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Free State Tax Program

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Free State Tax Program

Free state tax program Publication 525 - Main Content Table of Contents Employee CompensationBabysitting. Free state tax program Miscellaneous Compensation Fringe Benefits Retirement Plan Contributions Stock Options Restricted Property Special Rules for Certain EmployeesClergy Members of Religious Orders Foreign Employer Military Volunteers Business and Investment IncomeRents From Personal Property Royalties Partnership Income S Corporation Income Sickness and Injury BenefitsDisability Pensions Long-Term Care Insurance Contracts Workers' Compensation Other Sickness and Injury Benefits Miscellaneous IncomeBartering Canceled Debts Host or Hostess Life Insurance Proceeds Recoveries Survivor Benefits Unemployment Benefits Welfare and Other Public Assistance Benefits Other Income RepaymentsMethod 1. Free state tax program Method 2. Free state tax program How To Get Tax HelpLow Income Taxpayer Clinics Employee Compensation In most cases, you must include in gross income everything you receive in payment for personal services. Free state tax program In addition to wages, salaries, commissions, fees, and tips, this includes other forms of compensation such as fringe benefits and stock options. Free state tax program You should receive a Form W-2 from your employer or former employer showing the pay you received for your services. Free state tax program Include all your pay on line 7 of Form 1040 or Form 1040A or on line 1 of Form 1040EZ, even if you do not receive Form W-2, or you receive a Form W-2 that does not include all pay that should be included on the Form W-2. Free state tax program If you performed services, other than as an independent contractor, and your employer did not withhold social security and Medicare taxes from your pay, you must file Form 8919, Uncollected Social Security and Medicare Tax on Wages, with your Form 1040. Free state tax program These wages must be included on line 7 of Form 1040. Free state tax program See Form 8919 for more information. Free state tax program Childcare providers. Free state tax program   If you provide childcare, either in the child's home or in your home or other place of business, the pay you receive must be included in your income. Free state tax program If you are not an employee, you are probably self-employed and must include payments for your services on Schedule C (Form 1040), Profit or Loss From Business, or Schedule C-EZ (Form 1040), Net Profit From Business. Free state tax program You generally are not an employee unless you are subject to the will and control of the person who employs you as to what you are to do and how you are to do it. Free state tax program Babysitting. Free state tax program   If you babysit for relatives or neighborhood children, whether on a regular basis or only periodically, the rules for childcare providers apply to you. Free state tax program Bankruptcy. Free state tax program   If you filed for bankruptcy under Chapter 11 of the Bankruptcy Code, you must allocate your wages and withheld income tax. Free state tax program Your W-2 will show your total wages and withheld income tax for the year. Free state tax program On your tax return, you report the wages and withheld income tax for the period before you filed for bankruptcy. Free state tax program Your bankruptcy estate reports the wages and withheld income tax for the period after you filed for bankruptcy. Free state tax program If you receive other information returns (such as Form 1099-DIV, Dividends and Distributions, or 1099-INT, Interest Income) that report gross income to you, rather than to the bankruptcy estate, you must allocate that income. Free state tax program   The only exception is for purposes of figuring your self-employment tax, if you are self-employed. Free state tax program For that purpose, you must take into account all your self-employment income for the year from services performed both before and after the beginning of the case. Free state tax program   You must file a statement with your income tax return stating you filed a Chapter 11 bankruptcy case. Free state tax program The statement must show the allocation and describe the method used to make the allocation. Free state tax program For a sample of this statement and other information, see Notice 2006-83, 2006-40 I. Free state tax program R. Free state tax program B. Free state tax program 596, available at www. Free state tax program irs. Free state tax program gov/irb/2006-40_IRB/ar12. Free state tax program html. Free state tax program Miscellaneous Compensation This section discusses many types of employee compensation. Free state tax program The subjects are arranged in alphabetical order. Free state tax program Advance commissions and other earnings. Free state tax program   If you receive advance commissions or other amounts for services to be performed in the future and you are a cash-method taxpayer, you must include these amounts in your income in the year you receive them. Free state tax program    If you repay unearned commissions or other amounts in the same year you receive them, reduce the amount included in your income by the repayment. Free state tax program If you repay them in a later tax year, you can deduct the repayment as an itemized deduction on your Schedule A (Form 1040), Itemized Deductions, or you may be able to take a credit for that year. Free state tax program See Repayments , later. Free state tax program Allowances and reimbursements. Free state tax program    If you receive travel, transportation, or other business expense allowances or reimbursements from your employer, see Publication 463, Travel, Entertainment, Gift, and Car Expenses. Free state tax program If you are reimbursed for moving expenses, see Publication 521, Moving Expenses. Free state tax program Back pay awards. Free state tax program   Include in income amounts you are awarded in a settlement or judgment for back pay. Free state tax program These include payments made to you for damages, unpaid life insurance premiums, and unpaid health insurance premiums. Free state tax program They should be reported to you by your employer on Form W-2. Free state tax program Bonuses and awards. Free state tax program    Bonuses or awards you receive for outstanding work are included in your income and should be shown on your Form W-2. Free state tax program These include prizes such as vacation trips for meeting sales goals. Free state tax program If the prize or award you receive is goods or services, you must include the fair market value of the goods or services in your income. Free state tax program However, if your employer merely promises to pay you a bonus or award at some future time, it is not taxable until you receive it or it is made available to you. Free state tax program Employee achievement award. Free state tax program   If you receive tangible personal property (other than cash, a gift certificate, or an equivalent item) as an award for length of service or safety achievement, you generally can exclude its value from your income. Free state tax program However, the amount you can exclude is limited to your employer's cost and cannot be more than $1,600 ($400 for awards that are not qualified plan awards) for all such awards you receive during the year. Free state tax program Your employer can tell you whether your award is a qualified plan award. Free state tax program Your employer must make the award as part of a meaningful presentation, under conditions and circumstances that do not create a significant likelihood of it being disguised pay. Free state tax program   However, the exclusion does not apply to the following awards. Free state tax program A length-of-service award if you received it for less than 5 years of service or if you received another length-of-service award during the year or the previous 4 years. Free state tax program A safety achievement award if you are a manager, administrator, clerical employee, or other professional employee or if more than 10% of eligible employees previously received safety achievement awards during the year. Free state tax program Example. Free state tax program Ben Green received three employee achievement awards during the year: a nonqualified plan award of a watch valued at $250, and two qualified plan awards of a stereo valued at $1,000 and a set of golf clubs valued at $500. Free state tax program Assuming that the requirements for qualified plan awards are otherwise satisfied, each award by itself would be excluded from income. Free state tax program However, because the $1,750 total value of the awards is more than $1,600, Ben must include $150 ($1,750 − $1,600) in his income. Free state tax program Differential wage payments. Free state tax program   This is any payment made by an employer to an individual for any period during which the individual is, for a period of more than 30 days, an active duty member of the uniformed services and represents all or a portion of the wages the individual would have received from the employer for that period. Free state tax program These payments are treated as wages and are subject to income tax withholding, but not FICA or FUTA taxes. Free state tax program The payments are reported as wages on Form W-2. Free state tax program Government cost-of-living allowances. Free state tax program   Most payments received by U. Free state tax program S. Free state tax program Government civilian employees for working abroad are taxable. Free state tax program However, certain cost-of-living allowances are tax free. Free state tax program Publication 516, U. Free state tax program S. Free state tax program Government Civilian Employees Stationed Abroad, explains the tax treatment of allowances, differentials, and other special pay you receive for employment abroad. Free state tax program Nonqualified deferred compensation plans. Free state tax program   Your employer will report to you the total amount of deferrals for the year under a nonqualified deferred compensation plan. Free state tax program This amount is shown on Form W-2, box 12, using code Y. Free state tax program This amount is not included in your income. Free state tax program   However, if at any time during the tax year, the plan fails to meet certain requirements, or is not operated under those requirements, all amounts deferred under the plan for the tax year and all preceding tax years are included in your income for the current year. Free state tax program This amount is included in your wages shown on Form W-2, box 1. Free state tax program It is also shown on Form W-2, box 12, using code Z. Free state tax program Nonqualified deferred compensation plans of nonqualified entities. Free state tax program   In most cases, any compensation deferred under a nonqualified deferred compensation plan of a nonqualified entity is included in gross income when there is no substantial risk of forfeiture of the rights to such compensation. Free state tax program For this purpose, a nonqualified entity is: A foreign corporation unless substantially all of its income is: Effectively connected with the conduct of a trade or business in the United States, or Subject to a comprehensive foreign income tax. Free state tax program A partnership unless substantially all of its income is allocated to persons other than: Foreign persons for whom the income is not subject to a comprehensive foreign income tax, and Tax-exempt organizations. Free state tax program Note received for services. Free state tax program   If your employer gives you a secured note as payment for your services, you must include the fair market value (usually the discount value) of the note in your income for the year you receive it. Free state tax program When you later receive payments on the note, a proportionate part of each payment is the recovery of the fair market value that you previously included in your income. Free state tax program Do not include that part again in your income. Free state tax program Include the rest of the payment in your income in the year of payment. Free state tax program   If your employer gives you a nonnegotiable unsecured note as payment for your services, payments on the note that are credited toward the principal amount of the note are compensation income when you receive them. Free state tax program Severance pay. Free state tax program   You must include in income amounts you receive as severance pay and any payment for the cancellation of your employment contract. Free state tax program Accrued leave payment. Free state tax program   If you are a federal employee and receive a lump-sum payment for accrued annual leave when you retire or resign, this amount will be included as wages on your Form W-2. Free state tax program   If you resign from one agency and are reemployed by another agency, you may have to repay part of your lump-sum annual leave payment to the second agency. Free state tax program You can reduce gross wages by the amount you repaid in the same tax year in which you received it. Free state tax program Attach to your tax return a copy of the receipt or statement given to you by the agency you repaid to explain the difference between the wages on your return and the wages on your Forms W-2. Free state tax program Outplacement services. Free state tax program   If you choose to accept a reduced amount of severance pay so that you can receive outplacement services (such as training in résumé writing and interview techniques), you must include the unreduced amount of the severance pay in income. Free state tax program    However, you can deduct the value of these outplacement services (up to the difference between the severance pay included in income and the amount actually received) as a miscellaneous deduction (subject to the 2%-of-adjusted-gross-income (AGI) limit) on Schedule A (Form 1040). Free state tax program Sick pay. Free state tax program   Pay you receive from your employer while you are sick or injured is part of your salary or wages. Free state tax program In addition, you must include in your income sick pay benefits received from any of the following payers. Free state tax program A welfare fund. Free state tax program A state sickness or disability fund. Free state tax program An association of employers or employees. Free state tax program An insurance company, if your employer paid for the plan. Free state tax program However, if you paid the premiums on an accident or health insurance policy, the benefits you receive under the policy are not taxable. Free state tax program For more information, see Other Sickness and Injury Benefits under Sickness and Injury Benefits, later. Free state tax program Social security and Medicare taxes paid by employer. Free state tax program   If you and your employer have an agreement that your employer pays your social security and Medicare taxes without deducting them from your gross wages, you must report the amount of tax paid for you as taxable wages on your tax return. Free state tax program The payment is also treated as wages for figuring your social security and Medicare taxes and your social security and Medicare benefits. Free state tax program However, these payments are not treated as social security and Medicare wages if you are a household worker or a farm worker. Free state tax program Stock appreciation rights. Free state tax program   Do not include a stock appreciation right granted by your employer in income until you exercise (use) the right. Free state tax program When you use the right, you are entitled to a cash payment equal to the fair market value of the corporation's stock on the date of use minus the fair market value on the date the right was granted. Free state tax program You include the cash payment in income in the year you use the right. Free state tax program Fringe Benefits Fringe benefits received in connection with the performance of your services are included in your income as compensation unless you pay fair market value for them or they are specifically excluded by law. Free state tax program Abstaining from the performance of services (for example, under a covenant not to compete) is treated as the performance of services for purposes of these rules. Free state tax program See Valuation of Fringe Benefits , later in this discussion, for information on how to determine the amount to include in income. Free state tax program Recipient of fringe benefit. Free state tax program   You are the recipient of a fringe benefit if you perform the services for which the fringe benefit is provided. Free state tax program You are considered to be the recipient even if it is given to another person, such as a member of your family. Free state tax program An example is a car your employer gives to your spouse for services you perform. Free state tax program The car is considered to have been provided to you and not to your spouse. Free state tax program   You do not have to be an employee of the provider to be a recipient of a fringe benefit. Free state tax program If you are a partner, director, or independent contractor, you also can be the recipient of a fringe benefit. Free state tax program Provider of benefit. Free state tax program   Your employer or another person for whom you perform services is the provider of a fringe benefit regardless of whether that person actually provides the fringe benefit to you. Free state tax program The provider can be a client or customer of an independent contractor. Free state tax program Accounting period. Free state tax program   You must use the same accounting period your employer uses to report your taxable noncash fringe benefits. Free state tax program Your employer has the option to report taxable noncash fringe benefits by using either of the following rules. Free state tax program The general rule: benefits are reported for a full calendar year (January 1–December 31). Free state tax program The special accounting period rule: benefits provided during the last 2 months of the calendar year (or any shorter period) are treated as paid during the following calendar year. Free state tax program For example, each year your employer reports the value of benefits provided during the last 2 months of the prior year and the first 10 months of the current year. Free state tax program Your employer does not have to use the same accounting period for each fringe benefit, but must use the same period for all employees who receive a particular benefit. Free state tax program   You must use the same accounting period that you use to report the benefit to claim an employee business deduction (for use of a car, for example). Free state tax program Form W-2. Free state tax program   Your employer must include all taxable fringe benefits in box 1 of Form W-2 as wages, tips and other compensation and, if applicable, in boxes 3 and 5 as social security and Medicare wages. Free state tax program Although not required, your employer may include the total value of fringe benefits in box 14 (or on a separate statement). Free state tax program However, if your employer provided you with a vehicle and included 100% of its annual lease value in your income, the employer must separately report this value to you in box 14 (or on a separate statement). Free state tax program Accident or Health Plan In most cases, the value of accident or health plan coverage provided to you by your employer is not included in your income. Free state tax program Benefits you receive from the plan may be taxable, as explained, later, under Sickness and