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Hrblockfree com 4. Hrblockfree com   Foreign Earned Income and Housing: Exclusion – Deduction Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: Who Qualifies for the Exclusions and the Deduction? RequirementsTax Home in Foreign Country Bona Fide Residence Test Physical Presence Test Waiver of Time Requirements U. Hrblockfree com S. Hrblockfree com Travel Restrictions Foreign Earned Income Foreign Earned Income ExclusionLimit on Excludable Amount Choosing the Exclusion Foreign Housing Exclusion and DeductionHousing Amount Foreign Housing Exclusion Foreign Housing Deduction Married Couples Form 2555 and Form 2555-EZForm 2555-EZ Form 2555 Topics - This chapter discusses: Who qualifies for the foreign earned income exclusion, the foreign housing exclusion, and the foreign housing deduction, The requirements that must be met to claim either exclusion or the deduction, How to figure the foreign earned income exclusion, and How to figure the foreign housing exclusion and the foreign housing deduction. Hrblockfree com Useful Items - You may want to see: Publication 519 U. Hrblockfree com S. Hrblockfree com Tax Guide for Aliens 570 Tax Guide for Individuals With Income from U. Hrblockfree com S. Hrblockfree com Possessions 596 Earned Income Credit (EIC) Form (and Instructions) 1040X Amended U. Hrblockfree com S. Hrblockfree com Individual Income Tax Return 2555 Foreign Earned Income 2555-EZ Foreign Earned Income Exclusion See chapter 7 for information about getting these publications and forms. Hrblockfree com Who Qualifies for the Exclusions and the Deduction? If you meet certain requirements, you may qualify for the foreign earned income and foreign housing exclusions and the foreign housing deduction. Hrblockfree com If you are a U. Hrblockfree com S. Hrblockfree com citizen or a resident alien of the United States and you live abroad, you are taxed on your worldwide income. Hrblockfree com However, you may qualify to exclude from income up to $97,600 of your foreign earnings. Hrblockfree com In addition, you can exclude or deduct certain foreign housing amounts. Hrblockfree com See Foreign Earned Income Exclusion and Foreign Housing Exclusion and Deduction, later. Hrblockfree com You also may be entitled to exclude from income the value of meals and lodging provided to you by your employer. Hrblockfree com See Exclusion of Meals and Lodging, later. Hrblockfree com Requirements To claim the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction, you must meet all three of the following requirements. Hrblockfree com Your tax home must be in a foreign country. Hrblockfree com You must have foreign earned income. Hrblockfree com You must be one of the following. Hrblockfree com A U. Hrblockfree com S. Hrblockfree com citizen who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year. Hrblockfree com A U. Hrblockfree com S. Hrblockfree com resident alien who is a citizen or national of a country with which the United States has an income tax treaty in effect and who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year. Hrblockfree com A U. Hrblockfree com S. Hrblockfree com citizen or a U. Hrblockfree com S. Hrblockfree com resident alien who is physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months. Hrblockfree com See Publication 519 to find out if you are a U. Hrblockfree com S. Hrblockfree com resident alien for tax purposes and whether you keep that alien status when you temporarily work abroad. Hrblockfree com If you are a nonresident alien married to a U. Hrblockfree com S. Hrblockfree com citizen or resident alien, and both you and your spouse choose to treat you as a resident alien, you are a resident alien for tax purposes. Hrblockfree com For information on making the choice, see the discussion in chapter 1 under Nonresident Alien Spouse Treated as a Resident . Hrblockfree com Waiver of minimum time requirements. Hrblockfree com   The minimum time requirements for bona fide residence and physical presence can be waived if you must leave a foreign country because of war, civil unrest, or similar adverse conditions in that country. Hrblockfree com This is fully explained under Waiver of Time Requirements , later. Hrblockfree com   See Figure 4-A and information in this chapter to determine if you are eligible to claim either exclusion or the deduction. Hrblockfree com Tax Home in Foreign Country To qualify for the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction, your tax home must be in a foreign country throughout your period of bona fide residence or physical presence abroad. Hrblockfree com Bona fide residence and physical presence are explained later. Hrblockfree com Tax Home Your tax home is the general area of your main place of business, employment, or post of duty, regardless of where you maintain your family home. Hrblockfree com Your tax home is the place where you are permanently or indefinitely engaged to work as an employee or self-employed individual. Hrblockfree com Having a “tax home” in a given location does not necessarily mean that the given location is your residence or domicile for tax purposes. Hrblockfree com If you do not have a regular or main place of business because of the nature of your work, your tax home may be the place where you regularly live. Hrblockfree com If you have neither a regular or main place of business nor a place where you regularly live, you are considered an itinerant and your tax home is wherever you work. Hrblockfree com You are not considered to have a tax home in a foreign country for any period in which your abode is in the United States. Hrblockfree com However, your abode is not necessarily in the United States while you are temporarily in the United States. Hrblockfree com Your abode is also not necessarily in the United States merely because you maintain a dwelling in the United States, whether or not your spouse or dependents use the dwelling. Hrblockfree com “Abode” has been variously defined as one's home, habitation, residence, domicile, or place of dwelling. Hrblockfree com It does not mean your principal place of business. Hrblockfree com “Abode” has a domestic rather than a vocational meaning and does not mean the same as “tax home. Hrblockfree com ” The location of your abode often will depend on where you maintain your economic, family, and personal ties. Hrblockfree com Example 1. Hrblockfree com You are employed on an offshore oil rig in the territorial waters of a foreign country and work a 28-day on/28-day off schedule. Hrblockfree com You return to your family residence in the United States during your off periods. Hrblockfree com You are considered to have an abode in the United States and do not satisfy the tax home test in the foreign country. Hrblockfree com You cannot claim either of the exclusions or the housing deduction. Hrblockfree com Example 2. Hrblockfree com For several years, you were a marketing executive with a producer of machine tools in Toledo, Ohio. Hrblockfree com In November of last year, your employer transferred you to London, England, for a minimum of 18 months to set up a sales operation for Europe. Hrblockfree com Before you left, you distributed business cards showing your business and home addresses in London. Hrblockfree com You kept ownership of your home in Toledo but rented it to another family. Hrblockfree com You placed your car in storage. Hrblockfree com In November of last year, you moved your spouse, children, furniture, and family pets to a home your employer rented for you in London. Hrblockfree com Shortly after moving, you leased a car and you and your spouse got British driving licenses. Hrblockfree com Your entire family got library cards for the local public