it is possible a qualifying person could have no expenses and a second qualifying person could have expenses exceeding $3,000. Free income tax preparation 2007 You should list -0- for the one person and the actual amount for the second person. Free income tax preparation 2007 The $6,000 limit that applies to two or more qualifying persons would still be used to compute your credit unless you already excluded or deducted, in Part III of Form 2441, certain dependent care benefits paid to you (or on your behalf) by your employer. Free income tax preparation 2007 Example. Free income tax preparation 2007 Roger and Megan Paris have two qualifying children. Free income tax preparation 2007 They received $1,000 of dependent care benefits from Megan's employer during 2013, but they incurred a total of $19,500 of child and dependent care expenses. Free income tax preparation 2007 They complete Part III of Form 2441 to exclude the $1,000 from their taxable income (offsetting $1,000 of their expenses). Free income tax preparation 2007 Roger and Megan continue to line 27 to figure their credit using the remaining $18,500 of expenses. Free income tax preparation 2007 Line 30 tells them to complete line 2 without including any dependent care benefits. Free income tax preparation 2007 They complete line 2 of Form 2441, listing both Susan and James, as shown in the Line 2 example above. Free income tax preparation 2007 Line 2 Example (a) Qualifying person's name (b) Qualifying person's social security number (c) Qualified expenses you incurred and paid in 2013 for the person listed in column (a) First Last Susan Paris 123-00-6789 -0- James Paris 987-00-4321 18,500. Free income tax preparation 2007 00 All of Susan's expenses were covered by the $1,000 of employer-provided dependent care benefits. Free income tax preparation 2007 However, their son James has special needs and they paid $18,500 for his care. Free income tax preparation 2007 Line 3 imposes a $5,000 limit for two or more children ($6,000 limit, minus $1,000 already excluded from income = $5,000) and Roger and Megan continue to complete the form. Free income tax preparation 2007 Even though line 2 indicates one of the Paris children did not have any dependent care expenses, it does not change the fact that they had two qualifying children for the purposes of Form 2441. Free income tax preparation 2007 Payments for prior year's expenses. Free income tax preparation 2007   If you had work-related expenses in 2012 that you paid in 2013, you may be able to increase the credit on your 2013 return. Free income tax preparation 2007 Attach a statement to your form showing how you figured the additional amount from 2012. Free income tax preparation 2007 Then enter “CPYE” (Credit for Prior Year Expenses) and the amount of the credit on the dotted line next to line 9 on Form 2441. Free income tax preparation 2007 Also enter the name and taxpayer identification number of the person for whom you paid the prior year's expenses. Free income tax preparation 2007 Then add this credit to the amount on line 9, and replace the amount on line 9 with the total. Free income tax preparation 2007 See Worksheet A. Free income tax preparation 2007 Example. Free income tax preparation 2007 In 2012, Sam and Kate had childcare expenses of $2,600 for their 12-year-old child. Free income tax preparation 2007 Of the $2,600, they paid $2,000 in 2012 and $600 in 2013. Free income tax preparation 2007 Their adjusted gross income for 2012 was $30,000. Free income tax preparation 2007 Sam's earned income of $14,000 was less than Kate's earned income. Free income tax preparation 2007 A credit for their 2012 expenses paid in 2013 is not allowed in 2012. Free income tax preparation 2007 It is allowed for the 2013 tax year, but they must use their adjusted gross income for 2012 to compute the amount. Free income tax preparation 2007 The filled-in Worksheet A they used to figure this credit is shown later. Free income tax preparation 2007 Sam and Kate add the $162 from line 13 of this worksheet to their 2013 credit and enter the total on their Form 2441, line 9. Free income tax preparation 2007 They enter “CPYE $162” and their child's name and SSN in the space to the left of line 9. Free income tax preparation 2007 Worksheet A. Free income tax preparation 2007 Worksheet for 2012 Expenses Paid in 2013 Use this worksheet to figure the credit you may claim for 2012 expenses paid in 2013. Free income tax preparation 2007 1. Free income tax preparation 2007   Enter your 2012 qualified expenses paid in 2012 1. Free income tax preparation 2007     2. Free income tax preparation 2007   Enter your 2012 qualified expenses paid in 2013 2. Free income tax preparation 2007     3. Free income tax preparation 2007   Add the amounts on lines 1 and 2 3. Free income tax preparation 2007     4. Free income tax preparation 2007   Enter $3,000 if care was for one qualifying person ($6,000 if for two or more) 4. Free income tax preparation 2007     5. Free income tax preparation 2007   Enter any dependent care benefits received for 2012 and excluded from your income (from your 2012 Form 2441, line 25) 5. Free income tax preparation 2007     6. Free income tax preparation 2007   