Injury Benefits . Free state tax program For information on the items covered in this section, other than Long-term care coverage , see Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans. Free state tax program Long-term care coverage. Free state tax program   Contributions by your employer to provide coverage for long-term care services generally are not included in your income. Free state tax program However, contributions made through a flexible spending or similar arrangement (such as a cafeteria plan) must be included in your income. Free state tax program This amount will be reported as wages in box 1 of your Form W-2. Free state tax program Archer MSA contributions. Free state tax program    Contributions by your employer to your Archer MSA generally are not included in your income. Free state tax program Their total will be reported in box 12 of Form W-2, with code R. Free state tax program You must report this amount on Form 8853, Archer MSAs and Long-Term Care Insurance Contracts. Free state tax program File the form with your return. Free state tax program Health flexible spending arrangement (health FSA). Free state tax program   If your employer provides a health FSA that qualifies as an accident or health plan, the amount of your salary reduction, and reimbursements of your medical care expenses, in most cases, are not included in your income. Free state tax program   Health FSAs are subject to a $2,500 limit on salary reduction contributions for plan years beginning after 2012. Free state tax program The $2,500 limit is subject to an inflation adjustment for plan years beginning after 2013. Free state tax program For more information, see Notice 2012-40, 2012-26 I. Free state tax program R. Free state tax program B. Free state tax program 1046, available at www. Free state tax program irs. Free state tax program gov/irb/2012-26 IRB/ar09. Free state tax program html. Free state tax program Health reimbursement arrangement (HRA). Free state tax program   If your employer provides an HRA that qualifies as an accident or health plan, coverage and reimbursements of your medical care expenses generally are not included in your income. Free state tax program Health savings accounts (HSA). Free state tax program   If you are an eligible individual, you and any other person, including your employer or a family member, can make contributions to your HSA. Free state tax program Contributions, other than employer contributions, are deductible on your return whether or not you itemize deductions. Free state tax program Contributions made by your employer are not included in your income. Free state tax program Distributions from your HSA that are used to pay qualified medical expenses are not included in your income. Free state tax program Distributions not used for qualified medical expenses are included in your income. Free state tax program See Publication 969 for the requirements of an HSA. Free state tax program   Contributions by a partnership to a bona fide partner's HSA are not contributions by an employer. Free state tax program The contributions are treated as a distribution of money and are not included in the partner's gross income. Free state tax program Contributions by a partnership to a partner's HSA for services rendered are treated as guaranteed payments that are includible in the partner's gross income. Free state tax program In both situations, the partner can deduct the contribution made to the partner's HSA. Free state tax program   Contributions by an S corporation to a 2% shareholder-employee's HSA for services rendered are treated as guaranteed payments and are includible in the shareholder-employee's gross income. Free state tax program The shareholder-employee can deduct the contribution made to the shareholder-employee's HSA. Free state tax program Qualified HSA funding distribution. Free state tax program   You can make a one-time distribution from your individual retirement account (IRA) to an HSA and you generally will not include any of the distribution in your income. Free state tax program See Publication 590, Individual Retirement Arrangements (IRAs), for the requirements for these qualified HSA funding distributions. Free state tax program Failure to maintain eligibility. Free state tax program   If your HSA received qualified HSA distributions from a health FSA or HRA (discussed earlier) or a qualified HSA funding distribution, you must be an eligible individual for HSA purposes for the period beginning with the month in which the qualified distribution was made and ending on the last day of the 12th month following that month. Free state tax program If you fail to be an eligible individual during this period, other than because of death or disability, you must include the distribution in your income for the tax year in which you become ineligible. Free state tax program This income is also subject to an additional 10% tax. Free state tax program Adoption Assistance You may be able to exclude from your income amounts paid or expenses incurred by your employer for qualified adoption expenses in connection with your adoption of an eligible child. Free state tax program See Instructions for Form 8839, Qualified Adoption Expenses, for more information. Free state tax program Adoption benefits are reported by your employer in box 12 of Form W-2 with code T. Free state tax program They also are included as social security and Medicare wages in boxes 3 and 5. Free state tax program However, they are not included as wages in box 1. Free state tax program To determine the taxable and nontaxable amounts, you must complete Part III of Form 8839. Free state tax program File the form with your return. Free state tax program Athletic Facilities If your employer provides you with the free or low-cost use of an employer-operated gym or other athletic club on your employer's premises, the value is not included in your compensation. Free state tax program The gym must be used primarily by employees, their spouses, and their dependent children. Free state tax program If your employer pays for a fitness program provided to you at an off-site resort hotel or athletic club, the value of the program is included in your compensation. Free state tax program De Minimis (Minimal) Benefits If your employer provides you with a product or service and the cost of it is so small that it would be unreasonable for the employer to account for it, the value is not included in your income. Free state tax program In most cases, the value of benefits such as discounts at company cafeterias, cab fares home when working overtime, and company picnics are not included in your income. Free state tax program Also see Employee Discounts , later. Free state tax program Holiday gifts. Free state tax program   If your employer gives you a turkey, ham, or other item of nominal value at Christmas or other holidays, do not include the value of the gift in your income. Free state tax program However, if your employer gives you cash, a gift certificate, or a similar item that you can easily exchange for cash, you include the value of that gift as extra salary or wages regardless of the amount involved. Free state tax program Dependent Care Benefits If your employer provides dependent care benefits under a qualified plan, you may be able to exclude these benefits from your income. Free state tax program Dependent care benefits include: Amounts your employer pays directly to either you or your care provider for the care of your qualifying person while you work, and The fair market value of care in a daycare facility provided or sponsored by your employer. Free state tax program The amount you can exclude is limited to the lesser 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 state tax program Your employer must show the total amount of dependent care benefits provided to you during the year under a qualified plan in box 10 of your Form W-2. Free state tax program Your employer also will include any dependent care benefits over $5,000 in your wages shown in box 1 of your Form W-2. Free state tax program To claim the exclusion, you must complete Part III of Form 2441, Child and Dependent Care Expenses. Free state tax program See the Instructions for Form 2441 for more information. Free state tax program Educational Assistance You can exclude from your income up to $5,250 of qualified employer-provided educational assistance. Free state tax program For more information, see Publication 970. Free state tax program Employee Discounts If your employer sells you property or services at a discount, you may be able to exclude the amount of the discount from your income. Free state tax program The exclusion applies to discounts on property or services offered to customers in the ordinary course of the line of business in which you work. Free state tax program However, it does not apply to discounts on real property or property commonly held for investment (such as stocks or bonds). Free state tax program The exclusion is limited to the price charged nonemployee customers multiplied by the following percentage. Free state tax program For a discount on property, your employer's gross profit percentage (gross profit divided by gross sales) on all property sold during the employer's previous tax year. Free state tax program (Ask your employer for this percentage. Free state tax program ) For a discount on services, 20%. Free state tax program Financial Counseling Fees Financial counseling fees paid for you by your employer are included in your income and must be reported as part of wages. Free state tax program If the fees are for tax or investment counseling, they can be deducted on Schedule A (Form 1040) as a miscellaneous deduction (subject to the 2%-of-AGI limit). Free state tax program Qualified retirement planning services paid for you by your employer may be excluded from your income. Free state tax program For more information, see Retirement Planning Services , later. Free state tax program Group-Term Life Insurance In most cases, the cost of up to $50,000 of group-term life insurance coverage provided to you by your employer (or former employer) is not included in your income. Free state tax program However, you must include in income the cost of employer-provided insurance that is more than the cost of $50,000 of coverage reduced by any amount you pay toward the purchase of the insurance. Free state tax program For exceptions to this rule, see Entire cost excluded , and Entire cost taxed , later. Free state tax program If your employer provided more than $50,000 of coverage, the amount included in your income is reported as part of your wages in box 1 of your Form W-2. Free state tax program Also, it is shown separately in box 12 with code C. Free state tax program Group-term life insurance. Free state tax program   This insurance is term life insurance protection (insurance for a fixed period of time) that: Provides a general death benefit, Is provided to a group of employees, Is provided under a policy carried by the employer, and Provides an amount of insurance to each employee based on a formula that prevents individual selection. Free state tax program Permanent benefits. Free state tax program   If your group-term life insurance policy includes permanent benefits, such as a paid-up or cash surrender value, you must include in your income, as wages, the cost of the permanent benefits minus the amount you pay for them. Free state tax program Your employer should be able to tell you the amount to include in your income. Free state tax program Accidental death benefits. Free state tax program   Insurance that provides accidental or other death benefits but does not provide general death benefits (travel insurance, for example) is not group-term life insurance. Free state tax program Former employer. Free state tax program   If your former employer provided more than $50,000 of group-term life insurance coverage during the year, the amount included in your income is reported as wages in box 1 of Form W-2. Free state tax program Also, it is shown separately in box 12 with code C. Free state tax program Box 12 also will show the amount of uncollected social security and Medicare taxes on the excess coverage, with codes M and N. Free state tax program You must pay these taxes with your income tax return. Free state tax program Include them on line 60, Form 1040, and follow the instructions forline 60. Free state tax program For more information, see the Instructions for Form 1040. Free state tax program Two or more employers. Free state tax program   Your exclusion for employer-provided group-term life insurance coverage cannot exceed the cost of $50,000 of coverage, whether the insurance is provided by a single employer or multiple employers. Free state tax program If two or more employers provide insurance coverage that totals more than $50,000, the amounts reported as wages on your Forms W-2 will not be correct. Free state tax program You must figure how much to include in your income. Free state tax program Reduce the amount you figure by any amount reported with code C in box 12 of your Forms W-2, add the result to the wages reported in box 1, and report the total on your return. Free state tax program Figuring the taxable cost. Free state tax program    Use the following worksheet to figure the amount to include in your income. Free state tax program   If you pay any part of the cost of the insurance, your entire payment reduces, dollar for dollar, the amount you otherwise would include in your income. Free state tax program However, you cannot reduce the amount to include in your income by: Payments for coverage in a different tax year, Payments for coverage through a cafeteria plan, unless the payments are after-tax contributions, or Payments for coverage not taxed to you because of the exceptions discussed later under Entire cost excluded . Free state tax program Worksheet 1. Free state tax program Figuring the Cost of Group-Term Life Insurance To Include in Income 1. Free state tax program Enter the total amount of your insurance coverage from your employer(s) 1. Free state tax program   2. Free state tax program Limit on exclusion for employer-provided group-term life insurance coverage 2. Free state tax program 50,000 3. Free state tax program Subtract line 2 from line 1 3. Free state tax program   4. Free state tax program Divide line 3 by $1,000. Free state tax program Figure to the nearest tenth 4. Free state tax program   5. Free state tax program Go to Table 1. Free state tax program Using your age on the last day of the tax year, find your age group in the left column, and enter the cost from the column on the right for your age group 5. Free state tax program   6. Free state tax program Multiply line 4 by line 5 6. Free state tax program     7. Free state tax program Enter the number of full months of coverage at this cost 7. Free state tax program   8. Free state tax program Multiply line 6 by line 7 8. Free state tax program   9. Free state tax program Enter the premiums you paid per month 9. Free state tax program       10. Free state tax program Enter the number of months you paid the  premiums 10. Free state tax program       11. Free state tax program Multiply line 9 by line 10. Free state tax program 11. Free state tax program   12. Free state tax program Subtract line 11 from line 8. Free state tax program Include this amount in your income as wages 12. Free state tax program   Table 1. Free state tax program Cost of $1,000 of Group-Term Life Insurance for One Month   Age Cost     Under 25 $ . Free state tax program 05     25 through 29 . Free state tax program 06     30 through 34 . Free state tax program 08     35 through 39 . Free state tax program 09     40 through 44 . Free state tax program 10     45 through 49 . Free state tax program 15     50 through 54 . Free state tax program 23     55 through 59 . Free state tax program 43     60 through 64 . Free state tax program 66     65 through 69 1. Free state tax program 27     70 and older 2. Free state tax program 06   Example. Free state tax program You are 51 years old and work for employers A and B. Free state tax program Both employers provide group-term life insurance coverage for you for the entire year. Free state tax program Your coverage is $35,000 with employer A and $45,000 with employer B. Free state tax program You pay premiums of $4. Free state tax program 15 a month under the employer B group plan. Free state tax program You figure the amount to include in your income as follows. Free state tax program   Worksheet 1. Free state tax program Figuring the Cost of Group-Term Life Insurance To Include in Income—Illustrated 1. Free state tax program Enter the total amount of your insurance coverage from your employer(s) 1. Free state tax program 80,000 2. Free state tax program Limit on exclusion for employer-provided group-term life insurance coverage 2. Free state tax program 50,000 3. Free state tax program Subtract line 2 from line 1 3. Free state tax program 30,000 4. Free state tax program Divide line 3 by $1,000. Free state tax program Figure to the nearest tenth 4. Free state tax program 30. Free state tax program 0 5. Free state tax program Go to Table 1. Free state tax program Using your age on the last day of the tax year, find your age group in the left column, and enter the cost from the column on the right for your age group 5. Free state tax program . Free state tax program 23 6. Free state tax program Multiply line 4 by line 5 6. Free state tax program 6. Free state tax program 90 7. Free state tax program Enter the number of full months of coverage at this cost. Free state tax program 7. Free state tax program 12 8. Free state tax program Multiply line 6 by line 7 8. Free state tax program 82. Free state tax program 80 9. Free state tax program Enter the premiums you paid per month 9. Free state tax program 4. Free state tax program 15     10. Free state tax program Enter the number of months you paid the premiums 10. Free state tax program 12     11. Free state tax program Multiply line 9 by line 10. Free state tax program 11. Free state tax program 49. Free state tax program 80 12. Free state tax program Subtract line 11 from line 8. Free state tax program Include this amount in your income as wages 12. Free state tax program 33. Free state tax program 00 The total amount to include in income for the cost of excess group-term life insurance is $33. Free state tax program Neither employer provided over $50,000 insurance coverage, so the wages shown on your Forms W-2 do not include any part of that $33. Free state tax program You must add it to the wages shown on your Forms W-2 and include the total on your return. Free state tax program Entire cost excluded. Free state tax program   You are not taxed on the cost of group-term life insurance if any of the following circumstances apply. Free state tax program You are permanently and totally disabled and have ended your employment. Free state tax program Your employer is the beneficiary of the policy for the entire period the insurance is in force during the tax year. Free state tax program A charitable organization to which contributions are deductible is the only beneficiary of the policy for the entire period the insurance is in force during the tax year. Free state tax program (You are not entitled to a deduction for a charitable contribution for naming a charitable organization as the beneficiary of your policy. Free state tax program ) The plan existed on January 1, 1984, and: You retired before January 2, 1984, and were covered by the plan when you retired, or You reached age 55 before January 2, 1984, and were