File your Taxes for Free!
  • Get your maximum refund*
  • 100% accurate calculations guaranteed*

TurboTax Federal Free Edition - File Taxes Online

Don't let filing your taxes get you down! We'll help make it as easy as possible. With e-file and direct deposit, there's no faster way to get your refund!

Approved TurboTax Affiliate Site. TurboTax and TurboTax Online, among others, are registered trademarks and/or service marks of Intuit Inc. in the United States and other countries. Other parties' trademarks or service marks are the property of the respective owners.


© 2012 - 2018 All rights reserved.

This is an Approved TurboTax Affiliate site. TurboTax and TurboTax Online, among other are registered trademarks and/or service marks of Intuit, Inc. in the United States and other countries. Other parties' trademarks or service marks are the property of the respective owners.
When discussing "Free e-file", note that state e-file is an additional fee. E-file fees do not apply to New York state returns. Prices are subject to change without notice. E-file and get your refund faster
*If you pay an IRS or state penalty or interest because of a TurboTax calculations error, we'll pay you the penalty and interest.
*Maximum Refund Guarantee - or Your Money Back: If you get a larger refund or smaller tax due from another tax preparation method, we'll refund the applicable TurboTax federal and/or state purchase price paid. TurboTax Federal Free Edition customers are entitled to payment of $14.99 and a refund of your state purchase price paid. Claims must be submitted within sixty (60) days of your TurboTax filing date and no later than 6/15/14. E-file, Audit Defense, Professional Review, Refund Transfer and technical support fees are excluded. This guarantee cannot be combined with the TurboTax Satisfaction (Easy) Guarantee. *We're so confident your return will be done right, we guarantee it. Accurate calculations guaranteed. If you pay an IRS or state penalty or interest because of a TurboTax calculations error, we'll pay you the penalty and interest.
https://turbotax.intuit.com/corp/guarantees.jsp

Hr Block Free Tax File

H And R Block 2012 Tax ReturnFederal 1040x InstructionsFederal Tax Forms 2009Efile 1040nr Ez 540nr ShortTurbotax Military FreeMinimum Income To File TaxesDo My 2012 Taxes Online For Free2008 1040xAmended Tax Return Online2011 1040 Ez2012 Free Tax Software Online2010 1040ez Tax FormTax Software FreeState Tax Forms FreePast Year TaxesFiling State Income Tax Return2010 Form 1040xIrs File 1040ezIrs Form1040xState Tax SlabsHow To Fill Out A Tax AmendmentH&r Block Free FilingState Tax Preparation Free1040x Amended Form1040ez 2012 Fillable FormTax Forms For StudentsFree E File State Taxes OnlyHow To File A Revised Tax Return2011 Tax ScheduleHow To File 1040x OnlineFile A 1040xHow To Do 1040xAmend Your TaxesFile Taxes OnlineIrs Tax Forms1040 Ez FormAmended Tax Return FormHow To File 2012 Taxes Late1040 Ez Instructions 20132012 Schedule A Tax Form

Hr Block Free Tax File

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

Economic Research Service

The Economic Research Service provides the Department of Agriculture and the public economic information and research on food, agriculture, the environment and rural development.