library. Hrblockfree com You and your spouse opened bank accounts with a London bank and secured consumer credit. Hrblockfree com You joined a local business league and both you and your spouse became active in the neighborhood civic association and worked with a local charity. Hrblockfree com Your abode is in London for the time you live there. Hrblockfree com You satisfy the tax home test in the foreign country. Hrblockfree com Please click here for the text description of the image. Hrblockfree com Figure 4–A Can I Claim the Exclusion or Deduction? Temporary or Indefinite Assignment The location of your tax home often depends on whether your assignment is temporary or indefinite. Hrblockfree com If you are temporarily absent from your tax home in the United States on business, you may be able to deduct your away-from-home expenses (for travel, meals, and lodging), but you would not qualify for the foreign earned income exclusion. Hrblockfree com If your new work assignment is for an indefinite period, your new place of employment becomes your tax home and you would not be able to deduct any of the related expenses that you have in the general area of this new work assignment. Hrblockfree com If your new tax home is in a foreign country and you meet the other requirements, your earnings may qualify for the foreign earned income exclusion. Hrblockfree com If you expect your employment away from home in a single location to last, and it does last, for 1 year or less, it is temporary unless facts and circumstances indicate otherwise. Hrblockfree com If you expect it to last for more than 1 year, it is indefinite. Hrblockfree com If you expect it to last for 1 year or less, but at some later date you expect it to last longer than 1 year, it is temporary (in the absence of facts and circumstances indicating otherwise) until your expectation changes. Hrblockfree com Once your expectation changes, it is indefinite. Hrblockfree com Foreign Country To meet the bona fide residence test or the physical presence test, you must live in or be present in a foreign country. Hrblockfree com A foreign country includes any territory under the sovereignty of a government other than that of the United States. Hrblockfree com The term “foreign country” includes the country's airspace and territorial waters, but not international waters and the airspace above them. Hrblockfree com It also includes the seabed and subsoil of those submarine areas adjacent to the country's territorial waters over which it has exclusive rights under international law to explore and exploit the natural resources. Hrblockfree com The term “foreign country” does not include Antarctica or U. Hrblockfree com S. Hrblockfree com possessions such as Puerto Rico, Guam, the Commonwealth of the Northern Mariana Islands, the U. Hrblockfree com S. Hrblockfree com Virgin Islands, and Johnston Island. Hrblockfree com For purposes of the foreign earned income exclusion, the foreign housing exclusion, and the foreign housing deduction, the terms “foreign,” “abroad,” and “overseas” refer to areas outside the United States and those areas listed or described in the previous sentence. Hrblockfree com American Samoa, Guam, and the Commonwealth of the Northern Mariana Islands Residence or presence in a U. Hrblockfree com S. Hrblockfree com possession does not qualify you for the foreign earned income exclusion. Hrblockfree com You may, however, qualify for an exclusion of your possession income on your U. Hrblockfree com S. Hrblockfree com return. Hrblockfree com American Samoa. Hrblockfree com   There is a possession exclusion available to individuals who are bona fide residents of American Samoa for the entire tax year. Hrblockfree com Gross income from sources within American Samoa may be eligible for this exclusion. Hrblockfree com Income that is effectively connected with the conduct of a trade or business within American Samoa also may be eligible for this exclusion. Hrblockfree com Use Form 4563, Exclusion of Income for Bona Fide Residents of American Samoa, to figure the exclusion. Hrblockfree com Guam and the Commonwealth of the Northern Mariana Islands. Hrblockfree com   An exclusion will be available to residents of Guam and the Commonwealth of the Northern Mariana Islands if, and when, new implementation agreements take effect between the United States and those possessions. Hrblockfree com   For more information, see Publication 570. Hrblockfree com Puerto Rico and U. Hrblockfree com S. Hrblockfree com Virgin Islands Residents of Puerto Rico and the U. Hrblockfree com S. Hrblockfree com Virgin Islands cannot claim the foreign earned income exclusion or the foreign housing exclusion. Hrblockfree com Puerto Rico. Hrblockfree com   Generally, if you are a U. Hrblockfree com S. Hrblockfree com citizen who is a bona fide resident of Puerto Rico for the entire tax year, you are not subject to U. Hrblockfree com S. Hrblockfree com tax on income from Puerto Rican sources. Hrblockfree com This does not include amounts paid for services performed as an employee of the United States. Hrblockfree com However, you are subject to U. Hrblockfree com S. Hrblockfree com tax on your income from sources outside Puerto Rico. Hrblockfree com In figuring your U. Hrblockfree com S. Hrblockfree com tax, you cannot deduct expenses allocable to income not subject to tax. Hrblockfree com Bona Fide Residence Test You meet the bona fide residence test if you are a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year. Hrblockfree com You can use the bona fide residence test to qualify for the exclusions and the deduction only if you are either: A U. Hrblockfree com S. Hrblockfree com citizen, or A U. Hrblockfree com S. Hrblockfree com resident alien who is a citizen or national of a country with which the United States has an income tax treaty in effect. Hrblockfree com You do not automatically acquire bona fide resident status merely by living in a foreign country or countries for 1 year. Hrblockfree com If you go to a foreign country to work on a particular job for a specified period of time, you ordinarily will not be regarded as a bona fide resident of that country even though you work there for 1 tax year or longer. Hrblockfree com The length of your stay and the nature of your job are only two of the factors to be considered in determining whether you meet the bona fide residence test. Hrblockfree com Bona fide residence. Hrblockfree com   To meet the bona fide residence test, you must have established a bona fide residence in a foreign country. Hrblockfree com   Your bona fide residence is not necessarily the same as your domicile. Hrblockfree com Your domicile is your permanent home, the place to which you always return or intend to return. Hrblockfree com Example. Hrblockfree com You could have your domicile in Cleveland, Ohio, and a bona fide residence in Edinburgh, Scotland, if you intend to return eventually to Cleveland. Hrblockfree com The fact that you go to Scotland does not automatically make Scotland your bona fide residence. Hrblockfree com If you go there as a tourist, or on a short business trip, and return to the United States, you have not established bona fide residence in Scotland. Hrblockfree com But if you go to Scotland to work for an indefinite or extended period and you set up permanent quarters there for yourself and your family, you probably have established a bona fide residence in a foreign country, even though you intend to return eventually to the United States. Hrblockfree com You are clearly not a resident of Scotland in the first instance. Hrblockfree com However, in the second, you are a resident because your stay in Scotland appears to be permanent. Hrblockfree com If your residency is not