employed by the employer or its predecessor in 1983. Free state tax program Entire cost taxed. Free state tax program   You are taxed on the entire cost of group-term life insurance if either of the following circumstances apply. Free state tax program The insurance is provided by your employer through a qualified employees' trust, such as a pension trust or a qualified annuity plan. Free state tax program You are a key employee and your employer's plan discriminates in favor of key employees. Free state tax program Meals and Lodging You do not include in your income the value of meals and lodging provided to you and your family by your employer at no charge if the following conditions are met. Free state tax program The meals are: Furnished on the business premises of your employer, and Furnished for the convenience of your employer. Free state tax program The lodging is: Furnished on the business premises of your employer, Furnished for the convenience of your employer, and A condition of your employment. Free state tax program (You must accept it in order to be able to properly perform your duties. Free state tax program ) You also do not include in your income the value of meals or meal money that qualifies as a de minimis fringe benefit. Free state tax program See De Minimis (Minimal) Benefits , earlier. Free state tax program Faculty lodging. Free state tax program   If you are an employee of an educational institution or an academic health center and you are provided with lodging that does not meet the three conditions given earlier, you still may not have to include the value of the lodging in income. Free state tax program However, the lodging must be qualified campus lodging, and you must pay an adequate rent. Free state tax program Academic health center. Free state tax program   This is an organization that meets the following conditions. Free state tax program Its principal purpose or function is to provide medical or hospital care or medical education or research. Free state tax program It receives payments for graduate medical education under the Social Security Act. Free state tax program One of its principal purposes or functions is to provide and teach basic and clinical medical science and research using its own faculty. Free state tax program Qualified campus lodging. Free state tax program   Qualified campus lodging is lodging furnished to you, your spouse, or one of your dependents by, or on behalf of, the institution or center for use as a home. Free state tax program The lodging must be located on or near a campus of the educational institution or academic health center. Free state tax program Adequate rent. Free state tax program   The amount of rent you pay for the year for qualified campus lodging is considered adequate if it is at least equal to the lesser of: 5% of the appraised value of the lodging, or The average of rentals paid by individuals (other than employees or students) for comparable lodging held for rent by the educational institution. Free state tax program If the amount you pay is less than the lesser of these amounts, you must include the difference in your income. Free state tax program   The lodging must be appraised by an independent appraiser and the appraisal must be reviewed on an annual basis. Free state tax program Example. Free state tax program Carl Johnson, a sociology professor for State University, rents a home from the university that is qualified campus lodging. Free state tax program The house is appraised at $200,000. Free state tax program The average rent paid for comparable university lodging by persons other than employees or students is $14,000 a year. Free state tax program Carl pays an annual rent of $11,000. Free state tax program Carl does not include in his income any rental value because the rent he pays equals at least 5% of the appraised value of the house (5% × $200,000 = $10,000). Free state tax program If Carl paid annual rent of only $8,000, he would have to include $2,000 in his income ($10,000 − $8,000). Free state tax program Moving Expense Reimbursements In most cases, if your employer pays for your moving expenses (either directly or indirectly) and the expenses would have been deductible if you paid them yourself, the value is not included in your income. Free state tax program See Publication 521 for more information. Free state tax program No-Additional-Cost Services The value of services you receive from your employer for free, at cost, or for a reduced price is not included in your income if your employer: Offers the same service for sale to customers in the ordinary course of the line of business in which you work, and Does not have a substantial additional cost (including any sales income given up) to provide you with the service (regardless of what you paid for the service). Free state tax program In most cases, no-additional-cost services are excess capacity services, such as airline, bus, or train tickets, hotel rooms, and telephone services. Free state tax program Example. Free state tax program You are employed as a flight attendant for a company that owns both an airline and a hotel chain. Free state tax program Your employer allows you to take personal flights (if there is an unoccupied seat) and stay in any one of their hotels (if there is an unoccupied room) at no cost to you. Free state tax program The value of the personal flight is not included in your income. Free state tax program However, the value of the hotel room is included in your income because you do not work in the hotel business. Free state tax program Retirement Planning Services If your employer has a qualified retirement plan, qualified retirement planning services provided to you (and your spouse) by your employer are not included in your income. Free state tax program Qualified services include retirement planning advice, information about your employer's retirement plan, and information about how the plan may fit into your overall individual retirement income plan. Free state tax program You cannot exclude the value of any tax preparation, accounting, legal, or brokerage services provided by your employer. Free state tax program Also, see Financial Counseling Fees , earlier. Free state tax program Transportation If your employer provides you with a qualified transportation fringe benefit, it can be excluded from your income, up to certain limits. Free state tax program A qualified transportation fringe benefit is: Transportation in a commuter highway vehicle (such as a van) between your home and work place, A transit pass, Qualified parking, or Qualified bicycle commuting reimbursement. Free state tax program Cash reimbursement by your employer for these expenses under a bona fide reimbursement arrangement is also excludable. Free state tax program However, cash reimbursement for a transit pass is excludable only if a voucher or similar item that can be exchanged only for a transit pass is not readily available for direct distribution to you. Free state tax program Exclusion limit. Free state tax program   The exclusion for commuter vehicle transportation and transit pass fringe benefits cannot be more than $245 a month. Free state tax program   The exclusion for the qualified parking fringe benefit cannot be more than $245 a month. Free state tax program   The exclusion for qualified bicycle commuting in a calendar year is $20 multiplied by the number of qualified bicycle commuting months that year. Free state tax program   If the benefits have a value that is more than these limits, the excess must be included in your income. Free state tax program You are not entitled to these exclusions if the reimbursements are made under a compensation reduction agreement. Free state tax program Commuter highway vehicle. Free state tax program   This is a highway vehicle that seats at least six adults (not including the driver). Free state tax program At least 80% of the vehicle's mileage must reasonably be expected to be: For transporting employees between their homes and work place, and On trips during which employees occupy at least half of the vehicle's adult seating capacity (not including the driver). Free state tax program Transit pass. Free state tax program   This is any pass, token, farecard, voucher, or similar item entitling a person to ride mass transit (whether public or private) free or at a reduced rate or to ride in a commuter highway vehicle operated by a person in the business of transporting persons for compensation. Free state tax program Qualified parking. Free state tax program   This is parking provided to an employee at or near the employer's place of business. Free state tax program It also includes parking provided on or near a location from which the employee commutes to work by mass transit, in a commuter highway vehicle, or by carpool. Free state tax program It does not include parking at or near the employee's home. Free state tax program Qualified bicycle commuting. Free state tax program   This is reimbursement based on the number of qualified bicycle commuting months for the year. Free state tax program A qualified bicycle commuting month is any month you use the bicycle regularly for a substantial portion of the travel between your home and place of employment and you do not receive any of the other qualified transportation fringe benefits. Free state tax program The reimbursement can be for expenses you incurred during the year for the purchase of a bicycle and bicycle improvements, repair, and storage. Free state tax program Tuition Reduction You can exclude a qualified tuition reduction from your income. Free state tax program This is the amount of a reduction in tuition: For education (below graduate level) furnished by an educational institution to an employee, former employee who retired or became disabled, or his or her spouse and dependent children. Free state tax program For education furnished to a graduate student at an educational institution if the graduate student is engaged in teaching or research activities for that institution. Free state tax program Representing payment for teaching, research, or other services if you receive the amount under the National Health Service Corps Scholarship Program or the Armed Forces Health Professions Scholarship and Financial Assistance program. Free state tax program For more information, see Publication 970. Free state tax program Working Condition Benefits If your employer provides you with a product or service and the cost of it would have been allowable as a business or depreciation deduction if you paid for it yourself, the cost is not included in your income. Free state tax program Example. Free state tax program You work as an engineer and your employer provides you with a subscription to an engineering trade magazine. Free state tax program The cost of the subscription is not included in your income because the cost would have been allowable to you as a business deduction if you had paid for the subscription yourself. Free state tax program Valuation of Fringe Benefits If a fringe benefit is included in your income, the amount included is generally its value determined under the general valuation rule or under the special valuation rules. Free state tax program For an exception, see Group-Term Life Insurance , earlier. Free state tax program General valuation rule. Free state tax program   You must include in your income the amount by which the fair market value of the fringe benefit is more than the sum of: The amount, if any, you paid for the benefit, plus The amount, if any, specifically excluded from your income by law. Free state tax program If you pay fair market value for a fringe benefit, no amount is included in your income. Free state tax program Fair market value. Free state tax program   The fair market value of a fringe benefit is determined by all the facts and circumstances. Free state tax program It is the amount you would have to pay a third party to buy or lease the benefit. Free state tax program This is determined without regard to: Your perceived value of the benefit, or The amount your employer paid for the benefit. Free state tax program Employer-provided vehicles. Free state tax program   If your employer provides a car (or other highway motor vehicle) to you, your personal use of the car is usually a taxable noncash fringe benefit. Free state tax program   Under the general valuation rules, the value of an employer-provided vehicle is the amount you would have to pay a third party to lease the same or a similar vehicle on the same or comparable terms in the same geographic area where you use the vehicle. Free state tax program An example of a comparable lease term is the amount of time the vehicle is available for your use, such as a 1-year period. Free state tax program The value cannot be determined by multiplying a cents-per-mile rate times the number of miles driven unless you prove the vehicle could have been leased on a cents-per-mile basis. Free state tax program Flights on employer-provided aircraft. Free state tax program   Under the general valuation rules, if your flight on an employer-provided piloted aircraft is primarily personal and you control the use of the aircraft for the flight, the value is the amount it would cost to charter the flight from a third party. Free state tax program   If there is more than one employee on the flight, the cost to charter the aircraft must be divided among those employees. Free state tax program The division must be based on all the facts, including which employee or employees control the use of the aircraft. Free state tax program Special valuation rules. Free state tax program   You generally can use a special valuation rule for a fringe benefit only if your employer uses the rule. Free state tax program If your employer uses a special valuation rule, you cannot use a different special rule to value that benefit. Free state tax program You always can use the general valuation rule discussed earlier, based on facts and circumstances, even if your employer uses a special rule. Free state tax program   If you and your employer use a special valuation rule, you must include in your income the amount your employer determines under the special rule minus the sum of: Any amount you repaid your employer, plus Any amount specifically excluded from income by law. Free state tax program The special valuation rules are the following. Free state tax program The automobile lease rule. Free state tax program The vehicle cents-per-mile rule. Free state tax program The commuting rule. Free state tax program The unsafe conditions commuting rule. Free state tax program The employer-operated eating-facility rule. Free state tax program   For more information on these rules, see Publication 15-B, Employer's Tax Guide to Fringe Benefits. Free state tax program    For information on the non-commercial flight and commercial flight valuation rules, see sections 1. Free state tax program 61-21(g) and 1. Free state tax program 61-21(h) of the regulations. Free state tax program Retirement Plan Contributions Your employer's contributions to a qualified retirement plan for you are not included in income at the time contributed. Free state tax program (Your employer can tell you whether your retirement plan is qualified. Free state tax program ) However, the cost of life insurance coverage included in the plan may have to be included. Free state tax program See Group-Term Life Insurance , earlier, under Fringe Benefits. Free state tax program If your employer pays into a nonqualified plan for you, you generally must include the contributions in your income as wages for the tax year in which the contributions are made. Free state tax program However, if your interest in the plan is not transferable or is subject to a substantial risk of forfeiture (you have a good chance of losing it) at the time of the contribution, you do not have to include the value of your interest in your income until it is transferable or is no longer subject to a substantial risk of forfeiture. Free state tax program For information on distributions from retirement plans, see Publication 575 (or Publication 721, Tax Guide to U. Free state tax program S. Free state tax program Civil Service Retirement Benefits, if you are a federal employee or retiree). Free state tax program Elective Deferrals If you are covered by certain kinds of retirement plans, you can choose to have part of your compensation contributed by your employer to a retirement fund, rather than have it paid to you. Free state tax program The amount you set aside (called an elective deferral) is treated as an employer contribution to a qualified plan. Free state tax program An elective deferral, other than a designated Roth contribution (discussed later), is not included in wages subject to income tax at the time contributed. Free state tax program However, it is included in wages subject to social security and Medicare taxes. Free state tax program Elective deferrals include elective contributions to the following retirement plans. Free state tax program Cash or deferred arrangements (section 401(k) plans). Free state tax program The Thrift Savings Plan for federal employees. Free state tax program Salary reduction simplified employee pension plans (SARSEP). Free state tax program Savings incentive match plans for employees (SIMPLE plans). Free state tax program Tax-sheltered annuity plans (403(b) plans). Free state tax program Section 501(c)(18)(D) plans. Free state tax program (But see Reporting by employer , later. Free state tax program ) Section 457 plans. Free state tax program Qualified automatic contribution arrangements. Free state tax program   Under a qualified automatic contribution arrangement, your employer can treat you as having elected to have a part of your compensation contributed to a section 401(k) plan. Free state tax program You are to receive written notice of your rights and obligations under the qualified automatic contribution arrangement. Free state tax program The notice must explain: Your rights to elect not to have elective contributions made, or to have contributions made at a different percentage, and How contributions made will be invested in the absence of any investment decision by you. Free state tax program   You must be given a reasonable period of time after receipt of the notice and before the first elective contribution is made to make an election with respect to the contributions. Free state tax program Overall limit on deferrals. Free state tax program   For 2013, in most cases, you should not have deferred more than a total of $17,500 of contributions to the plans listed in (1) through (3), earlier. Free state tax program The specific plan limits for the plans listed in (4) through (7), earlier, are discussed later. Free state tax program Amounts deferred under specific plan limits are part of the overall limit on deferrals. Free state tax program   Your employer or plan administrator should apply the proper annual limit when figuring your plan contributions. Free state tax program However, you are responsible for monitoring the total you defer to ensure that the deferrals are not more than the overall limit. Free state tax program Catch-up contributions. Free state tax program   You may be allowed catch-up contributions (additional elective deferrals) if you are age 50 or older by the end of your tax year. Free state tax program For more information about catch-up contributions to 403(b) plans, see chapter 6 of Publication 571, Tax Sheltered Annuity Plans. Free state tax program   For more information about additional elective deferrals to: SEPs (SARSEPs), see Salary Reduction