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H&r Block Free Tax File 2012

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H&r Block Free Tax File 2012

H&r block free tax file 2012 Publication 907 - Main Content Table of Contents IncomeDependent Care Benefits Social Security and Railroad Retirement Benefits Disability Pensions Military and Government Disability Pensions Other Payments Itemized DeductionsMedical Expenses Impairment-Related Work Expenses Tax CreditsChild and Dependent Care Credit Credit for the Elderly or the Disabled Earned Income Credit Household Employers Business Tax Incentives How To Get Tax Help Income All income is taxable unless it is specifically excluded by law. H&r block free tax file 2012 The following discussions highlight some income items (both taxable and nontaxable) that are of particular interest to people with disabilities and those who care for people with disabilities. H&r block free tax file 2012 Dependent Care Benefits Dependent care benefits include: Amounts your employer paid directly to either you or your care provider for the care of your qualifying person(s) while you worked, The fair market value of care in a daycare facility provided or sponsored by your employer, and Pre-tax contributions you made under a dependent care flexible spending arrangement. H&r block free tax file 2012 Exclusion or deduction. H&r block free tax file 2012   If your employer provides dependent care benefits under a qualified plan, you may be able to exclude these benefits from your income. H&r block free tax file 2012 Your employer can tell you whether your benefit plan qualifies. H&r block free tax file 2012 To claim the exclusion, you must complete Part III of Form 2441, Child and Dependent Care Expenses. H&r block free tax file 2012 You cannot use Form 1040EZ. H&r block free tax file 2012   If you are self-employed and receive benefits from a qualified dependent care benefit plan, you are treated as both employer and employee. H&r block free tax file 2012 Therefore, you would not get an exclusion from wages. H&r block free tax file 2012 Instead, you would get a deduction on Form 1040, Schedule C, line 14; Schedule E, line 19 or 28; or Schedule F, line 15. H&r block free tax file 2012 To claim the deduction, you must use Form 2441. H&r block free tax file 2012   The amount you can exclude or deduct is limited to the smallest of: The total amount of dependent care benefits you received during the year, The total amount of qualified expenses you incurred during the year, Your earned income, Your spouse's earned income, or $5,000 ($2,500 if married filing separately). H&r block free tax file 2012 Statement for employee. H&r block free tax file 2012   Your employer must give you a Form W-2 (or similar statement), showing in box 10 the total amount of dependent care benefits provided to you during the year under a qualified plan. H&r block free tax file 2012 Your employer will also include any dependent care benefits over $5,000 in your wages shown on your Form W-2 in box 1. H&r block free tax file 2012 Qualifying person(s). H&r block free tax file 2012   A qualifying person is: A qualifying child who is under age 13 whom you can claim as a dependent. H&r block free tax file 2012 If the child turned 13 during the year, the child is a qualifying person for the part of the year he or she was under age 13. H&r block free tax file 2012 Your disabled spouse who is not physically or mentally able to care for himself or herself. H&r block free tax file 2012 Any disabled person who was not physically or mentally able to care for himself or herself whom you can claim as a dependent (or could claim as a dependent except that the person had gross income of $3,900 or more or filed a joint return). H&r block free tax file 2012 Any disabled person who was not physically or mentally able to care for himself or herself whom you could claim as a dependent except that you (or your spouse if filing jointly) could be claimed as a dependent on another taxpayer's 2013 return. H&r block free tax file 2012 For information about excluding benefits on Form 1040, Form 1040NR, or Form 1040A, see Form 2441 and its instructions. H&r block free tax file 2012 Social Security and Railroad Retirement Benefits If you received social security or equivalent Tier 1 railroad retirement (RRTA) benefits during the year, part of the amount you received may be taxable. H&r block free tax file 2012 Are any of your benefits taxable?   If the only income you received during the year was your social security or equivalent Tier 1 railroad retirement (RRTA) benefits, your benefits generally are not taxable. H&r block free tax file 2012   If you received income during the year in addition to social security or equivalent Tier 1 railroad retirement (RRTA) benefits, part of your benefits may be taxable if all of your other income, including tax-exempt interest, plus half of your benefits are more than: $25,000 if you are single, head of household, or qualifying widow(er), $25,000 if you are married filing separately and lived apart from your spouse for all of 2013, $32,000 if you are married filing jointly, or $-0- if you are married filing separately and lived with your spouse at any time during 2013. H&r block free tax file 2012   For more information, see the instructions for Form 1040, lines 20a and 20b, or Form 1040A, lines 14a and 14b. H&r block free tax file 2012 Publication 915, Social Security and Equivalent Railroad Retirement Benefits, contains more detailed information. H&r block free tax file 2012 Supplemental security income (SSI) payments. H&r block free tax file 2012   Social security benefits do not include SSI payments, which are not taxable. H&r block free tax file 2012 Do not include these payments in your income. H&r block free tax file 2012 Disability Pensions If you retired on disability, you must include in income any disability pension you receive under a plan that is paid for by your employer. H&r block free tax file 2012 You must report your taxable disability payments as wages on line 7 of Form 1040 or Form 1040A until you reach minimum retirement age. H&r block free tax file 2012 Minimum retirement age generally is the age at which you can first receive a pension or annuity if you are not disabled. H&r block free tax file 2012 You may be entitled to a tax credit if you were permanently and totally disabled when you retired. H&r block free tax file 2012 For information on this credit, see Publication 524, Credit for the Elderly or the Disabled. H&r block free tax file 2012 Beginning on the day after you reach minimum retirement age, payments you receive are taxable as a pension or annuity. H&r block free tax file 2012 Report the payments on lines 16a and 16b of Form 1040 or on lines 12a and 12b of Form 1040A. H&r block free tax file 2012 For more information on pensions and annuities, see Publication 575, Pension and Annuity Income. H&r block free tax file 2012 Retirement and profit-sharing plans. H&r block free tax file 2012   If you receive payments from a retirement or profit-sharing plan that does not provide for disability retirement, do not treat the payments as a disability pension. H&r block free tax file 2012 The payments must be reported as a pension or annuity. H&r block free tax file 2012 Accrued leave payment. H&r block free tax file 2012   If you retire on disability, any lump-sum payment you receive for accrued annual leave is a salary payment. H&r block free tax file 2012 The payment is not a disability payment. H&r block free tax file 2012 Include it in your income in the tax year you receive it. H&r block free tax file 2012 See Publication 525, Taxable and Nontaxable Income, for more information. H&r block free tax file 2012 Military and Government Disability Pensions Generally, you must report disability pensions as income, but do not include certain military and government disability pensions. H&r block free tax file 2012 For information about military and government disability pensions, see Publication 525. H&r block free tax file 2012 VA disability benefits. H&r block free tax file 2012   Do not include disability benefits you receive from the Department of Veterans Affairs (VA) in your gross income. H&r block free tax file 2012 If you are a military retiree and do not receive your disability benefits from the VA, see Publication 525 for more information. H&r block free tax file 2012   Do not include in your income any veterans' benefits paid under any law, regulation, or administrative practice administered by the VA. H&r block free tax file 2012 These include: Education, training, and subsistence allowances, Disability compensation and pension payments for disabilities paid either to veterans or their families, Grants for homes designed for wheelchair living, Grants for motor vehicles for veterans who lost their sight or the use of their limbs, Veterans' insurance proceeds and dividends paid either to veterans or their beneficiaries, including the proceeds of a veteran's endowment policy paid before death, Interest on insurance dividends left on deposit with the VA, Benefits under a dependent-care assistance program, The death gratuity paid to a survivor of a member of the Armed Forces who died after September 10, 2001, or Payments made under the VA's compensated work therapy program. H&r block free tax file 2012 Other Payments You may receive other payments that are related to your disability. H&r block free tax file 2012 The following payments are not taxable. H&r block free tax file 2012 Benefit payments from a public welfare fund, such as payments due to blindness. H&r block free tax file 2012 Workers' compensation for an occupational sickness or injury if paid under a workers' compensation act or similar law. H&r block free tax file 2012 Compensatory (but not punitive) damages for physical injury or physical sickness. H&r block free tax file 2012 Disability benefits under a “no-fault” car insurance policy for loss of income or earning capacity as a result of injuries. H&r block free tax file 2012 Compensation for permanent loss or loss of use of a part or function of your body, or for your permanent disfigurement. H&r block free tax file 2012 Long-Term Care Insurance Long-term care insurance contracts generally are treated as accident and health insurance contracts. H&r block free tax file 2012 Amounts you receive from them (other than policyholder dividends or premium refunds) generally are excludable from income as amounts received for personal injury or sickness. H&r block free tax file 2012 More detailed information can be found in Publication 525. H&r block free tax file 2012 Accelerated Death Benefits You can exclude from income accelerated death benefits you receive on the life of an insured individual if certain requirements are met. H&r block free tax file 2012 Accelerated death benefits are amounts received under a life insurance contract before the death of the insured. H&r block free tax file 2012 These benefits also include amounts received on the sale or assignment of the contract to a viatical settlement provider. H&r block free tax file 2012 This exclusion applies only if the insured was a terminally ill individual or a chronically ill individual. H&r block free tax file 2012 For more information, see Publication 525. H&r block free tax file 2012 Itemized Deductions If you file Form 1040, you generally can either claim the standard deduction or itemize your deductions. H&r block free tax file 2012 You must use Schedule A (Form 1040) to itemize your deductions. H&r block free tax file 2012 See your form instructions for information on the standard deduction and the deductions you can itemize. H&r block free tax file 2012 The following discussions highlight some itemized deductions that are of particular interest to persons with disabilities. H&r block free tax file 2012 Medical Expenses When figuring your deduction for medical expenses, you can generally include medical and dental expenses you pay for yourself, your spouse, and your dependents. H&r block free tax file 2012 Medical expenses are the cost of diagnosis, cure, mitigation, treatment, or prevention of disease and the costs for treatments affecting any part or function of the body. H&r block free tax file 2012 They include the costs of equipment, supplies, diagnostic devices, and transportation for needed medical