Subtract the amount on line 5 from the amount on line 4 and enter the result 6. Free income tax preparation 2007     7. Free income tax preparation 2007   Compare your earned income for 2012 and your spouse's earned income for 2012 and enter the smaller amount 7. Free income tax preparation 2007     8. Free income tax preparation 2007   Compare the amounts on lines 3, 6, and 7 and enter the smallest amount 8. Free income tax preparation 2007     9. Free income tax preparation 2007   Enter the amount on which you figured the credit for 2012 (from your 2012 Form 2441, line 6) 9. Free income tax preparation 2007     10. Free income tax preparation 2007   Subtract the amount on line 9 from the amount on line 8 and enter the result. Free income tax preparation 2007 If zero or less, stop here. Free income tax preparation 2007 You cannot increase your 2013 credit by any previous year's expenses 10. Free income tax preparation 2007     11. Free income tax preparation 2007   Enter your 2012 adjusted gross income (from your 2012 Form 1040, line 38; Form 1040A, line 22; or Form 1040NR, line 37) 11. Free income tax preparation 2007     12. Free income tax preparation 2007   Find your 2012 adjusted gross income in the table below and enter the corresponding decimal amount here 12. Free income tax preparation 2007             IF your 2012 adjusted gross income is:   THEN the decimal                 Over:   But not over:     amount is:                 $0 — $15,000     . Free income tax preparation 2007 35                 15,000 — 17,000     . Free income tax preparation 2007 34                 17,000 — 19,000     . Free income tax preparation 2007 33                 19,000 — 21,000     . Free income tax preparation 2007 32                 21,000 — 23,000     . Free income tax preparation 2007 31                 23,000 — 25,000     . Free income tax preparation 2007 30                 25,000 — 27,000     . Free income tax preparation 2007 29                 27,000 — 29,000     . Free income tax preparation 2007 28                 29,000 — 31,000     . Free income tax preparation 2007 27                 31,000 — 33,000     . Free income tax preparation 2007 26                 33,000 — 35,000     . Free income tax preparation 2007 25                 35,000 — 37,000     . Free income tax preparation 2007 24                 37,000 — 39,000     . Free income tax preparation 2007 23                 39,000 — 41,000     . Free income tax preparation 2007 22                 41,000 — 43,000     . Free income tax preparation 2007 21                 43,000 — No limit     . Free income tax preparation 2007 20           13. Free income tax preparation 2007   Multiply line 10 by line 12. Free income tax preparation 2007 Add this amount to your 2013 credit and enter the total on your 2013 Form 2441, line 9. Free income tax preparation 2007 Enter the following on the dotted line next to line 9 of Form 2441: “CPYE” The amount of this credit for a prior year's expenses           Also, attach a statement to your tax return showing the name and taxpayer identification number of the person for whom you paid the prior year's expenses and how you figured the credit 13. Free income tax preparation 2007       Worksheet A. Free income tax preparation 2007 Filled-in Worksheet for 2012 Expenses Paid in 2013 Use this worksheet to figure the credit you may claim for 2012 expenses paid in 2013. Free income tax preparation 2007 1. Free income tax preparation 2007   Enter your 2012 qualified expenses paid in 2012 1. Free income tax preparation 2007   $2,000 2. Free income tax preparation 2007   Enter your 2012 qualified expenses paid in 2013 2. Free income tax preparation 2007   600 3. Free income tax preparation 2007   Add the amounts on lines 1 and 2 3. Free income tax preparation 2007   2,600 4. Free income tax preparation 2007   Enter $3,000 if care was for one qualifying person ($6,000 if for two or more) 4. Free income tax preparation 2007   3,000 5. Free income tax preparation 2007   Enter any dependent care benefits received for 2012 and excluded from your income (from your 2012 Form 2441, line 25) 5. Free income tax preparation 2007   0 6. Free income tax preparation 2007   Subtract the amount on line 5 from the amount on line 4 and enter the result 6. Free income tax preparation 2007   3,000 7. Free income tax preparation 2007   Compare your earned income for 2012 and your spouse's earned income for 2012 and enter the smaller amount 7. Free income tax preparation 2007   14,000 8. Free income tax preparation 2007   Compare the amounts on lines 3, 6, and 7 and enter the smallest amount 8. Free income tax preparation 2007   2,600 9. Free income tax preparation 2007   Enter the amount on which you figured the credit for 2012 (from your 2012 Form 2441, line 6) 9. Free income tax preparation 2007   2,000 10. Free income tax preparation 2007   Subtract the amount on line 9 from the amount on line 8 and enter the result. Free income tax preparation 2007 If zero or less, stop here. Free income tax preparation 2007 You cannot increase your 2013 credit by any previous year's expenses 10. Free income tax preparation 2007   600 11. Free income tax preparation 2007   Enter your 2012 adjusted gross income (from your 