Simplified Employee Pension in chapter 2 of Publication 560, Retirement Plans for Small Business. Free state tax program SIMPLE plans, see How Much Can Be Contributed on Your Behalf? in chapter 3 of Publication 590. Free state tax program Section 457 plans, see Limit for deferrals under section 457 plans , later. Free state tax program Limit for deferrals under SIMPLE plans. Free state tax program   If you are a participant in a SIMPLE plan, you generally should not have deferred more than $12,000 in 2013. Free state tax program Amounts you defer under a SIMPLE plan count toward the overall limit ($17,500 for 2013) and may affect the amount you can defer under other elective deferral plans. Free state tax program Limit for tax-sheltered annuities. Free state tax program   If you are a participant in a tax-sheltered annuity plan (403(b) plan), the limit on elective deferrals for 2013 generally is $17,500. Free state tax program However, if you have at least 15 years of service with a public school system, a hospital, a home health service agency, a health and welfare service agency, a church, or a convention or association of churches (or associated organization), the limit on elective deferrals is increased by the least of the following amounts. Free state tax program $3,000, $15,000, reduced by the sum of: The additional pre-tax elective deferrals made in earlier years because of this rule, plus The aggregate amount of designated Roth contributions permitted for prior tax years because of this rule, or $5,000 times the number of your years of service for the organization, minus the total elective deferrals made by your employer on your behalf for earlier years. Free state tax program   If you qualify for the 15-year rule, your elective deferrals under this limit can be as high as $20,500 for 2013. Free state tax program   For more information, see Publication 571. Free state tax program Limit for deferral under section 501(c)(18) plans. Free state tax program   If you are a participant in a section 501(c)(18) plan (a trust created before June 25, 1959, funded only by employee contributions), you should have deferred no more than the lesser of $7,000 or 25% of your compensation. Free state tax program Amounts you defer under a section 501(c)(18) plan count toward the overall limit ($17,500 in 2013) and may affect the amount you can defer under other elective deferral plans. Free state tax program Limit for deferrals under section 457 plans. Free state tax program   If you are a participant in a section 457 plan (a deferred compensation plan for employees of state or local governments or tax-exempt organizations), you should have deferred no more than the lesser of your includible compensation or $17,500 in 2013. Free state tax program However, if you are within 3 years of normal retirement age, you may be allowed an increased limit if the plan allows it. Free state tax program See Increased limit , later. Free state tax program Includible compensation. Free state tax program   This is the pay you received for the year from the employer who maintained the section 457 plan. Free state tax program In most cases, it includes all the following payments. Free state tax program Wages and salaries. Free state tax program Fees for professional services. Free state tax program The value of any employer-provided qualified transportation fringe benefit (defined under Transportation , earlier) that is not included in your income. Free state tax program Other amounts received (cash or noncash) for personal services you performed, including, but not limited to, the following items. Free state tax program Commissions and tips. Free state tax program Fringe benefits. Free state tax program Bonuses. Free state tax program Employer contributions (elective deferrals) to: The section 457 plan. Free state tax program Qualified cash or deferred arrangements (section 401(k) plans) that are not included in your income. Free state tax program A salary reduction simplified employee pension (SARSEP). Free state tax program A tax-sheltered annuity (section 403(b) plan). Free state tax program A savings incentive match plan for employees (SIMPLE plan). Free state tax program A section 125 cafeteria plan. Free state tax program   Instead of using the amounts listed earlier to determine your includible compensation, your employer can use any of the following amounts. Free state tax program Your wages as defined for income tax withholding purposes. Free state tax program Your wages as reported in box 1 of Form W-2. Free state tax program Your wages that are subject to social security withholding (including elective deferrals). Free state tax program Increased limit. Free state tax program   During any, or all, of the last 3 years ending before you reach normal retirement age under the plan, your plan may provide that your limit is the lesser of: Twice the annual limit ($35,000 for 2013), or The basic annual limit plus the amount of the basic limit not used in prior years (only allowed if not using age 50 or over catch-up contributions). Free state tax program Catch-up contributions. Free state tax program   You generally can have additional elective deferrals made to your governmental section 457 plan if: You reached age 50 by the end of the year, and No other elective deferrals can be made for you to the plan for the year because of limits or restrictions. Free state tax program If you qualify, your limit can be the lesser of your includible compensation or $17,500, plus $5,500. Free state tax program However, if you are within 3 years of retirement age and your plan provides the increased limit, discussed earlier, that limit may be higher. Free state tax program Designated Roth contributions. Free state tax program   Employers with section 401(k) and section 403(b) plans can create qualified Roth contribution programs so that you may elect to have part or all of your elective deferrals to the plan designated as after-tax Roth contributions. Free state tax program Designated Roth contributions are treated as elective deferrals, except that they are included in income. Free state tax program Your retirement plan must maintain separate accounts and recordkeeping for the designated Roth contributions. Free state tax program   Qualified distributions from a Roth plan are not included in income. Free state tax program In most cases, a distribution made before the end of the 5-tax-year period beginning with the first tax year for which you made a designated Roth contribution to the plan is not a qualified distribution. Free state tax program Reporting by employer. Free state tax program   Your employer generally should not include elective deferrals in your wages in box 1 of Form W-2. Free state tax program Instead, your employer should mark the Retirement plan checkbox in box 13 and show the total amount deferred in box 12. Free state tax program Section 501(c)(18)(D) contributions. Free state tax program   Wages shown in box 1 of your Form W-2 should not have been reduced for contributions you made to a section 501(c)(18)(D) retirement plan. Free state tax program The amount you contributed should be identified with code “H” in box 12. Free state tax program You may deduct the amount deferred subject to the limits that apply. Free state tax program Include your deduction in the total on Form 1040, line 36. Free state tax program Enter the amount and “501(c)(18)(D)” on the dotted line next to line 36. Free state tax program Designated Roth contributions. Free state tax program    These contributions are elective deferrals but are included in your wages in box 1 of Form W-2. Free state tax program Designated Roth contributions to a section 401(k) plan are reported using code AA in box 12, or, for section 403(b) plans, code BB in box 12. Free state tax program Excess deferrals. Free state tax program   If your deferrals exceed the limit, you must notify your plan by the date required by the plan. Free state tax program If the plan permits, the excess amount will be distributed to you. Free state tax program If you participate in more than one plan, you can have the excess paid out of any of the plans that permit these distributions. Free state tax program You must notify each plan by the date required by that plan of the amount to be paid from that particular plan. Free state tax program The plan then must pay you the amount of the excess, along with any income earned on that amount, by April 15 of the following year. Free state tax program   You must include the excess deferral in your income for the year of the deferral unless you have an excess deferral of a designated Roth contribution. Free state tax program File Form 1040 to add the excess deferral amount to your wages on line 7. Free state tax program Do not use Form 1040A or Form 1040EZ to report excess deferral amounts. Free state tax program Excess not distributed. Free state tax program   If you do not take out the excess amount, you cannot include it in the cost of the contract even though you included it in your income. Free state tax program Therefore, you are taxed twice on the excess deferral left in the plan—once when you contribute it, and again when you receive it as a distribution. Free state tax program Excess distributed to you. Free state tax program   If you take out the excess after the year of the deferral and you receive the corrective distribution by April 15 of the following year, do not include it in income again in the year you receive it. Free state tax program If you receive it later, you must include it in income in both the year of the deferral and the year you receive it. Free state tax program Any income on the excess deferral taken out is taxable in the tax year in which you take it out. Free state tax program If you take out part of the excess deferral and the income on it, allocate the distribution proportionately between the excess deferral and the income. Free state tax program    You should receive a Form 1099-R for the year in which the excess deferral is distributed to you. Free state tax program Use the following rules to report a corrective distribution shown on Form 1099-R for 2013. Free state tax program If the distribution was for a 2013 excess deferral, your Form 1099-R should have the code “8” in box 7. Free state tax program Add the excess deferral amount to your wages on your 2013 tax return. Free state tax program If the distribution was for a 2013 excess deferral to a designated Roth account, your Form 1099-R should have code “B” in box 7. Free state tax program Do not add this amount to your wages on your 2013 return. Free state tax program If the distribution was for a 2012 excess deferral, your Form 1099-R should have the code “P” in box 7. Free state tax program If you did not add the excess deferral amount to your wages on your 2012 tax return, you must file an amended return on Form 1040X, Amended U. Free state tax program S. Free state tax program Individual Income Tax Return. Free state tax program If you did not receive the distribution by April 15, 2013, you also must add it to your wages on your 2013 tax return. Free state tax program If the distribution was for the income earned on an excess deferral, your Form 1099-R should have the code “8” in box 7. Free state tax program Add the income amount to your wages on your 2013 income tax return, regardless of when the excess deferral was made. Free state tax program Report a loss on a corrective distribution of an excess deferral in the year the excess amount (reduced by the loss) is distributed to you. Free state tax program Include the loss as a negative amount on Form 1040, line 21 and identify it as “Loss on Excess Deferral Distribution. Free state tax program ”    Even though a corrective distribution of excess deferrals is reported on Form 1099-R, it is not otherwise treated as a distribution from the plan. Free state tax program It cannot be rolled over into another plan, and it is not subject to the additional tax on early distributions. Free state tax program Excess Contributions If you are a highly compensated employee, the total of your elective deferrals and other contributions made for you for any year under a section 401(k) plan or SARSEP can be, as a percentage of pay, no more than 125% of the average deferral percentage (ADP) of all eligible non-highly compensated employees. Free state tax program If the total contributed to the plan is more than the amount allowed under the ADP test, the excess contributions must be either distributed to you or recharacterized as after-tax employee contributions by treating them as distributed to you and then contributed by you to the plan. Free state tax program You must include the excess contributions in your income as wages on Form 1040, line 7. Free state tax program You cannot use Form 1040A or Form 1040EZ to report excess contribution amounts. Free state tax program If you receive a corrective distribution of excess contributions (and allocable income), it is included in your income in the year of the distribution. Free state tax program The allocable income is the amount of gain or loss through the end of the plan year for which the contribution was made that is allocable to the excess contributions. Free state tax program You should receive a Form 1099-R for the year the excess contributions are distributed to you. Free state tax program Add the distribution to your wages for that year. Free state tax program Even though a corrective distribution of excess contributions is reported on Form 1099-R, it is not otherwise treated as a distribution from the plan. Free state tax program It cannot be rolled over into another plan, and it is not subject to the additional tax on early distributions. Free state tax program Excess Annual Additions The amount contributed in 2013 to a defined contribution plan is generally limited to the lesser of 100% of your compensation or $51,000. Free state tax program Under certain circumstances, contributions that exceed these limits (excess annual additions) may be corrected by a distribution of your elective deferrals or a return of your after-tax contributions and earnings from these contributions. Free state tax program A corrective payment of excess annual additions consisting of elective deferrals or earnings from your after-tax contributions is fully taxable in the year paid. Free state tax program A corrective payment consisting of your after-tax contributions is not taxable. Free state tax program If you received a corrective payment of excess annual additions, you should receive a separate Form 1099-R for the year of the payment with the code “E” in box 7. Free state tax program Report the total payment shown in box 1 of Form 1099-R on line 16a of Form 1040 or line 12a of Form 1040A. Free state tax program Report the taxable amount shown in box 2a of Form 1099-R on line 16b of Form 1040 or line 12b of Form 1040A. Free state tax program Even though a corrective distribution of excess annual additions is reported on Form 1099-R, it is not otherwise treated as a distribution from the plan. Free state tax program It cannot be rolled over into another plan, and it is not subject to the additional tax on early distributions. Free state tax program Stock Options If you receive an option to buy or sell stock or other property as payment for your services, you may have income when you receive the option (the grant), when you exercise the option (use it to buy or sell the stock or other property), or when you sell or otherwise dispose of the option or property acquired through exercise of the option. Free state tax program The timing, type, and amount of income inclusion depend on whether you receive a nonstatutory stock option or a statutory stock option. Free state tax program Your employer can tell you which kind of option you hold. Free state tax program Nonstatutory Stock Options Grant of option. Free state tax program   If you are granted a nonstatutory stock option, you may have income when you receive the option. Free state tax program The amount of income to include and the time to include it depend on whether the fair market value of the option can be readily determined. Free state tax program The fair market value of an option can be readily determined if it is actively traded on an established market. Free state tax program    The fair market value of an option that is not traded on an established market can be readily determined only if all of the following conditions exist. Free state tax program You can transfer the option. Free state tax program You can exercise the option immediately in full. Free state tax program The option or the property subject to the option is not subject to any condition or restriction (other than a condition to secure payment of the purchase price) that has a significant effect on the fair market value of the option. Free state tax program The fair market value of the option privilege can be readily determined. Free state tax program The option privilege for an option to buy is the opportunity to benefit during the option's exercise period from any increase in the value of property subject to the option without risking any capital. Free state tax program For example, if during the exercise period the fair market value of stock subject to an option is greater than the option's exercise price, a profit may be realized by exercising the option and immediately selling the stock at its higher value. Free state tax program The option privilege for an option to sell is the opportunity to benefit during the exercise period from a decrease in the value of the property subject to the option. Free state tax program If you or a member of your family is an officer, director, or more-than-10% owner of an expatriated corporation, you may owe an excise tax on the value of nonstatutory options and other stock-based compensation from that corporation. Free state tax program For more information on the excise tax, see Internal Revenue Code section 4985. Free state tax program Option with readily determinable value. Free state tax program   If you receive a nonstatutory stock option that has a readily determinable fair market value at the time it is granted to you, the option is treated like other property received as compensation. Free state tax program See Restricted Property , later, for rules on how much income to include and when to include it. Free state tax program However, the rule described in that discussion for choosing to include the value of property in your income for the year of the transfer does not apply to a nonstatutory option. Free state tax program Option without readily determinable value. Free state tax program   If the fair market value of the option is not readily determinable at the time it is granted to you (even if it is determined later), you do not have income until you exercise or transfer the option. Free state tax program    Exercise or transfer of option. Free state tax program   When you exercise a nonstatutory stock option, the amount to include in your income depends on whether the option had a readily determinable value. Free state tax program Option with readily determinable value. Free state tax program   When you exercise a nonstatutory stock option that had a readily determinable value at the time the option was granted, you do not have to include any amount in income. Free state tax program Option without readily determinable value. Free state tax program   When you exercise a nonstatutory stock option that did not have a readily determinable value at the time the option was granted, the restricted prope
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Taxpayer Guide to Identity Theft