as clearly defined as either of these illustrations, it may be more difficult to decide whether you have established a bona fide residence. Hrblockfree com Determination. Hrblockfree com   Questions of bona fide residence are determined according to each individual case, taking into account factors such as your intention, the purpose of your trip, and the nature and length of your stay abroad. Hrblockfree com   To meet the bona fide residence test, you must show the Internal Revenue Service (IRS) that you have been a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year. Hrblockfree com The IRS decides whether you are a bona fide resident of a foreign country largely on the basis of facts you report on Form 2555. Hrblockfree com IRS cannot make this determination until you file Form 2555. Hrblockfree com Statement to foreign authorities. Hrblockfree com   You are not considered a bona fide resident of a foreign country if you make a statement to the authorities of that country that you are not a resident of that country, and the authorities: Hold that you are not subject to their income tax laws as a resident, or Have not made a final decision on your status. Hrblockfree com Special agreements and treaties. Hrblockfree com   An income tax exemption provided in a treaty or other international agreement will not in itself prevent you from being a bona fide resident of a foreign country. Hrblockfree com Whether a treaty prevents you from becoming a bona fide resident of a foreign country is determined under all provisions of the treaty, including specific provisions relating to residence or privileges and immunities. Hrblockfree com Example 1. Hrblockfree com You are a U. Hrblockfree com S. Hrblockfree com citizen employed in the United Kingdom by a U. Hrblockfree com S. Hrblockfree com employer under contract with the U. Hrblockfree com S. Hrblockfree com Armed Forces. Hrblockfree com You are not subject to the North Atlantic Treaty Status of Forces Agreement. Hrblockfree com You may be a bona fide resident of the United Kingdom. Hrblockfree com Example 2. Hrblockfree com You are a U. Hrblockfree com S. Hrblockfree com citizen in the United Kingdom who qualifies as an “employee” of an armed service or as a member of a “civilian component” under the North Atlantic Treaty Status of Forces Agreement. Hrblockfree com You are not a bona fide resident of the United Kingdom. Hrblockfree com Example 3. Hrblockfree com You are a U. Hrblockfree com S. Hrblockfree com citizen employed in Japan by a U. Hrblockfree com S. Hrblockfree com employer under contract with the U. Hrblockfree com S. Hrblockfree com Armed Forces. Hrblockfree com You are subject to the agreement of the Treaty of Mutual Cooperation and Security between the United States and Japan. Hrblockfree com Being subject to the agreement does not make you a bona fide resident of Japan. Hrblockfree com Example 4. Hrblockfree com You are a U. Hrblockfree com S. Hrblockfree com citizen employed as an “official” by the United Nations in Switzerland. Hrblockfree com You are exempt from Swiss taxation on the salary or wages paid to you by the United Nations. Hrblockfree com This does not prevent you from being a bona fide resident of Switzerland. Hrblockfree com Effect of voting by absentee ballot. Hrblockfree com   If you are a U. Hrblockfree com S. Hrblockfree com citizen living abroad, you can vote by absentee ballot in any election held in the United States without risking your status as a bona fide resident of a foreign country. Hrblockfree com   However, if you give information to the local election officials about the nature and length of your stay abroad that does not match the information you give for the bona fide residence test, the information given in connection with absentee voting will be considered in determining your status, but will not necessarily be conclusive. Hrblockfree com Uninterrupted period including entire tax year. Hrblockfree com   To meet the bona fide residence test, you must reside in a foreign country or countries for an uninterrupted period that includes an entire tax year. Hrblockfree com An entire tax year is from January 1 through December 31 for taxpayers who file their income tax returns on a calendar year basis. Hrblockfree com   During the period of bona fide residence in a foreign country, you can leave the country for brief or temporary trips back to the United States or elsewhere for vacation or business. Hrblockfree com To keep your status as a bona fide resident of a foreign country, you must have a clear intention of returning from such trips, without unreasonable delay, to your foreign residence or to a new bona fide residence in another foreign country. Hrblockfree com Example 1. Hrblockfree com You arrived with your family in Lisbon, Portugal, on November 1, 2011. Hrblockfree com Your assignment is indefinite, and you intend to live there with your family until your company sends you to a new post. Hrblockfree com You immediately established residence there. Hrblockfree com You spent April of 2012 at a business conference in the United States. Hrblockfree com Your family stayed in Lisbon. Hrblockfree com Immediately following the conference, you returned to Lisbon and continued living there. Hrblockfree com On January 1, 2013, you completed an uninterrupted period of residence for a full tax year (2012), and you meet the bona fide residence test. Hrblockfree com Example 2. Hrblockfree com Assume the same facts as in Example 1, except that you transferred back to the United States on December 13, 2012. Hrblockfree com You would not meet the bona fide residence test because your bona fide residence in the foreign country, although it lasted more than a year, did not include a full tax year. Hrblockfree com You may, however, qualify for the foreign earned income exclusion or the housing exclusion or deduction under the physical presence test (discussed later). Hrblockfree com Bona fide resident for part of a year. Hrblockfree com   Once you have established bona fide residence in a foreign country for an uninterrupted period that includes an entire tax year, you are a bona fide resident of that country for the period starting with the date you actually began the residence and ending with the date you abandon the foreign residence. Hrblockfree com Your period of bona fide residence can include an entire tax year plus parts of 2 other tax years. Hrblockfree com Example. Hrblockfree com You were a bona fide resident of Singapore from March 1, 2011, through September 14, 2013. Hrblockfree com On September 15, 2013, you returned to the United States. Hrblockfree com Since you were a bona fide resident of a foreign country for all of 2012, you were also a bona fide resident of a foreign country from March 1, 2011, through the end of 2011 and from January 1, 2013, through September 14, 2013. Hrblockfree com Reassignment. Hrblockfree com   If you are assigned from one foreign post to another, you may or may not have a break in foreign residence between your assignments, depending on the circumstances. Hrblockfree com Example 1. Hrblockfree com You were a resident of Pakistan from October 1, 2012, through November 30, 2013. Hrblockfree com On December 1, 2013, you and your family returned to the United States to wait for an assignment to another foreign country. Hrblockfree com Your household goods also were returned to the United States. Hrblockfree com Your foreign residence ended on November 30, 2013, and did not begin again until after you were assigned to another foreign country and physically entered that country. Hrblockfree com Since you were not a bona fide resident of a foreign country for the entire tax year of 2012 or 2013 you do not meet the bona fide residence