care and payments for medical insurance. H&r block free tax file 2012 You can deduct only the amount of your medical and dental expenses that is more than 10% (7. H&r block free tax file 2012 5% if either you or your spouse was born before January 2, 1949) of your adjusted gross income shown on Form 1040, line 38. H&r block free tax file 2012 The following list highlights some of the medical expenses you can include in figuring your medical expense deduction. H&r block free tax file 2012 For more detailed information, see Publication 502, Medical and Dental Expenses (Including the Health Coverage Tax Credit). H&r block free tax file 2012 Artificial limbs, contact lenses, eyeglasses, and hearing aids. H&r block free tax file 2012 The part of the cost of Braille books and magazines that is more than the price of regular printed editions. H&r block free tax file 2012 Cost and repair of special telephone equipment for hearing-impaired persons. H&r block free tax file 2012 Cost and maintenance of a wheelchair or a three-wheel motor vehicle commercially known as an “autoette. H&r block free tax file 2012 ” Cost and care of a guide dog or other animal aiding a person with a physical disability. H&r block free tax file 2012 Costs for a school that furnishes special education if a principal reason for using the school is its resources for relieving a mental or physical disability. H&r block free tax file 2012 This includes the cost of teaching Braille and lip reading and the cost of remedial language training to correct a condition caused by a birth defect. H&r block free tax file 2012 Premiums for qualified long-term care insurance, up to certain amounts. H&r block free tax file 2012 Improvements to a home that do not increase its value if the main purpose is medical care. H&r block free tax file 2012 An example is constructing entrance or exit ramps. H&r block free tax file 2012 Improvements that increase a home's value, if the main purpose is medical care, may be partly included as a medical expense. H&r block free tax file 2012 See Publication 502 for more information. H&r block free tax file 2012 Impairment-Related Work Expenses If you are disabled, you can take a business deduction for expenses that are necessary for you to be able to work. H&r block free tax file 2012 If you take a business deduction for these impairment-related work expenses, they are not subject to the 10% (7. H&r block free tax file 2012 5% if you or your spouse is age 65 or older) limit that applies to medical expenses. H&r block free tax file 2012 You are disabled if you have: A physical or mental disability (for example, blindness or deafness) that functionally limits your being employed, or A physical or mental impairment (including, but not limited to, a sight or hearing impairment) that substantially limits one or more of your major life activities, such as performing manual tasks, walking, speaking, breathing, learning, or working. H&r block free tax file 2012 Impairment-related expenses defined. H&r block free tax file 2012   Impairment-related expenses are those ordinary and necessary business expenses that are: Necessary for you to do your work satisfactorily, For goods and services not required or used, other than incidentally, in your personal activities, and Not specifically covered under other income tax laws. H&r block free tax file 2012 Publication 502 contains more detailed information. H&r block free tax file 2012 Tax Credits This discussion highlights three tax credits that may be of interest to people with disabilities and those who care for people with disabilities. H&r block free tax file 2012 Child and Dependent Care Credit If you pay someone to care for either your dependent under age 13 or your spouse or dependent who is not able to care for himself or herself, you may be able to get a credit of up to 35% of your expenses. H&r block free tax file 2012 To qualify, you must pay these expenses so you can work or look for work. H&r block free tax file 2012 The care must be provided for: Your qualifying child who is your dependent and who was under age 13 when the care was provided, Your spouse who was not physically or mentally able to care for himself or herself and lived with you for more than half the year, or A person who was not physically or mentally able to care for himself or herself, lived with you for more than half the year, and either: Was your dependent, or Would have been your dependent except that: He or she received gross income of $3,900 or more, He or she filed a joint return, or You, or your spouse if filing jointly, could be claimed as a dependent on someone else's 2013 return. H&r block free tax file 2012 You can claim the credit on Form 1040 or 1040A. H&r block free tax file 2012 You cannot claim the credit on Form 1040EZ or Form 1040NR-EZ. H&r block free tax file 2012 You figure the credit on Form 2441. H&r block free tax file 2012 For more information, see the instructions for Form 1040, line 48, or Form 1040A, line 29. H&r block free tax file 2012 Publication 503, Child and Dependent Care Expenses, contains more detailed information. H&r block free tax file 2012 Credit for the Elderly or the Disabled You may be able to claim this credit if you are a U. H&r block free tax file 2012 S. H&r block free tax file 2012 citizen or a resident alien and either of the following apply. H&r block free tax file 2012 You were 65 or older at the end of 2013, You were under 65 at the end of 2013, and retired on permanent or total disability. H&r block free tax file 2012 You can claim the credit on Form 1040 or 1040A. H&r block free tax file 2012 You figure the credit on Schedule R. H&r block free tax file 2012 For more information, see the instructions for Form 1040, line 53, or Form 1040A, line 30. H&r block free tax file 2012 Publication 524, Credit for the Elderly or the Disabled, contains more detailed information. H&r block free tax file 2012 Earned Income Credit This credit is based on the amount of your earned income. H&r block free tax file 2012 You can get the credit if your adjusted gross income for 2013 is less than: $14,340 ($19,680 for married filing jointly) if you do not have a qualifying child, $37,870 ($43,210 for married filing jointly) if you have one qualifying child, $43,038 ($48,378 for married filing jointly) if you have two qualifying children, or $46,227 ($51,567 for married filing jointly) if you have three or more qualifying children. H&r block free tax file 2012 To figure the credit, use the worksheet in the instructions for Form 1040, 1040A, or 1040EZ. H&r block free tax file 2012 If you have a qualifying child, also complete Schedule EIC, Earned Income Credit, and attach it to your Form 1040 or 1040A. H&r block free tax file 2012 You cannot use Form 1040EZ if you have a qualifying child. H&r block free tax file 2012 Qualifying child. H&r block free tax file 2012   To be a qualifying child, your child must be younger than you (or your spouse if married filing jointly) and under age 19 or a full-time student under age 24 at the end of 2013, or permanently and totally disabled at any time during 2013, regardless of age. H&r block free tax file 2012 Earned income. H&r block free tax file 2012   If you are retired on disability, benefits you receive under your employer's disability retirement plan are considered earned income until you reach minimum retirement age. H&r block free tax file 2012 However, payments you received from a disability insurance policy that you paid the premiums for are not earned income. H&r block free tax file 2012 More information. H&r block free tax file 2012   For more information, including all the requirements to claim the earned income credit, see the instructions for Form 1040, line 64a; Form 1040A, line 38a; or Form 1040EZ, line 8a. H&r block free tax file 2012 Publication 596, Earned Income Credit (EIC), contains more detailed information. H&r block free tax file 2012 Household Employers If you pay someone to work in your home, such as a babysitter or housekeeper, you may be a household employer who has to pay employment taxes. H&r block free tax file 2012 A person you hire through an agency is not your employee if the agency controls what work is done and how it is done. H&r block free tax file 2012 This control could include setting the fee, requiring regular reports, and providing rules of conduct and appearance. H&r block free tax file 2012 In this case you do not have to pay employment taxes on the amount you pay. H&r block free tax file 2012 But if you control what work is done and how it is done, the worker is your employee. H&r block free tax file 2012 If you possess the right to discharge a worker, that worker is generally considered to be your employee. H&r block free tax file 2012 If a worker is your employee, it does not matter that you hired the worker through an agency or from a list provided by an agency. H&r block free tax file 2012 To find out if you have to pay employment taxes, see Publication 926, Household Employer's Tax Guide For Wages Paid in 2013. H&r block free tax file 2012 Business Tax Incentives If you own or operate a business, or you are looking for work, you should be aware of the following tax incentives for businesses to help persons with disabilities. H&r block free tax file 2012 Deduction for costs of removing barriers to the disabled and the elderly—This is a deduction a business can take for making a facility or public transportation vehicle more accessible to and usable by persons who are disabled or elderly. H&r block free tax file 2012 For more information, see chapter 7 of Publication 535, Business Expenses. H&r block free tax file 2012 Disabled access credit—This is a nonrefundable tax credit for an eligible small business that pays or incurs expenses to provide access to persons with disabilities. H&r block free tax file 2012 The expenses must be to enable the eligible small business to comply with the Americans With Disabilities Act of 1990. H&r block free tax file 2012 See Form 8826, Disabled Access Credit, for more information. H&r block free tax file 2012 Work opportunity credit—This credit provides businesses with an incentive to hire individuals from targeted groups that have a particularly high unemployment rate or other special employment needs. H&r block free tax file 2012 One targeted group consists of vocational rehabilitation referrals. H&r block free tax file 2012 These are individuals who have a physical or mental disability that results in a substantial handicap to employment. H&r block free tax file 2012 See Form 5884, Work Opportunity Credit. H&r block free tax file 2012 How To Get Tax Help Go online, use a smart phone, call or walk in to an office near you. H&r block free tax file 2012 Whether it's help with a tax issue, preparing your tax return or picking up a free publication or form, get the help you need the way you want it. H&r block free tax file 2012 Free help with your tax return. H&r block free tax file 2012   Free help in preparing your return is available nationwide from IRS-certified volunteers. H&r block free tax file 2012 The Volunteer Income Tax Assistance (VITA) program is designed to help low-to-moderate income, elderly, persons with disabilities, and limited English proficient taxpayers. H&r block free tax file 2012 The Tax Counseling for the Elderly (TCE) program is designed to assist taxpayers age 60 and older with their tax returns. H&r block free tax file 2012 Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. H&r block free tax file 2012 Some VITA and TCE sites provide taxpayers the opportunity to prepare their return with the assistance of an IRS-certified volunteer. H&r block free tax file 2012 To find the nearest VITA or TCE site, visit IRS. H&r block free tax file 2012 gov or call 1-800-906-9887. H&r block free tax file 2012   As part of the TCE program, AARP offers the Tax-Aide counseling program. H&r block free tax file 2012 To find the nearest AARP Tax-Aide site, visit AARP's website at www. H&r block free tax file 2012 aarp. H&r block free tax file 2012 org/money/taxaide or call 1-888-227-7669. H&r block free tax file 2012   For more information on these programs, go to IRS. H&r block free tax file 2012 gov and enter “VITA” in the search box. H&r block free tax file 2012 Internet. H&r block free tax file 2012 IRS. H&r block free tax file 2012 gov and IRS2Go are ready when you