We know identity theft is a frustrating process for victims. We take this issue very seriously and continue to expand on our robust screening process in order to stop fraudulent returns.

What is identity theft?

Identity theft occurs when someone uses your personal information such as your name, Social Security number (SSN) or other identifying information, without your permission, to commit fraud or other crimes.

How do you know if your tax records have been affected?

Usually, an identity thief uses a legitimate taxpayer’s identity to fraudulently file a tax return and claim a refund. Generally, the identity thief will use a stolen SSN to file a forged tax return and attempt to get a fraudulent refund early in the filing season.

 

You may be unaware that this has happened until you file your return later in the filing season and discover that two returns have been filed using the same SSN.

 

Be alert to possible identity theft if you receive an IRS notice or letter that states that:

  • More than one tax return for you was filed,
  • You have a balance due, refund offset or have had collection actions taken against you for a year you did not file a tax return, or
  • IRS records indicate you received wages from an employer unknown to you.

What to do if your tax records were affected by identity theft?

If you receive a notice from IRS, respond immediately. If you believe someone may have used your SSN fraudulently, please notify IRS immediately by responding to the name and number printed on the notice or letter. You will need to fill out the IRS Identity Theft Affidavit, Form 14039.

 

For victims of identity theft who have previously been in contact with the IRS and have not achieved a resolution, please contact the IRS Identity Protection Specialized Unit, toll-free, at 1-800-908-4490.

How can you protect your tax records?

If your tax records are not currently affected by identity theft, but you believe you may be at risk due to a lost/stolen purse or wallet, questionable credit card activity or credit report, etc., contact the IRS Identity Protection Specialized Unit at 1-800-908-4490.

How can you minimize the chance of becoming a victim?

  • Don’t carry your Social Security card or any document(s) with your SSN on it.
  • Don’t give a business your SSN just because they ask. Give it only when required.
  • Protect your financial information.
  • Check your credit report every 12 months.
  • Secure personal information in your home.
  • Protect your personal computers by using firewalls, anti-spam/virus software, update security patches, and change passwords for Internet accounts.
  • Don’t give personal information over the phone, through the mail or on the Internet unless you have initiated the contact or you are sure you know who you are dealing with.
 

ID Theft Tool Kit

Are you a victim of identity theft?

 

If you receive a notice from the IRS, please call the number on that notice. If not, contact the IRS at 800-908-4490

 

Fill out the IRS Identity Theft Affidavit, Form 14039. (Please write legibly and follow the directions on the back of the form that relate to your specific circumstances.)


Credit Bureaus

 

Equifax
www.equifax.com
1-800-525-6285

 

Experian
www.experian.com
1-888-397-3742

 

TransUnion
www.transunion.com
1-800-680-7289


Other Resources

 

Visit the Federal Trade Commission's Identity Theft page or use the FTC's Complaint Assistant.

 

Visit the Internet Crime Complaint Center (IC3) to learn more about their internet crime prevention tips.


Report Suspicious Emails

 

Report suspicious online or emailed phishing scams to:
phishing@irs.gov.

 

For phishing scams by phone, fax or mail, call:
1-800-366-4484.


For More Information

 

The IRS does not initiate contact with taxpayers by email to request personal or financial information. This includes any type of electronic communication, such as text messages and social media channels.