2012 Form 1040, line 38; Form 1040A, line 22; or Form 1040NR, line 37) 11. Free income tax preparation 2007   30,000 12. Free income tax preparation 2007   Find your 2012 adjusted gross income in the table below and enter the corresponding decimal amount here 12. Free income tax preparation 2007   . Free income tax preparation 2007 27         IF your 2012 adjusted gross income is:   THEN the decimal                 Over   But not over     amount is:                 $0 — $15,000     . Free income tax preparation 2007 35                 15,000 — 17,000     . Free income tax preparation 2007 34                 17,000 — 19,000     . Free income tax preparation 2007 33                 19,000 — 21,000     . Free income tax preparation 2007 32                 21,000 — 23,000     . Free income tax preparation 2007 31                 23,000 — 25,000     . Free income tax preparation 2007 30                 25,000 — 27,000     . Free income tax preparation 2007 29                 27,000 — 29,000     . Free income tax preparation 2007 28                 29,000 — 31,000     . Free income tax preparation 2007 27                 31,000 — 33,000     . Free income tax preparation 2007 26                 33,000 — 35,000     . Free income tax preparation 2007 25                 35,000 — 37,000     . Free income tax preparation 2007 24                 37,000 — 39,000     . Free income tax preparation 2007 23                 39,000 — 41,000     . Free income tax preparation 2007 22                 41,000 — 43,000     . Free income tax preparation 2007 21                 43,000 — No limit     . Free income tax preparation 2007 20           13. Free income tax preparation 2007   Multiply line 10 by line 12. Free income tax preparation 2007 Add this amount to your 2013 credit and enter the total on your 2013 Form 2441, line 9. Free income tax preparation 2007 Enter the following on the dotted line next to line 9 of Form 2441: “CPYE” The amount of this credit for a prior year's expenses             Also, attach a statement to your tax return showing the name and taxpayer identification number of the person for whom you paid the prior year's expenses and how you figured the credit 13. Free income tax preparation 2007   $162   How To Claim the Credit To claim the credit, you can file Form 1040, Form 1040A, or Form 1040NR. Free income tax preparation 2007 You cannot claim the credit on Form 1040EZ or Form 1040NR-EZ. Free income tax preparation 2007 Form 1040, Form 1040A, or Form 1040NR. Free income tax preparation 2007    You must complete Form 2441 and attach it to your Form 1040, Form 1040A, or Form 1040NR. Free income tax preparation 2007 Enter the credit on your Form 1040, line 48; Form 1040A, line 29; or Form 1040NR, line 46. Free income tax preparation 2007 Limit on credit. Free income tax preparation 2007    The amount of credit you can claim is limited to your tax. Free income tax preparation 2007 For more information, see the Instructions for Form 2441. Free income tax preparation 2007 Tax credit not refundable. Free income tax preparation 2007   You cannot get a refund for any part of the credit that is more than this limit. Free income tax preparation 2007 Recordkeeping. Free income tax preparation 2007 You should keep records of your work-related expenses. Free income tax preparation 2007 Also, if your dependent or spouse is not able to care for himself or herself, your records should show both the nature and length of the disability. Free income tax preparation 2007 Other records you should keep to support your claim for the credit are described under Provider Identification Test, earlier. Free income tax preparation 2007 Employment Taxes for Household Employers If you pay someone to come to your home and care for your dependent or spouse, you may be a household employer. Free income tax preparation 2007 If you are a household employer, you will need an employer identification number (EIN) and you may have to pay employment taxes. Free income tax preparation 2007 If the individuals who work in your home are self-employed, you are not liable for any of the taxes discussed in this section. Free income tax preparation 2007 Self-employed persons who are in business for themselves are not household employees. Free income tax preparation 2007 Usually, you are not a household employer if the person who cares for your dependent or spouse does so at his or her home or place of business. Free income tax preparation 2007 If you use a placement agency that exercises control over what work is done and how it will be done by a babysitter or companion who works in your home, the worker is not your employee. Free income tax preparation 2007 This control could include providing rules of conduct and appearance and requiring regular reports. Free income tax preparation 2007 In this case, you do not have to pay employment taxes. Free income tax preparation 2007 But, if an agency merely gives you a list of sitters and you hire one from that list, and pay the sitter directly, the sitter may be your employee. Free income tax preparation 2007 If you have a household employee, you may be subject to: Social security and Medicare taxes, Federal unemployment tax, and Federal income tax withholding. Free