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Free Turbo Tax 2011

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Free Turbo Tax 2011

Free turbo tax 2011 Index A Activities not for profit, Hobby Expenses Adjustments to gross income Armed forces reservists' travel expenses, Armed Forces reservists traveling more than 100 miles from home. Free turbo tax 2011 Performing artists, Performing Artists State or local government officials paid on fee basis, Officials Paid on a Fee Basis Unlawful discrimination claims, Unlawful discrimination claims. Free turbo tax 2011 Administrative fees IRA trustees, Trustee's Administrative Fees for IRA Adoption expenses, Adoption Expenses Amortizable bond premium, Amortizable Premium on Taxable Bonds, More information. Free turbo tax 2011 Appraisal fees, Appraisal Fees Armed forces Military uniforms, Military uniforms. Free turbo tax 2011 Reservists, travel expenses, Armed Forces reservists traveling more than 100 miles from home. Free turbo tax 2011 Assistance (see Tax help) B Bad debts, Business Bad Debt Bank accounts Check-writing fees, Check-Writing Fees on Personal Account Losses on deposits, Loss on Deposits Bonds Amortizable premium, Amortizable Premium on Taxable Bonds Breach of contract Damages, Damages for Breach of Employment Contract Bribes, List of Nondeductible Expenses Burial expenses, List of Nondeductible Expenses Business expenses (see Employee business expenses) Business gifts, Gift expenses. Free turbo tax 2011 C Campaign contributions, Lobbying and political activities. Free turbo tax 2011 , Political Contributions Campaign expenses, Campaign Expenses Capital expenditures, Capital Expenses Casualty losses, Casualty and Theft Losses, Casualty and Theft Losses of Income-Producing Property Cell phones, Depreciation on Computers Chambers of Commerce dues, Lobbying and political activities. Free turbo tax 2011 Check-writing fees, Check-Writing Fees on Personal Account Claim of right repayments, Repayments Under Claim of Right Clerical help, deductibility of, Clerical Help and Office Rent Clothes Protective, Protective clothing. Free turbo tax 2011 Work, Work Clothes and Uniforms Club dues, Club Dues Commissions, Commissions Commuting expenses, Commuting Expenses Computers Depreciation, Depreciation on Computers, Depreciation on Home Computer, Excess Deductions of an Estate Convenience fees, Credit or Debit Card Convenience Fees Criminal prosecutions Travel expenses for federal staff, Federal crime investigation and prosecution. Free turbo tax 2011 D Damages Breach of employment contract, Damages for Breach of Employment Contract Deposits Losses on, Loss on Deposits Depreciation Computers, Depreciation on Computers, Depreciation on Home Computer, Excess Deductions of an Estate Disabilities, persons with Work-related expenses, Impairment-Related Work Expenses Dividends Fees to collect, Fees To Collect Interest and Dividends Service charges on reinvestment plans, Service Charges on Dividend Reinvestment Plans Dues, Dues to Chambers of Commerce and Professional Societies (see also Expenses) (see also Fees) Chambers of Commerce, Dues to Chambers of Commerce and Professional Societies Club, Club Dues Lobbying, Dues used for lobbying. Free turbo tax 2011 Professional societies, Dues to Chambers of Commerce and Professional Societies Union, Union Dues and Expenses E Education, Educator Expenses, Education Expenses During Unemployment Education expenses, Work-Related Education, More information. Free turbo tax 2011 Employee business expenses Form 2106 and Form 2106-EZ, Form 2106 and Form 2106-EZ. Free turbo tax 2011 Performing artists, Performing Artists Unreimbursed, Unreimbursed Employee Expenses Employment Agency fees, Employment and outplacement agency fees. Free turbo tax 2011 Breach of contract, Damages for Breach of Employment Contract Entertainers and musicians (see Performing artists) Entertainment expenses, Meals and entertainment. Free turbo tax 2011 Estates Federal estate tax, Federal Estate Tax on Income in Respect of a Decedent Expenses, Dues to Chambers of Commerce and Professional Societies, Education Expenses During Unemployment (see also Dues) (see also Fees) Adoption, Adoption Expenses Campaign, Campaign Expenses Capital, Capital Expenses Commuting, Commuting Expenses Education Work-related, Work-Related Education Educator, Educator Expenses Qualified, Qualified expenses. Free turbo tax 2011 Educator Expenses, Eligible educator. Free turbo tax 2011 Employee business (see Employee business expenses) Entertainment, Meals and entertainment. Free turbo tax 2011 Funeral and burial, List of Nondeductible Expenses Gifts, Travel, Transportation, Meals, Entertainment, Gifts, and Local Lodging, Gift expenses. Free turbo tax 2011 Health spa, Health Spa Expenses Hobby, Hobby Expenses Home office, Home Office Impairment-related, Impairment-Related Work Expenses Investment, Investment Fees and Expenses, Investment-Related Seminars Job search, Job Search Expenses Legal (see Legal expenses) Local lodging, Travel, Transportation, Meals, Entertainment, Gifts, and Local Lodging Meals, Meals and entertainment. Free turbo tax 2011 , Lunches With Co-workers Meals and entertainment, Travel, Transportation, Meals, Entertainment, Gifts, and Local Lodging Nondeductible, Nondeductible Expenses Over limit, educator, Educator expenses over limit. Free turbo tax 2011 Personal, Nondeductible Expenses Production of income, Other Expenses Professional promotion, Professional Reputation Tax-exempt income, Tax-Exempt Income Expenses Travel and transportation, Travel, Transportation, Meals, Entertainment, Gifts, and Local Lodging Travel as education, Travel as education. Free turbo tax 2011 F Federal estate tax, Federal Estate Tax on Income in Respect of a Decedent Fees, Dues to Chambers of Commerce and Professional Societies (see also Dues) (see also Expenses) Appraisal, Appraisal Fees Check-writing, Check-Writing Fees on Personal Account Employment and outplacement agency, Employment and outplacement agency fees. Free turbo tax 2011 Investment, Fees To Collect Interest and Dividends, Investment Fees and Expenses IRA trustee, Trustee's Administrative Fees for IRA Legal (see Legal expenses) License, Licenses and Regulatory Fees Professional accreditation, Professional Accreditation Fees Fines, Fines or Penalties Form 2106 Employee business expenses, Form 2106 and Form 2106-EZ. Free turbo tax 2011 Form 2106-EZ Employee business expenses, Form 2106 and Form 2106-EZ. Free turbo tax 2011 Form 4562 Depreciation and amortization, Reporting your depreciation deduction. Free turbo tax 2011 , Depreciation. Free turbo tax 2011 , Computer used in a home office. Free turbo tax 2011 Free tax services, Free help with your tax return. Free turbo tax 2011 Funeral expenses, List of Nondeductible Expenses G Gambling winnings and losses, Gambling Losses Up to the Amount of Gambling Winnings Government employees Federal criminal investigation and prosecution travel expenses, Federal crime investigation and prosecution. Free turbo tax 2011 State or local government officials paid on fee basis, Officials Paid on a Fee Basis H Health spa, Health Spa Expenses Help (see Tax help) Hobbies, Hobby Expenses Home Security system, Home Security System Telephone service, Residential Telephone Service Home office Computers, Computer used in a home office. Free turbo tax 2011 Expenses, Home Office Principal place of business, Principal place of business. Free turbo tax 2011 Travel and transportation expenses, Home office. Free turbo tax 2011 I Impairment-related work expenses, Impairment-Related Work Expenses Income aid payment, Repayment of Income Aid Payment Income in respect of decedent Estate tax, Federal Estate Tax on Income in Respect of a Decedent Individual retirement arrangements (IRAs) Trustees' fees, Trustee's Administrative Fees for IRA Insurance Business liability, Business Liability Insurance Life insurance, Life Insurance Premiums Malpractice, Unreimbursed Employee Expenses Personal disability, List of Nondeductible Expenses Interest income Fees to collect, Fees To Collect Interest and Dividends Investments Annuity, unrecovered investment in, Unrecovered Investment in Annuity Deposits, losses on, Loss on Deposits Fees and expenses, Investment Fees and Expenses Seminars, Investment-Related Seminars Itemized deductions Deductions not subject to 2% limit, Deductions Not Subject to the 2% Limit Deductions subject to 2% limit, Introduction, Deductions Subject to the 2% Limit How to report, How To Report J Job search, Job Search Expenses, Travel and transportation expenses. Free turbo tax 2011 K Kickbacks, List of Nondeductible Expenses L Legal expenses Job-related, Legal Fees Personal, Personal Legal Expenses Political campaigns, Legal fees. Free turbo tax 2011 Production of income, Legal Expenses Unlawful discrimination claims, Legal Expenses Licenses Fees, Licenses and Regulatory Fees Life insurance, Life Insurance Premiums Lobbying, Lobbying and political activities. Free turbo tax 2011 , Lobbying Expenses, Exceptions. Free turbo tax 2011 Local transportation, Local transportation expenses. Free turbo tax 2011 Losses Casualties and thefts, Casualty and Theft Losses, Casualty and Theft Losses of Income-Producing Property Deposits, Loss on Deposits Gambling, Gambling Losses Up to the Amount of Gambling Winnings IRA, Loss on IRA Mislaid cash or property, Lost or Mislaid Cash or Property Partnership, Loss From Other Activities From Schedule K-1 (Form 1065-B), Box 2 Roth IRA, Loss on IRA M Mail carriers, rural, Rural Mail Carriers' Vehicle Expenses Malpractice insurance, Unreimbursed Employee Expenses Meal and lodging expenses, Meals and entertainment. Free turbo tax 2011 Lunches with coworkers, Lunches With Co-workers Working late, Meals While Working Late Medical examinations, Unreimbursed Employee Expenses Mileage rate, What's New Missing children, photographs of, Reminders Mutual funds Indirect deductions, Indirect Deductions of Pass-Through Entities N Nondeductible expenses, Nondeductible Expenses, Wristwatches Not-for-profit activities, Hobby Expenses O Occupational taxes, Occupational Taxes Office Home (see Home office) Rent, Clerical Help and Office Rent Outplacement agency fees, Employment and outplacement agency fees. Free turbo tax 2011 P Partnerships Indirect deductions, Indirect Deductions of Pass-Through Entities Pass-through entities, Indirect Deductions of Pass-Through Entities Passport expense, Unreimbursed Employee Expenses Penalties, Fines or Penalties Performing artists, Performing Artists Work clothes, Work Clothes and Uniforms Personal expenses, Nondeductible Expenses, Wristwatches Political contributions, Lobbying and political activities. Free turbo tax 2011 , Political Contributions Campaign expenses, Campaign Expenses Ponzi-type investment schemes, Losses From Ponzi-type Investment Schemes Postal workers, Rural Mail Carriers' Vehicle Expenses Production of income expenses, Other Expenses, Loss on IRA Professional accreditation fees, Professional Accreditation Fees Professional journals, Unreimbursed Employee Expenses Professional reputation and marketing, Professional Reputation Professional societies dues, Lobbying and political activities. Free turbo tax 2011 Prosecution travel expenses, Federal crime investigation and prosecution. Free turbo tax 2011 Protective clothing, Protective clothing. Free