Contact the Agency or Department

Website: Economic Research Service

Address: 355 E St SW
Washington, DC 20024-3221

The Hr Block Free Tax File

Hr block free tax file 2. Hr block free tax file   Simplified Employee Pensions (SEPs) Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: Setting Up a SEPWhen not to use Form 5305-SEP. Hr block free tax file How Much Can I Contribute?Contribution Limits Deducting ContributionsDeduction Limit for Contributions for Participants Deduction Limit for Self-Employed Individuals Carryover of Excess SEP Contributions When To Deduct Contributions Where To Deduct Contributions Salary Reduction Simplified Employee Pensions (SARSEPs)SARSEP ADP test. Hr block free tax file Deferral percentage. Hr block free tax file Employee compensation. Hr block free tax file Compensation of self-employed individuals. Hr block free tax file Choice not to treat deferrals as compensation. Hr block free tax file Limit on Elective Deferrals Tax Treatment of Deferrals Distributions (Withdrawals) Additional TaxesEffects on employee. Hr block free tax file Reporting and Disclosure Requirements Topics - This chapter discusses: Setting up a SEP How much can I contribute Deducting contributions Salary reduction simplified employee pensions (SARSEPs) Distributions (withdrawals) Additional taxes Reporting and disclosure requirements Useful Items - You may want to see: Publication 590 Individual Retirement Arrangements (IRAs) 3998 Choosing A Retirement Solution for Your Small Business 4285 SEP Checklist 4286 SARSEP Checklist 4333 SEP Retirement Plans for Small Businesses 4336 SARSEP for Small Businesses 4407 SARSEP—Key Issues and Assistance Forms (and Instructions) W-2 Wage and Tax Statement 1040 U. Hr block free tax file S. Hr block free tax file Individual Income Tax Return 5305-SEP Simplified Employee Pension—Individual Retirement Accounts Contribution Agreement 5305A-SEP Salary Reduction Simplified Employee Pension—Individual Retirement Accounts Contribution Agreement 8880 Credit for Qualified Retirement Savings Contributions 8881 Credit for Small Employer Pension Plan Startup Costs A SEP is a written plan that allows you to make contributions toward your own retirement and your employees' retirement without getting involved in a more complex qualified plan. Hr block free tax file Under a SEP, you make contributions to a traditional individual retirement arrangement (called a SEP-IRA) set up by or for each eligible employee. Hr block free tax file A SEP-IRA is owned and controlled by the employee, and you make contributions to the financial institution where the SEP-IRA is maintained. Hr block free tax file SEP-IRAs are set up for, at a minimum, each eligible employee (defined below). Hr block free tax file A SEP-IRA may have to be set up for a leased employee (defined in chapter 1), but does not need to be set up for excludable employees (defined later). Hr block free tax file Eligible employee. Hr block free tax file   An eligible employee is an individual who meets all the following requirements. Hr block free tax file Has reached age 21. Hr block free tax file Has worked for you in at least 3 of the last 5 years. Hr block free tax file Has received at least $550 in compensation from you in 2013. Hr block free tax file This amount remains the same in 2014. Hr block free tax file    You can use less restrictive participation requirements than those listed, but not more restrictive ones. Hr block free tax file Excludable employees. Hr block free tax file   The following employees can be excluded from coverage under a SEP. Hr block free tax file Employees covered by a union agreement and whose retirement benefits were bargained for in good faith by the employees' union and you. Hr block free tax file Nonresident alien employees who have received no U. Hr block free tax file S. Hr block free tax file source wages, salaries, or other personal services compensation from you. Hr block free tax file For more information about nonresident aliens, see Publication 519, U. Hr block free tax file S. Hr block free tax file Tax Guide for Aliens. Hr block free tax file Setting Up a SEP There are three basic steps in setting up a SEP. Hr block free tax file You must execute a formal written agreement to provide benefits to all eligible employees. Hr block free tax file You must give each eligible employee certain information about the SEP. Hr block free tax file A SEP-IRA must be set up by or for each eligible employee. Hr block free tax file Many financial institutions will help you set up a SEP. Hr block free tax file Formal written agreement. Hr block free tax file   You must execute a formal written agreement to provide benefits to all eligible employees under a SEP. Hr block free tax file You can satisfy the written agreement requirement by adopting an IRS model SEP using Form 5305-SEP. Hr block free tax file However, see When not to use Form 5305-SEP, below. Hr block free tax