are — every day, every night, 24 hours a day, 7 days a week. H&r block free tax file 2012 Apply for an Employer Identification Number (EIN). H&r block free tax file 2012 Go to IRS. H&r block free tax file 2012 gov and enter Apply for an EIN in the search box. H&r block free tax file 2012 Request an Electronic Filing PIN by going to IRS. H&r block free tax file 2012 gov and entering Electronic Filing PIN in the search box. H&r block free tax file 2012 Check the status of your 2013 refund with Where's My Refund? Go to IRS. H&r block free tax file 2012 gov or the IRS2Go app, and click on Where's My Refund? You'll get a personalized refund date as soon as the IRS processes your tax return and approves your refund. H&r block free tax file 2012 If you e-file, your refund status is usually available within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. H&r block free tax file 2012 Check the status of your amended return. H&r block free tax file 2012 Go to IRS. H&r block free tax file 2012 gov and enter Where's My Amended Return in the search box. H&r block free tax file 2012 Download forms, instructions, and publications, including some accessible versions. H&r block free tax file 2012 Order free transcripts of your tax returns or tax account using the Order a Transcript tool on IRS. H&r block free tax file 2012 gov or IRS2Go. H&r block free tax file 2012 Tax return and tax account transcripts are generally available for the current year and past three years. H&r block free tax file 2012 Figure your income tax withholding with the IRS Withholding Calculator on IRS. H&r block free tax file 2012 gov. H&r block free tax file 2012 Use it if you've had too much or too little withheld, your personal situation has changed, you're starting a new job or you just want to see if you're having the right amount withheld. H&r block free tax file 2012 Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. H&r block free tax file 2012 gov. H&r block free tax file 2012 Locate the nearest Taxpayer Assistance Center using the Office Locator tool on IRS. H&r block free tax file 2012 gov or IRS2Go. H&r block free tax file 2012 Stop by most business days for face-to-face tax help, no appointment necessary — just walk in. H&r block free tax file 2012 An employee can explain IRS letters, request adjustments to your tax account or help you set up a payment plan. H&r block free tax file 2012 Before you visit, check the Office Locator for the address, phone number, hours of operation and the services provided. H&r block free tax file 2012 If you have an ongoing tax account problem or a special need, such as a disability, you can request an appointment. H&r block free tax file 2012 Call the local number listed in the Office Locator, or look in the phone book under United States Government, Internal Revenue Service. H&r block free tax file 2012 Locate the nearest volunteer help site with the VITA Locator Tool on IRS. H&r block free tax file 2012 gov. H&r block free tax file 2012 Low-to-moderate income, elderly, persons with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. H&r block free tax file 2012 The Tax Counseling for the Elderly (TCE) program helps taxpayers 60 and older with their tax returns. H&r block free tax file 2012 Most VITA and TCE sites offer free electronic filing and some provide IRS-certified volunteers who can help prepare your tax return. H&r block free tax file 2012 AARP offers the Tax-Aide counseling program as part of the TCE program. H&r block free tax file 2012 Visit AARP's website to find the nearest Tax-Aide location. H&r block free tax file 2012 Research your tax questions. H&r block free tax file 2012 Search publications and instructions by topic or keyword. H&r block free tax file 2012 Read the Internal Revenue Code, regulations, or other official guidance. H&r block free tax file 2012 Read Internal Revenue Bulletins. H&r block free tax file 2012 Sign up to receive local and national tax news by email. H&r block free tax file 2012 Phone. H&r block free tax file 2012 You can call the IRS, or you can carry it in your pocket with the IRS2Go app on your smart phone or tablet. H&r block free tax file 2012 Download the free IRS2Go mobile app from the iTunes app store or from Google Play. H&r block free tax file 2012 Use it to watch the IRS YouTube channel, get IRS news as soon as it's released to the public, order transcripts of your tax returns or tax account, check your refund status, subscribe to filing season updates or daily tax tips, and follow the IRS Twitter news feed, @IRSnews, to get the latest federal tax news, including information about tax law changes and important IRS programs. H&r block free tax file 2012 Call to locate the nearest volunteer help site, 1-800-906-9887. H&r block free tax file 2012 Low-to-moderate income, elderly, persons with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. H&r block free tax file 2012 The Tax Counseling for the Elderly (TCE) program helps taxpayers 60 and older with their tax returns. H&r block free tax file 2012 Most VITA and TCE sites offer free electronic filing. H&r block free tax file 2012 Some VITA and TCE sites provide IRS-certified volunteers who can help prepare your tax return. H&r block free tax file 2012 Through the TCE program, AARP offers the Tax-Aide counseling program; call 1-888-227-7669 to find the nearest Tax-Aide location. H&r block free tax file 2012 Call to check the status of your 2013 refund, 1-800-829-1954 or 1-800-829-4477. H&r block free tax file 2012 The automated Where's My Refund? information is available 24 hours a day, 7 days a week. H&r block free tax file 2012 If you e-file, your refund status is usually available within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. H&r block free tax file 2012 Before you call, have your 2013 tax return handy so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund. H&r block free tax file 2012 Where's My Refund? can give you a personalized refund date as soon as the IRS processes your tax return and approves your refund. H&r block free tax file 2012 Where's My Refund? includes information for the most recent return filed in the current year and does not include information about amended returns. H&r block free tax file 2012 Call the Amended Return Hotline, 1-866-464-2050, to check the status of your amended return. H&r block free tax file 2012 Call to order forms, instructions and publications, 1-800-TAX-FORM (1-800-829-3676) to order current-year forms, instructions and publications, and prior-year forms and instructions (limited to 5 years). H&r block free tax file 2012 You should receive your order within 10 business days. H&r block free tax file 2012 Call to order transcripts of your tax returns or tax account, 1-800-908-9946. H&r block free tax file 2012 Follow the prompts to provide your Social Security Number or Individual Taxpayer Identification Number, date of birth, street address and ZIP code. H&r block free tax file 2012 Call for TeleTax topics, 1-800-829-4477, to listen to pre-recorded messages covering various tax topics. H&r block free tax file 2012 Call to ask tax questions, 1-800-829-1040. H&r block free tax file 2012 Call using TTY/TDD equipment, 1-800-829-4059 to ask tax questions or order forms and publications. H&r block free tax file 2012 The TTY/TDD telephone number is for people who are deaf, hard of hearing, or have a speech disability. H&r block free tax file 2012 These individuals can also contact the IRS through relay services such as the Federal Relay Service available at www. H&r block free tax file 2012 gsa. H&r block free tax file 2012 gov/fedrelay. H&r block free tax file 2012 Walk-in. H&r block free tax file 2012 You can find a selection of forms, publications and services — in-person, face-to-face. H&r block free tax file 2012 Products. H&r block free tax file 2012 You can walk in to some post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. H&r block free tax file 2012 Some IRS offices, libraries, and city and county government offices have a collection of products available to photocopy from reproducible proofs. H&r block free tax file 2012 Services. H&r block free tax file 2012 You can walk in to your local TAC most business days for personal, face-to-face tax help. H&r block free tax file 2012 An employee can explain IRS letters, request adjustments to your tax account, or help you set up a payment plan. H&r block free tax file 2012 If you need to resolve a tax problem, have questions about how the tax law applies to your individual tax return, or you are more comfortable talking with someone in person, visit your local TAC where you can talk with an IRS representative face-to-face. H&r block free tax file 2012 No appointment is necessary—just walk in. H&r block free tax file 2012 Before visiting, check www. H&r block free tax file 2012 irs. H&r block free tax file 2012 gov/localcontacts for hours of operation and services provided. H&r block free tax file 2012 Mail. H&r block free tax file 2012 You can send your order for forms, instructions, and publications to the address below. H&r block free tax file 2012 You should receive a response within 10 business days after your request is received. H&r block free tax file 2012  Internal Revenue Service 1201 N. H&r block free tax file 2012 Mitsubishi Motorway Bloomington, IL 61705-6613 The Taxpayer Advocate Service Is Here to Help You. H&r block free tax file 2012   The Taxpayer Advocate Service (TAS) is your voice at the IRS. H&r block free tax file 2012 Our job is to ensure that every taxpayer is treated fairly and that you know and understand your rights. H&r block free tax file 2012 What can TAS do for you?   We can offer you free help with IRS problems that you can't resolve on your own. H&r block free tax file 2012 We know this process can be confusing, but the worst thing you can do is nothing at all! TAS can help if you can't resolve your tax problem and: Your problem is causing financial difficulties for you, your family, or your business. H&r block free tax file 2012 You face (or your business is facing) an immediate threat of adverse action. H&r block free tax file 2012 You've tried repeatedly to contact the IRS but no one has responded, or the IRS hasn't responded by the date promised. H&r block free tax file 2012   If you qualify for our help, you'll be assigned to one advocate who'll be with you at every turn and will do everything possible to resolve your problem. H&r block free tax file 2012 Here's why we can help: TAS is an independent organization within the IRS. H&r block free tax file 2012 Our advocates know how to work with the IRS. H&r block free tax file 2012 Our services are free and tailored to meet your needs. H&r block free tax file 2012 We have offices in every state, the District of Columbia, and Puerto Rico. H&r block free tax file 2012 How can you reach us?   If you think TAS can help you, call your local advocate, whose number is in your local directory and at www. H&r block free tax file 2012 irs. H&r block free tax file 2012 gov/advocate, or call us toll-free at 1-877-777-4778. H&r block free tax file 2012 How else does TAS help taxpayers?   TAS also works to resolve large-scale, systemic problems that affect many taxpayers. H&r block free tax file 2012 If you know of one of these broad issues, please report it to us through our Systemic Advocacy Management System at www. H&r block free tax file 2012 irs. H&r block free tax file 2012 gov/sams. H&r block free tax file 2012 Low Income Taxpayer Clinics. H&r block free tax file 2012   Low Income Taxpayer Clinics (LITCs) serve individuals whose income is below a certain level and need to resolve tax problems such as audits, appeals, and tax collection disputes. H&r block free tax file 2012 Some clinics can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. H&r block free tax file 2012 Visit www. H&r block free tax file 2012 TaxpayerAdvocate. H&r block free tax file 2012 irs. H&r block free tax file 2012 gov or see IRS Publication 4134, Low Income Taxpayer Clinic List. H&r block free tax file 2012 Prev  Up  Next   Home   More Online Publications
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The H&r Block Free Tax File 2012