income tax preparation 2007 Social security and Medicare taxes are generally withheld from the employee's pay and matched by the employer. Free income tax preparation 2007 Federal unemployment (FUTA) tax is paid by the employer only and provides for payments of unemployment compensation to workers who have lost their jobs. Free income tax preparation 2007 Federal income tax is withheld from the employee's total pay if the employee asks you to do so and you agree. Free income tax preparation 2007 For more information on a household employer's tax responsibilities, see Publication 926 and Schedule H (Form 1040) and its instructions. Free income tax preparation 2007 State employment tax. Free income tax preparation 2007   You may also have to pay state unemployment tax. Free income tax preparation 2007 Contact your state unemployment tax office for information. Free income tax preparation 2007 You should also find out whether you need to pay or collect other state employment taxes or carry worker's compensation insurance. Free income tax preparation 2007 For a list of state unemployment tax agencies, visit the U. Free income tax preparation 2007 S. Free income tax preparation 2007 Department of Labor's website. Free income tax preparation 2007 To find that website, use the link in Publication 926 or search online. Free income tax preparation 2007 How To Get Tax Help Whether it's help with a tax issue, preparing your tax return or a need for a free publication or form, get the help you need the way you want it: online, use a smart phone, call or walk in to an IRS office or volunteer site near you. Free income tax preparation 2007 Free help with your tax return. Free income tax preparation 2007   You can get free help preparing your return nationwide from IRS-certified volunteers. Free income tax preparation 2007 The Volunteer Income Tax Assistance (VITA) program helps low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers. Free income tax preparation 2007 The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. Free income tax preparation 2007 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 income tax preparation 2007 In addition, some VITA and TCE sites provide taxpayers the opportunity to prepare their own return with help from an IRS-certified volunteer. Free income tax preparation 2007 To find the nearest VITA or TCE site, you can use the VITA Locator Tool on IRS. Free income tax preparation 2007 gov, download the IRS2Go app, or call 1-800-906-9887. Free income tax preparation 2007   As part of the TCE program, AARP offers the Tax-Aide counseling program. Free income tax preparation 2007 To find the nearest AARP Tax-Aide site, visit AARP's website at www. Free income tax preparation 2007 aarp. Free income tax preparation 2007 org/money/taxaide or call 1-888-227-7669. Free income tax preparation 2007 For more information on these programs, go to IRS. Free income tax preparation 2007 gov and enter “VITA” in the search box. Free income tax preparation 2007 Internet. Free income tax preparation 2007    IRS. Free income tax preparation 2007 gov and IRS2Go are ready when you are —24 hours a day, 7 days a week. Free income tax preparation 2007 Download the free IRS2Go app from the iTunes app store or from Google Play. Free income tax preparation 2007 Use it to check your refund status, order transcripts of your tax returns or tax account, watch the IRS YouTube channel, get IRS news as soon as it's released to the public, subscribe to filing season updates or daily tax tips, and follow the IRS Twitter news feed, @IRSnews, to get the latest federal tax news, including information about tax law changes and important IRS programs. Free income tax preparation 2007 Check the status of your 2013 refund with the Where's My Refund? application on IRS. Free income tax preparation 2007 gov or download the IRS2Go app and select the Refund Status option. Free income tax preparation 2007 The IRS issues more than 9 out of 10 refunds in less than 21 days. Free income tax preparation 2007 Using these applications, you can start checking on the status of your return within 24 hours after we receive your e-filed return or 4 weeks after you mail a paper return. Free income tax preparation 2007 You will also be given a personalized refund date as soon as the IRS processes your tax return and approves your refund. Free income tax preparation 2007 The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. Free income tax preparation 2007 Use the Interactive Tax Assistant (ITA) to research your tax questions. Free income tax preparation 2007 No need to wait on the phone or stand in line. Free income tax preparation 2007 The ITA is available 24 hours a day, 7 days a week, and provides you with a variety of tax information related to general filing topics, deductions, credits, and income. Free income tax preparation 2007 When you reach the response screen, you can print the entire interview and the final response for your records. Free income tax preparation 2007 New subject areas are added on a regular basis. Free income tax preparation 2007  Answers not provided through ITA may be found in Tax Trails, one of the Tax Topics on IRS. Free income tax preparation 2007 gov which