file   If you adopt an IRS model SEP using Form 5305-SEP, no prior IRS approval or determination letter is required. Hr block free tax file Keep the original form. Hr block free tax file Do not file it with the IRS. Hr block free tax file Also, using Form 5305-SEP will usually relieve you from filing annual retirement plan information returns with the IRS and the Department of Labor. Hr block free tax file See the Form 5305-SEP instructions for details. Hr block free tax file If you choose not to use Form 5305-SEP, you should seek professional advice in adopting a SEP. Hr block free tax file When not to use Form 5305-SEP. Hr block free tax file   You cannot use Form 5305-SEP if any of the following apply. Hr block free tax file You currently maintain any other qualified retirement plan other than another SEP. Hr block free tax file You have any eligible employees for whom IRAs have not been set up. Hr block free tax file You use the services of leased employees, who are not your common-law employees (as described in chapter 1). Hr block free tax file You are a member of any of the following unless all eligible employees of all the members of these groups, trades, or businesses participate under the SEP. Hr block free tax file An affiliated service group described in section 414(m). Hr block free tax file A controlled group of corporations described in section 414(b). Hr block free tax file Trades or businesses under common control described in section 414(c). Hr block free tax file You do not pay the cost of the SEP contributions. Hr block free tax file Information you must give to employees. Hr block free tax file   You must give each eligible employee a copy of Form 5305-SEP, its instructions, and the other information listed in the Form 5305-SEP instructions. Hr block free tax file An IRS model SEP is not considered adopted until you give each employee this information. Hr block free tax file Setting up the employee's SEP-IRA. Hr block free tax file   A SEP-IRA must be set up by or for each eligible employee. Hr block free tax file SEP-IRAs can be set up with banks, insurance companies, or other qualified financial institutions. Hr block free tax file You send SEP contributions to the financial institution where the SEP-IRA is maintained. Hr block free tax file Deadline for setting up a SEP. Hr block free tax file   You can set up a SEP for any year as late as the due date (including extensions) of your income tax return for that year. Hr block free tax file Credit for startup costs. Hr block free tax file   You may be able to claim a tax credit for part of the ordinary and necessary costs of starting a SEP that first became effective in 2013. Hr block free tax file For more information, see Credit for startup costs under Reminders, earlier. Hr block free tax file How Much Can I Contribute? The SEP rules permit you to contribute a limited amount of money each year to each employee's SEP-IRA. Hr block free tax file If you are self-employed, you can contribute to your own SEP-IRA. Hr block free tax file Contributions must be in the form of money (cash, check, or money order). Hr block free tax file You cannot contribute property. Hr block free tax file However, participants may be able to transfer or roll over certain property from one retirement plan to another. Hr block free tax file See Publication 590 for more information about rollovers. Hr block free tax file You do not have to make contributions every year. Hr block free tax file But if you make contributions, they must be based on a written allocation formula and must not discriminate in favor of highly compensated employees (defined in chapter 1). Hr block free tax file When you contribute, you must contribute to the SEP-IRAs of all participants who actually performed personal services during the year for which the contributions are made, including employees who die or terminate employment before the contributions are made. Hr block free tax file Contributions are deductible within limits, as discussed later, and generally are not taxable to the plan participants. Hr block free tax file A SEP-IRA cannot be a Roth IRA. Hr block free tax file Employer contributions to a SEP-IRA will not affect the amount an individual can contribute to a Roth or traditional IRA. Hr block free tax file Unlike regular contributions to a traditional IRA, contributions under a SEP can be made to participants over age 70½. Hr block free tax file If you are self-employed, you can also make contributions under the SEP for yourself even if you are over 70½. Hr block free tax file Participants age 70½ or over must take required minimum distributions. Hr block free tax file Time limit for making contributions. Hr block free tax file   To deduct contributions for a year, you must make the contributions by the due date (including extensions) of your tax return for the year. Hr block free tax file Contribution Limits Contributions you make for 2013 to a