H&r block free tax file 2012 4. H&r block free tax file 2012   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. H&r block free tax file 2012 Resident aliens are generally taxed in the same way as U. H&r block free tax file 2012 S. H&r block free tax file 2012 citizens. H&r block free tax file 2012 Nonresident aliens are taxed based on the source of their income and whether or not their income is effectively connected with a U. H&r block free tax file 2012 S. H&r block free tax file 2012 trade or business. H&r block free tax file 2012 The following discussions will help you determine if income you receive during the tax year is effectively connected with a U. H&r block free tax file 2012 S. H&r block free tax file 2012 trade or business and how it is taxed. H&r block free tax file 2012 Topics - This chapter discusses: Income that is effectively connected with a U. H&r block free tax file 2012 S. H&r block free tax file 2012 trade or business. H&r block free tax file 2012 Income that is not effectively connected with a U. H&r block free tax file 2012 S. H&r block free tax file 2012 trade or business. H&r block free tax file 2012 Interrupted period of residence. H&r block free tax file 2012 Expatriation tax. H&r block free tax file 2012 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. H&r block free tax file 2012 Resident Aliens Resident aliens are generally taxed in the same way as U. H&r block free tax file 2012 S. H&r block free tax file 2012 citizens. H&r block free tax file 2012 This means that their worldwide income is subject to U. H&r block free tax file 2012 S. H&r block free tax file 2012 tax and must be reported on their U. H&r block free tax file 2012 S. H&r block free tax file 2012 tax return. H&r block free tax file 2012 Income of resident aliens is subject to the graduated tax rates that apply to U. H&r block free tax file 2012 S. H&r block free tax file 2012 citizens. H&r block free tax file 2012 Resident aliens use the Tax Table or Tax Computation Worksheets located in the Form 1040 instructions, which apply to U. H&r block free tax file 2012 S. H&r block free tax file 2012 citizens. H&r block free tax file 2012 Nonresident Aliens A nonresident alien's income that is subject to U. H&r block free tax file 2012 S. H&r block free tax file 2012 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). H&r block free tax file 2012 The difference between these two categories is that effectively connected income, after allowable deductions, is taxed at graduated rates. H&r block free tax file 2012 These are the same rates that apply to U. H&r block free tax file 2012 S. H&r block free tax file 2012 citizens and residents. H&r block free tax file 2012 Income that is not effectively connected is taxed at a flat 30% (or lower treaty) rate. H&r block free tax file 2012 If you were formerly a U. H&r block free tax file 2012 S. H&r block free tax file 2012 citizen or resident alien, these rules may not apply. H&r block free tax file 2012 See Expatriation Tax, later, in this chapter. H&r block free tax file 2012 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. H&r block free tax file 2012 Whether you are engaged in a trade or business in the United States depends on the nature of your activities. H&r block free tax file 2012 The discussions that follow will help you determine whether you are engaged in a trade or business in the United States. H&r block free tax file 2012 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. H&r block free tax file 2012 Certain compensation paid to a nonresident alien by a foreign employer is not included in gross income. H&r block free tax file 2012 For more information, see Services Performed for Foreign Employer in chapter 3. H&r block free tax file 2012 Other Trade or Business Activities Other examples of being engaged in a trade or business in the United States follow. H&r block free tax file 2012 Students and trainees. H&r block free tax file 2012   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. H&r block free tax file 2012 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. H&r block free tax file 2012 The taxable part of any scholarship or fellowship grant that is U. H&r block free tax file 2012 S. H&r block free tax file 2012 source income is treated as effectively connected with a trade or business in the United States. H&r block free tax file 2012 Business operations. H&r block free tax file 2012   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. H&r block free tax file 2012 Partnerships. H&r block free tax file 2012   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. H&r block free tax file 2012 Beneficiary of an estate or trust. H&r block free tax file 2012   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. H&r block free tax file 2012 Trading in stocks, securities, and commodities. H&r block free tax file 2012   If your only U. H&r block free tax file 2012 S. H&r block free tax file 2012 business activity is trading in stocks, securities, or commodities (including hedging transactions) through a U. H&r block free tax file 2012 S. H&r block free tax file 2012 resident broker or other agent, you are not engaged in a trade or business in the United States. H&r block free tax file 2012   For transactions in stocks or securities, this applies to any nonresident alien, including a dealer or broker in stocks and securities. H&r block free tax file 2012   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. H&r block free tax file 2012   This discussion does not apply if you have a U. H&r block free tax file 2012 S. H&r block free tax file 2012 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. H&r block free tax file 2012 Trading for a nonresident alien's own account. H&r block free tax file 2012   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. H&r block free tax file 2012 S. H&r block free tax file 2012 business activity. H&r block free tax file 2012 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. H&r block free tax file 2012   This does not apply to trading for your own account if you are a dealer in stocks, securities, or commodities. H&r block free tax file 2012 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. H&r block free tax file 2012 Determine that based on the facts and circumstances in each case or under the rules given above in Trading in stocks, securities, and commodities . H&r block free tax file 2012 Effectively Connected Income If you are engaged in a U. H&r block free tax file 2012 S. H&r block free tax file 2012 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. H&r block free tax file 2012 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. H&r block free tax file 2012 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. H&r block free tax file 2012 In limited circumstances, some kinds of foreign source income may be treated as effectively connected with a trade or business in the United States. H&r block free tax file 2012 For a discussion of these rules, see Foreign Income , later. H&r block free tax file 2012 Investment Income Investment income from U. H&r block free tax file 2012 S. H&r block free tax file 2012 sources that may or may not be treated as effectively connected with a U. H&r block free tax file 2012 S. H&r block free tax file 2012 trade or business generally falls into the following three categories. H&r block free tax file 2012 Fixed or determinable income (interest, dividends, rents, royalties, premiums, annuities, etc. H&r block free tax file 2012 ). H&r block free tax file 2012 Gains (some of which are considered capital gains) from the sale or exchange of the following types of property. H&r block free tax file 2012 Timber, coal, or domestic iron ore with a retained economic interest. H&r block free tax file 2012 Patents, copyrights, and similar property on which you receive contingent payments after October 4, 1966. H&r block free tax file 2012 Patents transferred before October 5, 1966. H&r block free tax file 2012 Original issue discount obligations. H&r block free tax file 2012 Capital gains (and losses). H&r block free tax file 2012 Use the two tests, described next, to determine whether an item of U. H&r block free tax file 2012 S. H&r block free tax file 2012 source income falling in one of the three categories above and received during the tax year is effectively connected with your U. H&r block free tax file 2012 S. H&r block free tax file 2012 trade or business. H&r block free tax file 2012 If the tests indicate that the item of income is effectively connected, you must include it with your other effectively connected income. H&r block free tax file 2012 If the item of income is not effectively connected, include it with all other income discussed under The 30% Tax later, in this chapter. H&r block free tax file 2012 Asset-use test. H&r block free tax file 2012   This test usually applies to income that is not directly produced by trade or business activities. H&r block free tax file 2012 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. H&r block free tax file 2012   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. H&r block free tax file 2012 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. H&r block free tax file 2012 Business-activities test. H&r block free tax file 2012   This test usually applies when income, gain, or loss comes directly from the active conduct of the trade or business. H&r block free tax file 2012 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. H&r block free tax file 2012 Under this test, if the conduct of the U. H&r block free tax file 2012 S. H&r block free tax file 2012 trade or business was a material factor in producing the income, the income is considered effectively connected. H&r block free tax file 2012 Personal Service Income You usually are engaged in a U. H&r block free tax file 2012 S. H&r block free tax file 2012 trade or business when you perform personal services in the United States. H&r block free tax file 2012 Personal service income you receive in a tax year in which you are engaged in a U. H&r block free tax file 2012 S. H&r block free tax file 2012 trade or business is effectively connected with a U. H&r block free tax file 2012 S. H&r block free tax file 2012 trade or business. H&r block free tax file 2012 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. H&r block free tax file 2012 Personal service income includes wages, salaries, commissions, fees, per diem allowances, and employee allowances and bonuses. H&r block free tax file 2012 The income may be paid to you in the form of cash, services, or property. H&r block free tax file 2012 If you are engaged in a U. H&r block free tax file 2012 S. H&r block free tax file 2012 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. H&r block free tax file 2012 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. H&r block free tax file 2012 Pensions. H&r block free tax file 2012   If you were a nonresident alien engaged in a U. H&r block free tax file 2012 S. H&r block free tax file 2012 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. H&r block free tax file 2012 This is true whether or not you are engaged in a U. H&r block free tax file 2012 S. H&r block free tax file 2012 trade or business in the year you receive the retirement pay. H&r block free tax file 2012 Transportation Income Transportation income (defined in chapter 2) is effectively connected if you meet both of the following conditions. H&r block free tax file 2012 You had a fixed place of business in the United States involved in earning the income. H&r block free tax file 2012 At least 90% of your U. H&r block free tax file 2012 S. H&r block free tax file 2012 source transportation income is attributable to regularly scheduled transportation. H&r block free tax file 2012 “Fixed place of business” generally means a place, site, structure, or other similar facility through which you engage in a trade or business. H&r block free tax file 2012 “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. H&r block free tax file 2012 This definition applies to both scheduled and chartered air transportation. H&r block free tax file 2012 If you do not meet the two conditions above, the income is not effectively connected and is taxed at a 4% rate. H&r block free tax file 2012 See Transportation Tax, later, in this chapter. H&r block free tax file 2012 Business Profits and Losses and Sales Transactions All profits or losses from U. H&r block free tax file 2012 S. H&r block free tax file 2012 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. H&r block free tax