turbo tax 2011 Publications (see Tax help) R Recordkeeping requirements Computer used for home and business, Depreciation on Computers Deductions, to verify, Introduction Gambling winnings and losses, Gambling Losses Up to the Amount of Gambling Winnings Home office, Home Office Relief fund contributions, Relief Fund Contributions Rent Office, Clerical Help and Office Rent Safe deposit box, Safe Deposit Box Rent Repayments Claim of right, Repayments Under Claim of Right Income, Repayments of Income Income aid payments, Unreimbursed Employee Expenses Social Security benefits, Repayments of Social Security Benefits Reporting requirements Armed Forces reservists, Armed Forces reservists. Free turbo tax 2011 Computer used in a home office, Computer used in a home office. Free turbo tax 2011 Depreciation, Depreciation. Free turbo tax 2011 Form 2106 and Form 2106-EZ, Form 2106 and Form 2106-EZ. Free turbo tax 2011 Impairment-related work expenses, Impairment-related work expenses. Free turbo tax 2011 Itemized deductions, How To Report Tax preparation fees, Tax preparation fees. Free turbo tax 2011 Research expenses, Research Expenses of a College Professor Résumé, Résumé. Free turbo tax 2011 Rural mail carriers, Rural Mail Carriers' Vehicle Expenses S S corporations Indirect deductions, Indirect Deductions of Pass-Through Entities Safe deposit box, Safe Deposit Box Rent Security systems, home, Home Security System Seminars, investment-related, Investment-Related Seminars Service charges on dividend reinvestment plans, Service Charges on Dividend Reinvestment Plans Social Security repayments, Repayments of Social Security Benefits State or local governments Officials paid on fee basis, Officials Paid on a Fee Basis Stockholders' meeting expenses, Stockholders' Meetings T Tax help, How To Get Tax Help Tax-exempt income expenses, Tax-Exempt Income Expenses Taxes Estate tax, Federal Estate Tax on Income in Respect of a Decedent Occupational, Occupational Taxes Telephones Cell phone, Depreciation on Computers Residential service, Residential Telephone Service Theft losses, Casualty and Theft Losses, Casualty and Theft Losses of Income-Producing Property Tools, Tools Used in Your Work Travel and transportation expenses, Local lodging. Free turbo tax 2011 , Additional information. Free turbo tax 2011 Another individual, paid by taxpayer, Travel Expenses for Another Individual Armed forces reservists, Armed Forces reservists traveling more than 100 miles from home. Free turbo tax 2011 Commuting, Commuting Expenses Criminal investigations and prosecutions, Federal crime investigation and prosecution. Free turbo tax 2011 Education, Travel as education. Free turbo tax 2011 Indefinite work assignments, Indefinite work assignment. Free turbo tax 2011 Job search, Travel and transportation expenses. Free turbo tax 2011 Local transportation, Local transportation expenses. Free turbo tax 2011 Research, Research Expenses of a College Professor Temporary work assignments, Temporary work assignment. Free turbo tax 2011 Trustees IRA administrative fees, Trustee's Administrative Fees for IRA TTY/TDD information, How To Get Tax Help U Unemployment and education expenses, Education Expenses During Unemployment Unemployment benefit fund contributions, Voluntary Unemployment Benefit Fund Contributions Uniforms, military, Military uniforms. Free turbo tax 2011 Union dues, Union Dues and Expenses Unreimbursed employee expenses, Unreimbursed Employee Expenses, Military uniforms. Free turbo tax 2011 W Wagering winnings and losses, Gambling Losses Up to the Amount of Gambling Winnings Work Clothes and uniforms, Work Clothes and Uniforms Impairment-related expenses, Impairment-Related Work Expenses Supplies, Unreimbursed Employee Expenses Tools, Unreimbursed Employee Expenses, Tools Used in Your Work Travel and transportation expenses, Travel, Transportation, Meals, Entertainment, Gifts, and Local Lodging Wristwatches, List of Nondeductible Expenses, Wristwatches Prev  Up     Home   More Online Publications
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Tax Information for Government Entities

Tax Information for Federal, State, & Local Governments
Federal, State and Local Governments facilitates cooperation through partnerships with federal, state, and local government agencies for the purpose of meeting their federal tax responsibilities, with a focus on customer service and fairness to all.

Tax Information for Indian Tribal Governments
Indian Tribal Governments (ITG) uses partnership opportunities with Indian tribal governments, tribal associations and other federal agencies to respectfully and cooperatively meet the needs of both governments.

Information for the Tax Exempt Bond Community
Tax Exempt Bonds (TEB) provides specialized information and services to the municipal finance community, including tailored educational programs which focus on bond industry segments; pro-active education and outreach products which address non-compliance trends; and compliance programs devised to foster voluntary resolution of tax law infractions.

Partnering Opportunities for Federal, State & Local Governments
The Office of Governmental Liaison (GL) is responsible for developing and implementing cooperative tax administration initiatives between the IRS and federal, state, and local governments. Each state has an assigned GL to serve as the primary liaison for the GL program.

Page Last Reviewed or Updated: 19-Mar-2014

The Free Turbo Tax 2011

Free turbo tax 2011 4. Free turbo tax 2011   How Income of Aliens Is Taxed Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Resident Aliens Nonresident AliensTrade or Business in the United States Effectively Connected Income The 30% Tax Income From Real Property Transportation Tax Interrupted Period of Residence Expatriation TaxExpatriation Before June 4, 2004 Expatriation After June 3, 2004, and Before June 17, 2008 Expatriation After June 16, 2008 Introduction Resident and nonresident aliens are taxed in different ways. Free turbo tax 2011 Resident aliens are generally taxed in the same way as U. Free turbo tax 2011 S. Free turbo tax 2011 citizens. Free turbo tax 2011 Nonresident aliens are taxed based on the source of their income and whether or not their income is effectively connected with a U. Free turbo tax 2011 S. Free turbo tax 2011 trade or business. Free turbo tax 2011 The following discussions will help you determine if income you receive during the tax year is effectively connected with a U. Free turbo tax 2011 S. Free turbo tax 2011 trade or business and how it is taxed. Free turbo tax 2011 Topics - This chapter discusses: Income that is effectively connected with a U. Free turbo tax 2011 S. Free turbo tax 2011 trade or business. Free turbo tax 2011 Income that is not effectively connected with a U. Free turbo tax 2011 S. Free turbo tax 2011 trade or business. Free turbo tax 2011 Interrupted period of residence. Free turbo tax 2011 Expatriation tax. Free turbo tax 2011 Useful Items - You may want to see: Publication 544 Sales and Other Dispositions of Assets 1212 List of Original Issue Discount Instruments Form (and Instructions) 6251 Alternative Minimum Tax—Individuals Schedule D (Form 1040) Capital Gains and Losses See chapter 12 for information about getting these publications and forms. Free turbo tax 2011 Resident Aliens Resident aliens are generally taxed in the same way as U. Free turbo tax 2011 S. Free turbo tax 2011 citizens. Free turbo tax 2011 This means that their worldwide income is subject to U. Free turbo tax 2011 S. Free turbo tax 2011 tax and must be reported on their U. Free turbo tax 2011 S. Free turbo tax 2011 tax return. Free turbo tax 2011 Income of resident aliens is subject to the graduated tax rates that apply to U. Free turbo tax 2011 S. Free turbo tax 2011 citizens. Free turbo tax 2011 Resident aliens use the Tax Table or Tax Computation Worksheets located in the Form 1040 instructions, which apply to U. Free turbo tax 2011 S. Free turbo tax 2011 citizens. Free turbo tax 2011 Nonresident Aliens A nonresident alien's income that is subject to U. Free turbo tax 2011 S. Free turbo tax 2011 income tax must be divided into two categories: Income that is effectively connected with a trade or business in the United States, and Income that is not effectively connected with a trade or business in the United States (discussed under The 30% Tax, later). Free turbo tax 2011 The difference between these two categories is that effectively connected income, after allowable deductions, is taxed at graduated rates. Free turbo tax 2011 These are the same rates that apply to U. Free turbo tax 2011 S. Free turbo tax 2011 citizens and residents. Free turbo tax 2011 Income that is not effectively connected is taxed at a flat 30% (or lower treaty) rate. Free turbo tax 2011 If you were formerly a U. Free turbo tax 2011 S. Free turbo tax 2011 citizen or resident alien, these rules may not apply. Free turbo tax 2011 See Expatriation Tax, later, in this chapter. Free turbo tax 2011 Trade or Business in the United States Generally, you must be engaged in a trade or business during the tax year to be able to treat income received in that year as effectively connected with that trade or business. Free turbo tax 2011 Whether you are engaged in a trade or business in the United States depends on the nature of your activities. Free turbo tax 2011 The discussions that follow will help you determine whether you are engaged in a trade or business in the United States. Free turbo tax 2011 Personal Services If you perform personal services in the United States at any time during the tax year, you usually are considered engaged in a trade or business in the United States. Free turbo tax 2011 Certain compensation paid to a nonresident alien by a foreign employer is not included in gross income. Free turbo tax 2011 For more information, see Services Performed for Foreign Employer in chapter 3. Free turbo tax 2011 Other Trade or Business Activities Other examples of being engaged in a trade or business in the United States follow. Free turbo tax 2011 Students and trainees. Free turbo tax 2011   You are considered engaged in a trade or business in the United States if you are temporarily present in the United States as a nonimmigrant under an “F,” “J,” “M,” or “Q” visa. Free turbo tax 2011 A nonresident alien temporarily present in the United States under a “J” visa includes a nonresident alien individual admitted to the United States as an exchange visitor under the Mutual Educational and Cultural Exchange Act of 1961. Free turbo tax 2011 The taxable part of any scholarship or fellowship grant that is U. Free turbo tax 2011 S. Free turbo tax 2011 source income is treated as effectively connected with a trade or business in the United States. Free turbo tax 2011 Business operations. Free turbo tax 2011   If you own and operate a business in the United States selling services, products, or merchandise, you are, with certain exceptions, engaged in a trade or business in the United States. Free turbo tax 2011 Partnerships. Free turbo tax 2011   If you are a member of a partnership that at any time during the tax year is engaged in a trade or business in the United States, you are considered to be engaged in a trade or business in the United States. Free turbo tax 2011 Beneficiary of an estate or trust. Free turbo tax 2011   If