test in either year. Hrblockfree com You may, however, qualify for the foreign earned income exclusion or the housing exclusion or deduction under the physical presence test, discussed later. Hrblockfree com Example 2. Hrblockfree com Assume the same facts as in Example 1, except that upon completion of your assignment in Pakistan you were given a new assignment to Turkey. Hrblockfree com On December 1, 2013, you and your family returned to the United States for a month's vacation. Hrblockfree com On January 2, 2014, you arrived in Turkey for your new assignment. Hrblockfree com Because you did not interrupt your bona fide residence abroad, you meet the bona fide residence test. Hrblockfree com Physical Presence Test You meet the physical presence test if you are physically present in a foreign country or countries 330 full days during a period of 12 consecutive months. Hrblockfree com The 330 days do not have to be consecutive. Hrblockfree com Any U. Hrblockfree com S. Hrblockfree com citizen or resident alien can use the physical presence test to qualify for the exclusions and the deduction. Hrblockfree com The physical presence test is based only on how long you stay in a foreign country or countries. Hrblockfree com This test does not depend on the kind of residence you establish, your intentions about returning, or the nature and purpose of your stay abroad. Hrblockfree com 330 full days. Hrblockfree com   Generally, to meet the physical presence test, you must be physically present in a foreign country or countries for at least 330 full days during a 12-month period. Hrblockfree com You can count days you spent abroad for any reason. Hrblockfree com You do not have to be in a foreign country only for employment purposes. Hrblockfree com You can be on vacation. Hrblockfree com   You do not meet the physical presence test if illness, family problems, a vacation, or your employer's orders cause you to be present for less than the required amount of time. Hrblockfree com Exception. Hrblockfree com   You can be physically present in a foreign country or countries for less than 330 full days and still meet the physical presence test if you are required to leave a country because of war or civil unrest. Hrblockfree com See Waiver of Time Requirements, later. Hrblockfree com Full day. Hrblockfree com   A full day is a period of 24 consecutive hours, beginning at midnight. Hrblockfree com Travel. Hrblockfree com    When you leave the United States to go directly to a foreign country or when you return directly to the United States from a foreign country, the time you spend on or over international waters does not count toward the 330-day total. Hrblockfree com Example. Hrblockfree com You leave the United States for France by air on June 10. Hrblockfree com You arrive in France at 9:00 a. Hrblockfree com m. Hrblockfree com on June 11. Hrblockfree com Your first full day of physical presence in France is June 12. Hrblockfree com Passing over foreign country. Hrblockfree com   If, in traveling from the United States to a foreign country, you pass over a foreign country before midnight of the day you leave, the first day you can count toward the 330-day total is the day following the day you leave the United States. Hrblockfree com Example. Hrblockfree com You leave the United States by air at 9:30 a. Hrblockfree com m. Hrblockfree com on June 10 to travel to Kenya. Hrblockfree com You pass over western Africa at 11:00 p. Hrblockfree com m. Hrblockfree com on June 10 and arrive in Kenya at 12:30 a. Hrblockfree com m. Hrblockfree com on June 11. Hrblockfree com Your first full day in a foreign country is June 11. Hrblockfree com Change of location. Hrblockfree com   You can move about from one place to another in a foreign country or to another foreign country without losing full days. Hrblockfree com If any part of your travel is not within any foreign country and takes less than 24 hours, you are considered to be in a foreign country during that part of travel. Hrblockfree com Example 1. Hrblockfree com You leave Ireland by air at 11:00 p. Hrblockfree com m. Hrblockfree com on July 6 and arrive in Sweden at 5:00 a. Hrblockfree com m. Hrblockfree com on July 7. Hrblockfree com Your trip takes less than 24 hours and you lose no full days. Hrblockfree com Example 2. Hrblockfree com You leave Norway by ship at 10:00 p. Hrblockfree com m. Hrblockfree com on July 6 and arrive in Portugal at 6:00 a. Hrblockfree com m. Hrblockfree com on July 8. Hrblockfree com Since your travel is not within a foreign country or countries and the trip takes more than 24 hours, you lose as full days July 6, 7, and 8. Hrblockfree com If you remain in Portugal, your next full day in a foreign country is July 9. Hrblockfree com In United States while in transit. Hrblockfree com   If you are in transit between two points outside the United States and are physically present in the United States for less than 24 hours, you are not treated as present in the United States during the transit. Hrblockfree com You are treated as traveling over areas not within any foreign country. Hrblockfree com    Please click here for the text description of the image. Hrblockfree com Figure 4-B How to figure the 12-month period. Hrblockfree com   There are four rules you should know when figuring the 12-month period. Hrblockfree com Your 12-month period can begin with any day of the month. Hrblockfree com It ends the day before the same calendar day, 12 months later. Hrblockfree com Your 12-month period must be made up of consecutive months. Hrblockfree com Any 12-month period can be used if the 330 days in a foreign country fall within that period. Hrblockfree com You do not have to begin your 12-month period with your first full day in a foreign country or end it with the day you leave. Hrblockfree com You can choose the 12-month period that gives you the greatest exclusion. Hrblockfree com In determining whether the 12-month period falls within a longer stay in the foreign country, 12-month periods can overlap one another. Hrblockfree com Example 1. Hrblockfree com You are a construction worker who works on and off in a foreign country over a 20-month period. Hrblockfree com You might pick up the 330 full days in a 12-month period only during the middle months of the time you work in the foreign country because the first few and last few months of the 20-month period are broken up by long visits to the United States. Hrblockfree com Example 2. Hrblockfree com You work in New Zealand for a 20-month period from January 1, 2012, through August 31, 2013, except that you spend 28 days in February 2012 and 28 days in February 2013 on vacation in the United States. Hrblockfree com You are present in New Zealand for at least 330 full days during each of the following two 12-month periods: January 1, 2012 – December 31, 2012 and September 1, 2012 – August 31, 2013. Hrblockfree com By overlapping the 12-month periods in this way, you meet the physical presence test for the whole 20-month period. Hrblockfree com See Figure 4-B, on the previous page. Hrblockfree com Waiver of Time Requirements Both the bona fide residence test and the physical presence test contain minimum time requirements. Hrblockfree com The minimum time requirements can be waived, however, if you must leave a foreign country because of war, civil unrest, or similar adverse conditions in that country. Hrblockfree com You must be able to show that you reasonably could have expected to meet the minimum time requirements if not for the adverse conditions. Hrblockfree com To qualify for the waiver, you must actually have your tax home in the foreign country and be a bona fide resident of, or be physically present in, the foreign country on or before