contain general individual and business tax information or by searching the IRS Tax Map, which includes an international subject index. Free income tax preparation 2007 You can use the IRS Tax Map, to search publications and instructions by topic or keyword. Free income tax preparation 2007 The IRS Tax Map integrates forms and publications into one research tool and provides single-point access to tax law information by subject. Free income tax preparation 2007 When the user searches the IRS Tax Map, they will be provided with links to related content in existing IRS publications, forms and instructions, questions and answers, and Tax Topics. Free income tax preparation 2007 Coming this filing season, you can immediately view and print for free all 5 types of individual federal tax transcripts (tax returns, tax account, record of account, wage and income statement, and certification of non-filing) using Get Transcript. Free income tax preparation 2007 You can also ask the IRS to mail a return or an account transcript to you. Free income tax preparation 2007 Only the mail option is available by choosing the Tax Records option on the IRS2Go app by selecting Mail Transcript on IRS. Free income tax preparation 2007 gov or by calling 1-800-908-9946. Free income tax preparation 2007 Tax return and tax account transcripts are generally available for the current year and the past three years. Free income tax preparation 2007 Determine if you are eligible for the EITC and estimate the amount of the credit with the Earned Income Tax Credit (EITC) Assistant. Free income tax preparation 2007 Visit Understanding Your IRS Notice or Letter to get answers to questions about a notice or letter you received from the IRS. Free income tax preparation 2007 If you received the First Time Homebuyer Credit, you can use the First Time Homebuyer Credit Account Look-up tool for information on your repayments and account balance. Free income tax preparation 2007 Check the status of your amended return using Where's My Amended Return? Go to IRS. Free income tax preparation 2007 gov and enter Where's My Amended Return? in the search box. Free income tax preparation 2007 You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. Free income tax preparation 2007 It can take up to 3 weeks from the date you mailed it to show up in our system. Free income tax preparation 2007 Make a payment using one of several safe and convenient electronic payment options available on IRS. Free income tax preparation 2007 gov. Free income tax preparation 2007 Select the Payment tab on the front page of IRS. Free income tax preparation 2007 gov for more information. Free income tax preparation 2007 Determine if you are eligible and apply for an online payment agreement, if you owe more tax than you can pay today. Free income tax preparation 2007 Figure your income tax withholding with the IRS Withholding Calculator on IRS. Free income tax preparation 2007 gov. Free income tax preparation 2007 Use it if you've had too much or too little withheld, your personal situation has changed, you're starting a new job or you just want to see if you're having the right amount withheld. Free income tax preparation 2007 Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. Free income tax preparation 2007 gov. Free income tax preparation 2007 Request an Electronic Filing PIN by going to IRS. Free income tax preparation 2007 gov and entering Electronic Filing PIN in the search box. Free income tax preparation 2007 Download forms, instructions and publications, including accessible versions for people with disabilities. Free income tax preparation 2007 Locate the nearest Taxpayer Assistance Center (TAC) using the Office Locator tool on IRS. Free income tax preparation 2007 gov, or choose the Contact Us option on the IRS2Go app and search Local Offices. Free income tax preparation 2007 An employee can answer questions about your tax account or help you set up a payment plan. Free income tax preparation 2007 Before you visit, check the Office Locator on IRS. Free income tax preparation 2007 gov, or Local Offices under Contact Us on IRS2Go to confirm the address, phone number, days and hours of operation, and the services provided. Free income tax preparation 2007 If you have a special need, such as a disability, you can request an appointment. Free income tax preparation 2007 Call the local number listed in the Office Locator, or look in the phone book under Unit
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Know Your Rights: Visit the Tax Toolkit

As a taxpayer, you have rights the IRS must respect in its dealings with you. Our tax toolkit at www.TaxpayerAdvocate.irs.gov can help you understand those rights and how to protect them. The Taxpayer Advocate Service (TAS), your voice at the IRS, has designed this site for individuals, businesses, and tax professionals alike.  Go to www.TaxpayerAdvocate.irs.gov to find:

  • Basic tax information and videos
  • Information about tax credits
  • Small business resources
  • Tips on choosing a tax preparer
  • Updates on preparer regulation
  • Ways to prevent identity theft
  • Low Income Taxpayer Clinic information
  • Links to the Taxpayer Advocacy Panel—help improve the IRS!