file 2012 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. H&r block free tax file 2012 A share of U. H&r block free tax file 2012 S. H&r block free tax file 2012 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. H&r block free tax file 2012 Real Property Gain or Loss Gains and losses from the sale or exchange of U. H&r block free tax file 2012 S. H&r block free tax file 2012 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. H&r block free tax file 2012 You must treat the gain or loss as effectively connected with that trade or business. H&r block free tax file 2012 U. H&r block free tax file 2012 S. H&r block free tax file 2012 real property interest. H&r block free tax file 2012   This is any interest in real property located in the United States or the U. H&r block free tax file 2012 S. H&r block free tax file 2012 Virgin Islands or any interest (other than as a creditor) in a domestic corporation that is a U. H&r block free tax file 2012 S. H&r block free tax file 2012 real property holding corporation. H&r block free tax file 2012 Real property includes the following. H&r block free tax file 2012 Land and unsevered natural products of the land, such as growing crops and timber, and mines, wells, and other natural deposits. H&r block free tax file 2012 Improvements on land, including buildings, other permanent structures, and their structural components. H&r block free tax file 2012 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. H&r block free tax file 2012 U. H&r block free tax file 2012 S. H&r block free tax file 2012 real property holding corporation. H&r block free tax file 2012   A corporation is a U. H&r block free tax file 2012 S. H&r block free tax file 2012 real property holding corporation if the fair market value of the corporation's U. H&r block free tax file 2012 S. H&r block free tax file 2012 real property interests are at least 50% of the total fair market value of: The corporation's U. H&r block free tax file 2012 S. H&r block free tax file 2012 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. H&r block free tax file 2012   Gain or loss on the sale of the stock in any domestic corporation is taxed as if you are engaged in a U. H&r block free tax file 2012 S. H&r block free tax file 2012 trade or business unless you establish that the corporation is not a U. H&r block free tax file 2012 S. H&r block free tax file 2012 real property holding corporation. H&r block free tax file 2012   A U. H&r block free tax file 2012 S. H&r block free tax file 2012 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. H&r block free tax file 2012 An interest in a foreign corporation owning U. H&r block free tax file 2012 S. H&r block free tax file 2012 real property generally is not a U. H&r block free tax file 2012 S. H&r block free tax file 2012 real property interest unless the corporation chooses to be treated as a domestic corporation. H&r block free tax file 2012 Qualified investment entities. H&r block free tax file 2012   Special rules apply to qualified investment entities (QIEs). H&r block free tax file 2012 A QIE is any real estate investment trust (REIT) or any regulated investment company (RIC) that is a U. H&r block free tax file 2012 S. H&r block free tax file 2012 real property holding corporation. H&r block free tax file 2012    Generally, any distribution from a QIE to a shareholder that is attributable to gain from the sale or exchange of a U. H&r block free tax file 2012 S. H&r block free tax file 2012 real property interest is treated as a U. H&r block free tax file 2012 S. H&r block free tax file 2012 real property gain by the shareholder receiving the distribution. H&r block free tax file 2012 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. H&r block free tax file 2012 S. H&r block free tax file 2012 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. H&r block free tax file 2012 A distribution that you do not treat as gain from the sale or exchange of a U. H&r block free tax file 2012 S. H&r block free tax file 2012 real property interest is included in your gross income as a regular dividend. H&r block free tax file 2012 Note. H&r block free tax file 2012 Beginning January 1, 2014 (unless extended by legislation), a RIC that is a U. H&r block free tax file 2012 S. H&r block free tax file 2012 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. H&r block free tax file 2012 Domestically controlled QIE. H&r block free tax file 2012   The sale of an interest in a domestically controlled QIE is not the sale of a U. H&r block free tax file 2012 S. H&r block free tax file 2012 real property interest. H&r block free tax file 2012 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. H&r block free tax file 2012 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. H&r block free tax file 2012 Wash sale. H&r block free tax file 2012    If you dispose of an interest in a domestically controlled QIE in an applicable wash sale transaction, special rules apply. H&r block free tax file 2012 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. H&r block free tax file 2012 S. H&r block free tax file 2012 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. H&r block free tax file 2012 If this occurs, you are treated as having gain from the sale or exchange of a U. H&r block free tax file 2012 S. H&r block free tax file 2012 real property interest in an amount equal to the distribution made after June 15, 2006, that would have been treated as such gain. H&r block free tax file 2012 This also applies to any substitute dividend payment. H&r block free tax file 2012   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. H&r block free tax file 2012 Alternative minimum tax. H&r block free tax file 2012   There may be a minimum tax on your net gain from the disposition of U. H&r block free tax file 2012 S. H&r block free tax file 2012 real property interests. H&r block free tax file 2012 Figure the amount of this tax, if any, on Form 6251. H&r block free tax file 2012 Withholding of tax. H&r block free tax file 2012   If you dispose of a U. H&r block free tax file 2012 S. H&r block free tax file 2012 real property interest, the buyer may have to withhold tax. H&r block free tax file 2012 See the discussion of Tax Withheld on Real Property Sales in chapter 8. H&r block free tax file 2012 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. H&r block free tax file 2012 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. H&r block free tax file 2012 The three kinds of foreign source income are listed below. H&r block free tax file 2012 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. H&r block free tax file 2012 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. H&r block free tax file 2012 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. H&r block free tax file 2012 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. H&r block free tax file 2012 Income, gain, or loss from the sale outside the United States, through the U. H&r block free tax file 2012 S. H&r block free tax file 2012 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. H&r block free tax file 2012 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. H&r block free tax file 2012 Any foreign source income that is equivalent to any item of income described above is treated as effectively connected with a U. H&r block free tax file 2012 S. H&r block free tax file 2012 trade or business. H&r block free tax file 2012 For example, foreign source interest and dividend equivalents are treated as U. H&r block free tax file 2012 S. H&r block free tax file 2012 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. H&r block free tax file 2012 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. H&r block free tax file 2012 S. H&r block free tax file 2012 citizens and residents. H&r block free tax file 2012 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. H&r block free tax file 2012 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. H&r block free tax file 2012 Example. H&r block free tax file 2012 Ted Richards, a nonresident alien, entered the United States in August 2012, to perform personal services in the U. H&r block free tax file 2012 S. H&r block free tax file 2012 office of his overseas employer. H&r block free tax file 2012 He worked in the U. H&r block free tax file 2012 S. H&r block free tax file 2012 office until December 25, 2012, but did not leave this country until January 11, 2013. H&r block free tax file 2012 On January 8, 2013, he received his final paycheck for services performed in the United States during 2012. H&r block free tax file 2012 All of Ted's income during his stay here is U. H&r block free tax file 2012 S. H&r block free tax file 2012 source income. H&r block free tax file 2012 During 2012, Ted was engaged in the trade or business of performing personal services in the United States. H&r block free tax file 2012 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. H&r block free tax file 2012 The salary payment Ted received in January 2013 is U. H&r block free tax file 2012 S. H&r block free tax file 2012 source income to him in 2013. H&r block free tax file 2012 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. H&r block free tax file 2012 Real property income. H&r block free tax file 2012   You may be able to choose to treat all income from real property as effectively connected. H&r block free tax file 2012 See Income From Real Property , later, in this chapter. H&r block free tax file 2012 The 30% Tax Tax at a 30% (or lower treaty) rate applies to certain items of income or gains from U. H&r block free tax file 2012 S. H&r block free tax file 2012 sources but only if the items are not effectively connected with your U. H&r block free tax file 2012 S. H&r block free tax file 2012 trade or business. H&r block free tax file 2012 Fixed or Determinable Income The 30% (or lower treaty) rate applies to the gross amount of U. H&r block free tax file 2012 S. H&r block free tax file 2012 source fixed or determinable annual or periodic gains, profits, or income. H&r block free tax file 2012 Income is fixed when it is paid in amounts known ahead of time. H&r block free tax file 2012 Income is determinable whenever there is a basis for figuring the amount to be paid. H&r block free tax file 2012 Income can be periodic if it is paid from time to time. H&r block free tax file 2012 It does not have to be paid annually or at regular intervals. H&r block free tax file 2012 Income can be determinable or periodic even if the length of time during which the payments are made is increased or decreased. H&r block free tax file 2012 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. H&r block free tax file 2012 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. H&r block free tax file 2012 Other items of income, such as royalties, also may be subject to the 30% tax. H&r block free tax file 2012 Some fixed or determinable income may be exempt from U. H&r block free tax file 2012 S. H&r block free tax file 2012 tax. H&r block free tax file 2012 See chapter 3 if you are not sure whether the income is taxable. H&r block free tax file 2012 Original issue discount (OID). H&r block free tax file 2012   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. H&r block free tax file 2012 The amount of OID is the difference between the stated redemption price at maturity and the issue price of the debt instrument. H&r block free tax file 2012 The 30% tax applies in the following circumstances. H&r block free tax file 2012 You received a payment on a debt instrument. H&r block free tax file 2012 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. H&r block free tax file 2012 But the tax on the OID cannot be more than the payment minus the tax on the interest payment on the debt instrument. H&r block free tax file 2012 You sold or exchanged the debt instrument. H&r block free tax file 2012 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. H&r block free tax file 2012   Report on your return the amount of OID shown on Form 1042-S, Foreign Person's U. H&r block free tax file 2012 S. H&r block free tax file 2012 Source Income Subject to Withholding, if you bought the debt instrument at original issue. H&r block free tax file 2012 However, you must recompute your proper share of OID shown on Form 1042-S if any of the following apply. H&r block free tax file 