Page Last Reviewed or Updated: 30-Jan-2014

The Free State Tax Program

Free state tax program 5. Free state tax program   Figuring Your Tax Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Tax Year Identification NumberF-1 and M-1 visa holders. Free state tax program J-1 visa holders. Free state tax program Filing StatusResident Aliens Nonresident Aliens Reporting Your Income DeductionsResident Aliens Nonresident Aliens ExemptionsResident Aliens Nonresident Aliens Itemized DeductionsResident Aliens Nonresident Aliens Tax Credits and PaymentsResident Aliens Nonresident Aliens Bona Fide Residents of American Samoa or Puerto Rico Introduction After you have determined your alien status, the source of your income, and if and how that income is taxed in the United States, your next step is to figure your tax. Free state tax program The information in this chapter is not as comprehensive for resident aliens as it is for nonresident aliens. Free state tax program Resident aliens should get publications, forms, and instructions for U. Free state tax program S. Free state tax program citizens, because the information for filing returns for resident aliens is generally the same as for U. Free state tax program S. Free state tax program citizens. Free state tax program If you are both a nonresident alien and a resident alien in the same tax year, see chapter 6 for a discussion of dual-status aliens. Free state tax program Topics - This chapter discusses: Identification numbers, Filing status, Deductions, Exemptions, Tax credits and payments, and Special rules for bona fide residents of American Samoa and Puerto Rico. Free state tax program Useful Items - You may want to see: Publication 463 Travel, Entertainment, Gift, and Car Expenses 501 Exemptions, Standard Deduction, and Filing Information 521 Moving Expenses 526 Charitable Contributions 535 Business Expenses 597 Information on the United States–Canada Income Tax Treaty Form (and Instructions) W-7 Application for IRS Individual Taxpayer Identification Number 1040 U. Free state tax program S. Free state tax program Individual Income Tax Return 1040NR U. Free state tax program S. Free state tax program Nonresident Alien Income Tax Return 1040NR-EZ U. Free state tax program S. Free state tax program Income Tax Return for Certain Nonresident Aliens With No Dependents 2106 Employee Business Expenses 2106-EZ Unreimbursed Employee Business Expenses 3903 Moving Expenses 4563 Exclusion of Income for Bona Fide Residents of American Samoa 8959 Additional Medicare Tax See chapter 12 for information about getting these publications and forms. Free state tax program Tax Year You must figure your income and file a tax return on the basis of an annual accounting period called a tax year. Free state tax program If you have not previously established a fiscal tax year, your tax year is the calendar year. Free state tax program A calendar year is 12 consecutive months ending on December 31. Free state tax program If you have previously established a regular fiscal year (12 consecutive months ending on the last day of a month other than December or a 52–53 week year) and are considered to be a U. Free state tax program S. Free state tax program resident for any calendar year, you will be treated as a U. Free state tax program S. Free state tax program resident for any part of your fiscal year that falls within that calendar year. Free state tax program Identification Number A taxpayer identification number must be furnished on returns, statements, and other tax-related documents. Free state tax program For an individual, this is a social security number (SSN). Free state tax program If you do not have and are not eligible to get an SSN, you must apply for an individual taxpayer identification number (ITIN). Free state tax program An employer identification number (EIN) is required if you are engaged in a trade or business as a sole proprietor and have employees or a qualified retirement plan. Free state tax program You must furnish a taxpayer identification number if you are: An alien who has income effectively connected with the conduct of a U. Free state tax program S. Free state tax program trade or business at any time during the year, An alien who has a U. Free state tax program S. Free state tax program office or place of business at any time during the year, A nonresident alien spouse treated as a resident, as discussed in chapter 1, or Any other alien who files a tax return, an amended return, or a refund claim (but not information returns). Free state tax program Social security number (SSN). Free state tax program   Generally, you can get an SSN if you have been lawfully admitted to the United States for permanent residence or under other immigration categories that authorize U. Free state tax program S. Free state tax program employment. Free state tax program   To apply for this number, get Form SS-5, Application for a Social Security Card, from your local Social Security Administration (SSA) office or call the SSA at 1-800-772-1213. Free state tax program You can also download Form SS-5 from the SSA's website at www. Free state tax program socialsecurity. Free state tax program gov/ssnumber/ss5. Free state tax program htm. Free state tax program You must visit an SSA office in person and submit your Form SS-5 along with original documentation showing your age, identity, immigration status, and authority to work in the United States. Free state tax program Generally, you will receive your card about 2 weeks after the SSA has all of the necessary information. Free state tax program F-1 and M-1 visa holders. Free state tax program    If you are an F-1 or M-1 student, you must also show your Form I-20. Free state tax program For more information, see SSA Publication 05-10181, International Students and Social Security Numbers, available online at www. Free state tax program socialsecurity. Free state tax program gov/pubs/10181. Free state tax program html. Free state tax program J-1 visa holders. Free state tax program   If you are a J-1 exchange visitor, you will also need to show your Form DS-2019. Free state tax program For more information, see SSA Publication 05-10107, Foreign Workers and Social Security Numbers, available online at www. Free state tax program socialsecurity. Free state tax program gov/pubs/10107. Free state tax program html. Free state tax program Individual taxpayer identification number (ITIN). Free state tax program   If you do not have and are not eligible to get an SSN, you must apply for an ITIN. Free state tax program For details on how to do so, see Form W-7 and its instructions. Free state tax program Allow 6 to 10 weeks for the IRS to notify you of your ITIN. Free state tax program If you already have an ITIN, enter it wherever an SSN is required on your tax return. Free state tax program   An ITIN is for tax use only. Free state tax program It does not entitle you to social security benefits or change your employment or immigration status under U. Free state tax program S. Free state tax program law. Free state tax program   In addition to those aliens who are required to furnish a taxpayer identification number and are not eligible for an SSN, a Form W-7 must be filed for: Alien individuals who are claimed as dependents and are not eligible for an SSN, and Alien spouses who are claimed as exemptions and are not eligible for an SSN. Free state tax program Employer identification number (EIN). Free state tax program   An individual may use an SSN (or ITIN) for individual taxes and an EIN for business taxes. Free state tax program To apply for an EIN, file Form SS-4, Application for Employer Identification Number, with the IRS. Free state tax program Filing Status The amount of your tax depends on your filing status. Free state tax program Your filing status is important in determining whether you can take certain deductions and credits. Free state tax program The rules for determining your filing status are different for resident aliens and nonresident aliens. Free state tax program Resident Aliens Resident aliens can use the same filing statuses available to U. Free state tax program S. Free state tax program citizens. Free state tax program See your form instructions or Publication 501 for more information on filing status. Free state tax program Married filing jointly. Free state tax program   Generally, you can file as married filing jointly only if both you and your spouse were resident aliens for the entire tax year, or if you make one of the choices discussed in chapter 1 to treat your spouse as a resident alien for the entire tax year. Free state tax program Qualifying widow(er). Free state tax program   If your spouse died in 2011 or 2012, you did not remarry before the end of 2013, and you have a dependent child living with you, you may qualify to file as a qualifying widow(er) and use the joint return tax rates. Free state tax program This applies only if you could have filed a joint return with your spouse for the year your spouse died. Free state tax program Head of household. Free state tax program   You can qualify as head of household if you are unmarried or considered unmarried on the last day of the year and you pay more than half the cost of keeping up a home for you and a qualifying person. Free state tax program You must be a resident alien for the entire tax year. Free state tax program   You are considered unmarried for this purpose if your spouse was a nonresident alien at any time during the year and you do not make one of the choices discussed in chapter 1 to treat your spouse as a resident alien for the entire tax year. Free state tax program Note. Free state tax program   Even if you are considered unmarried for head of household purposes because you are married to a nonresident alien, you may still be considered married for purposes of the earned income credit. Free state tax program In that case, you will not be entitled to the credit. Free state tax program See Publication 596 for more information. Free state tax program Nonresident Aliens If you are a nonresident alien filing Form 1040NR, you may be able to use one of the filing statuses discussed later. Free state tax program If you are filing Form 1040NR-EZ, you can only claim “Single nonresident alien” or “Married nonresident alien” as your filing status. Free state tax program Married nonresident alien. Free state tax program   Married nonresident aliens who are not married to U. Free state tax program S. Free state tax program citizens or residents generally must use the Tax Table column or the Tax Computation Worksheet for married filing separate returns when determining the tax on income effectively connected with a U. Free state tax program S. Free state tax program trade or business. Free state tax program Exceptions. Free state tax program   Married nonresident aliens normally cannot use the Tax Table column or the Tax Computation Worksheet for single individuals. Free state tax program However, you may be able to file as single if you lived apart from your spouse during the last 6 months of the year and you are a married resident of Canada, Mexico, South Korea, or are a married U. Free state tax program S. Free state tax program national. Free state tax program See the instructions for Form 1040NR or Form 1040NR-EZ to see if you qualify. Free state tax program U. Free state tax program S. Free state tax program national is defined later in this section under Qualifying widow(er) . Free state tax program   A nonresident alien generally cannot file as married filing jointly. Free state tax program However, a nonresident alien who is married to a U. Free state tax program S. Free state tax program citizen or resident can choose to be treated as a resident and file a joint return on Form 1040, Form 1040A, or Form 1040EZ. Free state tax program For information on these choices, see chapter 1. Free state tax program If you do not make the choice to file jointly, file Form 1040NR or Form 1040NR-EZ and use the Tax Table column or the Tax Computation Worksheet for married individuals filing separately. Free state tax program Qualifying widow(er). Free state tax program   You may be eligible to file as a qualifying widow(er) and use the joint return tax rates if all of the following conditions apply. Free state tax program You were a resident of Canada, Mexico, or South Korea, or a U. Free state tax program S. Free state tax program national (defined later). Free state tax program Your spouse died in 2011 or 2012 and you did not remarry before the end of 2013. Free state tax program You have a dependent child living with you. Free state tax program See the instructions for Form 1040NR for the rules for filing as a qualifying widow(er) with a dependent child. Free state tax program   A U. Free state tax program S. Free state tax program national is an individual who, although not a U. Free state tax program S. Free state tax program citizen, owes his or her allegiance to the United States. Free state tax program U. Free state tax program S. Free state tax program nationals include American Samoans and Northern Mariana Islanders who chose to become U. Free state tax program S. Free state tax program nationals instead of U. Free state tax program S. Free state tax program citizens. Free state tax program Head of household. Free state tax program   You cannot file as head of household if you are a nonresident alien at any time during the tax year. Free state tax program However, if you are married, your spouse can qualify as a head of household if: Your spouse is a resident alien or U. Free state tax program S. Free state tax program citizen for the entire tax year, You do not choose to be treated as a resident alien, and Your spouse meets the other requirements for this filing status, as discussed earlier under Resident Aliens . Free state tax program Note. Free state tax program   Even if your spouse is considered unmarried for head of household purposes because you are a nonresident alien, your spouse may still be considered married for purposes of the earned income credit. Free state tax program In that case, your spouse will not be entitled to the credit. Free state tax program See Publication 596 for more information. Free state tax program Estates and trusts. Free state tax program   A nonresident alien estate or trust using Form 1040NR must use Tax Rate Schedule W in the Form 1040NR instructions when determining the tax on income effectively connected with a U. Free state tax program S. Free state tax program trade or business. Free state tax program Special rules for aliens from certain U. Free state tax program S. Free state tax program possessions. Free state tax program   A nonresident alien who is a bona fide resident of American Samoa or Puerto Rico for the entire tax year and who is temporarily working in the United States should read Bona Fide Residents of American Samoa or Puerto Rico, at the end of this chapter, for information about special rules. Free state tax program Reporting Your Income You must report each item of income that is taxable according to the rules in chapters 2, 3, and 4. Free state tax program For resident aliens, this includes income from sources both within and outside the United States. Free state tax program For nonresident aliens, this includes both income that is effectively connected with a trade or business in the United States (subject to graduated tax rates) and income from U. Free state tax program S. Free state tax program sources that is not effectively connected (subject to a flat 30% tax rate or lower tax treaty rate). Free state tax program Deductions Resident and nonresident aliens can claim similar deductions on their U. Free state tax program S. Free state tax program tax returns. Free state tax program However, nonresident aliens generally can claim only deductions related to income that is effectively connected with their U. Free state tax program S. Free state tax program trade or business. Free state tax program Resident Aliens You can claim the same deductions allowed to U. Free state tax program S. Free state tax program citizens if you are a resident alien for the entire tax year. Free state tax program While the discussion that follows contains some of the same general rules and guidelines that apply to you, it is specifically directed toward nonresident aliens. Free state tax program You should get Form 1040 and instructions for more information on how to claim your allowable deductions. Free state tax program Nonresident Aliens You can claim deductions to figure your effectively connected taxable income. Free state tax program You generally cannot claim deductions related to income that is not connected with your U. Free state tax program S. Free state tax program business activities. Free state tax program Except for personal exemptions, and certain itemized deductions, discussed later, you can claim deductions only to the extent they are connected with your effectively connected income. Free state tax program Ordinary and necessary business expenses. Free state tax program   You can deduct all ordinary and necessary expenses in the operation of your U. Free state tax program S. Free state tax program trade or business to the extent they relate to income effectively connected with that trade or business. Free state tax program The deduction for travel expenses while in the United States is discussed under Itemized Deductions, later. Free state tax program For information about other business expenses, see Publication 535. Free state tax program Losses. Free state tax program   You can deduct losses resulting from transactions that you entered into for profit and that you were not reimbursed for by insurance, etc. Free state tax program to the extent that they relate to income that is effectively connected with a trade or business in the United States. Free state tax program Educator expenses. Free state tax program   If you were an eligible educator in 2013, you can deduct as an adjustment to income up to $250 in unreimbursed qualified expenses you paid or incurred during 2013 for books, supplies (other than nonathletic supplies for courses of instruction in health or physical education), computer equipment, and other equipment and materials used in the classroom. Free state tax program For more information, see your tax form instructions. Free state tax program Individual retirement arrangement (IRA). Free state tax program   If you made contributions to a traditional IRA for 2013, you may be able to take an IRA deduction. Free state tax program But you must have taxable compensation effectively connected with a U. Free state tax program S. Free state tax program trade or business to do so. Free state tax program A Form 5498 should be sent to you by May 31, 2014, that shows all contributions to your traditional IRA for 2013. Free state tax program If you were covered by a retirement plan (qualified pension, profit-sharing (including 401(k)), annuity, SEP, SIMPLE, etc. Free state tax program ) at work or through self-employment, your IRA deduction may be reduced or eliminated. Free state tax program But you can still make contributions to a traditional IRA even if you cannot deduct them. Free state tax program If you made nondeductible contributions to a traditional IRA for 2013, you must report them on Form 8606, Nondeductible IRAs. Free state tax program   For more information, see Publication 590, Individual Retirement Arrangements (IRAs). Free state tax program Moving expenses. Free state tax program   If you are a nonresident alien temporarily in the United States earning taxable income for performing personal services, you can deduct moving expenses to the United States if you meet both of the following tests. Free state tax program You are a full-time employee for at least 39 weeks during the 12 months right after you move, or if you are self-employed, you work full time for at least 39 weeks during the first 12 months and 78 weeks during the first 24 months right after you move. Free state tax program Your new job location is at least 50 miles farther (by the shortest commonly traveled route) from your former home than your former job location was. Free state tax program If you had no former job location, the new job location must be at least 50 miles from your former home. Free state tax program   You cannot deduct the moving expense you have when returning to your home abroad or moving to a foreign job site. Free state tax program   Figure your deductible moving expenses to the United States on Form 3903, and deduct them on line 26 of Form 1040NR. Free state tax program   For more information on the moving expense deduction, see Publication 521. Free state tax program Reimbursements. Free state tax program   If your employer reimbursed you for allowable moving expenses under an accountable plan, your employer should have excluded these reimbursements from your income. Free state tax program You can only deduct allowable moving expenses that were not reimbursed by your employer or that were reimbursed but the reimbursement was included in your income. Free state tax program For more information, see Publication 521. Free state tax program Moving expense or travel expense. Free state tax program   If you deduct moving expenses to the United States, you cannot also deduct travel expenses (discussed later under Itemized Deductions) while temporarily away from your tax home in a foreign country. Free state tax program Moving expenses are based on a change in your principal place of business while travel expenses are based on your temporary absence from your principal place of business. Free state tax program Self-employed SEP, SIMPLE, and qualified retirement plans. Free state tax program   If you are self-employed, you may be able to deduct contributions to a SEP, SIMPLE, or qualified retirement plan that provides retirement benefits for yourself and your common-law employees, if any. Free state tax program To make deductible contributions for yourself, you must have net earnings from self-employment that are effectively connected with your U. Free state tax program S. Free state tax program trade or business. Free state tax program   Get Publication 560, Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans), for further information. Free state tax program Penalty on early withdrawal of savings. Free state tax program   You must include in income all effectively connected interest income you receive or that is credited to your account during the year. Free state tax program Do not reduce it by any penalty you must pay on an early withdrawal from a time savings account. Free state tax program However, if the interest income is effectively connected with your U. Free state tax program S. Free state tax program trade or business during the year, you can deduct on line 30 of Form 1040NR the amount of the early withdrawal penalty that the banking institution charged. Free state tax program Student loan interest expense. Free state tax program   If you paid interest on a student loan in 2013, you may be able to deduct up to $2,500 of the interest you paid. Free state tax program Generally, you can claim the deduction if all the following requirements are met. Free state tax program Your filing status is any filing status except married filing separately. Free state tax program Your modified