you are the beneficiary of an estate or trust that is engaged in a trade or business in the United States, you are treated as being engaged in the same trade or business. Free turbo tax 2011 Trading in stocks, securities, and commodities. Free turbo tax 2011   If your only U. Free turbo tax 2011 S. Free turbo tax 2011 business activity is trading in stocks, securities, or commodities (including hedging transactions) through a U. Free turbo tax 2011 S. Free turbo tax 2011 resident broker or other agent, you are not engaged in a trade or business in the United States. Free turbo tax 2011   For transactions in stocks or securities, this applies to any nonresident alien, including a dealer or broker in stocks and securities. Free turbo tax 2011   For transactions in commodities, this applies to commodities that are usually traded on an organized commodity exchange and to transactions that are usually carried out at such an exchange. Free turbo tax 2011   This discussion does not apply if you have a U. Free turbo tax 2011 S. Free turbo tax 2011 office or other fixed place of business at any time during the tax year through which, or by the direction of which, you carry out your transactions in stocks, securities, or commodities. Free turbo tax 2011 Trading for a nonresident alien's own account. Free turbo tax 2011   You are not engaged in a trade or business in the United States if trading for your own account in stocks, securities, or commodities is your only U. Free turbo tax 2011 S. Free turbo tax 2011 business activity. Free turbo tax 2011 This applies even if the trading takes place while you are present in the United States or is done by your employee or your broker or other agent. Free turbo tax 2011   This does not apply to trading for your own account if you are a dealer in stocks, securities, or commodities. Free turbo tax 2011 This does not necessarily mean, however, that as a dealer you are considered to be engaged in a trade or business in the United States. Free turbo tax 2011 Determine that based on the facts and circumstances in each case or under the rules given above in Trading in stocks, securities, and commodities . Free turbo tax 2011 Effectively Connected Income If you are engaged in a U. Free turbo tax 2011 S. Free turbo tax 2011 trade or business, all income, gain, or loss for the tax year that you get from sources within the United States (other than certain investment income) is treated as effectively connected income. Free turbo tax 2011 This applies whether or not there is any connection between the income and the trade or business being carried on in the United States during the tax year. Free turbo tax 2011 Two tests, described next under Investment Income, determine whether certain items of investment income (such as interest, dividends, and royalties) are treated as effectively connected with that business. Free turbo tax 2011 In limited circumstances, some kinds of foreign source income may be treated as effectively connected with a trade or business in the United States. Free turbo tax 2011 For a discussion of these rules, see Foreign Income , later. Free turbo tax 2011 Investment Income Investment income from U. Free turbo tax 2011 S. Free turbo tax 2011 sources that may or may not be treated as effectively connected with a U. Free turbo tax 2011 S. Free turbo tax 2011 trade or business generally falls into the following three categories. Free turbo tax 2011 Fixed or determinable income (interest, dividends, rents, royalties, premiums, annuities, etc. Free turbo tax 2011 ). Free turbo tax 2011 Gains (some of which are considered capital gains) from the sale or exchange of the following types of property. Free turbo tax 2011 Timber, coal, or domestic iron ore with a retained economic interest. Free turbo tax 2011 Patents, copyrights, and similar property on which you receive contingent payments after October 4, 1966. Free turbo tax 2011 Patents transferred before October 5, 1966. Free turbo tax 2011 Original issue discount obligations. Free turbo tax 2011 Capital gains (and losses). Free turbo tax 2011 Use the two tests, described next, to determine whether an item of U. Free turbo tax 2011 S. Free turbo tax 2011 source income falling in one of the three categories above and received during the tax year is effectively connected with your U. Free turbo tax 2011 S. Free turbo tax 2011 trade or business. Free turbo tax 2011 If the tests indicate that the item of income is effectively connected, you must include it with your other effectively connected income. Free turbo tax 2011 If the item of income is not effectively connected, include it with all other income discussed under The 30% Tax later, in this chapter. Free turbo tax 2011 Asset-use test. Free turbo tax 2011   This test usually applies to income that is not directly produced by trade or business activities. Free turbo tax 2011 Under this test, if an item of income is from assets (property) used in, or held for use in, the trade or business in the United States, it is considered effectively connected. Free turbo tax 2011   An asset is used in, or held for use in, the trade or business in the United States if the asset is: Held for the principal purpose of promoting the conduct of a trade or business in the United States, Acquired and held in the ordinary course of the trade or business conducted in the United States (for example, an account receivable or note receivable arising from that trade or business), or Otherwise held to meet the present needs of the trade or business in the United States and not its anticipated future needs. Free turbo tax 2011 Generally, stock of a corporation is not treated as an asset used in, or held for use in, a trade or business in the United States. Free turbo tax 2011 Business-activities test. Free turbo tax 2011   This test usually applies when income, gain, or loss comes directly from the active conduct of the trade or business. Free turbo tax 2011 The business-activities test is most important when: Dividends or interest are received by a dealer in stocks or securities, Royalties are received in the trade or business of licensing patents or similar property, or Service fees are earned by a servicing business. Free turbo tax 2011 Under this test, if the conduct of the U. Free turbo tax 2011 S. Free turbo tax 2011 trade or business was a material factor in producing the income, the income is considered effectively connected. Free turbo tax 2011 Personal Service Income You usually are engaged in a U. Free turbo tax 2011 S. Free turbo tax 2011 trade or business when you perform personal services in the United States. Free turbo tax 2011 Personal service income you receive in a tax year in which you are engaged in a U. Free turbo tax 2011 S. Free turbo tax 2011 trade or business is effectively connected with a U. Free turbo tax 2011 S. Free turbo tax 2011 trade or business. Free turbo tax 2011 Income received in a year other than the year you performed the services is also effectively connected if it would have been effectively connected if received in the year you performed the services. Free turbo tax 2011 Personal service income includes wages, salaries, commissions, fees, per diem allowances, and employee allowances and bonuses. Free turbo tax 2011 The income may be paid to you in the form of cash, services, or property. Free turbo tax 2011 If you are engaged in a U. Free turbo tax 2011 S. Free turbo tax 2011 trade or business only because you perform personal services in the United States during the tax year, income and gains from assets, and gains and losses from the sale or exchange of capital assets are generally not effectively connected with your trade or business. Free turbo tax 2011 However, if there is a direct economic relationship between your holding of the asset and your trade or business of performing personal services, the income, gain, or loss is effectively connected. Free turbo tax 2011 Pensions. Free turbo tax 2011   If you were a nonresident alien engaged in a U. Free turbo tax 2011 S. Free turbo tax 2011 trade or business after 1986 because you performed personal services in the United States, and you later receive a pension or retirement pay attributable to these services, such payments are effectively connected income in each year you receive them. Free turbo tax 2011 This is true whether or not you are engaged in a U. Free turbo tax 2011 S. Free turbo tax 2011 trade or business in the year you receive the retirement pay. Free turbo tax 2011 Transportation Income Transportation income (defined in chapter 2) is effectively connected if you meet both of the following conditions. Free turbo tax 2011 You had a fixed place of business in the United States involved in earning the income. Free turbo tax 2011 At least 90% of your U. Free turbo tax 2011 S. Free turbo tax 2011 source transportation income is attributable to regularly scheduled transportation. Free turbo tax 2011 “Fixed place of business” generally means a place, site, structure, or other similar facility through which you engage in a trade or business. Free turbo tax 2011 “Regularly scheduled transportation” means that a ship or aircraft follows a published schedule with repeated sailings or flights at regular intervals between the same points for voyages or flights that begin or end in the United States. Free turbo tax 2011 This definition applies to both scheduled and chartered air transportation. Free turbo tax 2011 If you do not meet the two conditions above, the income is not effectively connected and is taxed at a 4% rate. Free turbo tax 2011 See Transportation Tax, later, in this chapter. Free turbo tax 2011 Business Profits and Losses and Sales Transactions All profits or losses from U. Free turbo tax 2011 S. Free turbo tax 2011 sources that are from the operation of a business in the United States are effectively connected with a trade or business in the United States. Free turbo tax 2011 For example, profit from the sale in the United States of inventory property purchased either in this country or in a foreign country is effectively connected trade or business income. Free turbo tax 2011 A share of U. Free turbo tax 2011 S. Free turbo tax 2011 source profits or losses of a partnership that is engaged in a trade or business in the United States is also effectively connected with a trade or business in the United States. Free turbo tax 2011 Real Property Gain or Loss Gains and losses from the sale or exchange of U. Free turbo tax 2011 S. Free turbo tax 2011 real property interests (whether or not they are capital assets) are taxed as if you are engaged in a trade or business in the United States. Free turbo tax 2011 You must treat the gain or loss as effectively connected with that trade or business. Free turbo tax 2011 U. Free turbo tax 2011 S. Free turbo tax 2011 real property interest. Free turbo tax 2011   This is any interest in real property located in the United States or the U. Free turbo tax 2011 S. Free turbo tax 2011 Virgin Islands or any interest (other than as a creditor) in a domestic corporation that is a U. Free turbo tax 2011 S. Free turbo tax 2011 real property holding corporation. Free turbo tax 2011 Real property includes the following. Free turbo tax 2011 Land and unsevered natural products of the land, such as growing crops and timber, and mines, wells, and other natural deposits. Free turbo tax 