2012 You bought the debt instrument at a premium or paid an acquisition premium. H&r block free tax file 2012 The debt instrument is a stripped bond or a stripped coupon (including zero coupon instruments backed by U. H&r block free tax file 2012 S. H&r block free tax file 2012 Treasury securities). H&r block free tax file 2012 The debt instrument is a contingent payment or inflation-indexed debt instrument. H&r block free tax file 2012 For the definition of premium and acquisition premium and instructions on how to recompute OID, get Publication 1212. H&r block free tax file 2012   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. H&r block free tax file 2012 See chapter 12. H&r block free tax file 2012 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. H&r block free tax file 2012 S. H&r block free tax file 2012 trade or business and is not exempted by treaty. H&r block free tax file 2012 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. H&r block free tax file 2012 Nonresident aliens are taxed at graduated rates on net gambling income won in the United States that is effectively connected with a U. H&r block free tax file 2012 S. H&r block free tax file 2012 trade or business. H&r block free tax file 2012 Social Security Benefits A nonresident alien must include 85% of any U. H&r block free tax file 2012 S. H&r block free tax file 2012 social security benefit (and the social security equivalent part of a tier 1 railroad retirement benefit) in U. H&r block free tax file 2012 S. H&r block free tax file 2012 source fixed or determinable annual or periodic income. H&r block free tax file 2012 Social security benefits include monthly retirement, survivor, and disability benefits. H&r block free tax file 2012 This income is exempt under some tax treaties. H&r block free tax file 2012 See Table 1 in Publication 901, U. H&r block free tax file 2012 S. H&r block free tax file 2012 Tax Treaties, for a list of tax treaties that exempt U. H&r block free tax file 2012 S. H&r block free tax file 2012 social security benefits from U. H&r block free tax file 2012 S. H&r block free tax file 2012 tax. H&r block free tax file 2012 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. H&r block free tax file 2012 They apply even if you are engaged in a trade or business in the United States. H&r block free tax file 2012 These rules do not apply to the sale or exchange of a U. H&r block free tax file 2012 S. H&r block free tax file 2012 real property interest or to the sale of any property that is effectively connected with a trade or business in the United States. H&r block free tax file 2012 See Real Property Gain or Loss , earlier, under Effectively Connected Income. H&r block free tax file 2012 A capital asset is everything you own except: Inventory. H&r block free tax file 2012 Business accounts or notes receivable. H&r block free tax file 2012 Depreciable property used in a trade or business. H&r block free tax file 2012 Real property used in a trade or business. H&r block free tax file 2012 Supplies regularly used in a trade or business. H&r block free tax file 2012 Certain copyrights, literary or musical or artistic compositions, letters or memoranda, or similar property. H&r block free tax file 2012 Certain U. H&r block free tax file 2012 S. H&r block free tax file 2012 government publications. H&r block free tax file 2012 Certain commodities derivative financial instruments held by a commodities derivatives dealer. H&r block free tax file 2012 Hedging transactions. H&r block free tax file 2012 A capital gain is a gain on the sale or exchange of a capital asset. H&r block free tax file 2012 A capital loss is a loss on the sale or exchange of a capital asset. H&r block free tax file 2012 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. H&r block free tax file 2012 S. H&r block free tax file 2012 currency at the rate of exchange prevailing as of the date of the purchase and date of the sale, respectively. H&r block free tax file 2012 You may want to read Publication 544. H&r block free tax file 2012 However, use Publication 544 only to determine what is a sale or exchange of a capital asset, or what is treated as such. H&r block free tax file 2012 Specific tax treatment that applies to U. H&r block free tax file 2012 S. H&r block free tax file 2012 citizens or residents generally does not apply to you. H&r block free tax file 2012 The following gains are subject to the 30% (or lower treaty) rate without regard to the 183-day rule, discussed later. H&r block free tax file 2012 Gains on the disposal of timber, coal, or domestic iron ore with a retained economic interest. H&r block free tax file 2012 Gains on contingent payments received from the sale or exchange of patents, copyrights, and similar property after October 4, 1966. H&r block free tax file 2012 Gains on certain transfers of all substantial rights to, or an undivided interest in, patents if the transfers were made before October 5, 1966. H&r block free tax file 2012 Gains on the sale or exchange of original issue discount obligations. H&r block free tax file 2012 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. H&r block free tax file 2012 S. H&r block free tax file 2012 trade or business. H&r block free tax file 2012 See Income From Real Property , later. H&r block free tax file 2012 183-day rule. H&r block free tax file 2012   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. H&r block free tax file 2012 For purposes of the 30% (or lower treaty) rate, net gain is the excess of your capital gains from U. H&r block free tax file 2012 S. H&r block free tax file 2012 sources over your capital losses from U. H&r block free tax file 2012 S. H&r block free tax file 2012 sources. H&r block free tax file 2012 This rule applies even if any of the transactions occurred while you were not in the United States. H&r block free tax file 2012   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. H&r block free tax file 2012 S. H&r block free tax file 2012 trade or business during the year and the gains and losses were effectively connected with that trade or business during the tax year. H&r block free tax file 2012   In arriving at your net gain, do not take the following into consideration. H&r block free tax file 2012 The four types of gains listed earlier. H&r block free tax file 2012 The deduction for a capital loss carryover. H&r block free tax file 2012 Capital losses in excess of capital gains. H&r block free tax file 2012 Exclusion for gain from the sale or exchange of qualified small business stock (section 1202 exclusion). H&r block free tax file 2012 Losses from the sale or exchange of property held for personal use. H&r block free tax file 2012 However, losses resulting from casualties or thefts may be deductible on Schedule A (Form 1040NR). H&r block free tax file 2012 See Itemized Deductions in chapter 5. H&r block free tax file 2012   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. H&r block free tax file 2012 Also, you must file your tax return on a calendar-year basis. H&r block free tax file 2012   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. H&r block free tax file 2012 Reporting. H&r block free tax file 2012   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. H&r block free tax file 2012 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. H&r block free tax file 2012 Attach them to Form 1040NR. H&r block free tax file 2012 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. H&r block free tax file 2012 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. H&r block free tax file 2012 This includes income from rents, royalties from mines, oil or gas wells, or other natural resources. H&r block free tax file 2012 It also includes gains from the sale or exchange of timber, coal, or domestic iron ore with a retained economic interest. H&r block free tax file 2012 You can make this choice only for real property income that is not otherwise effectively connected with your U. H&r block free tax file 2012 S. H&r block free tax file 2012 trade or business. H&r block free tax file 2012 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. H&r block free tax file 2012 This choice does not treat a nonresident alien, who is not otherwise engaged in a U. H&r block free tax file 2012 S. H&r block free tax file 2012 trade or business, as being engaged in a trade or business in the United States during the year. H&r block free tax file 2012 Example. H&r block free tax file 2012 You are a nonresident alien and are not engaged in a U. H&r block free tax file 2012 S. H&r block free tax file 2012 trade or business. H&r block free tax file 2012 You own a single-family house in the United States that you rent out. H&r block free tax file 2012 Your rental income for the year is $10,000. H&r block free tax file 2012 This is your only U. H&r block free tax file 2012 S. H&r block free tax file 2012 source income. H&r block free tax file 2012 As discussed earlier under The 30% Tax, the rental income is subject to a tax at a 30% (or lower treaty) rate. H&r block free tax file 2012 You received a Form 1042-S showing that your tenants properly withheld this tax from the rental income. H&r block free tax file 2012 You do not have to file a U. H&r block free tax file 2012 S. H&r block free tax file 2012 tax return (Form 1040NR) because your U. H&r block free tax file 2012 S. H&r block free tax file 2012 tax liability is satisfied by the withholding of tax. H&r block free tax file 2012 If you make the choice discussed earlier, you can offset the $10,000 income by certain rental expenses. H&r block free tax file 2012 (See Publication 527, Residential Rental Property, for information on rental expenses. H&r block free tax file 2012 ) Any resulting net income is taxed at graduated rates. H&r block free tax file 2012 If you make this choice, report the rental income and expenses on Schedule E (Form 1040) and attach the schedule to Form 1040NR. H&r block free tax file 2012 For the first year you make the choice, also attach the statement discussed next. H&r block free tax file 2012 Making the choice. H&r block free tax file 2012   Make the initial choice by attaching a statement to your return, or amended return, for the year of the choice. H&r block free tax file 2012 Include the following in your statement. H&r block free tax file 2012 That you are making the choice. H&r block free tax file 2012 Whether the choice is under Internal Revenue Code section 871(d) (explained earlier) or a tax treaty. H&r block free tax file 2012 A complete list of all your real property, or any interest in real property, located in the United States. H&r block free tax file 2012 Give the legal identification of U. H&r block free tax file 2012 S. H&r block free tax file 2012 timber, coal, or iron ore in which you have an interest. H&r block free tax file 2012 The extent of your ownership in the property. H&r block free tax file 2012 The location of the property. H&r block free tax file 2012 A description of any major improvements to the property. H&r block free tax file 2012 The dates you owned the property. H&r block free tax file 2012 Your income from the property. H&r block free tax file 2012 Details of any previous choices and revocations of the real property income choice. H&r block free tax file 2012   This choice stays in effect for all later tax years unless you revoke it. H&r block free tax file 2012 Revoking the choice. H&r block free tax file 2012   You can revoke the choice without IRS approval by filing Form 1040X, Amended U. H&r block free tax file 2012 S. H&r block free tax file 2012 Individual Income Tax Return, for the year you made the choice and for later tax years. H&r block free tax file 2012 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. H&r block free tax file 2012 If this time period has expired for the year of choice, you cannot revoke the choice for that year. H&r block free tax file 2012 However, you may revoke the choice for later tax years only if you have IRS approval. H&r block free tax file 2012 For information on how to get IRS approval, see Regulation section 1. H&r block free tax file 2012 871-10(d)(2). H&r block free tax file 2012 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 . H&r block free tax file 2012 If you receive transportation income subject to the 4% tax, you should figure the tax and show it on line 57 