the beginning date of the waiver. Hrblockfree com Early in 2014, the IRS will publish in the Internal Revenue Bulletin a list of the only countries that qualify for the waiver for 2013 and the effective dates. Hrblockfree com If you left one of the countries on or after the date listed for each country, you can meet the bona fide residence test or physical presence test for 2013 without meeting the minimum time requirement. Hrblockfree com However, in figuring your exclusion, the number of your qualifying days of bona fide residence or physical presence includes only days of actual residence or presence within the country. Hrblockfree com U. Hrblockfree com S. Hrblockfree com Travel Restrictions If you are present in a foreign country in violation of U. Hrblockfree com S. Hrblockfree com law, you will not be treated as a bona fide resident of a foreign country or as physically present in a foreign country while you are in violation of the law. Hrblockfree com Income that you earn from sources within such a country for services performed during a period of violation does not qualify as foreign earned income. Hrblockfree com Your housing expenses within that country (or outside that country for housing your spouse or dependents) while you are in violation of the law cannot be included in figuring your foreign housing amount. Hrblockfree com For 2013, the only country to which travel restrictions applied was Cuba. Hrblockfree com The restrictions applied for the entire year. Hrblockfree com However, individuals working at the U. Hrblockfree com S. Hrblockfree com Naval Base at Guantanamo Bay in Cuba are not in violation of U. Hrblockfree com S. Hrblockfree com law. Hrblockfree com Personal service income earned by individuals at the base is eligible for the foreign earned income exclusion provided the other requirements are met. Hrblockfree com Foreign Earned Income To claim the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction, you must have foreign earned income. Hrblockfree com Foreign earned income generally is income you receive for services you perform during a period in which you meet both of the following requirements. Hrblockfree com Your tax home is in a foreign country. Hrblockfree com You meet either the bona fide residence test or the physical presence test. Hrblockfree com To determine whether your tax home is in a foreign country, see Tax Home in Foreign Country, earlier. Hrblockfree com To determine whether you meet either the bona fide residence test or the physical presence test, see Bona Fide Residence Test and Physical Presence Test, earlier. Hrblockfree com Foreign earned income does not include the following amounts. Hrblockfree com The value of meals and lodging that you exclude from your income because the meals and lodging were furnished for the convenience of your employer. Hrblockfree com Pension or annuity payments you receive, including social security benefits (see Pensions and annuities, later). Hrblockfree com Pay you receive as an employee of the U. Hrblockfree com S. Hrblockfree com Government. Hrblockfree com (See U. Hrblockfree com S. Hrblockfree com Government Employees, later. Hrblockfree com ) Amounts you include in your income because of your employer's contributions to a nonexempt employee trust or to a nonqualified annuity contract. Hrblockfree com Any unallowable moving expense deduction that you choose to recapture as explained under Moving Expense Attributable to Foreign Earnings in 2 Years in chapter 5. Hrblockfree com Payments you receive after the end of the tax year following the tax year in which you performed the services that earned the income. Hrblockfree com Earned income. Hrblockfree com   This is pay for personal services performed, such as wages, salaries, or professional fees. Hrblockfree com The list that follows classifies many types of income into three categories. Hrblockfree com The column headed Variable Income lists income that may fall into either the earned income category, the unearned income category, or partly into both. Hrblockfree com For more information on earned and unearned income, see Earned and Unearned Income, later. Hrblockfree com Earned Income Unearned Income Variable Income Salaries and wages Dividends Business profits Commissions Interest Royalties Bonuses Capital gains Rents Professional fees Gambling winnings Scholarships and fellowships Tips Alimony     Social security benefits     Pensions     Annuities     In addition to the types of earned income listed, certain noncash income and allowances or reimbursements are considered earned income. Hrblockfree com Noncash income. Hrblockfree com   The fair market value of property or facilities provided to you by your employer in the form of lodging, meals, or use of a car is earned income. Hrblockfree com Allowances or reimbursements. Hrblockfree com   Earned income includes allowances or reimbursements you receive, such as the following amounts. Hrblockfree com    Cost-of-living allowances. Hrblockfree com Overseas differential. Hrblockfree com Family allowance. Hrblockfree com Reimbursement for education or education allowance. Hrblockfree com Home leave allowance. Hrblockfree com Quarters allowance. Hrblockfree com Reimbursement for moving or moving allowance (unless excluded from income as discussed later in Reimbursement of employee expenses under Earned and Unearned Income). Hrblockfree com Source of Earned Income The source of your earned income is the place where you perform the services for which you received the income. Hrblockfree com Foreign earned income is income you receive for working in a foreign country. Hrblockfree com Where or how you are paid has no effect on the source of the income. Hrblockfree com For example, income you receive for work done in Austria is income from a foreign source even if the income is paid directly to your bank account in the United States and your employer is located in New York City. Hrblockfree com Example. Hrblockfree com You are a U. Hrblockfree com S. Hrblockfree com citizen, a bona fide resident of Canada, and working as a mining engineer. Hrblockfree com Your salary is $76,800 per year. Hrblockfree com You also receive a $6,000 cost-of-living allowance, and a $6,000 education allowance. Hrblockfree com Your employment contract did not indicate that you were entitled to these allowances only while outside the United States. Hrblockfree com Your total income is $88,800. Hrblockfree com You work a 5-day week, Monday through Friday. Hrblockfree com After subtracting your vacation, you have a total of 240 workdays in the year. Hrblockfree com You worked in the United States during the year for 6 weeks (30 workdays). Hrblockfree com The following shows how to figure the part of your income that is for work done in Canada during the year. Hrblockfree com   Number of days worked in Canada during the year (210) × Total income ($88,800) = $77,700     Number of days of work during the year for which payment was made (240)   Your foreign source earned income is $77,700. Hrblockfree com Earned and Unearned Income Earned income was defined earlier as pay for personal services performed. Hrblockfree com Some types of income are not easily identified as earned or unearned income. Hrblockfree com Some of these types of income are further explained here. Hrblockfree com Income from a sole proprietorship or partnership. Hrblockfree com   Income from a business in which capital investment is an important part of producing the income may be unearned income. Hrblockfree com If you are a sole proprietor or partner and your personal services are also an important part of producing the income, the part of the income that represents the value of your personal services will be treated as earned