common-law employee's SEP-IRA cannot exceed the lesser of 25% of the employee's compensation or $51,000. Hr block free tax file Compensation generally does not include your contributions to the SEP. Hr block free tax file The SEP plan document will specify how the employer contribution is determined and how it will be allocated to participants. Hr block free tax file Example. Hr block free tax file Your employee, Mary Plant, earned $21,000 for 2013. Hr block free tax file The maximum contribution you can make to her SEP-IRA is $5,250 (25% x $21,000). Hr block free tax file Contributions for yourself. Hr block free tax file   The annual limits on your contributions to a common-law employee's SEP-IRA also apply to contributions you make to your own SEP-IRA. Hr block free tax file However, special rules apply when figuring your maximum deductible contribution. Hr block free tax file See Deduction Limit for Self-Employed Individuals , later. Hr block free tax file Annual compensation limit. Hr block free tax file   You cannot consider the part of an employee's compensation over $255,000 when figuring your contribution limit for that employee. Hr block free tax file However, $51,000 is the maximum contribution for an eligible employee. Hr block free tax file These limits are $260,000 and $52,000, respectively, in 2014. Hr block free tax file Example. Hr block free tax file Your employee, Susan Green, earned $210,000 for 2013. Hr block free tax file Because of the maximum contribution limit for 2013, you can only contribute $51,000 to her SEP-IRA. Hr block free tax file More than one plan. Hr block free tax file   If you contribute to a defined contribution plan (defined in chapter 4), annual additions to an account are limited to the lesser of $51,000 or 100% of the participant's compensation. Hr block free tax file When you figure this limit, you must add your contributions to all defined contribution plans maintained by you. Hr block free tax file Because a SEP is considered a defined contribution plan for this limit, your contributions to a SEP must be added to your contributions to other defined contribution plans you maintain. Hr block free tax file Tax treatment of excess contributions. Hr block free tax file   Excess contributions are your contributions to an employee's SEP-IRA (or to your own SEP-IRA) for 2013 that exceed the lesser of the following amounts. Hr block free tax file 25% of the employee's compensation (or, for you, 20% of your net earnings from self-employment). Hr block free tax file $51,000. Hr block free tax file Excess contributions are included in the employee's income for the year and are treated as contributions by the employee to his or her SEP-IRA. Hr block free tax file For more information on employee tax treatment of excess contributions, see chapter 1 in Publication 590. Hr block free tax file Reporting on Form W-2. Hr block free tax file   Do not include SEP contributions on your employee's Form W-2 unless contributions were made under a salary reduction arrangement (discussed later). Hr block free tax file Deducting Contributions Generally, you can deduct the contributions you make each year to each employee's SEP-IRA. Hr block free tax file If you are self-employed, you can deduct the contributions you make each year to your own SEP-IRA. Hr block free tax file Deduction Limit for Contributions for Participants The most you can deduct for your contributions to you or your employee's SEP-IRA is the lesser of the following amounts. Hr block free tax file Your contributions (including any excess contributions carryover). Hr block free tax file 25% of the compensation (limited to $255,000 per participant) paid to the participants during 2013 from the business that has the plan, not to exceed $51,000 per participant. Hr block free tax file In 2014, the amounts in (2) above are $260,000 and $52,000, respectively. Hr block free tax file Deduction Limit for Self-Employed Individuals If you contribute to your own SEP-IRA, you must make a special computation to figure your maximum deduction for these contributions. Hr block free tax file When figuring the deduction for contributions made to your own SEP-IRA, compensation is your net earnings from self-employment (defined in chapter 1), which takes into account both the following deductions. Hr block free tax file The deduction for the deductible part of your self-employment tax. Hr block free tax file The deduction for contributions to your own SEP-IRA. Hr block free tax file The deduction for contributions to your own SEP-IRA and your net earnings depend on each other. Hr block free tax file For this reason, you determine the deduction for contributions to your own SEP-IRA indirectly by reducing the contribution rate called for in your plan. Hr block free tax file To do this, use the Rate Table for Self-Employed or the Rate Worksheet for Self-Employed, whichever is appropriate for your plan's contribution