adjusted gross income is less than $75,000. Free state tax program No one else is claiming an exemption for you on his or her 2013 tax return. Free state tax program You paid interest on a loan taken out only to pay tuition and other qualified higher education expenses for yourself, your spouse, someone who was your dependent when the loan was taken out, or someone you could have claimed as a dependent for the year the loan was taken out except that: The person filed a joint return, The person had gross income that was equal to or more than the exemption amount for that year ($3,900 for 2013), or You could be claimed as a dependent on someone else's return. Free state tax program The loan is not from a related person or a person who borrowed the proceeds under a qualified employer plan or a contract purchased under such a plan. Free state tax program The education expenses were paid or incurred within a reasonable period of time before or after the loan was taken out. Free state tax program The person for whom the expenses were paid or incurred was an eligible student. Free state tax program Use the worksheet in the Form 1040NR or Form 1040NR-EZ instructions to figure the deduction. Free state tax program For more information, see Publication 970, Tax Benefits for Education. Free state tax program Exemptions Resident aliens can claim personal exemptions and exemptions for dependents in the same way as U. Free state tax program S. Free state tax program citizens. Free state tax program However, nonresident aliens generally can claim only a personal exemption for themselves on their U. Free state tax program S. Free state tax program tax return. Free state tax program Resident Aliens You can claim personal exemptions and exemptions for dependents according to the dependency rules for U. Free state tax program S. Free state tax program citizens. Free state tax program You can claim an exemption for your spouse on a separate return if your spouse had no gross income for U. Free state tax program S. Free state tax program tax purposes and was not the dependent of another taxpayer. Free state tax program You can claim this exemption even if your spouse has not been a resident alien for a full tax year or is an alien who has not come to the United States. Free state tax program You can claim an exemption for each person who qualifies as a dependent according to the rules for U. Free state tax program S. Free state tax program citizens. Free state tax program The dependent must be a citizen or national (defined earlier) of the United States or be a resident of the United States, Canada, or Mexico for some part of the calendar year in which your tax year begins. Free state tax program Get Publication 501 for more information. Free state tax program Your spouse and each dependent for whom you claim an exemption must have either an SSN or an ITIN. Free state tax program See Identification Number, earlier. Free state tax program Nonresident Aliens Generally, if you are a nonresident alien engaged in a trade or business in the United States, you can claim only one personal exemption ($3,900 for 2013). Free state tax program You may be able to claim an exemption for a spouse and a dependent if you are described in any of the following discussions. Free state tax program Your spouse and each dependent for whom you claim an exemption must have either an SSN or an ITIN. Free state tax program See Identification Number, earlier. Free state tax program Residents of Mexico or Canada or U. Free state tax program S. Free state tax program nationals. Free state tax program   If you are a resident of Mexico or Canada or a national of the United States (defined earlier), you can also claim a personal exemption for your spouse if your spouse had no gross income for U. Free state tax program S. Free state tax program tax purposes and cannot be claimed as the dependent on another U. Free state tax program S. Free state tax program taxpayer's return. Free state tax program In addition, you can claim exemptions for your dependents who meet certain tests. Free state tax program Residents of Mexico, Canada, or nationals of the United States must use the same rules as U. Free state tax program S. Free state tax program citizens to determine who is a dependent and for which dependents exemptions can be claimed. Free state tax program See Publication 501 for these rules. Free state tax program For purposes of these rules, dependents who are U. Free state tax program S. Free state tax program nationals meet the citizenship test discussed in Publication 501. Free state tax program Residents of South Korea. Free state tax program   Nonresident aliens who are residents of South Korea may be able to claim exemptions for a spouse and children. Free state tax program The income tax treaty with South Korea imposes two additional requirements on South Korean residents: The spouse and all children claimed must live with the alien in the United States at some time during the tax year, and The additional deduction for the exemptions must be prorated based on the ratio of the alien's U. Free state tax program S. Free state tax program source gross income effectively connected with a U. Free state tax program S. Free state tax program trade or business for the tax year to the alien's entire income from all sources during the tax year. Free state tax program Example. Free state tax program Mr. Free state tax program Park, a nonresident alien who is a resident of South Korea, lives temporarily in the United States with his wife and two children. Free state tax program During the tax year he receives U. Free state tax program S. Free state tax program compensation of $18,000. Free state tax program He also receives $6,000 of income from sources outside the United States that is not effectively connected with his U. Free state tax program S. Free state tax program trade or business. Free state tax program Thus, his total income for the year is $24,000. Free state tax program Mr. Free state tax program Park meets all requirements for claiming exemptions for his spouse and two children. Free state tax program The additional deduction for 2013 is $8,775 figured as follows: $18,000 $24,000 × $11,700* = $8,775               *3 × $3,900 = $11,700   Students and business apprentices from India. Free state tax program   Students and business apprentices who are eligible for the benefits of Article 21(2) of the United States–India Income Tax Treaty may be able to claim exemptions for their spouse and dependents. Free state tax program   You can claim an exemption for your spouse if he or she had no gross income during the year and cannot be claimed as a dependent on another U. Free state tax program S. Free state tax program taxpayer's return. Free state tax program   You can claim exemptions for each of your dependents not admitted to the United States on “F-2,” “J-2,” or “M-2” visas if they meet the same rules that apply to U. Free state tax program S. Free state tax program citizens. Free state tax program See Publication 501 for these rules. Free state tax program   List your spouse and dependents on line 7c of Form 1040NR. Free state tax program Enter the total on the appropriate line to the right of line 7c. Free state tax program Itemized Deductions Nonresident aliens can claim some of the same itemized deductions that resident aliens can claim. Free state tax program However, nonresident aliens can claim itemized deductions only if they have income effectively connected with their U. Free state tax program S. Free state tax program trade or business. Free state tax program Resident Aliens You can claim the same itemized deductions as U. Free state tax program S. Free state tax program citizens, using Schedule A of Form 1040. Free state tax program These deductions include certain medical and dental expenses, state and local income taxes, real estate taxes, interest you paid on a home mortgage, charitable contributions, casualty and theft losses, and miscellaneous deductions. Free state tax program If you do not itemize your deductions, you can claim the standard deduction for your particular filing status. Free state tax program For further information, see Form 1040 and instructions. Free state tax program Nonresident Aliens You can deduct certain itemized deductions if you receive income effectively connected with your U. Free state tax program S. Free state tax program trade or business. Free state tax program These deductions include state and local income taxes, charitable contributions to U. Free state tax program S. Free state tax program organizations, casualty and theft losses, and miscellaneous deductions. Free state tax program Use Schedule A of Form 1040NR to claim itemized deductions. Free state tax program If you are filing Form 1040NR-EZ, you can only claim a deduction for state or local income taxes. Free state tax program If you are claiming any other itemized deduction, you must file Form 1040NR. Free state tax program Standard deduction. Free state tax program   Nonresident aliens cannot claim the standard deduction. Free state tax program However, see Students and business apprentices from India , next. Free state tax program Students and business apprentices from India. Free state tax program   A special rule applies to students and business apprentices who are eligible for the benefits of Article 21(2) of the United States–India Income Tax Treaty. Free state tax program You can claim the standard deduction provided you do not claim itemized deductions. Free state tax program   Use Worksheet 5-1 to figure your standard deduction. Free state tax program If you are married and your spouse files a return and itemizes deductions, you cannot take the standard deduction. Free state tax program State and local income taxes. Free state tax program   You can deduct state and local income taxes you paid on income that is effectively connected with a trade or business in the United States. Free state tax program If you received a refund or rebate in 2013 of taxes you paid in an earlier year, do not reduce your deduction by that amount. Free state tax program Instead, you must include the refund or rebate in income if you deducted the taxes in the earlier year and the deduction reduced your tax. Free state tax program See Recoveries in Publication 525 for details on how to figure the amount to include in income. Free state tax program Charitable contributions. Free state tax program   You can deduct your charitable contributions or gifts to qualified organizations subject to certain limits. Free state tax program Qualified organizations include organizations that are religious, charitable, educational, scientific, or literary in nature, or that work to prevent cruelty to children or animals. Free state tax program Certain organizations that promote national or international amateur sports competition are also qualified organizations. Free state tax program Foreign organizations. Free state tax program   Contributions made directly to a foreign organization are not deductible. Free state tax program However, you can deduct contributions to a U. Free state tax program S. Free state tax program organization that transfers funds to a charitable foreign organization if the U. Free state tax program S. Free state tax program organization controls the use of the funds or if the foreign organization is only an administrative arm of the U. Free state tax program S. Free state tax program organization. Free state tax program   For more information about organizations that qualify to receive charitable contributions, see Publication 526, Charitable Contributions. Free state tax program Worksheet 5-1. Free state tax program 2013 Standard Deduction Worksheet for Students and Business Apprentices From India Caution. Free state tax program If you are married filing a separate return and your spouse itemizes deductions, do not complete this worksheet. Free state tax program You cannot take the standard deduction even if you were born before January 2, 1949, or are blind. Free state tax program 1 Enter the amount shown below for your filing status. Free state tax program           Single or married filing separately—$6,100 Qualifying widow(er)—$12,200 1. Free state tax program           2 Can you be claimed as a dependent on someone else's U. Free state tax program S. Free state tax program income tax return?  No. Free state tax program Enter the amount from line 1 on line 4. Free state tax program Skip line 3 and go to line 5. Free state tax program   Yes. Free state tax program Go to line 3. Free state tax program         3 Is your earned income* more than $650?           Yes. Free state tax program Add $350 to your earned income. Free state tax program Enter the total. Free state tax program           No. Free state tax program Enter $1,000 3. Free state tax program       4 Enter the smaller of line 1 or line 3 4. Free state tax program   5 If born before January 2, 1949, OR blind, enter $1,200 ($1,500 if single). Free state tax program If born before January 2, 1949, AND blind, enter $2,400 ($3,000 if single). Free state tax program Otherwise, enter -0- 5. Free state tax program   6 Add lines 4 and 5. Free state tax program Enter the total here and on Form 1040NR, line 38 (or Form 1040NR-EZ, line 11). Free state tax program Print “Standard Deduction Allowed Under U. Free state tax program S. Free state tax program –India Income Tax Treaty” in the space to the left of these lines. Free state tax program This is your standard deduction for 2013. Free state tax program 6. Free state tax program   *Earned income includes wages, salaries, tips, professional fees, and other compensation received for personal services you performed. Free state tax program It also includes any amount received as a scholarship that you must include in your income. Free state tax program Generally, your earned income is the total of the amount(s) you reported on Form 1040NR, lines 8,12,13, and 19, minus amounts on lines 27 and 31 (or Form 1040NR-EZ, lines 3 and 5, minus any amount on line 8). Free state tax program Contributions from which you benefit. Free state tax program   If you receive a benefit as a result of making a contribution to a qualified organization, you can deduct only the amount of your contribution that is more than the value of the benefit you receive. Free state tax program   If you pay more than the fair market value to a qualified organization for merchandise, goods, or services, the amount you pay that is more than the value of the item can be a charitable contribution. Free state tax program For the excess amount to qualify, you must pay it with the intent to make a charitable contribution. Free state tax program Cash contributions. Free state tax program   You cannot deduct a cash contribution, regardless of the amount, unless you keep as a record of the contribution a bank record (such as a canceled check, a bank copy of a canceled check, or a bank statement containing the name of the charity, the date, and the amount) or a written record from the charity. Free state tax program The written record must include the name of the charity, date of the contribution, and the amount of the contribution. Free state tax program   You may deduct a cash contribution of $250 or more only if you have a written statement from the charitable organization showing: The amount of any money contributed, Whether the organization gave you any goods or services in return for your contribution, and A description and estimate of the value of any goods or services described in (2). Free state tax program If you received only intangible religious benefits, the organization must state this, but it does not have to describe or value the benefit. Free state tax program Noncash contributions. Free state tax program   For contributions not made in cash, the records you must keep depend on the amount of your deduction. Free state tax program See Publication 526 for details. Free state tax program For example, if you make a noncash contribution and the amount of your deduction is more than $500, you must complete and attach to your tax return Form 8283, Noncash Charitable Contributions. Free state tax program If you deduct more than $500 for a contribution of a motor vehicle, boat, or airplane, you must also attach a statement from the charitable organization to your return. Free state tax program If your total deduction is over $5,000, you also may have to get appraisals of the values of the property. Free state tax program If the donated property is valued at more than $5,000, you must obtain a qualified appraisal. Free state tax program You generally must attach to your tax return an appraisal of any property if your deduction for the property is more than $500,000. Free state tax program See Form 8283 and its instructions for details. Free state tax program Contributions of appreciated property. Free state tax program   If you contribute property to a qualified organization, the amount of your charitable contribution is generally the fair market value of the property at the time of the contribution. Free state tax program However, if you contribute property with a fair market value that is more than your basis in it, you may have to reduce the fair market value by the amount of appreciation (increase in value) when you figure your deduction. Free state tax program Your basis in the property is generally what you paid for it. Free state tax program If you need more information about basis, get Publication 551, Basis of Assets. Free state tax program   Different rules apply to figuring your deduction, depending on whether the property is: Ordinary income property, or Capital gain property. Free state tax program For information about these rules, see Publication 526. Free state tax program Limit. Free state tax program   The amount you can deduct in a tax year is limited in the same way it is for a citizen or resident of the United States. Free state tax program For a discussion of limits on charitable contributions and other information, get Publication 526. Free state tax program Casualty and theft losses. Free state tax program   You can deduct your loss from fire, storm, shipwreck, or other casualty, or theft of property even though your property is not connected with a U. Free state tax program S. Free state tax program trade or business. Free state tax program The property can be personal use property or income-producing property not connected with a U. Free state tax program S. Free state tax program trade or business. Free state tax program The property must be located in the United States at the time of the casualty or theft. Free state tax program You can deduct theft losses only in the year in which you discover the loss. Free state tax program   The amount of the loss is the fair market value of the property immediately before the casualty or theft less its fair market value immediately after the casualty or theft (but not more than its cost or adjusted basis) less any insurance or other reimbursement. Free state tax program The fair market value of property immediately after a theft is considered zero, because you no longer have the property. Free state tax program   If your property is covered by insurance, you should file a timely insurance claim for reimbursement. Free state tax program If you do not, you cannot deduct this loss as a casualty or theft loss. Free state tax program   Figure your deductible casualty and theft losses on Form 4684, Casualties and Thefts. Free state tax program Losses from personal use property. Free state tax program    You cannot deduct the first $100 of each casualty or theft loss to property held for personal use. Free state tax program You can deduct only the total of these losses for the year (reduced by the $100 limit) that is more than 10% of your adjusted gross income (line 37, Form 1040NR) for the year. Free state tax program Losses from income-producing property. Free state tax program   These losses are not subject to the limitations that apply to personal use property. Free state tax program Use Section B of Form 4684 to figure your deduction for these losses. Free state tax program Job expenses and other miscellaneous deductions. Free state tax program   You can deduct job expenses, such as allowable unreimbursed travel expenses (discussed next), and other miscellaneous deductions. Free state tax program Generally, the allowable deductions must be related to effectively connected income. Free state tax program Deductible expenses include: Union dues, Safety equipment and small tools needed for your job, Dues to professional organizations, Subscriptions to professional journals, Tax return preparation fees, and Casualty and theft losses of property used in performing services as an employee (employee property). Free state tax program   Most miscellaneous itemized deductions are deductible only if they are more than 2% of your adjusted gross income (line 37, Form 1040NR). Free state tax program For more information on miscellaneous deductions, see the instructions for Form 1040NR. Free state tax program Travel expenses. Free state tax program   You may be able to deduct your ordinary and necessary travel expenses while you are temporarily performing personal services in the United States. Free state tax program Generally, a temporary assignment in a single location is one that is realistically expected to last (and does in fact last) for one year or less. Free state tax program You must be able to show you were present in the United States on an activity that required your temporary absence from your regular place of work. Free state tax program   For example, if you have established a “tax home” through regular employment in a foreign country, and intend to return to similar employment in the same country at the end of your temporary stay in the United States, you can deduct reasonable travel expenses you paid. Free state tax program You cannot deduct travel expenses for other members of your family or party. Free state tax program Deductible travel expenses. Free state tax program   If you qualify, you can deduct your expenses for: Transportation—airfare, local transportation, including train, bus, etc. Free state tax program , Lodging—rent paid, utilities (do not include telephone), hotel or motel room expenses, and Meal expenses—actual expenses allowed if you keep records of the amounts, or, if you do not wish to keep detailed records, you are generally allowed a standard meal allowance amount depending on the date and area of your travel. Free state tax program You generally can deduct only 50% of unreimbursed meal expenses. Free state tax program The standard meal allowance rates for high-cost areas are available at www. Free state tax program gsa. Free state tax program gov/perdiem. Free state tax program The rates for other areas are in Publication 463. Free state tax program   Use Form 2106 or 2106-EZ to figure your allowable expenses that you claim on line 7 of Schedule A (Form 1040NR). Free state tax program Expenses allocable to U. Free state tax program S. Free state tax program tax-exempt income. Free state tax program   You cannot deduct an expense, or part of an expense, that is allocable to U. Free state tax program S. Free state tax program tax-exempt income, including income exempt by tax treaty. Free state tax