Page Last Reviewed or Updated: 05-Nov-2013

The Free Income Tax Preparation 2007

Free income tax preparation 2007 2. Free income tax preparation 2007   Withholding Tax Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: Income Tax Withholding Statement. Free income tax preparation 2007 30% Flat Rate Withholding Social Security and Medicare TaxesGeneral Information Bilateral Social Security (Totalization) Agreements Topics - This chapter discusses: Withholding income tax from the pay of U. Free income tax preparation 2007 S. Free income tax preparation 2007 citizens, Withholding tax at a flat rate, and Social security and Medicare taxes. Free income tax preparation 2007 Useful Items - You may want to see: Publication 505 Tax Withholding and Estimated Tax Form (and Instructions) 673 Statement For Claiming Exemption From Withholding on Foreign Earned Income Eligible for the Exclusion Provided by Section 911 W-4 Employee's Withholding Allowance Certificate W-9 Request for Taxpayer Identification Number and Certification See chapter 7 for information about getting this publication and these forms. Free income tax preparation 2007 Income Tax Withholding U. Free income tax preparation 2007 S. Free income tax preparation 2007 employers generally must withhold U. Free income tax preparation 2007 S. Free income tax preparation 2007 income tax from the pay of U. Free income tax preparation 2007 S. Free income tax preparation 2007 citizens working abroad unless the employer is required by foreign law to withhold foreign income tax. Free income tax preparation 2007 Foreign earned income exclusion. Free income tax preparation 2007   Your employer does not have to withhold U. Free income tax preparation 2007 S. Free income tax preparation 2007 income taxes from wages you earn abroad if it is reasonable to believe that you will exclude them from income under the foreign earned income exclusion or the foreign housing exclusion. Free income tax preparation 2007   Your employer should withhold taxes from any wages you earn for working in the United States. Free income tax preparation 2007 Statement. Free income tax preparation 2007   You can give a statement to your employer indicating that you expect to qualify for the foreign earned income exclusion under either the bona fide residence test or the physical presence test and indicating your estimated housing cost exclusion. Free income tax preparation 2007   Form 673 is an acceptable statement. Free income tax preparation 2007 You can use Form 673 only if you are a U. Free income tax preparation 2007 S. Free income tax preparation 2007 citizen. Free income tax preparation 2007 You do not have to use the form. Free income tax preparation 2007 You can prepare your own statement. Free income tax preparation 2007 See a copy of Form 673, later. Free income tax preparation 2007   Generally, your employer can stop the withholding once you submit the statement that includes a declaration that the statement is made under penalties of perjury. Free income tax preparation 2007 However, if your employer has reason to believe that you will not qualify for either the foreign earned income or the foreign housing exclusion, your employer must continue to withhold. Free income tax preparation 2007   In determining whether your foreign earned income is more than the limit on either the foreign earned income exclusion or the foreign housing exclusion, if your employer has any information about pay you received from any other source outside the United States, your employer must take that information into account. Free income tax preparation 2007 Foreign tax credit. Free income tax preparation 2007   If you plan to take a foreign tax credit, you may be eligible for additional withholding allowances on Form W-4. Free income tax preparation 2007 You can take these additional withholding allowances only for foreign tax credits attributable to taxable salary or wage income. Free income tax preparation 2007 Withholding from pension payments. Free income tax preparation 2007   U. Free income tax preparation 2007 S. Free income tax preparation 2007 payers of benefits from employer-deferred compensation plans, individual retirement plans, and commercial annuities generally must withhold income tax from payments delivered outside of the United States. Free income tax preparation 2007 You can choose exemption from withholding if you: Provide the payer of the benefits with a residence address in the United States or a U. Free income tax preparation 2007 S. Free income tax preparation 2007 possession, or Certify to the payer that you are not a U. Free income tax preparation 2007 S. Free income tax preparation 2007 citizen or resident alien or someone who left the United States to avoid tax. Free income tax preparation 2007 Check your withholding. Free income tax preparation 2007   Before you report U. Free income tax preparation 2007 S. Free income tax preparation 2007 income tax withholding on your tax return, you should carefully review all information documents, such as Form W-2, Wage and Tax Statement, and the Form 1099 information returns. Free income tax preparation 2007 Compare other records, such as final pay records or bank statements, with Form W-2 or Form 1099 to verify the withholding on these forms. Free income tax preparation 2007 Check your U. Free income tax preparation 2007 S. Free income tax preparation 2007 income tax withholding even if you pay someone else to prepare your tax return. Free income tax preparation 2007 You may be assessed penalties and interest if