rate, in chapter 5. Hr block free tax file Then figure your maximum deduction by using the Deduction Worksheet for Self-Employed in chapter 5. Hr block free tax file Carryover of Excess SEP Contributions If you made SEP contributions that are more than the deduction limit (nondeductible contributions), you can carry over and deduct the difference in later years. Hr block free tax file However, the carryover, when combined with the contribution for the later year, is subject to the deduction limit for that year. Hr block free tax file If you also contributed to a defined benefit plan or defined contribution plan, see Carryover of Excess Contributions under Employer Deduction in chapter 4 for the carryover limit. Hr block free tax file Excise tax. Hr block free tax file   If you made nondeductible (excess) contributions to a SEP, you may be subject to a 10% excise tax. Hr block free tax file For information about the excise tax, see Excise Tax for Nondeductible (Excess) Contributions under Employer Deduction in chapter 4. Hr block free tax file When To Deduct Contributions When you can deduct contributions made for a year depends on the tax year on which the SEP is maintained. Hr block free tax file If the SEP is maintained on a calendar year basis, you deduct the yearly contributions on your tax return for the year within which the calendar year ends. Hr block free tax file If you file your tax return and maintain the SEP using a fiscal year or short tax year, you deduct contributions made for a year on your tax return for that year. Hr block free tax file Example. Hr block free tax file You are a fiscal year taxpayer whose tax year ends June 30. Hr block free tax file You maintain a SEP on a calendar year basis. Hr block free tax file You deduct SEP contributions made for calendar year 2013 on your tax return for your tax year ending June 30, 2014. Hr block free tax file Where To Deduct Contributions Deduct the contributions you make for your common-law employees on your tax return. Hr block free tax file For example, sole proprietors deduct them on Schedule C (Form 1040) or Schedule F (Form 1040), Profit or Loss From Farming; partnerships deduct them on Form 1065, U. Hr block free tax file S. Hr block free tax file Return of Partnership Income; and corporations deduct them on Form 1120, U. Hr block free tax file S. Hr block free tax file Corporation Income Tax Return, or Form 1120S, U. Hr block free tax file S. Hr block free tax file Income Tax Return for an S Corporation. Hr block free tax file Sole proprietors and partners deduct contributions for themselves on line 28 of Form 1040. Hr block free tax file (If you are a partner, contributions for yourself are shown on the Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc. Hr block free tax file , you receive from the partnership. Hr block free tax file ) Remember that sole proprietors and partners can't deduct as a business expense contributions made to a SEP for themselves, only those made for their common-law employees. Hr block free tax file Salary Reduction Simplified Employee Pensions (SARSEPs) A SARSEP is a SEP set up before 1997 that includes a salary reduction arrangement. Hr block free tax file (See the Caution, next. Hr block free tax file ) Under a SARSEP, your employees can choose to have you contribute part of their pay to their SEP-IRAs rather than receive it in cash. Hr block free tax file This contribution is called an “elective deferral” because employees choose (elect) to set aside the money, and they defer the tax on the money until it is distributed to them. Hr block free tax file You are not allowed to set up a SARSEP after 1996. Hr block free tax file However, participants (including employees hired after 1996) in a SARSEP set up before 1997 can continue to have you contribute part of their pay to the plan. Hr block free tax file If you are interested in setting up a retirement plan that includes a salary reduction arrangement, see chapter 3. Hr block free tax file Who can have a SARSEP?   A SARSEP set up before 1997 is available to you and your eligible employees only if all the following requirements are met. Hr block free tax file At least 50% of your employees eligible to participate choose to make elective deferrals. Hr block free tax file You have 25 or fewer employees who were eligible to participate in the SEP at any time during the preceding year. Hr block free tax file The elective deferrals of your highly compensated employees meet the SARSEP ADP test. Hr block free tax file SARSEP ADP test. Hr block free tax file   Under the SARSEP ADP test, the amount deferred each year by each eligible highly compensated employee as a percentage of pay (the deferral percentage) cannot be more than 125% of the average deferral percentage (ADP) of all non-highly compensated employees eligible to participate. Hr block free tax file A highly compensated employee is defined in chapter 1. Hr block free tax file