2011 Improvements on land, including buildings, other permanent structures, and their structural components. Free turbo tax 2011 Personal property associated with the use of real property, such as equipment used in farming, mining, forestry, or construction or property used in lodging facilities or rented office space, unless the personal property is: Disposed of more than one year before or after the disposition of the real property, or Separately sold to persons unrelated either to the seller or to the buyer of the real property. Free turbo tax 2011 U. Free turbo tax 2011 S. Free turbo tax 2011 real property holding corporation. Free turbo tax 2011   A corporation is a U. Free turbo tax 2011 S. Free turbo tax 2011 real property holding corporation if the fair market value of the corporation's U. Free turbo tax 2011 S. Free turbo tax 2011 real property interests are at least 50% of the total fair market value of: The corporation's U. Free turbo tax 2011 S. Free turbo tax 2011 real property interests, plus The corporation's interests in real property located outside the United States, plus The corporation's other assets that are used in, or held for use in, a trade or business. Free turbo tax 2011   Gain or loss on the sale of the stock in any domestic corporation is taxed as if you are engaged in a U. Free turbo tax 2011 S. Free turbo tax 2011 trade or business unless you establish that the corporation is not a U. Free turbo tax 2011 S. Free turbo tax 2011 real property holding corporation. Free turbo tax 2011   A U. Free turbo tax 2011 S. Free turbo tax 2011 real property interest does not include a class of stock of a corporation that is regularly traded on an established securities market, unless you hold more than 5% of the fair market value of that class of stock. Free turbo tax 2011 An interest in a foreign corporation owning U. Free turbo tax 2011 S. Free turbo tax 2011 real property generally is not a U. Free turbo tax 2011 S. Free turbo tax 2011 real property interest unless the corporation chooses to be treated as a domestic corporation. Free turbo tax 2011 Qualified investment entities. Free turbo tax 2011   Special rules apply to qualified investment entities (QIEs). Free turbo tax 2011 A QIE is any real estate investment trust (REIT) or any regulated investment company (RIC) that is a U. Free turbo tax 2011 S. Free turbo tax 2011 real property holding corporation. Free turbo tax 2011    Generally, any distribution from a QIE to a shareholder that is attributable to gain from the sale or exchange of a U. Free turbo tax 2011 S. Free turbo tax 2011 real property interest is treated as a U. Free turbo tax 2011 S. Free turbo tax 2011 real property gain by the shareholder receiving the distribution. Free turbo tax 2011 A distribution by a QIE on stock regularly traded on an established securities market in the United States is not treated as gain from the sale or exchange of a U. Free turbo tax 2011 S. Free turbo tax 2011 real property interest if you did not own more than 5% of that stock at any time during the 1-year period ending on the date of the distribution. Free turbo tax 2011 A distribution that you do not treat as gain from the sale or exchange of a U. Free turbo tax 2011 S. Free turbo tax 2011 real property interest is included in your gross income as a regular dividend. Free turbo tax 2011 Note. Free turbo tax 2011 Beginning January 1, 2014 (unless extended by legislation), a RIC that is a U. Free turbo tax 2011 S. Free turbo tax 2011 real property holding corporation will only be treated as a QIE for certain distributions from the RIC that are directly or indirectly attributable to distributions received by the RIC from a REIT. Free turbo tax 2011 Domestically controlled QIE. Free turbo tax 2011   The sale of an interest in a domestically controlled QIE is not the sale of a U. Free turbo tax 2011 S. Free turbo tax 2011 real property interest. Free turbo tax 2011 The entity is domestically controlled if at all times during the testing period less than 50% in value of its stock was held, directly or indirectly, by foreign persons. Free turbo tax 2011 The testing period is the shorter of (a) the 5-year period ending on the date of disposition, or (b) the period during which the entity was in existence. Free turbo tax 2011 Wash sale. Free turbo tax 2011    If you dispose of an interest in a domestically controlled QIE in an applicable wash sale transaction, special rules apply. Free turbo tax 2011 An applicable wash sale transaction is one in which you: Dispose of an interest in the domestically controlled QIE during the 30-day period before the ex-dividend date of a distribution that you would (but for the disposition) have treated as gain from the sale or exchange of a U. Free turbo tax 2011 S. Free turbo tax 2011 real property interest, and Acquire, or enter into a contract or option to acquire, a substantially identical interest in that entity during the 61-day period that began on the first day of the 30-day period. Free turbo tax 2011 If this occurs, you are treated as having gain from the sale or exchange of a U. Free turbo tax 2011 S. Free turbo tax 2011 real property interest in an amount equal to the distribution made after June 15, 2006, that would have been treated as such gain. Free turbo tax 2011 This also applies to any substitute dividend payment. Free turbo tax 2011   A transaction is not treated as an applicable wash sale transaction if: You actually receive the distribution from the domestically controlled QIE related to the interest disposed of, or acquired, in the transaction, or You dispose of any class of stock in a QIE that is regularly traded on an established securities market in the United States but only if you did not own more than 5% of that class of stock at any time during the 1-year period ending on the date of the distribution. Free turbo tax 2011 Alternative minimum tax. Free turbo tax 2011   There may be a minimum tax on your net gain from the disposition of U. Free turbo tax 2011 S. Free turbo tax 2011 real property interests. Free turbo tax 2011 Figure the amount of this tax, if any, on Form 6251. Free turbo tax 2011 Withholding of tax. Free turbo tax 2011   If you dispose of a U. Free turbo tax 2011 S. Free turbo tax 2011 real property interest, the buyer may have to withhold tax. Free turbo tax 2011 See the discussion of Tax Withheld on Real Property Sales in chapter 8. Free turbo tax 2011 Foreign Income You must treat three kinds of foreign source income as effectively connected with a trade or business in the United States if: You have an office or other fixed place of business in the United States to which the income can be attributed, That office or place of business is a material factor in producing the income, and The income is produced in the ordinary course of the trade or business carried on through that office or other fixed place of business. Free turbo tax 2011 An office or other fixed place of business is a material factor if it significantly contributes to, and is an essential economic element in, the earning of the income. Free turbo tax 2011 The three kinds of foreign source income are listed below. Free turbo tax 2011 Rents and royalties for the use of, or for the privilege of using, intangible personal property located outside the United States or from any interest in such property. Free turbo tax 2011 Included are rents or royalties for the use, or for the privilege of using, outside the United States, patents, copyrights, secret processes and formulas, goodwill, trademarks, trade brands, franchises, and similar properties if the rents or royalties are from the active conduct of a trade or business in the United States. Free turbo tax 2011 Dividends, interest, or amounts received for the provision of a guarantee of indebtedness issued after September 27, 2010, from the active conduct of a banking, financing, or similar business in the United States. Free turbo tax 2011 A substitute dividend or interest payment received under a securities lending transaction or a sale-repurchase transaction is treated the same as the amounts received on the transferred security. Free turbo tax 2011 Income, gain, or loss from the sale outside the United States, through the U. Free turbo tax 2011 S. Free turbo tax 2011 office or other fixed place of business, of: Stock in trade, Property that would be included in inventory if on hand at the end of the tax year, or Property held primarily for sale to customers in the ordinary course of business. Free turbo tax 2011 Item (3) will not apply if you sold the property for use, consumption, or disposition outside the United States and an office or other fixed place of business in a foreign country was a material factor in the sale. Free turbo tax 2011 Any foreign source income that is equivalent to any item of income described above is treated as effectively connected with a U. Free turbo tax 2011 S. Free turbo tax 2011 trade or business. Free turbo tax 2011 For example, foreign source interest and dividend equivalents are treated as U. Free turbo tax 2011 S. Free turbo tax 2011 effectively connected income if the income is derived by a foreign person in the active conduct of a banking, financing, or similar business within the United States. Free turbo tax 2011 Tax on Effectively Connected Income Income you receive during the tax year that is effectively connected with your trade or business in the United States is, after allowable deductions, taxed at the rates that apply to U. Free turbo tax 2011 S. Free turbo tax 2011 citizens and residents. Free turbo tax 2011 Generally, you can receive effectively connected income only if you are a nonresident alien engaged in trade or business in the United States during the tax year. Free turbo tax 2011 However, income you receive from the sale or exchange of property, the performance of services, or any other transaction in another tax year is treated as effectively connected in that year if it would have been effectively connected in the year the transaction took place or you performed the services. Free turbo tax 2011 Example. Free turbo tax 2011 Ted Richards, a nonresident alien, entered the United States in August 2012, to perform personal services in the U. Free turbo tax 2011 S. Free turbo tax 2011 office of his overseas employer. Free turbo tax 2011 He worked in the U. Free turbo tax 2011 S. Free turbo tax 2011 office until December 25, 2012, but did not leave this country until January 11, 2013. Free turbo tax 2011 On January 8, 2013, he received his final paycheck for services performed in the United States during 2012. Free turbo tax 2011 All of Ted's income during his stay here is U. Free turbo tax 2011 S. Free turbo tax 2011 source income. Free turbo tax 2011 During 2012, Ted was engaged in the trade or business of performing personal services in the United States. Free turbo tax 2011 Therefore, all amounts paid to him in 2012 for services performed in the United States during 2012 are effectively connected with that trade or business during 2012. Free turbo tax 2011 The salary payment Ted received in January 2013 is U. Free turbo tax 2011 S. Free turbo tax 2011 source income to him in 2013. Free turbo tax 2011 It is effectively connected with a trade or business in the United States because he was engaged in a trade or business in the United States during 2012 when he performed