income. Hrblockfree com Capital a factor. Hrblockfree com   If capital investment is an important part of producing income, no more than 30% of your share of the net profits of the business is earned income. Hrblockfree com   If you have no net profits, the part of your gross profit that represents a reasonable allowance for personal services actually performed is considered earned income. Hrblockfree com Because you do not have a net profit, the 30% limit does not apply. Hrblockfree com Example 1. Hrblockfree com You are a U. Hrblockfree com S. Hrblockfree com citizen and meet the bona fide residence test. Hrblockfree com You invest in a partnership based in Cameroon that is engaged solely in selling merchandise outside the United States. Hrblockfree com You perform no services for the partnership. Hrblockfree com At the end of the tax year, your share of the net profits is $80,000. Hrblockfree com The entire $80,000 is unearned income. Hrblockfree com Example 2. Hrblockfree com Assume that in Example 1 you spend time operating the business. Hrblockfree com Your share of the net profits is $80,000; 30% of your share of the profits is $24,000. Hrblockfree com If the value of your services for the year is $15,000, your earned income is limited to the value of your services, $15,000. Hrblockfree com Capital not a factor. Hrblockfree com   If capital is not an income-producing factor and personal services produce the business income, the 30% rule does not apply. Hrblockfree com The entire amount of business income is earned income. Hrblockfree com Example. Hrblockfree com You and Lou Green are management consultants and operate as equal partners in performing services outside the United States. Hrblockfree com Because capital is not an income- producing factor, all the income from the partnership is considered earned income. Hrblockfree com Income from a corporation. Hrblockfree com   The salary you receive from a corporation is earned income only if it represents a reasonable allowance as compensation for work you do for the corporation. Hrblockfree com Any amount over what is considered a reasonable salary is unearned income. Hrblockfree com Example 1. Hrblockfree com You are a U. Hrblockfree com S. Hrblockfree com citizen and an officer and stockholder of a corporation in Honduras. Hrblockfree com You perform no work or service of any kind for the corporation. Hrblockfree com During the tax year you receive a $10,000 “salary” from the corporation. Hrblockfree com The $10,000 clearly is not for personal services and is unearned income. Hrblockfree com Example 2. Hrblockfree com You are a U. Hrblockfree com S. Hrblockfree com citizen and work full time as secretary-treasurer of your corporation. Hrblockfree com During the tax year you receive $100,000 as salary from the corporation. Hrblockfree com If $80,000 is a reasonable allowance as pay for the work you did, then $80,000 is earned income. Hrblockfree com Stock options. Hrblockfree com   You may have earned income if you disposed of stock that you got by exercising a stock option granted to you under an employee stock purchase plan. Hrblockfree com   If your gain on the disposition of stock you got by exercising an option is treated as capital gain, your gain is unearned income. Hrblockfree com   However, if you disposed of the stock less than 2 years after you were granted the option or less than 1 year after you got the stock, part of the gain on the disposition may be earned income. Hrblockfree com It is considered received in the year you disposed of the stock and earned in the year you performed the services for which you were granted the option. Hrblockfree com Any part of the earned income that is due to work you did outside the United States is foreign earned income. Hrblockfree com   See Publication 525, Taxable and Nontaxable Income, for a discussion of the treatment of stock options. Hrblockfree com Pensions and annuities. Hrblockfree com    For purposes of the foreign earned income exclusion, the foreign housing exclusion, and the foreign housing deduction, amounts received as pensions or annuities are unearned income. Hrblockfree com Royalties. Hrblockfree com   Royalties from the leasing of oil and mineral lands and patents generally are a form of rent or dividends and are unearned income. Hrblockfree com   Royalties received by a writer are earned income if they are received: For the transfer of property rights of the writer in the writer's product, or Under a contract to write a book or series of articles. Hrblockfree com Rental income. Hrblockfree com   Generally, rental income is unearned income. Hrblockfree com If you perform personal services in connection with the production of rent, up to 30% of your net rental income can be considered earned income. Hrblockfree com Example. Hrblockfree com Larry Smith, a U. Hrblockfree com S. Hrblockfree com citizen living in Australia, owns and operates a rooming house in Sydney. Hrblockfree com If he is operating the rooming house as a business that requires capital and personal services, he can consider up to 30% of net rental income as earned income. Hrblockfree com On the other hand, if he just owns the rooming house and performs no personal services connected with its operation, except perhaps making minor repairs and collecting rents, none of his net income from the house is considered earned income. Hrblockfree com It is all unearned income. Hrblockfree com Professional fees. Hrblockfree com   If you are engaged in a professional occupation (such as a doctor or lawyer), all fees received in the performance of these services are earned income. Hrblockfree com Income of an artist. Hrblockfree com   Income you receive from the sale of paintings you created is earned income. Hrblockfree com Scholarships and fellowships. Hrblockfree com   Any portion of a scholarship or fellowship grant that is paid to you for teaching, research or other services is considered earned income if you must include it in your gross income. Hrblockfree com If the payer of the grant is required to provide you with a Form W-2, Wage and Tax Statement, these amounts will be listed as wages. Hrblockfree com    Certain scholarship and fellowship income may be exempt under other provisions. Hrblockfree com See Publication 970, Tax Benefits for Education, chapter 1. Hrblockfree com Use of employer's property or facilities. Hrblockfree com   If you receive fringe benefits in the form of the right to use your employer's property or facilities, the fair market value of that right is earned income. Hrblockfree com Fair market value is the price at which the property would change hands between a willing buyer and a willing seller, neither being required to buy or sell, and both having reasonable knowledge of all the necessary facts. Hrblockfree com Example. Hrblockfree com You are privately employed and live in Japan all year. Hrblockfree com You are paid a salary of $6,000 a month. Hrblockfree com You live rent-free in a house provided by your employer that has a fair rental value of $3,000 a month. Hrblockfree com The house is not provided for your employer's convenience. Hrblockfree com You report on the calendar-year, cash basis. Hrblockfree com You received $72,000 salary from foreign sources plus $36,000 fair rental value of the house, or a total of $108,000 of earned income. Hrblockfree com Reimbursement of employee expenses. Hrblockfree com   If you are reimbursed under an accountable plan (defined below) for expenses you incur on your employer's behalf and you have adequately accounted to your employer for the expenses, do not include the reimbursement for those expenses in your earned income. Hrblockfree com   The expenses for which you are reimbursed are not considered