you claim more than your correct amount of withholding allowances. Free income tax preparation 2007 This image is too large to be displayed in the current screen. Free income tax preparation 2007 Please click the link to view the image. Free income tax preparation 2007 Form 673 30% Flat Rate Withholding Generally, U. Free income tax preparation 2007 S. Free income tax preparation 2007 payers of income other than wages, such as dividends and royalties, are required to withhold tax at a flat 30% (or lower treaty) rate on nonwage income paid to nonresident aliens. Free income tax preparation 2007 If you are a U. Free income tax preparation 2007 S. Free income tax preparation 2007 citizen or resident alien and this tax is withheld in error from payments to you because you have a foreign address, you should notify the payer of the income to stop the withholding. Free income tax preparation 2007 Use Form W-9 to notify the payer. Free income tax preparation 2007 You can claim the tax withheld in error as a withholding credit on your tax return if the amount is not adjusted by the payer. Free income tax preparation 2007 Social security benefits paid to residents. Free income tax preparation 2007   If you are a lawful permanent resident (green card holder) and a flat 30% tax was withheld in error on your social security benefits, the tax is refundable by the Social Security Administration (SSA) or the IRS. Free income tax preparation 2007 The SSA will refund the tax withheld if the refund can be processed during the same calendar year in which the tax was withheld. Free income tax preparation 2007 If the SSA cannot refund the tax withheld, you must file a Form 1040 or 1040A with the Internal Revenue Service Center at the address listed under Where To File to determine if you are entitled to a refund. Free income tax preparation 2007 The following information must be submitted with your Form 1040 or Form 1040A. Free income tax preparation 2007 A copy of Form SSA-1042S, Social Security Benefit Statement. Free income tax preparation 2007 A copy of your “green card. Free income tax preparation 2007 ” A signed declaration that includes the following statements. Free income tax preparation 2007   “I am a U. Free income tax preparation 2007 S. Free income tax preparation 2007 lawful permanent resident and my green card has been neither revoked nor administratively or judicially determined to have been abandoned. Free income tax preparation 2007 I am filing a U. Free income tax preparation 2007 S. Free income tax preparation 2007 income tax return for the taxable year as a resident alien reporting all of my worldwide income. Free income tax preparation 2007 I have not claimed benefits for the taxable year under an income tax treaty as a nonresident alien. Free income tax preparation 2007 ” Social Security and Medicare Taxes Social security and Medicare taxes may apply to wages paid to an employee regardless of where the services are performed. Free income tax preparation 2007 General Information In general, U. Free income tax preparation 2007 S. Free income tax preparation 2007 social security and Medicare taxes do not apply to wages for services you perform as an employee outside the United States unless one of the following exceptions applies. Free income tax preparation 2007 You perform the services on or in connection with an American vessel or aircraft (defined later) and either: You entered into your employment contract within the United States, or The vessel or aircraft touches at a U. Free income tax preparation 2007 S. Free income tax preparation 2007 port while you are employed on it. Free income tax preparation 2007 You are working in one of the countries with which the United States has entered into a bilateral social security agreement (discussed later). Free income tax preparation 2007 You are working for an American employer (defined later). Free income tax preparation 2007 You are working for a foreign affiliate (defined later) of an American employer under a voluntary agreement entered into between the American employer and the U. Free income tax preparation 2007 S. Free income tax preparation 2007 Treasury Department. Free income tax preparation 2007 American vessel or aircraft. Free income tax preparation 2007   An American vessel is any vessel documented or numbered under the laws of the United States and any other vessel whose crew is employed solely by one or more U. Free income tax preparation 2007 S. Free income tax preparation 2007 citizens, residents, or corporations. Free income tax preparation 2007 An American aircraft is an aircraft registered under the laws of the United States. Free income tax preparation 2007 American employer. Free income tax preparation 2007   An American employer includes any of the following. Free income tax preparation 2007 The U. Free income tax preparation 2007 S. Free income tax preparation 2007 Government or any of its instrumentalities. Free income tax preparation 2007 An individual who is a resident of the United States. Free income tax preparation 2007 A partnership of which at least two-thirds of the partners are U. Free income tax preparation 2007 S. Free income tax preparation 2007 residents. Free income tax preparation 2007 A trust of which all the trustees are U. Free income tax preparation 2007 S. Free income tax preparation 2007 residents. Free income tax preparation 2007 A corporation organized under the laws of the United States, any U. Free income tax preparation 2007 S. Free income tax preparation 2007 state, or the District of