the services that earned the income. Free turbo tax 2011 Real property income. Free turbo tax 2011   You may be able to choose to treat all income from real property as effectively connected. Free turbo tax 2011 See Income From Real Property , later, in this chapter. Free turbo tax 2011 The 30% Tax Tax at a 30% (or lower treaty) rate applies to certain items of income or gains from U. Free turbo tax 2011 S. Free turbo tax 2011 sources but only if the items are not effectively connected with your U. Free turbo tax 2011 S. Free turbo tax 2011 trade or business. Free turbo tax 2011 Fixed or Determinable Income The 30% (or lower treaty) rate applies to the gross amount of U. Free turbo tax 2011 S. Free turbo tax 2011 source fixed or determinable annual or periodic gains, profits, or income. Free turbo tax 2011 Income is fixed when it is paid in amounts known ahead of time. Free turbo tax 2011 Income is determinable whenever there is a basis for figuring the amount to be paid. Free turbo tax 2011 Income can be periodic if it is paid from time to time. Free turbo tax 2011 It does not have to be paid annually or at regular intervals. Free turbo tax 2011 Income can be determinable or periodic even if the length of time during which the payments are made is increased or decreased. Free turbo tax 2011 Items specifically included as fixed or determinable income are interest (other than original issue discount), dividends, dividend equivalent payments (defined in chapter 2), rents, premiums, annuities, salaries, wages, and other compensation. Free turbo tax 2011 A substitute dividend or interest payment received under a securities lending transaction or a sale-repurchase transaction is treated the same as the amounts received on the transferred security. Free turbo tax 2011 Other items of income, such as royalties, also may be subject to the 30% tax. Free turbo tax 2011 Some fixed or determinable income may be exempt from U. Free turbo tax 2011 S. Free turbo tax 2011 tax. Free turbo tax 2011 See chapter 3 if you are not sure whether the income is taxable. Free turbo tax 2011 Original issue discount (OID). Free turbo tax 2011   If you sold, exchanged, or received a payment on a bond or other debt instrument that was issued at a discount after March 31, 1972, all or part of the original issue discount (OID) (other than portfolio interest) may be subject to the 30% tax. Free turbo tax 2011 The amount of OID is the difference between the stated redemption price at maturity and the issue price of the debt instrument. Free turbo tax 2011 The 30% tax applies in the following circumstances. Free turbo tax 2011 You received a payment on a debt instrument. Free turbo tax 2011 In this case, the amount of OID subject to tax is the OID that accrued while you held the debt instrument minus the OID previously taken into account. Free turbo tax 2011 But the tax on the OID cannot be more than the payment minus the tax on the interest payment on the debt instrument. Free turbo tax 2011 You sold or exchanged the debt instrument. Free turbo tax 2011 The amount of OID subject to tax is the OID that accrued while you held the debt instrument minus the amount already taxed in (1) above. Free turbo tax 2011   Report on your return the amount of OID shown on Form 1042-S, Foreign Person's U. Free turbo tax 2011 S. Free turbo tax 2011 Source Income Subject to Withholding, if you bought the debt instrument at original issue. Free turbo tax 2011 However, you must recompute your proper share of OID shown on Form 1042-S if any of the following apply. Free turbo tax 2011 You bought the debt instrument at a premium or paid an acquisition premium. Free turbo tax 2011 The debt instrument is a stripped bond or a stripped coupon (including zero coupon instruments backed by U. Free turbo tax 2011 S. Free turbo tax 2011 Treasury securities). Free turbo tax 2011 The debt instrument is a contingent payment or inflation-indexed debt instrument. Free turbo tax 2011 For the definition of premium and acquisition premium and instructions on how to recompute OID, get Publication 1212. Free turbo tax 2011   If you held a bond or other debt instrument that was issued at a discount before April 1, 1972, contact the IRS for further information. Free turbo tax 2011 See chapter 12. Free turbo tax 2011 Gambling Winnings In general, nonresident aliens are subject to the 30% tax on the gross proceeds from gambling won in the United States if that income is not effectively connected with a U. Free turbo tax 2011 S. Free turbo tax 2011 trade or business and is not exempted by treaty. Free turbo tax 2011 However, no tax is imposed on nonbusiness gambling income a nonresident alien wins playing blackjack, baccarat, craps, roulette, or big-6 wheel in the United States. Free turbo tax 2011 Nonresident aliens are taxed at graduated rates on net gambling income won in the United States that is effectively connected with a U. Free turbo tax 2011 S. Free turbo tax 2011 trade or business. Free turbo tax 2011 Social Security Benefits A nonresident alien must include 85% of any U. Free turbo tax 2011 S. Free turbo tax 2011 social security benefit (and the social security equivalent part of a tier 1 railroad retirement benefit) in U. Free turbo tax 2011 S. Free turbo tax 2011 source fixed or determinable annual or periodic income. Free turbo tax 2011 Social security benefits include monthly retirement, survivor, and disability benefits. Free turbo tax 2011 This income is exempt under some tax treaties. Free turbo tax 2011 See Table 1 in Publication 901, U. Free turbo tax 2011 S. Free turbo tax 2011 Tax Treaties, for a list of tax treaties that exempt U. Free turbo tax 2011 S. Free turbo tax 2011 social security benefits from U. Free turbo tax 2011 S. Free turbo tax 2011 tax. Free turbo tax 2011 Sales or Exchanges of Capital Assets These rules apply only to those capital gains and losses from sources in the United States that are not effectively connected with a trade or business in the United States. Free turbo tax 2011 They apply even if you are engaged in a trade or business in the United States. Free turbo tax 2011 These rules do not apply to the sale or exchange of a U. Free turbo tax 2011 S. Free turbo tax 2011 real property interest or to the sale of any property that is effectively connected with a trade or business in the United States. Free turbo tax 2011 See Real Property Gain or Loss , earlier, under Effectively Connected Income. Free turbo tax 2011 A capital asset is everything you own except: Inventory. Free turbo tax 2011 Business accounts or notes receivable. Free turbo tax 2011 Depreciable property used in a trade or business. Free turbo tax 2011 Real property used in a trade or business. Free turbo tax 2011 Supplies regularly used in a trade or business. Free turbo tax 2011 Certain copyrights, literary or musical or artistic compositions, letters or memoranda, or similar property. Free turbo tax 2011 Certain U. Free turbo tax 2011 S. Free turbo tax 2011 government publications. Free turbo tax 2011 Certain commodities derivative financial instruments held by a commodities derivatives dealer. Free turbo tax 2011 Hedging transactions. Free turbo tax 2011 A capital gain is a gain on the sale or exchange of a capital asset. Free turbo tax 2011 A capital loss is a loss on the sale or exchange of a capital asset. Free turbo tax 2011 If the sale is in foreign currency, for the purpose of determining gain, the cost and selling price of the property should be expressed in U. Free turbo tax 2011 S. Free turbo tax 2011 currency at the rate of exchange prevailing as of the date of the purchase and date of the sale, respectively. Free turbo tax 2011 You may want to read Publication 544. Free turbo tax 2011 However, use Publication 544 only to determine what is a sale or exchange of a capital asset, or what is treated as such. Free turbo tax 2011 Specific tax treatment that applies to U. Free turbo tax 2011 S. Free turbo tax 2011 citizens or residents generally does not apply to you. Free turbo tax 2011 The following gains are subject to the 30% (or lower treaty) rate without regard to the 183-day rule, discussed later. Free turbo tax 2011 Gains on the disposal of timber, coal, or domestic iron ore with a retained economic interest. Free turbo tax 2011 Gains on contingent payments received from the sale or exchange of patents, copyrights, and similar property after October 4, 1966. Free turbo tax 2011 Gains on certain transfers of all substantial rights to, or an undivided interest in, patents if the transfers were made before October 5, 1966. Free turbo tax 2011 Gains on the sale or exchange of original issue discount obligations. Free turbo tax 2011 Gains in (1) are not subject to the 30% (or lower treaty) rate if you choose to treat the gains as effectively connected with a U. Free turbo tax 2011 S. Free turbo tax 2011 trade or business. Free turbo tax 2011 See Income From Real Property , later. Free turbo tax 2011 183-day rule. Free turbo tax 2011   If you were in the United States for 183 days or more during the tax year, your net gain from sales or exchanges of capital assets is taxed at a 30% (or lower treaty) rate. Free turbo tax 2011 For purposes of the 30% (or lower treaty) rate, net gain is the excess of your capital gains from U. Free turbo tax 2011 S. Free turbo tax 2011 sources over your capital losses from U. Free turbo tax 2011 S. Free turbo tax 2011 sources. Free turbo tax 2011 This rule applies even if any of the transactions occurred while you were not in the United States. Free turbo tax 2011   To determine your net gain, consider the amount of your gains and losses that would be recognized and taken into account only if, and to the extent that, they would be recognized and taken into account if you were in a U. Free turbo tax 2011 S. Free turbo tax 2011 trade or business during the year and the gains and losses were effectively connected with that trade or business during the tax year. Free turbo tax 2011   In arriving at your net gain, do not take the following into consideration. Free turbo tax 2011 The four types of gains listed earlier. Free turbo tax 2011 The deduction for a capital loss carryover. Free turbo tax 2011 Capital losses in excess of capital gains. Free turbo tax 2011 Exclusion for gain from the sale or exchange of qualified small business stock (section 1202 exclusion). Free turbo tax 2011 Losses from the sale or exchange of property held for personal use. Free turbo tax 2011 However, losses resulting from casualties or thefts may be deductible on Schedule A (Form 1040NR). Free turbo tax 2011 See Itemized Deductions in chapter 5. Free turbo tax 2011   If you are not engaged in a trade or business in the United States and have not established a tax year for a prior period, your tax year will be the calendar year for purposes of the 183-day rule. Free turbo tax 2011 Also, you must file your tax return on a calendar-year basis. Free turbo tax 2011   If you were in the United States for less than 183 days during the tax year, capital gains (other than gains listed earlier) are tax exempt unless they are effectively connected with a trade or business in the United States during your tax year. Free turbo tax 2011 Reporting. Free turbo tax 2011   Report your gains and losses from the sales or exchanges of capital assets that are not effectively connected with a trade or business