Deferral percentage. Hr block free tax file   The deferral percentage for an employee for a year is figured as follows. Hr block free tax file   The elective employer contributions (excluding certain catch-up contributions)  paid to the SEP for the employee for the year     The employee's compensation (limited to $255,000 in 2013)   The instructions for Form 5305A-SEP have a worksheet you can use to determine whether the elective deferrals of your highly compensated employees meet the SARSEP ADP test. Hr block free tax file Employee compensation. Hr block free tax file   For figuring the deferral percentage, compensation is generally the amount you pay to the employee for the year. Hr block free tax file Compensation includes the elective deferral and other amounts deferred in certain employee benefit plans. Hr block free tax file See Compensation in chapter 1. Hr block free tax file Elective deferrals under the SARSEP are included in figuring your employees' deferral percentage even though they are not included in the income of your employees for income tax purposes. Hr block free tax file Compensation of self-employed individuals. Hr block free tax file   If you are self-employed, compensation is your net earnings from self-employment as defined in chapter 1. Hr block free tax file   Compensation does not include tax-free items (or deductions related to them) other than foreign earned income and housing cost amounts. Hr block free tax file Choice not to treat deferrals as compensation. Hr block free tax file   You can choose not to treat elective deferrals (and other amounts deferred in certain employee benefit plans) for a year as compensation under your SARSEP. Hr block free tax file Limit on Elective Deferrals The most a participant can choose to defer for calendar year 2013 is the lesser of the following amounts. Hr block free tax file 25% of the participant's compensation (limited to $255,000 of the participant's compensation). Hr block free tax file $17,500. Hr block free tax file The $17,500 limit applies to the total elective deferrals the employee makes for the year to a SEP and any of the following. Hr block free tax file Cash or deferred arrangement (section 401(k) plan). Hr block free tax file Salary reduction arrangement under a tax-sheltered annuity plan (section 403(b) plan). Hr block free tax file SIMPLE IRA plan. Hr block free tax file In 2014, the $255,000 limit increases to $260,000 and the $17,500 limit remains at $17,500. Hr block free tax file Catch-up contributions. Hr block free tax file   A SARSEP can permit participants who are age 50 or over at the end of the calendar year to also make catch-up contributions. Hr block free tax file The catch-up contribution limit for 2013 is $5,500 and remains at $5,500 for 2014. Hr block free tax file Elective deferrals are not treated as catch-up contributions for 2013 until they exceed the elective deferral limit (the lesser of 25% of compensation or $17,500), the SARSEP ADP test limit discussed earlier, or the plan limit (if any). Hr block free tax file However, the catch-up contribution a participant can make for a year cannot exceed the lesser of the following amounts. Hr block free tax file The catch-up contribution limit. Hr block free tax file The excess of the participant's compensation over the elective deferrals that are not catch-up contributions. Hr block free tax file   Catch-up contributions are not subject to the elective deferral limit (the lesser of 25% of compensation or $17,500 in 2013 and in 2014). Hr block free tax file Overall limit on SEP contributions. Hr block free tax file   If you also make nonelective contributions to a SEP-IRA, the total of the nonelective and elective contributions to that SEP-IRA cannot exceed the lesser of 25% of the employee's compensation or $51,000 for 2013 ($52,000 for 2014). Hr block free tax file The same rule applies to contributions you make to your own SEP-IRA. Hr block free tax file See Contribution Limits , earlier. Hr block free tax file Figuring the elective deferral. Hr block free tax file   For figuring the 25% limit on elective deferrals, compensation does not include SEP contributions, including elective deferrals or other amounts deferred in certain employee benefit plans. Hr block free tax file Tax Treatment of Deferrals Elective deferrals that are not more than the limits discussed earlier under Limit on Elective Deferrals are excluded from your employees' wages subject to federal income tax in the year of deferral. Hr block free tax file However, these deferrals are included in wages for social security, Medicare, and federal unemployment (FUTA) tax. Hr block free tax file Excess deferrals. Hr block free tax file   For 2013, excess deferrals are the elective deferrals for the year that are more than the $17,500 limit discussed earlier. Hr block free tax file For a participant who is eligible to make catch-up contributions, excess deferrals are the