Columbia, Puerto Rico, the U. Free income tax preparation 2007 S. Free income tax preparation 2007 Virgin Islands, Guam, or American Samoa. Free income tax preparation 2007   An American employer also includes any foreign person with an employee who is performing services in connection with a contract between the U. Free income tax preparation 2007 S. Free income tax preparation 2007 government (or any instrumentality thereof) and a member of a domestically controlled group of entities which includes such foreign person. Free income tax preparation 2007 Foreign affiliate. Free income tax preparation 2007   A foreign affiliate of an American employer is any foreign entity in which the American employer has at least a 10% interest, directly or through one or more entities. Free income tax preparation 2007 For a corporation, the 10% interest must be in its voting stock. Free income tax preparation 2007 For any other entity, the 10% interest must be in its profits. Free income tax preparation 2007   Form 2032, Contract Coverage Under Title II of the Social Security Act, is used by American employers to extend social security coverage to U. Free income tax preparation 2007 S. Free income tax preparation 2007 citizens and resident aliens working abroad for foreign affiliates of American employers. Free income tax preparation 2007 Once you enter into an agreement, coverage cannot be terminated. Free income tax preparation 2007 Excludable meals and lodging. Free income tax preparation 2007   Social security tax does not apply to the value of meals and lodging provided to you for the convenience of your employer if it is reasonable to believe that you will be able to exclude the value from your income. Free income tax preparation 2007 Bilateral Social Security (Totalization) Agreements The United States has entered into agreements with some foreign countries to coordinate social security coverage and taxation of workers who are employed in those countries. Free income tax preparation 2007 These agreements are commonly referred to as totalization agreements and are in effect with the following countries. Free income tax preparation 2007 Australia Greece Norway Austria Ireland Poland Belgium Italy Portugal Canada Japan Spain Chile Korea, Sweden Czech South Switzerland Republic Luxembourg United Denmark Netherlands Kingdom Finland     France     Germany           Under these agreements, dual coverage and dual contributions (taxes) for the same work are eliminated. Free income tax preparation 2007 The agreements generally make sure that you pay social security taxes to only one country. Free income tax preparation 2007 Generally, under these agreements, you will only be subject to social security taxes in the country where you are working. Free income tax preparation 2007 However, if you are temporarily sent to work in a foreign country and your pay would otherwise be subject to social security taxes in both the United States and that country, you generally can remain covered only by U. Free income tax preparation 2007 S. Free income tax preparation 2007 social security. Free income tax preparation 2007 You can get more information on any specific agreement by contacting: Social Security Administration Office of International Programs P. Free income tax preparation 2007 O. Free income tax preparation 2007 Box 17741 Baltimore, MD 21235-7741 If you have access to the Internet, you can get more information at: http://www. Free income tax preparation 2007 socialsecurity. Free income tax preparation 2007 gov/international. Free income tax preparation 2007 Covered by U. Free income tax preparation 2007 S. Free income tax preparation 2007 only. Free income tax preparation 2007   If your pay in a foreign country is subject only to U. Free income tax preparation 2007 S. Free income tax preparation 2007 social security tax and is exempt from foreign social security tax, your employer should get a certificate of coverage from the Office of International Programs. Free income tax preparation 2007 Covered by foreign country only. Free income tax preparation 2007   If you are permanently working in a foreign country with which the United States has a social security agreement and, under the agreement, your pay is exempt from U. Free income tax preparation 2007 S. Free income tax preparation 2007 social security tax, you or your employer should get a statement from the authorized official or agency of the foreign country verifying that your pay is subject to social security coverage in that country. Free income tax preparation 2007   If the authorities of the foreign country will not issue such a statement, either you or your employer should get a statement from the U. Free income tax preparation 2007 S. Free income tax preparation 2007 Social Security Administration, Office of International Programs, at the address listed earlier. Free income tax preparation 2007 The statement should indicate that your wages are not covered by the U. Free income tax preparation 2007 S. Free income tax preparation 2007 social security system. Free income tax preparation 2007   This statement should be kept by your employer because it establishes that your pay is exempt from U. Free income tax preparation 2007 S. Free income tax preparation 2007 social security tax. Free income tax preparation 2007   Only wages paid on or after the effective date of the totalization agreement can be exempt from U. Free income tax preparation 2007 S. Free income tax preparation 2007 social security tax. 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