in the United States on page 4 of Form 1040NR. Free turbo tax 2011 Report gains and losses from sales or exchanges of capital assets (including real property) that are effectively connected with a trade or business in the United States on a separate Schedule D (Form 1040), Form 4797, or both. Free turbo tax 2011 Attach them to Form 1040NR. Free turbo tax 2011 Income From Real Property If you have income from real property located in the United States that you own or have an interest in and hold for the production of income, you can choose to treat all income from that property as income effectively connected with a trade or business in the United States. Free turbo tax 2011 The choice applies to all income from real property located in the United States and held for the production of income and to all income from any interest in such property. Free turbo tax 2011 This includes income from rents, royalties from mines, oil or gas wells, or other natural resources. Free turbo tax 2011 It also includes gains from the sale or exchange of timber, coal, or domestic iron ore with a retained economic interest. Free turbo tax 2011 You can make this choice only for real property income that is not otherwise effectively connected with your U. Free turbo tax 2011 S. Free turbo tax 2011 trade or business. Free turbo tax 2011 If you make the choice, you can claim deductions attributable to the real property income and only your net income from real property is taxed. Free turbo tax 2011 This choice does not treat a nonresident alien, who is not otherwise engaged in a U. Free turbo tax 2011 S. Free turbo tax 2011 trade or business, as being engaged in a trade or business in the United States during the year. Free turbo tax 2011 Example. Free turbo tax 2011 You are a nonresident alien and are not engaged in a U. Free turbo tax 2011 S. Free turbo tax 2011 trade or business. Free turbo tax 2011 You own a single-family house in the United States that you rent out. Free turbo tax 2011 Your rental income for the year is $10,000. Free turbo tax 2011 This is your only U. Free turbo tax 2011 S. Free turbo tax 2011 source income. Free turbo tax 2011 As discussed earlier under The 30% Tax, the rental income is subject to a tax at a 30% (or lower treaty) rate. Free turbo tax 2011 You received a Form 1042-S showing that your tenants properly withheld this tax from the rental income. Free turbo tax 2011 You do not have to file a U. Free turbo tax 2011 S. Free turbo tax 2011 tax return (Form 1040NR) because your U. Free turbo tax 2011 S. Free turbo tax 2011 tax liability is satisfied by the withholding of tax. Free turbo tax 2011 If you make the choice discussed earlier, you can offset the $10,000 income by certain rental expenses. Free turbo tax 2011 (See Publication 527, Residential Rental Property, for information on rental expenses. Free turbo tax 2011 ) Any resulting net income is taxed at graduated rates. Free turbo tax 2011 If you make this choice, report the rental income and expenses on Schedule E (Form 1040) and attach the schedule to Form 1040NR. Free turbo tax 2011 For the first year you make the choice, also attach the statement discussed next. Free turbo tax 2011 Making the choice. Free turbo tax 2011   Make the initial choice by attaching a statement to your return, or amended return, for the year of the choice. Free turbo tax 2011 Include the following in your statement. Free turbo tax 2011 That you are making the choice. Free turbo tax 2011 Whether the choice is under Internal Revenue Code section 871(d) (explained earlier) or a tax treaty. Free turbo tax 2011 A complete list of all your real property, or any interest in real property, located in the United States. Free turbo tax 2011 Give the legal identification of U. Free turbo tax 2011 S. Free turbo tax 2011 timber, coal, or iron ore in which you have an interest. Free turbo tax 2011 The extent of your ownership in the property. Free turbo tax 2011 The location of the property. Free turbo tax 2011 A description of any major improvements to the property. Free turbo tax 2011 The dates you owned the property. Free turbo tax 2011 Your income from the property. Free turbo tax 2011 Details of any previous choices and revocations of the real property income choice. Free turbo tax 2011   This choice stays in effect for all later tax years unless you revoke it. Free turbo tax 2011 Revoking the choice. Free turbo tax 2011   You can revoke the choice without IRS approval by filing Form 1040X, Amended U. Free turbo tax 2011 S. Free turbo tax 2011 Individual Income Tax Return, for the year you made the choice and for later tax years. Free turbo tax 2011 You must file Form 1040X within 3 years from the date your return was filed or 2 years from the time the tax was paid, whichever is later. Free turbo tax 2011 If this time period has expired for the year of choice, you cannot revoke the choice for that year. Free turbo tax 2011 However, you may revoke the choice for later tax years only if you have IRS approval. Free turbo tax 2011 For information on how to get IRS approval, see Regulation section 1. Free turbo tax 2011 871-10(d)(2). Free turbo tax 2011 Transportation Tax A 4% tax rate applies to transportation income that is not effectively connected because it does not meet the two conditions listed earlier under Transportation Income . Free turbo tax 2011 If you receive transportation income subject to the 4% tax, you should figure the tax and show it on line 57 of Form 1040NR. Free turbo tax 2011 Attach a statement to your return that includes the following information (if applicable). Free turbo tax 2011 Your name, taxpayer identification number, and tax year. Free turbo tax 2011 A description of the types of services performed (whether on or off board). Free turbo tax 2011 Names of vessels or registration numbers of aircraft on which you performed the services. Free turbo tax 2011 Amount of U. Free turbo tax 2011 S. Free turbo tax 2011 source transportation income derived from each type of service for each vessel or aircraft for the calendar year. Free turbo tax 2011 Total amount of U. Free turbo tax 2011 S. Free turbo tax 2011 source transportation income derived from all types of services for the calendar year. Free turbo tax 2011 This 4% tax applies to your U. Free turbo tax 2011 S. Free turbo tax 2011 source gross transportation income. Free turbo tax 2011 This only includes transportation income that is treated as derived from sources in the United States if the transportation begins or ends in the United States. Free turbo tax 2011 For transportation income from personal services, the transportation must be between the United States and a U. Free turbo tax 2011 S. Free turbo tax 2011 possession. Free turbo tax 2011 For personal services of a nonresident alien, this only applies to income derived from, or in connection with, an aircraft. Free turbo tax 2011 Interrupted Period of Residence You are subject to tax under a special rule if you interrupt your period of U. Free turbo tax 2011 S. Free turbo tax 2011 residence with a period of nonresidence. Free turbo tax 2011 The special rule applies if you meet all of the following conditions. Free turbo tax 2011 You were a U. Free turbo tax 2011 S. Free turbo tax 2011 resident for a period that includes at least 3 consecutive calendar years. Free turbo tax 2011 You were a U. Free turbo tax 2011 S. Free turbo tax 2011 resident for at least 183 days in each of those years. Free turbo tax 2011 You ceased to be treated as a U. Free turbo tax 2011 S. Free turbo tax 2011 resident. Free turbo tax 2011 You then again became a U. Free turbo tax 2011 S. Free turbo tax 2011 resident before the end of the third calendar year after the end of the period described in (1) above. Free turbo tax 2011 Under this special rule, you are subject to tax on your U. Free turbo tax 2011 S. Free turbo tax 2011 source gross income and gains on a net basis at the graduated rates applicable to individuals (with allowable deductions) for the period you were a nonresident alien, unless you would be subject to a higher tax under the 30% tax (discussed earlier) on income not connected with a U. Free turbo tax 2011 S. Free turbo tax 2011 trade or business. Free turbo tax 2011 For information on how to figure the special tax, see How To Figure the Expatriation Tax (If You Expatriated Before June 17, 2008) under Expatriation Tax , below. Free turbo tax 2011 Example. Free turbo tax 2011 John Willow, a citizen of New Zealand, entered the United States on April 1, 2008, as a lawful permanent resident. Free turbo tax 2011 On August 1, 2010, John ceased to be a lawful permanent resident and returned to New Zealand. Free turbo tax 2011 During his period of residence, he was present in the United States for at least 183 days in each of three consecutive years (2008, 2009, and 2010). Free turbo tax 2011 He returned to the United States on October 5, 2013, as a lawful permanent resident. Free turbo tax 2011 He became a resident before the close of the third calendar year (2013) beginning after the end of his first period of residence (August 1, 2010). Free turbo tax 2011 Therefore, he is subject to tax under the special rule for the period of nonresidence (August 2, 2010, through October 4, 2013) if it is more than the tax that would normally apply to him as a nonresident alien. Free turbo tax 2011 Reporting requirements. Free turbo tax 2011   If you are subject to this tax for any year in the period you were a nonresident alien, you must file Form 1040NR for that year. Free turbo tax 2011 The return is due by the due date (including extensions) for filing your U. Free turbo tax 2011 S. Free turbo tax 2011 income tax return for the year that you again become a U. Free turbo tax 2011 S. Free turbo tax 2011 resident. Free turbo tax 2011 If you already filed returns for that period, you must file amended returns. Free turbo tax 2011 You must attach a statement to your return that identifies the source of all of your U. Free turbo tax 2011 S. Free turbo tax 2011 and foreign gross income and the items of income subject to this special rule. Free turbo tax 2011 Expatriation Tax The expatriation tax provisions apply to U. Free turbo tax 2011 S. Free turbo tax 2011 citizens who have renounced their citizenship and long-term residents who have ended their residency. Free turbo tax 2011 The rules that apply are based on the dates of expatriation, which are described in the following sections. Free turbo tax 2011 Expatriation Before June 4, 2004. Free turbo tax 2011 Expatriation After June 3, 2004, and Before June 17, 2008. Free turbo tax 2011 Expatriation After June 16, 2008. Free turbo tax 2011 Long-term resident defined. Free turbo tax 2011   You are a long-term resident if you were a lawful permanent resident of the United States in at least 8 of the last 15 tax years ending with the year your residency ends. Free turbo tax 2011 In determining if you meet the 8-year requirement, do not count any year that you are treated as a resident of a foreign country under a tax treaty and do not waive treaty benefits. Free turbo tax 2011 Expatriation Before June 4, 2004 If you expatriated before June 4, 2004, the expatriation rules apply if one of the principal purposes of the action is the avoidance of U. Free turbo tax 2011 S. Free turbo tax 2011 taxes. Free turbo tax 2011 Unless you received a ruling from