elective deferrals that are more than $23,000. Hr block free tax file The treatment of excess deferrals made under a SARSEP is similar to the treatment of excess deferrals made under a qualified plan. Hr block free tax file See Treatment of Excess Deferrals under Elective Deferrals (401(k) Plans) in chapter 4. Hr block free tax file Excess SEP contributions. Hr block free tax file   Excess SEP contributions are elective deferrals of highly compensated employees that are more than the amount permitted under the SARSEP ADP test. Hr block free tax file You must notify your highly compensated employees within 2½ months after the end of the plan year of their excess SEP contributions. Hr block free tax file If you do not notify them within this time period, you must pay a 10% tax on the excess. Hr block free tax file For an explanation of the notification requirements, see Rev. Hr block free tax file Proc. Hr block free tax file 91-44, 1991-2 C. Hr block free tax file B. Hr block free tax file 733. Hr block free tax file If you adopted a SARSEP using Form 5305A-SEP, the notification requirements are explained in the instructions for that form. Hr block free tax file Reporting on Form W-2. Hr block free tax file   Do not include elective deferrals in the “Wages, tips, other compensation” box of Form W-2. Hr block free tax file You must, however, include them in the “Social security wages” and “Medicare wages and tips” boxes. Hr block free tax file You must also include them in box 12. Hr block free tax file Mark the “Retirement plan” checkbox in box 13. Hr block free tax file For more information, see the Form W-2 instructions. Hr block free tax file Distributions (Withdrawals) As an employer, you cannot prohibit distributions from a SEP-IRA. Hr block free tax file Also, you cannot make your contributions on the condition that any part of them must be kept in the account after you have made your contributions to the employee's accounts. Hr block free tax file Distributions are subject to IRA rules. Hr block free tax file Generally, you or your employee must begin to receive distributions from a SEP-IRA by April 1 of the first year after the calendar year in which you or your employee reaches age 70½. Hr block free tax file For more information about IRA rules, including the tax treatment of distributions, rollovers, required distributions, and income tax withholding, see Publication 590. Hr block free tax file Additional Taxes The tax advantages of using SEP-IRAs for retirement savings can be offset by additional taxes that may be imposed for all the following actions. Hr block free tax file Making excess contributions. Hr block free tax file Making early withdrawals. Hr block free tax file Not making required withdrawals. Hr block free tax file For information about these taxes, see chapter 1 in Publication 590. Hr block free tax file Also, a SEP-IRA may be disqualified, or an excise tax may apply, if the account is involved in a prohibited transaction, discussed next. Hr block free tax file Prohibited transaction. Hr block free tax file   If an employee improperly uses his or her SEP-IRA, such as by borrowing money from it, the employee has engaged in a prohibited transaction. Hr block free tax file In that case, the SEP-IRA will no longer qualify as an IRA. Hr block free tax file For a list of prohibited transactions, see Prohibited Transactions in chapter 4. Hr block free tax file Effects on employee. Hr block free tax file   If a SEP-IRA is disqualified because of a prohibited transaction, the assets in the account will be treated as having been distributed to the employee on the first day of the year in which the transaction occurred. Hr block free tax file The employee must include in income the fair market value of the assets (on the first day of the year) that is more than any cost basis in the account. Hr block free tax file Also, the employee may have to pay the additional tax for making early withdrawals. Hr block free tax file Reporting and Disclosure Requirements If you set up a SEP using Form 5305-SEP, you must give your eligible employees certain information about the SEP when you set it up. Hr block free tax file See Setting Up a SEP , earlier. Hr block free tax file Also, you must give your eligible employees a statement each year showing any contributions to their SEP-IRAs. Hr block free tax file You must also give them notice of any excess contributions. Hr block free tax file For details about other information you must give them, see the instructions for Form 5305-SEP or Form 5305A-SEP (for a salary reduction SEP). Hr block free tax file Even if you did not use Form 5305-SEP or Form 5305A-SEP to set up your SEP, you must give your employees information similar to that described above. Hr block free tax file For more information, see the instructions for either Form 5305-SEP or Form 5305A-SEP. Hr block free tax file Prev  Up  Next   Home   More Online Publications