of Form 1040NR. H&r block free tax file 2012 Attach a statement to your return that includes the following information (if applicable). H&r block free tax file 2012 Your name, taxpayer identification number, and tax year. H&r block free tax file 2012 A description of the types of services performed (whether on or off board). H&r block free tax file 2012 Names of vessels or registration numbers of aircraft on which you performed the services. H&r block free tax file 2012 Amount of U. H&r block free tax file 2012 S. H&r block free tax file 2012 source transportation income derived from each type of service for each vessel or aircraft for the calendar year. H&r block free tax file 2012 Total amount of U. H&r block free tax file 2012 S. H&r block free tax file 2012 source transportation income derived from all types of services for the calendar year. H&r block free tax file 2012 This 4% tax applies to your U. H&r block free tax file 2012 S. H&r block free tax file 2012 source gross transportation income. H&r block free tax file 2012 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. H&r block free tax file 2012 For transportation income from personal services, the transportation must be between the United States and a U. H&r block free tax file 2012 S. H&r block free tax file 2012 possession. H&r block free tax file 2012 For personal services of a nonresident alien, this only applies to income derived from, or in connection with, an aircraft. H&r block free tax file 2012 Interrupted Period of Residence You are subject to tax under a special rule if you interrupt your period of U. H&r block free tax file 2012 S. H&r block free tax file 2012 residence with a period of nonresidence. H&r block free tax file 2012 The special rule applies if you meet all of the following conditions. H&r block free tax file 2012 You were a U. H&r block free tax file 2012 S. H&r block free tax file 2012 resident for a period that includes at least 3 consecutive calendar years. H&r block free tax file 2012 You were a U. H&r block free tax file 2012 S. H&r block free tax file 2012 resident for at least 183 days in each of those years. H&r block free tax file 2012 You ceased to be treated as a U. H&r block free tax file 2012 S. H&r block free tax file 2012 resident. H&r block free tax file 2012 You then again became a U. H&r block free tax file 2012 S. H&r block free tax file 2012 resident before the end of the third calendar year after the end of the period described in (1) above. H&r block free tax file 2012 Under this special rule, you are subject to tax on your U. H&r block free tax file 2012 S. H&r block free tax file 2012 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. H&r block free tax file 2012 S. H&r block free tax file 2012 trade or business. H&r block free tax file 2012 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. H&r block free tax file 2012 Example. H&r block free tax file 2012 John Willow, a citizen of New Zealand, entered the United States on April 1, 2008, as a lawful permanent resident. H&r block free tax file 2012 On August 1, 2010, John ceased to be a lawful permanent resident and returned to New Zealand. H&r block free tax file 2012 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). H&r block free tax file 2012 He returned to the United States on October 5, 2013, as a lawful permanent resident. H&r block free tax file 2012 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). H&r block free tax file 2012 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. H&r block free tax file 2012 Reporting requirements. H&r block free tax file 2012   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. H&r block free tax file 2012 The return is due by the due date (including extensions) for filing your U. H&r block free tax file 2012 S. H&r block free tax file 2012 income tax return for the year that you again become a U. H&r block free tax file 2012 S. H&r block free tax file 2012 resident. H&r block free tax file 2012 If you already filed returns for that period, you must file amended returns. H&r block free tax file 2012 You must attach a statement to your return that identifies the source of all of your U. H&r block free tax file 2012 S. H&r block free tax file 2012 and foreign gross income and the items of income subject to this special rule. H&r block free tax file 2012 Expatriation Tax The expatriation tax provisions apply to U. H&r block free tax file 2012 S. H&r block free tax file 2012 citizens who have renounced their citizenship and long-term residents who have ended their residency. H&r block free tax file 2012 The rules that apply are based on the dates of expatriation, which are described in the following sections. H&r block free tax file 2012 Expatriation Before June 4, 2004. H&r block free tax file 2012 Expatriation After June 3, 2004, and Before June 17, 2008. H&r block free tax file 2012 Expatriation After June 16, 2008. H&r block free tax file 2012 Long-term resident defined. H&r block free tax file 2012   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. H&r block free tax file 2012 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. H&r block free tax file 2012 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. H&r block free tax file 2012 S. H&r block free tax file 2012 taxes. H&r block free tax file 2012 Unless you received a ruling from the IRS that you did not expatriate to avoid U. H&r block free tax file 2012 S. H&r block free tax file 2012 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. H&r block free tax file 2012 The amounts above are adjusted for inflation if your expatriation action is after 1997 (see Table 4-1). H&r block free tax file 2012 Table 4-1. H&r block free tax file 2012 Inflation-Adjusted Amounts for Expatriation Actions Before June 4, 2004 IF you expatriated during . H&r block free tax file 2012 . H&r block free tax file 2012 . H&r block free tax file 2012   THEN the rules outlined on this page apply if . H&r block free tax file 2012 . H&r block free tax file 2012 . H&r block free tax file 2012     Your 5-year average annual net income tax was more than . H&r block free tax file 2012 . H&r block free tax file 2012 . H&r block free tax file 2012 OR Your net worth equaled or exceeded . H&r block free tax file 2012 . H&r block free tax file 2012 . H&r block free tax file 2012 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. H&r block free tax file 2012 Reporting requirements. H&r block free tax file 2012   If you lost your U. H&r block free tax file 2012 S. H&r block free tax file 2012 citizenship, you should have filed Form 8854 with a consular office or a federal court at the time of loss of citizenship. H&r block free tax file 2012 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. H&r block free tax file 2012   Your U. H&r block free tax file 2012 S. H&r block free tax file 2012 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. H&r block free tax file 2012 Penalties. H&r block free tax file 2012   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. H&r block free tax file 2012 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. H&r block free tax file 2012 The penalty will not be imposed if you can show that the failure is due to reasonable cause and not willful neglect. H&r block free tax file 2012 Expatriation tax. H&r block free tax file 2012   The expatriation tax applies to the 10-year period following the date of expatriation or termination of residency. H&r block free tax file 2012 It is figured in the same way as for those expatriating after June 3, 2004, and before June 17, 2008. H&r block free tax file 2012 See How To Figure the Expatriation Tax (If You Expatriated Before June 17, 2008) in the next section. H&r block free tax file 2012 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. H&r block free tax file 2012 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. H&r block free tax file 2012 $127,000 if you expatriated or terminated residency in 2005. H&r block free tax file 2012 $131,000 if you expatriated or terminated residency in 2006. H&r block free tax file 2012 $136,000 if you expatriated or terminated residency in 2007. H&r block free tax file 2012 $139,000 if you expatriated or terminated residency in 2008. H&r block free tax file 2012 Your net worth is $2 million or more on the date of your expatriation or termination of residency. H&r block free tax file 2012 You fail to certify on Form 8854 that you have complied with all U. H&r block free tax file 2012 S. H&r block free tax file 2012 federal tax obligations for the 5 tax years preceding the date of your expatriation or termination of residency. H&r block free tax file 2012 Exception for dual-citizens and certain minors. H&r block free tax file 2012   Certain dual-citizens and certain minors (defined next) are not subject to the expatriation tax even if they meet (1) or (2) earlier. H&r block free tax file 2012 However, they still must provide the certification required in (3). H&r block free tax file 2012 Certain dual-citizens. H&r block free tax file 2012   You may qualify for the exception described above if all of the following apply. H&r block free tax file 2012 You became at birth a U. H&r block free tax file 2012 S. H&r block free tax file 2012 citizen and a citizen of another country and you continue to be a citizen of that other country. H&r block free tax file 2012 You were never a resident alien of the United States (as defined in chapter 1). H&r block free tax file 2012 You never held a U. H&r block free tax file 2012 S. H&r block free tax file 2012 passport. H&r block free tax file 2012 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. H&r block free tax file 2012 S. H&r block free tax file 2012 citizenship. H&r block free tax file 2012 Certain minors. H&r block free tax file 2012   You may qualify for the exception described above if you meet all of the following requirements. H&r block free tax file 2012 You became a U. H&r block free tax file 2012 S. H&r block free tax file 2012 citizen at birth. H&r block free tax file 2012 Neither of your parents was a U. H&r block free tax file 2012 S. H&r block free tax file 2012 citizen at the time of your birth. H&r block free tax file 2012 You expatriated before you were 18½. H&r block free tax file 2012 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. H&r block free tax file 2012 Tax consequences of presence in the United States. H&r block free tax file 2012   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. H&r block free tax file 2012   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. H&r block free tax file 2012 Instead, you are treated as a U. H&r block free tax file 2012 S. H&r block free tax file 2012 citizen or resident and taxed on your worldwide income for that tax year. H&r block free tax file 2012 You must file Form 1040, 1040A, or 1040EZ and figure your tax as prescribed in the instructions for those forms. H&r block free tax file 2012   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. H&r block free tax file 2012 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. H&r block free tax file 2012 You have ties with other countries. H&r block free tax file 2012 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. H&r block free tax file 2012 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. H&r block free tax file 2012 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. H&r block free tax file 2012 See Exempt individual and Medical condition in chapter 1 under Substantial Presence Test, but disregard the information about Form 8843. H&r block free tax file 2012 Related employer. H&r block free tax file 2012   If your employer in the United States is any of the following, then your employer is related to you. H&r block free tax file 2012 You must count any days you performed services in the United States for that employer as days of presence in the United States. H&r block free tax file 2012 Members of your family. H&r block free tax file 2012 This includes only your brothers and sisters, half-brothers and half-sisters, spouse, ancestors (parents, grandparents, etc. H&r block free tax file 2012 ), and lineal descendants (children, grandchildren, etc. H&r block free tax file 2012 ). H&r block free tax file 2012 A partnership in which you directly or indirectly own more than 50% of the capital interest or the profits interest. H&r block free tax file 