the IRS that you did not expatriate to avoid U. Free turbo tax 2011 S. Free turbo tax 2011 taxes, you are presumed to have tax avoidance as a principal purpose if: Your average annual net income tax for the last 5 tax years ending before the date of your action to relinquish your citizenship or terminate your residency was more than $100,000, or Your net worth on the date of your action was $500,000 or more. Free turbo tax 2011 The amounts above are adjusted for inflation if your expatriation action is after 1997 (see Table 4-1). Free turbo tax 2011 Table 4-1. Free turbo tax 2011 Inflation-Adjusted Amounts for Expatriation Actions Before June 4, 2004 IF you expatriated during . Free turbo tax 2011 . Free turbo tax 2011 . Free turbo tax 2011   THEN the rules outlined on this page apply if . Free turbo tax 2011 . Free turbo tax 2011 . Free turbo tax 2011     Your 5-year average annual net income tax was more than . Free turbo tax 2011 . Free turbo tax 2011 . Free turbo tax 2011 OR Your net worth equaled or exceeded . Free turbo tax 2011 . Free turbo tax 2011 . Free turbo tax 2011 1999   110,000   552,000 2000   112,000   562,000 2001   116,000   580,000 2002   120,000   599,000 2003   122,000   608,000 2004 (before June 4)*   124,000   622,000 *If you expatriated after June 3, 2004, see Expatriation After June 3, 2004, and Before June 17, 2008 or Expatriation After June 16, 2008. Free turbo tax 2011 Reporting requirements. Free turbo tax 2011   If you lost your U. Free turbo tax 2011 S. Free turbo tax 2011 citizenship, you should have filed Form 8854 with a consular office or a federal court at the time of loss of citizenship. Free turbo tax 2011 If you ended your long-term residency, you should have filed Form 8854 with the Internal Revenue Service when you filed your dual-status tax return for the year your residency ended. Free turbo tax 2011   Your U. Free turbo tax 2011 S. Free turbo tax 2011 residency is considered to have ended when you ceased to be a lawful permanent resident or you began to be treated as a resident of another country under a tax treaty and do not waive treaty benefits. Free turbo tax 2011 Penalties. Free turbo tax 2011   If you failed to file Form 8854, you may have to pay a penalty equal to the greater of 5% of the expatriation tax or $1,000. Free turbo tax 2011 The penalty will be assessed for each year of the 10-year period beginning on the date of expatriation during which your failure to file continues. Free turbo tax 2011 The penalty will not be imposed if you can show that the failure is due to reasonable cause and not willful neglect. Free turbo tax 2011 Expatriation tax. Free turbo tax 2011   The expatriation tax applies to the 10-year period following the date of expatriation or termination of residency. Free turbo tax 2011 It is figured in the same way as for those expatriating after June 3, 2004, and before June 17, 2008. Free turbo tax 2011 See How To Figure the Expatriation Tax (If You Expatriated Before June 17, 2008) in the next section. Free turbo tax 2011 Expatriation After June 3, 2004, and Before June 17, 2008 If you expatriated after June 3, 2004, and before June 17, 2008, the expatriation rules apply to you if any of the following statements apply. Free turbo tax 2011 Your average annual net income tax for the 5 tax years ending before the date of expatriation or termination of residency is more than: $124,000 if you expatriated or terminated residency in 2004. Free turbo tax 2011 $127,000 if you expatriated or terminated residency in 2005. Free turbo tax 2011 $131,000 if you expatriated or terminated residency in 2006. Free turbo tax 2011 $136,000 if you expatriated or terminated residency in 2007. Free turbo tax 2011 $139,000 if you expatriated or terminated residency in 2008. Free turbo tax 2011 Your net worth is $2 million or more on the date of your expatriation or termination of residency. Free turbo tax 2011 You fail to certify on Form 8854 that you have complied with all U. Free turbo tax 2011 S. Free turbo tax 2011 federal tax obligations for the 5 tax years preceding the date of your expatriation or termination of residency. Free turbo tax 2011 Exception for dual-citizens and certain minors. Free turbo tax 2011   Certain dual-citizens and certain minors (defined next) are not subject to the expatriation tax even if they meet (1) or (2) earlier. Free turbo tax 2011 However, they still must provide the certification required in (3). Free turbo tax 2011 Certain dual-citizens. Free turbo tax 2011   You may qualify for the exception described above if all of the following apply. Free turbo tax 2011 You became at birth a U. Free turbo tax 2011 S. Free turbo tax 2011 citizen and a citizen of another country and you continue to be a citizen of that other country. Free turbo tax 2011 You were never a resident alien of the United States (as defined in chapter 1). Free turbo tax 2011 You never held a U. Free turbo tax 2011 S. Free turbo tax 2011 passport. Free turbo tax 2011 You were present in the United States for no more than 30 days during any calendar year that is 1 of the 10 calendar years preceding your loss of U. Free turbo tax 2011 S. Free turbo tax 2011 citizenship. Free turbo tax 2011 Certain minors. Free turbo tax 2011   You may qualify for the exception described above if you meet all of the following requirements. Free turbo tax 2011 You became a U. Free turbo tax 2011 S. Free turbo tax 2011 citizen at birth. Free turbo tax 2011 Neither of your parents was a U. Free turbo tax 2011 S. Free turbo tax 2011 citizen at the time of your birth. Free turbo tax 2011 You expatriated before you were 18½. Free turbo tax 2011 You were present in the United States for not more than 30 days during any calendar year that is 1 of the 10 calendar years preceding your expatriation. Free turbo tax 2011 Tax consequences of presence in the United States. Free turbo tax 2011   The following rules apply if you do not meet the exception above for dual-citizens and certain minors and the expatriation rules would otherwise apply to you. Free turbo tax 2011   The expatriation tax does not apply to any tax year during the 10-year period if you are physically present in the United States for more than 30 days during the calendar year ending in that year. Free turbo tax 2011 Instead, you are treated as a U. Free turbo tax 2011 S. Free turbo tax 2011 citizen or resident and taxed on your worldwide income for that tax year. Free turbo tax 2011 You must file Form 1040, 1040A, or 1040EZ and figure your tax as prescribed in the instructions for those forms. Free turbo tax 2011   When counting the number of days of presence during a calendar year, count any day you were physically present in the United States at any time during the day. Free turbo tax 2011 However, do not count any days (up to a limit of 30 days) on which you performed personal services in the United States for an employer who is not related to you if either of the following apply. Free turbo tax 2011 You have ties with other countries. Free turbo tax 2011 You have ties with other countries if: You became (within a reasonable period after your expatriation or termination of residency) a citizen or resident of the country in which you, your spouse, or either of your parents were born, and You became fully liable for income tax in that country. Free turbo tax 2011 You were physically present in the United States for 30 days or less during each year in the 10-year period ending on the date of expatriation or termination of residency. Free turbo tax 2011 Do not count any day you were an exempt individual or were unable to leave the United States because of a medical condition that arose while you were in the United States. Free turbo tax 2011 See Exempt individual and Medical condition in chapter 1 under Substantial Presence Test, but disregard the information about Form 8843. Free turbo tax 2011 Related employer. Free turbo tax 2011   If your employer in the United States is any of the following, then your employer is related to you. Free turbo tax 2011 You must count any days you performed services in the United States for that employer as days of presence in the United States. Free turbo tax 2011 Members of your family. Free turbo tax 2011 This includes only your brothers and sisters, half-brothers and half-sisters, spouse, ancestors (parents, grandparents, etc. Free turbo tax 2011 ), and lineal descendants (children, grandchildren, etc. Free turbo tax 2011 ). Free turbo tax 2011 A partnership in which you directly or indirectly own more than 50% of the capital interest or the profits interest. Free turbo tax 2011 A corporation in which you directly or indirectly own more than 50% in value of the outstanding stock. Free turbo tax 2011 (See Publication 550, chapter 4, Constructive ownership of stock, for how to determine whether you directly or indirectly own outstanding stock. Free turbo tax 2011 ) A tax-exempt charitable or educational organization that is directly or indirectly controlled, in any manner or by any method, by you or by a member of your family, whether or not this control is legally enforceable. Free turbo tax 2011 Date of tax expatriation. Free turbo tax 2011   For purposes of U. Free turbo tax 2011 S. Free turbo tax 2011 tax rules, the date of your expatriation or termination of residency is the later of the dates on which you perform the following actions. Free turbo tax 2011 You notify either the Department of State or the Department of Homeland Security (whichever is appropriate) of your expatriating act or termination of residency. Free turbo tax 2011 You file Form 8854 in accordance with the form instructions. Free turbo tax 2011 Annual return. Free turbo tax 2011   If the expatriation tax applies to you, you must file Form 8854 each year during the 10-year period following the date of expatriation. Free turbo tax 2011 You must file this form even if you owe no U. Free turbo tax 2011 S. Free turbo tax 2011 tax. Free turbo tax 2011 Penalty. Free turbo tax 2011   If you fail to file Form 8854 for any tax year, fail to include all information required to be shown on the form, or include incorrect information, you may have to pay a penalty of $10,000. Free turbo tax 2011 You will not have to pay a penalty if you show that the failure is due to reasonable cause and not to willful neglect. Free turbo tax 2011 How To Figure the Expatriation Tax (If You Expatriated Before June 17, 2008) If the expatriation tax applies to you, you are generally subject to tax on your U. Free turbo tax 2011 S. Free turbo tax 2011 source gross income and gains on a net basis at the graduated rates applicable to individuals (with allowable deductions) unless you would be subject to a higher tax under the 30% tax (discussed earlier) on income not connected with a U. Free turbo tax 2011 S. Free turbo tax 2011 trade or business. Free turbo tax 2011 For this purpose, U. Free turbo tax 2011 S. Free turbo tax 2011 source gross income (defined in chapter 2) includes gains from the sale or exchange of: Property (other than stock or debt obligations) located in the United States, Stock issued by a U. Free turbo tax 2011 S. Free turbo tax 2011 domestic corporation, and Debt obligations of U. Free turbo tax 2011 S. Free turbo tax 2011 persons or of the United States, a state or political subdivision thereof, or the District of Columbia. Free turbo tax 2011 