allocable (related) to your earned income. Hrblockfree com If expenses and reimbursement are equal, there is nothing to allocate to excluded income. Hrblockfree com If expenses are more than the reimbursement, the unreimbursed expenses are considered to have been incurred in producing earned income and must be divided between your excluded and included income in determining the amount of unreimbursed expenses you can deduct. Hrblockfree com (See chapter 5. Hrblockfree com ) If the reimbursement is more than the expenses, no expenses remain to be divided between excluded and included income and the excess reimbursement must be included in earned income. Hrblockfree com   These rules do not apply to the following individuals. Hrblockfree com Straight-commission salespersons. Hrblockfree com Employees who have arrangements with their employers under which taxes are not withheld on a percentage of the commissions because the employers consider that percentage to be attributable to the employees' expenses. Hrblockfree com Accountable plan. Hrblockfree com   An accountable plan is a reimbursement or allowance arrangement that includes all three of the following rules. Hrblockfree com The expenses covered under the plan must have a business connection. Hrblockfree com The employee must adequately account to the employer for these expenses within a reasonable period of time. Hrblockfree com The employee must return any excess reimbursement or allowance within a reasonable period of time. Hrblockfree com Reimbursement of moving expenses. Hrblockfree com   Reimbursement of moving expenses may be earned income. Hrblockfree com You must include as earned income: Any reimbursements of, or payments for, nondeductible moving expenses, Reimbursements that are more than your deductible expenses and that you do not return to your employer, Any reimbursements made (or treated as made) under a nonaccountable plan (any plan that does not meet the rules listed above for an accountable plan), even if they are for deductible expenses, and Any reimbursement of moving expenses you deducted in an earlier year. Hrblockfree com This section discusses reimbursements that must be included in earned income. Hrblockfree com Publication 521, Moving Expenses, discusses additional rules that apply to moving expense deductions and reimbursements. Hrblockfree com   The rules for determining when the reimbursement is considered earned or where the reimbursement is considered earned may differ somewhat from the general rules previously discussed. Hrblockfree com   Although you receive the reimbursement in one tax year, it may be considered earned for services performed, or to be performed, in another tax year. Hrblockfree com You must report the reimbursement as income on your return in the year you receive it, even if it is considered earned during a different year. Hrblockfree com Move from U. Hrblockfree com S. Hrblockfree com to foreign country. Hrblockfree com   If you move from the United States to a foreign country, your moving expense reimbursement is generally considered pay for future services to be performed at the new location. Hrblockfree com The reimbursement is considered earned solely in the year of the move if you qualify for the exclusion for a period that includes at least 120 days during that tax year. Hrblockfree com   If you are neither a bona fide resident of nor physically present in a foreign country or countries for a period that includes 120 days during the year of the move, a portion of the reimbursement is considered earned in the year of the move and a portion is considered earned in the year following the year of the move. Hrblockfree com To figure the amount earned in the year of the move, multiply the reimbursement by a fraction. Hrblockfree com The numerator (top number) is the number of days in your qualifying period that fall within the year of the move, and the denominator (bottom number) is the total number of days in the year of the move. Hrblockfree com   The difference between the total reimbursement and the amount considered earned in the year of the move is the amount considered earned in the year following the year of the move. Hrblockfree com The part earned in each year is figured as shown in the following example. Hrblockfree com Example. Hrblockfree com You are a U. Hrblockfree com S. Hrblockfree com citizen working in the United States. Hrblockfree com You were told in October 2012 that you were being transferred to a foreign country. Hrblockfree com You arrived in the foreign country on December 15, 2012, and you are a bona fide resident for the remainder of 2012 and all of 2013. Hrblockfree com Your employer reimbursed you $2,000 in January 2013 for the part of the moving expense that you were not allowed to deduct. Hrblockfree com Because you did not qualify for the exclusion under the bona fide residence test for at least 120 days in 2012 (the year of the move), the reimbursement is considered pay for services performed in the foreign country for both 2012 and 2013. Hrblockfree com You figure the part of the reimbursement for services performed in the foreign country in 2012 by multiplying the total reimbursement by a fraction. Hrblockfree com The fraction is the number of days during which you were a bona fide resident in 2012 (the year of the move) divided by 366. Hrblockfree com The remaining part of the reimbursement is for services performed in the foreign country in 2013. Hrblockfree com This computation is used only to determine when the reimbursement is considered earned. Hrblockfree com You would include the amount of the reimbursement in income in 2013, the year you received it. Hrblockfree com Move between foreign countries. Hrblockfree com   If you move between foreign countries, any moving expense reimbursement that you must include in income will be considered earned in the year of the move if you qualify for the foreign earned income exclusion for a period that includes at least 120 days in the year of the move. Hrblockfree com Move to U. Hrblockfree com S. Hrblockfree com   If you move to the United States, the moving expense reimbursement that you must include in income is generally considered to be U. Hrblockfree com S. Hrblockfree com source income. Hrblockfree com   However, if under either an agreement between you and your employer or a statement of company policy that is reduced to writing before your move to the foreign country, your employer will reimburse you for your move back to the United States regardless of whether you continue to work for the employer, the includible reimbursement is considered compensation for past services performed in the foreign country. Hrblockfree com The includible reimbursement is considered earned in the year of the move if you qualify for the foreign earned income exclusion for a period that includes at least 120 days during that year. Hrblockfree com Otherwise, you treat the includible reimbursement as received for services performed in the foreign country in the year of the move and the year immediately before the year of the move. Hrblockfree com   See the discussion under Move from U. Hrblockfree com S. Hrblockfree com to foreign country , earlier, to figure the amount of the includible reimbursement considered earned in the year of the move. Hrblockfree com The amount earned in the year before the year of the move is the difference between the total includible reimbursement and the amount earned in the year of the move. Hrblockfree com Example. Hrblockfree com You are a U. Hrblockfree com S. Hrblockfree com citizen employed in a foreign country. Hrblockfree com You retired from employment with your employer on March 31, 2013, and returned to the United States after having been