2012 A corporation in which you directly or indirectly own more than 50% in value of the outstanding stock. H&r block free tax file 2012 (See Publication 550, chapter 4, Constructive ownership of stock, for how to determine whether you directly or indirectly own outstanding stock. H&r block free tax file 2012 ) 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. H&r block free tax file 2012 Date of tax expatriation. H&r block free tax file 2012   For purposes of U. H&r block free tax file 2012 S. H&r block free tax file 2012 tax rules, the date of your expatriation or termination of residency is the later of the dates on which you perform the following actions. H&r block free tax file 2012 You notify either the Department of State or the Department of Homeland Security (whichever is appropriate) of your expatriating act or termination of residency. H&r block free tax file 2012 You file Form 8854 in accordance with the form instructions. H&r block free tax file 2012 Annual return. H&r block free tax file 2012   If the expatriation tax applies to you, you must file Form 8854 each year during the 10-year period following the date of expatriation. H&r block free tax file 2012 You must file this form even if you owe no U. H&r block free tax file 2012 S. H&r block free tax file 2012 tax. H&r block free tax file 2012 Penalty. H&r block free tax file 2012   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. H&r block free tax file 2012 You will not have to pay a penalty if you show that the failure is due to reasonable cause and not to willful neglect. H&r block free tax file 2012 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. H&r block free tax file 2012 S. H&r block free tax file 2012 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. H&r block free tax file 2012 S. H&r block free tax file 2012 trade or business. H&r block free tax file 2012 For this purpose, U. H&r block free tax file 2012 S. H&r block free tax file 2012 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. H&r block free tax file 2012 S. H&r block free tax file 2012 domestic corporation, and Debt obligations of U. H&r block free tax file 2012 S. H&r block free tax file 2012 persons or of the United States, a state or political subdivision thereof, or the District of Columbia. H&r block free tax file 2012 U. H&r block free tax file 2012 S. H&r block free tax file 2012 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. H&r block free tax file 2012 The income or gain is considered U. H&r block free tax file 2012 S. H&r block free tax file 2012 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. H&r block free tax file 2012 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. H&r block free tax file 2012 S. H&r block free tax file 2012 source gross income in the tax year of the exchange unless you enter into a gain recognition agreement under Notice 97-19. H&r block free tax file 2012 Other information. H&r block free tax file 2012   For more information on the expatriation tax provisions, including exceptions to the tax and special U. H&r block free tax file 2012 S. H&r block free tax file 2012 source rules, see section 877 of the Internal Revenue Code. H&r block free tax file 2012 Expatriation Tax Return If you expatriated or terminated your U. H&r block free tax file 2012 S. H&r block free tax file 2012 residency, or you are subject to the expatriation tax, you must file Form 8854, Initial and Annual Expatriation Statement. H&r block free tax file 2012 Attach it to Form 1040NR if you are required to file that form. H&r block free tax file 2012 If you are present in the United States following your expatriation and are subject to tax as a U. H&r block free tax file 2012 S. H&r block free tax file 2012 citizen or resident, file Form 8854 with Form 1040. H&r block free tax file 2012 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. H&r block free tax file 2012 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. H&r block free tax file 2012 $145,000 if you expatriated or terminated residency in 2009 or 2010. H&r block free tax file 2012 $147,000 if you expatriated or terminated residency in 2011. H&r block free tax file 2012 $151,000 if you expatriated or terminated residency in 2012. H&r block free tax file 2012 $155,000 if you expatriated or terminated residency in 2013. H&r block free tax file 2012 Your net worth is $2 million or more on the date of your expatriation or termination of residency. H&r block free tax file 2012 You fail to certify on Form 8854 that you have complied with all U. H&r block free tax file 2012 S. H&r block free tax file 2012 federal tax obligations for the 5 years preceding the date of your expatriation or termination of residency. H&r block free tax file 2012 Exception for dual-citizens and certain minors. H&r block free tax file 2012   Certain dual-citizens and certain minors (defined next) are not subject to the expatriation tax even if they meet (1) or (2) above. H&r block free tax file 2012 However, they still must provide the certification required in (3) above. H&r block free tax file 2012 Certain dual-citizens. H&r block free tax file 2012   You may qualify for the exception described above if both of the following apply. H&r block free tax file 2012 You became at birth a U. H&r block free tax file 2012 S. H&r block free tax file 2012 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. H&r block free tax file 2012 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. H&r block free tax file 2012 For the purpose of determining U. H&r block free tax file 2012 S. H&r block free tax file 2012 residency, use the substantial presence test described in chapter 1. H&r block free tax file 2012 Certain minors. H&r block free tax file 2012   You may qualify for the exception described earlier if you meet both of the following requirements. H&r block free tax file 2012 You expatriated before you were 18½. H&r block free tax file 2012 You have been a resident of the United States for not more than 10 tax years before the expatriation occurs. H&r block free tax file 2012 For the purpose of determining U. H&r block free tax file 2012 S. H&r block free tax file 2012 residency, use the substantial presence test described in chapter 1. H&r block free tax file 2012 Expatriation date. H&r block free tax file 2012   Your expatriation date is the date you relinquish U. H&r block free tax file 2012 S. H&r block free tax file 2012 citizenship (in the case of a former citizen) or terminate your long-term residency (in the case of a former U. H&r block free tax file 2012 S. H&r block free tax file 2012 resident). H&r block free tax file 2012 Former U. H&r block free tax file 2012 S. H&r block free tax file 2012 citizen. H&r block free tax file 2012   You are considered to have relinquished your U. H&r block free tax file 2012 S. H&r block free tax file 2012 citizenship on the earliest of the following dates. H&r block free tax file 2012 The date you renounced U. H&r block free tax file 2012 S. H&r block free tax file 2012 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). H&r block free tax file 2012 The date you furnished to the State Department a signed statement of voluntary relinquishment of U. H&r block free tax file 2012 S. H&r block free tax file 2012 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). H&r block free tax file 2012 The date the State Department issued a certificate of loss of nationality. H&r block free tax file 2012 The date that a U. H&r block free tax file 2012 S. H&r block free tax file 2012 court canceled your certificate of naturalization. H&r block free tax file 2012 Former long-term resident. H&r block free tax file 2012   You are considered to have terminated your long-term residency on the earliest of the following dates. H&r block free tax file 2012 The date you voluntarily relinquished your lawful permanent resident status by filing Department of Homeland Security Form I-407 with a U. H&r block free tax file 2012 S. H&r block free tax file 2012 consular or immigration officer, and the Department of Homeland Security determined that you have, in fact, abandoned your lawful permanent resident status. H&r block free tax file 2012 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. H&r block free tax file 2012 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. H&r block free tax file 2012 See Effect of Tax Treaties in chapter 1 for more information about dual residents. H&r block free tax file 2012 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”). H&r block free tax file 2012 This applies to most types of property interests you held on the date of relinquishment of citizenship or termination of residency. H&r block free tax file 2012 But see Exceptions , later. H&r block free tax file 2012 Gains arising from deemed sales must be taken into account for the tax year of the deemed sale without regard to other U. H&r block free tax file 2012 S. H&r block free tax file 2012 internal revenue laws. H&r block free tax file 2012 Losses from deemed sales must be taken into account to the extent otherwise provided under U. H&r block free tax file 2012 S. H&r block free tax file 2012 internal revenue laws. H&r block free tax file 2012 However, Internal Revenue Code section 1091 (relating to the disallowance of losses on wash sales of stock and securities) does not apply. H&r block free tax file 2012 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. H&r block free tax file 2012 $626,000 if you expatriated or terminated residency in 2009. H&r block free tax file 2012 $627,000 if you expatriated or terminated residency in 2010. H&r block free tax file 2012 $636,000 if you expatriated or terminated residency in 2011. H&r block free tax file 2012 $651,000 if you expatriated or terminated residency in 2012. H&r block free tax file 2012 $668,000 if you expatriated or terminated residency in 2013. H&r block free tax file 2012 Exceptions. H&r block free tax file 2012   The mark-to-market tax does not apply to the following. H&r block free tax file 2012 Eligible deferred compensation items. H&r block free tax file 2012 Ineligible deferred compensation items. H&r block free tax file 2012 Interests in nongrantor trusts. H&r block free tax file 2012 Specified tax deferred accounts. H&r block free tax file 2012 Instead, items (1) and (3) may be subject to withholding at source. H&r block free tax file 2012 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. H&r block free tax file 2012 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. H&r block free tax file 2012 See paragraphs (d), (e), and (f) of section 877A for more information. H&r block free tax file 2012 Expatriation Tax Return If you expatriated or terminated your U. H&r block free tax file 2012 S. H&r block free tax file 2012 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. H&r block free tax file 2012 Attach it to Form 1040 or Form 1040NR if you are required to file either of those forms. H&r block free tax file 2012 Deferral of payment of mark-to-market tax. H&r block free tax file 2012   You can make an irrevocable election to defer payment of the mark-to-market tax imposed on the deemed sale of property. H&r block free tax file 2012 If you make this election, the following rules apply. H&r block free tax file 2012 You can make the election on a property-by-property basis. H&r block free tax file 2012 The deferred tax attributable to a particular property is due on the return for the tax year in which you dispose of the property. H&r block free tax file 2012 Interest is charged for the period the tax is deferred. H&r block free tax file 2012 The due date for the payment of the deferred tax cannot be extended beyond the earlier of the following dates. H&r block free tax file 2012 The due date of the return required for the year of death. H&r block free tax file 2012 The time that the security provided for the property fails to be adequate. H&r block free tax file 2012 See item (6) below. H&r block free tax file 2012 You make the election on Form 8854. H&r block free tax file 2012 You must provide adequate security (such as a bond). H&r block free tax file 2012 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. H&r block free tax file 2012   For more information about the deferral of payment, see the Instructions for Form 8854. H&r block free tax file 2012 Prev  Up  Next   Home   More Online Publications