program Example. Free state tax program Irina Oak, a citizen of Poland, resided in the United States for part of the year to acquire business experience from a U. Free state tax program S. Free state tax program company. Free state tax program During her stay in the United States, she received a salary of $8,000 from her Polish employer. Free state tax program She received no other U. Free state tax program S. Free state tax program source income. Free state tax program She spent $3,000 on travel expenses, of which $1,000 were for meals. Free state tax program None of these expenses were reimbursed. Free state tax program Under the tax treaty with Poland, $5,000 of her salary is exempt from U. Free state tax program S. Free state tax program income tax. Free state tax program In filling out Form 2106-EZ, she must reduce her deductible meal expenses by half ($500). Free state tax program She must reduce the remaining $2,500 of travel expenses by 62. Free state tax program 5% ($1,563) because 62. Free state tax program 5% ($5,000 ÷ $8,000) of her salary is exempt from tax. Free state tax program She enters the remaining total of $937 on line 7 of Schedule A (Form 1040NR). Free state tax program She completes the remaining lines according to the instructions for Schedule A. Free state tax program More information. Free state tax program   For more information about deductible expenses, reimbursements, and recordkeeping, get Publication 463. Free state tax program Tax Credits and Payments This discussion covers tax credits and payments for resident aliens, followed by a discussion of the credits and payments for nonresident aliens. Free state tax program Resident Aliens Resident aliens generally claim tax credits and report tax payments, including withholding, using the same rules that apply to U. Free state tax program S. Free state tax program citizens. Free state tax program The following items are some of the credits you may be able to claim. Free state tax program Foreign tax credit. Free state tax program   You can claim a credit, subject to certain limits, for income tax you paid or accrued to a foreign country on foreign source income. Free state tax program You cannot claim a credit for taxes paid or accrued on excluded foreign earned income. Free state tax program To claim a credit for income taxes paid or accrued to a foreign country, you generally will file Form 1116, Foreign Tax Credit (Individual, Estate, or Trust), with your Form 1040. Free state tax program   For more information, get Publication 514, Foreign Tax Credit for Individuals. Free state tax program Child and dependent care credit. Free state tax program   You may be able to take this credit if you pay someone to care for your qualifying child who is under age 13, or your disabled dependent or disabled spouse, so that you can work or look for work. Free state tax program Generally, you must be able to claim an exemption for your dependent. Free state tax program   For more information, get Publication 503, Child and Dependent Care Expenses, and Form 2441, Child and Dependent Care Expenses. Free state tax program Credit for the elderly or the disabled. Free state tax program   You may qualify for this credit if you are 65 or older or if you retired on permanent and total disability. Free state tax program For more information on this credit, get Publication 524, Credit for the Elderly or the Disabled, and Schedule R (Form 1040A or 1040). Free state tax program Education credits. Free state tax program   You may qualify for these credits if you paid qualified education expenses for yourself, your spouse, or your dependent. Free state tax program There are two education credits: the American Opportunity Credit and the lifetime learning credit. Free state tax program You cannot claim these credits if you are married filing separately. Free state tax program Use Form 8863, Education Credits (American Opportunity and Lifetime Learning Credits), to figure the credit. Free state tax program For more information, see Publication 970. Free state tax program Retirement savings contributions credit. Free state tax program   You may qualify for this credit (also known as the saver's credit) if you made eligible contributions to an employer-sponsored retirement plan or to an individual retirement arrangement (IRA) in 2013. Free state tax program You cannot claim this credit if: You were born after January 1, 1996, You were a full-time student, Your exemption is claimed by someone else on his or her 2013 tax return, or Your adjusted gross income is more than: $59,000, if your filing status is married filing jointly, $44,250, if your filing status is head of household, or $29,500, if your filing status is single, married filing separately, or qualifying widow(er). Free state tax program Use Form 8880, Credit for Qualified Retirement Savings Contributions, to figure the credit. Free state tax program For more information, see Publication 590. Free state tax program Child tax credit. Free state tax program   You may be able to take this credit if you have a qualifying child. Free state tax program   A qualifying child for purposes of the child tax credit is a child who: Was under age 17 at the end of 2013. Free state tax program Is your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, half brother, half sister, or a descendant of any of them (for example, your grandchild, niece, or nephew). Free state tax program Is a U. Free state tax program S. Free state tax program citizen, a U. Free state tax program S. Free state tax program national, or a resident alien. Free state tax program Did not provide over half of his or her own support for 2013. Free state tax program Lived with you more than half of 2013. Free state tax program Temporary absences, such as for school, vacation, or medical care, count as time lived in the home. Free state tax program Is claimed as a dependent on your return. Free state tax program An adopted child is always treated as your own child. Free state tax program An adopted child includes a child lawfully placed with you for legal adoption. Free state tax program   See your form instructions for additional details. Free state tax program Adoption credit. Free state tax program   You may qualify to take a tax credit of up to $12,970 for qualifying expenses paid to adopt an eligible child. Free state tax program This amount may be allowed for the adoption of a child with special needs regardless of whether you have qualifying expenses. Free state tax program To claim the adoption credit, file Form 8839, Qualified Adoption Expenses, with your Form 1040. Free state tax program Earned income credit. Free state tax program   You may qualify for an earned income credit of up to $3,250 if a child lived with you in the United States and your earned income and adjusted gross income were each less than $37,870 ($43,210 if married filing jointly). Free state tax program If two children lived with you in the United States and your earned income and adjusted gross income were each less than $43,038 ($48,378 if married filing jointly), your credit could be as much as $5,372. Free state tax program If three or more children lived with you in the United States and your earned income and adjusted gross income were each less than $46,227 ($51,567 if married filing jointly), your credit could be as much as $6,044. Free state tax program If you do not have a qualifying child and your earned income and adjusted gross income were each less than $14,340 ($19,680 if married filing jointly), your credit could be as much as $487. Free state tax program You cannot claim the earned income credit if your filing status is married filing separately. Free state tax program    You and your spouse (if filing a joint return) and any qualifying child must have valid SSNs to claim this credit. Free state tax program You cannot claim the credit using an ITIN. Free state tax program If a social security card has a legend that says Not Valid for Employment and the number was issued so that you (or your spouse or your qualifying child) could receive a federally funded benefit, you cannot claim the earned income credit. Free state tax program An example of a federally funded benefit is Medicaid. Free state tax program If a card has this legend and the individual's immigration status has changed so that the individual is now a U. Free state tax program S. Free state tax program citizen or lawful permanent resident, ask the SSA to issue a new social security card without the legend. Free state tax program Other information. Free state tax program   There are other eligibility rules that are not discussed here. Free state tax program For more information, get Publication 596, Earned Income Credit. Free state tax program Nonresident Aliens You can claim some of the same credits that resident aliens can claim. Free state tax program You can also report certain taxes you paid, are considered to have paid, or that were withheld from your income. Free state tax program Credits Credits are allowed only if you receive effectively connected income. Free state tax program You may be able to claim some of the following credits. Free state tax program Foreign tax credit. Free state tax program   If you receive foreign source income that is effectively connected with a trade or business in the United States, you can claim a credit for any income taxes paid or accrued to any foreign country or U. Free state tax program S. Free state tax program possession on that income. Free state tax program   If you do not have foreign source income effectively connected with a U. Free state tax program S. Free state tax program trade or business, you cannot claim credits against your U. Free state tax program S. Free state tax program tax for taxes paid or accrued to a foreign country or U. Free state tax program S. Free state tax program possession. Free state tax program   You cannot take any credit for taxes imposed by a foreign country or U. Free state tax program S. Free state tax program possession on your U. Free state tax program S. Free state tax program source income if those taxes were imposed only because you are a citizen or resident of the foreign country or possession. Free state tax program   If you claim a foreign tax credit, you generally will have to attach to your return a Form 1116. Free state tax program See Publication 514 for more information. Free state tax program Child and dependent care credit. Free state tax program   You may qualify for this credit if you pay someone to care for your qualifying child who is under age 13, or your disabled dependent or disabled spouse, so that you can work or look for work. Free state tax program Generally, you must be able to claim an exemption for your dependent. Free state tax program   Married nonresident aliens can claim the credit only if they choose to file a joint return with a U. Free state tax program S. Free state tax program citizen or resident spouse as discussed in chapter 1, or if they qualify as certain married individuals living apart (see Joint Return Test in Publication 503). Free state tax program   The amount of your child and dependent care expense that qualifies for the credit in any tax year cannot be more than your earned income from the United States for that tax year. Free state tax program Earned income generally means wages, salaries, and professional fees for personal services performed. Free state tax program   For more information, get Publication 503. Free state tax program Education credits. Free state tax program   If you are a nonresident alien for any part of the year, you generally cannot claim the education credits. Free state tax program However, if you are married and choose to file a joint return with a U. Free state tax program S. Free state tax program citizen or resident spouse as discussed in chapter 1, you may be eligible for these credits. Free state tax program Retirement savings contributions credit. Free state tax program   You may qualify for this credit (also known as the saver's credit) if you made eligible contributions to an employer-sponsored retirement plan or to an individual retirement arrangement (IRA) in 2013. Free state tax program You cannot claim this credit if: You were born after January 1, 1996, You were a full-time student, Your exemption is claimed by someone else on his or her 2013 tax return, or Your adjusted gross income is more than $29,500. Free state tax program Use Form 8880 to figure the credit. Free state tax program For more information, see Publication 590. Free state tax program Child tax credit. Free state tax program   You may be able to take this credit if you have a qualifying child. Free state tax program   A qualifying child for purposes of the child tax credit is a child who: Was under age 17 at the end of 2013. Free state tax program Is your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, half brother, half sister, or a descendant of any of them (for example, your grandchild, niece, or nephew). Free state tax program Is a U. Free state tax program S. Free state tax program citizen, a U. Free state tax program S. Free state tax program national, or a resident alien. Free state tax program Did not provide over half of his or her own support for 2013. Free state tax program Lived with you more than half of 2013. Free state tax program Temporary absences, such as for school, vacation, or medical care, count as time lived in the home. Free state tax program Is claimed as a dependent on your return. Free state tax program An adopted child is always treated as your own child. Free state tax program An adopted child includes a child lawfully placed with you for legal adoption. Free state tax program   See your form instructions for additional details. Free state tax program Adoption credit. Free state tax program   You may qualify to take a tax credit of up to $12,970 for qualifying expenses paid to adopt an eligible child. Free state tax program This amount may be allowed for the adoption of a child with special needs regardless of whether you have qualifying expenses. Free state tax program To claim the adoption credit, file Form 8839 with your Form 1040NR. Free state tax program   Married nonresident aliens can claim the credit only if they choose to file a joint return with a U. Free state tax program S. Free state tax program citizen or resident spouse as discussed in chapter 1, or if they qualify as certain married individuals living apart (see Married Persons Not Filing Jointly in the Form 8839 instructions). Free state tax program Credit for prior year minimum tax. Free state tax program   If you paid alternative minimum tax in a prior year, get Form 8801, Credit for Prior Year Minimum Tax—Individuals, Estates, and Trusts, to see if you qualify for this credit. Free state tax program Earned income credit. Free state tax program   If you are a nonresident alien for any part of the tax year, you generally cannot get the earned income credit. Free state tax program However, if you are married and choose to file a joint return with a U. Free state tax program S. Free state tax program citizen or resident spouse as discussed in chapter 1, you may be eligible for the credit. Free state tax program    You, your spouse, and any qualifying child must have valid SSNs to claim this credit. Free state tax program You cannot claim the credit using an ITIN. Free state tax program If a social security card has a legend that says Not Valid for Employment and the number was issued so that you (or your spouse or your qualifying child) could receive a federally funded benefit, you cannot claim the earned income credit. Free state tax program An example of a federally funded benefit is Medicaid. Free state tax program If a card has this legend and the individual's immigration status has changed so that the individual is now a U. Free state tax program S. Free state tax program citizen or lawful permanent resident, ask the SSA to issue a new social security card without the legend. Free state tax program   See Publication 596 for more information on the credit. Free state tax program Tax Withheld You can claim the tax withheld during the year as a payment against your U. Free state tax program S. Free state tax program tax. Free state tax program You claim it on line 61 of Form 1040NR or on line 18 of Form 1040NR-EZ. Free state tax program The tax withheld reduces any tax you owe with Form 1040NR or Form 1040NR-EZ. Free state tax program Withholding from wages. Free state tax program   Any federal income tax withheld from your wages during the tax year while you were a nonresident alien is allowed as a payment against your U. Free state tax program S. Free state tax program income tax liability for the same year. Free state tax program You can claim the income tax withheld whether or not you were engaged in a trade or business in the United States during the year, and whether or not the wages (or any other income) were connected with a trade or business in the United States. Free state tax program Excess social security tax withheld. Free state tax program   If you have two or more employers, you may be able to claim a credit against your U. Free state tax program S. Free state tax program income tax liability for social security tax withheld in excess of the maximum required. Free state tax program See Social Security and Medicare Taxes in chapter 8 for more information. Free state tax program Additional Medicare Tax. Free state tax program   Your employer is responsible for withholding the 0. Free state tax program 9% Additional Medicare Tax on Medicare wages or RRTA compensation it pays to you in excess of $200,000 in 2013. Free state tax program If you do not owe Additional Medicare Tax, you can claim a credit for any withheld Additional Medicare Tax against the total tax liability shown on your tax return by filing Form 8959. Free state tax program Tax paid on undistributed long-term capital gains. Free state tax program   If you are a shareholder in a mutual fund (or other regulated investment company) or real estate investment trust, you can claim a credit for your share of any taxes paid by the company on its undistributed long-term capital gains. Free state tax program You will receive information on Form 2439, Notice to Shareholder of Undistributed Long-Term Capital Gains, which you must attach to your return. Free state tax program Tax withheld at the source. Free state tax program   You can claim as a payment any tax withheld at the source on investment and other fixed or determinable annual or periodic income paid to you. Free state tax program Fixed or determinable income includes interest, dividend, rental, and royalty income that you do not claim to be effectively connected income. Free state tax program Wage or salary payments can be fixed or determinable income to you, but usually are subject to withholding as discussed above. Free state tax program Taxes on fixed or determinable income are withheld at a 30% rate or at a lower treaty rate. Free state tax program Tax withheld on partnership income. Free state tax program   If you are a foreign partner in a partnership, the partnership will withhold tax on your share of effectively connected taxable income from the partnership. Free state tax program The partnership will give you a statement on Form 8805, Foreign Partner's Information Statement of Section 1446 Withholding Tax, showing the tax withheld. Free state tax program A partnership that is publicly traded may withhold on your actual distributions of effectively connected income. Free state tax program In this case, the partnership will give you a statement on Form 1042-S. Free state tax program Claim the tax withheld as a payment on line 61b or 61d of Form 1040NR, as appropriate. Free state tax program Claiming tax withheld on your return. Free state tax program   When you fill out your tax return, take extra care to enter the correct amount of any tax withheld shown on your information documents. Free state tax program The following table lists some of the more common information documents and shows where to find the amount of tax withheld. Free state tax program Form number Location  of tax  withheld RRB-1042S Box 12 SSA-1042S Box 9 W-2 Box 2 W-2c Box 2 1042-S Box 9 8805 Line 10 8288-A Box 2 Bona Fide Residents of American Samoa or Puerto Rico If you are a nonresident alien who is a bona fide resident of American Samoa or Puerto Rico for the entire tax year, you generally are taxed the same as resident aliens. Free state tax program You should file Form 1040 and report all income from sources both in and outside the United States. Free state tax program However, you can exclude the income discussed in the following paragraphs. Free state tax program For tax purposes other than reporting income, however, you will be treated as a nonresident alien. Free state tax program For example, you are not allowed the standard deduction, you cannot file a joint return, and you are not allowed a deduction for a dependent unless that person is a citizen or national of the United States. Free state tax program There are also limits on what deductions and credits are allowed. Free state tax program See Nonresident Aliens under Deductions , Itemized Deductions , and Tax Credits and Payments in this chapter. Free state tax program Residents of Puerto Rico. Free state tax program   If you are a bona fide resident of Puerto Rico for the entire year, you can exclude from gross income all income from sources in Puerto Rico (other than amounts for services performed as an employee of the United States or any of its agencies). Free state tax program   If you report income on a calendar year basis and you do not have wages subject to withholding, file your return and pay your tax by June 15. Free state tax program You must also make your first payment of estimated tax by June 15. Free state tax program You cannot file a joint income tax return or make joint payments of estimated tax. Free state tax program However, if you are married to a U. Free state tax program S. Free state tax program citizen or resident, see Nonresident Spouse Treated as a Resident in chapter 1. Free state tax program   If you earn wages subject to withholding, your U. Free state tax program S. Free state tax program income tax return is due by April 15. Free state tax program Your first payment of estimated tax is also due by April 15. Free state tax program For information on withholding and estimated tax, see chapter 8 . Free state tax program Residents of American Samoa. Free state tax program   If you are a bona fide resident of American Samoa for the entire year, you can exclude from gross income all income from sources in American Samoa (other than amounts for services performed as an employee of the U. Free state tax program S. Free state tax program government or any of its agencies). Free state tax program An employee of the American Samoan government is not considered an employee of the U. Free state tax program S. Free state tax program government or any of its agencies for purposes of the exclusion. Free state tax program For more information about this exclusion, get Form 4563 and Publication 570, Tax Guide for Individuals With Income From U. Free state tax program S. Free state tax program Possessions. Free state tax program Prev  Up  Next   Home   More Online Publications