U. Free turbo tax 2011 S. Free turbo tax 2011 source income also includes any income or gain derived from stock in certain controlled foreign corporations if you owned, or were considered to own, at any time during the 2-year period ending on the date of expatriation, more than 50% of: The total combined voting power of all classes of that corporation's stock, or The total value of the stock. Free turbo tax 2011 The income or gain is considered U. Free turbo tax 2011 S. Free turbo tax 2011 source income only to the extent of your share of earnings and profits earned or accumulated before the date of expatriation and during the periods you met the ownership requirements discussed above. Free turbo tax 2011 Any exchange of property is treated as a sale of the property at its fair market value on the date of the exchange and any gain is treated as U. Free turbo tax 2011 S. Free turbo tax 2011 source gross income in the tax year of the exchange unless you enter into a gain recognition agreement under Notice 97-19. Free turbo tax 2011 Other information. Free turbo tax 2011   For more information on the expatriation tax provisions, including exceptions to the tax and special U. Free turbo tax 2011 S. Free turbo tax 2011 source rules, see section 877 of the Internal Revenue Code. Free turbo tax 2011 Expatriation Tax Return If you expatriated or terminated your U. Free turbo tax 2011 S. Free turbo tax 2011 residency, or you are subject to the expatriation tax, you must file Form 8854, Initial and Annual Expatriation Statement. Free turbo tax 2011 Attach it to Form 1040NR if you are required to file that form. Free turbo tax 2011 If you are present in the United States following your expatriation and are subject to tax as a U. Free turbo tax 2011 S. Free turbo tax 2011 citizen or resident, file Form 8854 with Form 1040. Free turbo tax 2011 Expatriation After June 16, 2008 If you expatriated after June 16, 2008, the expatriation rules apply to you if you meet any of the following conditions. Free turbo tax 2011 Your average annual net income tax for the 5 years ending before the date of expatriation or termination of residency is more than: $139,000 if you expatriated or terminated residency in 2008. Free turbo tax 2011 $145,000 if you expatriated or terminated residency in 2009 or 2010. Free turbo tax 2011 $147,000 if you expatriated or terminated residency in 2011. Free turbo tax 2011 $151,000 if you expatriated or terminated residency in 2012. Free turbo tax 2011 $155,000 if you expatriated or terminated residency in 2013. Free turbo tax 2011 Your net worth is $2 million or more on the date of your expatriation or termination of residency. Free turbo tax 2011 You fail to certify on Form 8854 that you have complied with all U. Free turbo tax 2011 S. Free turbo tax 2011 federal tax obligations for the 5 years preceding the date of your expatriation or termination of residency. Free turbo tax 2011 Exception for dual-citizens and certain minors. Free turbo tax 2011   Certain dual-citizens and certain minors (defined next) are not subject to the expatriation tax even if they meet (1) or (2) above. Free turbo tax 2011 However, they still must provide the certification required in (3) above. Free turbo tax 2011 Certain dual-citizens. Free turbo tax 2011   You may qualify for the exception described above if both of the following apply. Free turbo tax 2011 You became at birth a U. Free turbo tax 2011 S. Free turbo tax 2011 citizen and a citizen of another country and you continue to be a citizen of, and are taxed as a resident of, that other country. Free turbo tax 2011 You have been a resident of the United States for not more than 10 years during the 15-year tax period ending with the tax year during which the expatriation occurs. Free turbo tax 2011 For the purpose of determining U. Free turbo tax 2011 S. Free turbo tax 2011 residency, use the substantial presence test described in chapter 1. Free turbo tax 2011 Certain minors. Free turbo tax 2011   You may qualify for the exception described earlier if you meet both of the following requirements. Free turbo tax 2011 You expatriated before you were 18½. Free turbo tax 2011 You have been a resident of the United States for not more than 10 tax years before the expatriation occurs. Free turbo tax 2011 For the purpose of determining U. Free turbo tax 2011 S. Free turbo tax 2011 residency, use the substantial presence test described in chapter 1. Free turbo tax 2011 Expatriation date. Free turbo tax 2011   Your expatriation date is the date you relinquish U. Free turbo tax 2011 S. Free turbo tax 2011 citizenship (in the case of a former citizen) or terminate your long-term residency (in the case of a former U. Free turbo tax 2011 S. Free turbo tax 2011 resident). Free turbo tax 2011 Former U. Free turbo tax 2011 S. Free turbo tax 2011 citizen. Free turbo tax 2011   You are considered to have relinquished your U. Free turbo tax 2011 S. Free turbo tax 2011 citizenship on the earliest of the following dates. Free turbo tax 2011 The date you renounced U. Free turbo tax 2011 S. Free turbo tax 2011 citizenship before a diplomatic or consular officer of the United States (provided that the voluntary renouncement was later confirmed by the issuance of a certificate of loss of nationality). Free turbo tax 2011 The date you furnished to the State Department a signed statement of voluntary relinquishment of U. Free turbo tax 2011 S. Free turbo tax 2011 nationality confirming the performance of an expatriating act (provided that the voluntary relinquishment was later confirmed by the issuance of a certificate of loss of nationality). Free turbo tax 2011 The date the State Department issued a certificate of loss of nationality. Free turbo tax 2011 The date that a U. Free turbo tax 2011 S. Free turbo tax 2011 court canceled your certificate of naturalization. Free turbo tax 2011 Former long-term resident. Free turbo tax 2011   You are considered to have terminated your long-term residency on the earliest of the following dates. Free turbo tax 2011 The date you voluntarily relinquished your lawful permanent resident status by filing Department of Homeland Security Form I-407 with a U. Free turbo tax 2011 S. Free turbo tax 2011 consular or immigration officer, and the Department of Homeland Security determined that you have, in fact, abandoned your lawful permanent resident status. Free turbo tax 2011 The date you became subject to a final administrative order for your removal from the United States under the Immigration and Nationality Act and you actually left the United States as a result of that order. Free turbo tax 2011 If you were a dual resident of the United States and a country with which the United States has an income tax treaty, the date you began to be treated as a resident of that country and you determined that, for purposes of the treaty, you are a resident of the treaty country and notify the IRS of that treatment on Forms 8833 and 8854. Free turbo tax 2011 See Effect of Tax Treaties in chapter 1 for more information about dual residents. Free turbo tax 2011 How To Figure the Expatriation Tax (If You Expatriate After June 16, 2008) In the year you expatriate, you are subject to income tax on the net unrealized gain (or loss) in your property as if the property had been sold for its fair market value on the day before your expatriation date (“mark-to-market tax”). Free turbo tax 2011 This applies to most types of property interests you held on the date of relinquishment of citizenship or termination of residency. Free turbo tax 2011 But see Exceptions , later. Free turbo tax 2011 Gains arising from deemed sales must be taken into account for the tax year of the deemed sale without regard to other U. Free turbo tax 2011 S. Free turbo tax 2011 internal revenue laws. Free turbo tax 2011 Losses from deemed sales must be taken into account to the extent otherwise provided under U. Free turbo tax 2011 S. Free turbo tax 2011 internal revenue laws. Free turbo tax 2011 However, Internal Revenue Code section 1091 (relating to the disallowance of losses on wash sales of stock and securities) does not apply. Free turbo tax 2011 The net gain that you otherwise must include in your income is reduced (but not below zero) by: $600,000 if you expatriated or terminated residency before January 1, 2009. Free turbo tax 2011 $626,000 if you expatriated or terminated residency in 2009. Free turbo tax 2011 $627,000 if you expatriated or terminated residency in 2010. Free turbo tax 2011 $636,000 if you expatriated or terminated residency in 2011. Free turbo tax 2011 $651,000 if you expatriated or terminated residency in 2012. Free turbo tax 2011 $668,000 if you expatriated or terminated residency in 2013. Free turbo tax 2011 Exceptions. Free turbo tax 2011   The mark-to-market tax does not apply to the following. Free turbo tax 2011 Eligible deferred compensation items. Free turbo tax 2011 Ineligible deferred compensation items. Free turbo tax 2011 Interests in nongrantor trusts. Free turbo tax 2011 Specified tax deferred accounts. Free turbo tax 2011 Instead, items (1) and (3) may be subject to withholding at source. Free turbo tax 2011 In the case of item (2), you are treated as receiving the present value of your accrued benefit as of the day before the expatriation date. Free turbo tax 2011 In the case of item (4), you are treated as receiving a distribution of your entire interest in the account on the day before your expatriation date. Free turbo tax 2011 See paragraphs (d), (e), and (f) of section 877A for more information. Free turbo tax 2011 Expatriation Tax Return If you expatriated or terminated your U. Free turbo tax 2011 S. Free turbo tax 2011 residency, or you are subject to the expatriation rules (as discussed earlier in the first paragraph under Expatriation After June 16, 2008), you must file Form 8854. Free turbo tax 2011 Attach it to Form 1040 or Form 1040NR if you are required to file either of those forms. Free turbo tax 2011 Deferral of payment of mark-to-market tax. Free turbo tax 2011   You can make an irrevocable election to defer payment of the mark-to-market tax imposed on the deemed sale of property. Free turbo tax 2011 If you make this election, the following rules apply. Free turbo tax 2011 You can make the election on a property-by-property basis. Free turbo tax 2011 The deferred tax attributable to a particular property is due on the return for the tax year in which you dispose of the property. Free turbo tax 2011 Interest is charged for the period the tax is deferred. Free turbo tax 2011 The due date for the payment of the deferred tax cannot be extended beyond the earlier of the following dates. Free turbo tax 2011 The due date of the return required for the year of death. Free turbo tax 2011 The time that the security provided for the property fails to be adequate. Free turbo tax 2011 See item (6) below. Free turbo tax 2011 You make the election on Form 8854. Free turbo tax 2011 You must provide adequate security (such as a bond). Free turbo tax 2011 You must make an irrevocable waiver of any right under any treaty of the United States which would preclude assessment or collection of the mark-to-market tax. Free turbo tax 2011   For more information about the deferral of payment, see the Instructions for Form 8854. Free turbo tax 2011 Prev  Up  Next   Home   More Online Publications