a bona fide resident of the foreign country for several years. Hrblockfree com A written agreement with your employer entered into before you went abroad provided that you would be reimbursed for your move back to the United States. Hrblockfree com In April 2013, your former employer reimbursed you $4,000 for the part of the cost of your move back to the United States that you were not allowed to deduct. Hrblockfree com Because you were not a bona fide resident of a foreign country or countries for a period that included at least 120 days in 2013 (the year of the move), the includible reimbursement is considered pay for services performed in the foreign country for both 2013 and 2012. Hrblockfree com You figure the part of the moving expense reimbursement for services performed in the foreign country for 2013 by multiplying the total includible reimbursement by a fraction. Hrblockfree com The fraction is the number of days of foreign residence during the year (90) divided by the number of days in the year (365). Hrblockfree com The remaining part of the includible reimbursement is for services performed in the foreign country in 2012. Hrblockfree com You report the amount of the includible reimbursement in 2013, the year you received it. Hrblockfree com    In this example, if you met the physical presence test for a period that included at least 120 days in 2013, the moving expense reimbursement would be considered earned entirely in the year of the move. Hrblockfree com Storage expense reimbursements. Hrblockfree com   If you are reimbursed for storage expenses, the reimbursement is for services you perform during the period of time for which the storage expenses are incurred. Hrblockfree com U. Hrblockfree com S. Hrblockfree com Government Employees For purposes of the foreign earned income exclusion, the foreign housing exclusion, and the foreign housing deduction, foreign earned income does not include any amounts paid by the United States or any of its agencies to its employees. Hrblockfree com This includes amounts paid from both appropriated and nonappropriated funds. Hrblockfree com The following organizations (and other organizations similarly organized and operated under United States Army, Navy, or Air Force regulations) are integral parts of the Armed Forces, agencies, or instrumentalities of the United States. Hrblockfree com United States Armed Forces exchanges. Hrblockfree com Commissioned and noncommissioned officers' messes. Hrblockfree com Armed Forces motion picture services. Hrblockfree com Kindergartens on foreign Armed Forces installations. Hrblockfree com Amounts paid by the United States or its agencies to persons who are not their employees may qualify for exclusion or deduction. Hrblockfree com If you are a U. Hrblockfree com S. Hrblockfree com Government employee paid by a U. Hrblockfree com S. Hrblockfree com agency that assigned you to a foreign government to perform specific services for which the agency is reimbursed by the foreign government, your pay is from the U. Hrblockfree com S. Hrblockfree com Government and does not qualify for exclusion or deduction. Hrblockfree com If you have questions about whether you are an employee or an independent contractor, get Publication 15-A, Employer's Supplemental Tax Guide. Hrblockfree com American Institute in Taiwan. Hrblockfree com   Amounts paid by the American Institute in Taiwan are not foreign earned income for purposes of the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction. Hrblockfree com If you are an employee of the American Institute in Taiwan, allowances you receive are exempt from U. Hrblockfree com S. Hrblockfree com tax up to the amount that equals tax-exempt allowances received by civilian employees of the U. Hrblockfree com S. Hrblockfree com Government. Hrblockfree com Allowances. Hrblockfree com   Cost-of-living and foreign-area allowances paid under certain acts of Congress to U. Hrblockfree com S. Hrblockfree com civilian officers and employees stationed in Alaska and Hawaii or elsewhere outside the 48 contiguous states and the District of Columbia can be excluded from gross income. Hrblockfree com Post differentials are wages that must be included in gross income, regardless of the act of Congress under which they are paid. Hrblockfree com More information. Hrblockfree com   Publication 516, U. Hrblockfree com S. Hrblockfree com Government Civilian Employees Stationed Abroad, has more information for U. Hrblockfree com S. Hrblockfree com Government employees abroad. Hrblockfree com Exclusion of Meals and Lodging You do not include in your income the value of meals and lodging provided to you and your family by your employer at no charge if the following conditions are met. Hrblockfree com The meals are furnished: On the business premises of your employer, and For the convenience of your employer. Hrblockfree com The lodging is furnished: On the business premises of your employer, For the convenience of your employer, and As a condition of your employment. Hrblockfree com If these conditions are met, do not include the value of the meals or lodging in your income, even if a law or your employment contract says that they are provided as compensation. Hrblockfree com Amounts you do not include in income because of these rules are not foreign earned income. Hrblockfree com If you receive a Form W-2, excludable amounts should not be included in the total reported in box 1 as wages. Hrblockfree com Family. Hrblockfree com   Your family, for this purpose, includes only your spouse and your dependents. Hrblockfree com Lodging. Hrblockfree com   The value of lodging includes the cost of heat, electricity, gas, water, sewer service, and similar items needed to make the lodging fit to live in. Hrblockfree com Business premises of employer. Hrblockfree com   Generally, the business premises of your employer is wherever you work. Hrblockfree com For example, if you work as a housekeeper, meals and lodging provided in your employer's home are provided on the business premises of your employer. Hrblockfree com Similarly, meals provided to cowhands while herding cattle on land leased or owned by their employer are considered provided on the premises of their employer. Hrblockfree com Convenience of employer. Hrblockfree com   Whether meals or lodging are provided for your employer's convenience must be determined from all the facts and circumstances. Hrblockfree com Meals furnished at no charge are considered provided for your employer's convenience if there is a good business reason for providing them, other than to give you more pay. Hrblockfree com   On the other hand, if your employer provides meals to you or your family as a means of giving you more pay, and there is no other business reason for providing them, their value is extra income to you because they are not furnished for the convenience of your employer. Hrblockfree com Condition of employment. Hrblockfree com   Lodging is provided as a condition of employment if you must accept the lodging to properly carry out the duties of your job. Hrblockfree com You must accept lodging to properly carry out your duties if, for example, you must be available for duty at all times or you could not perform your duties if the lodging was not furnished. Hrblockfree com Foreign camps. Hrblockfree com   If the lodging is in a camp located in a foreign country, the camp is considered part of your employer's business premises. Hrblockfree com The camp must be: Provided for your employer's convenience because the place where you work is in a remote area where satisfactory housing is not available to you on the open market within a reasonable commuting distance, Located as close as reasonably possible in the area where you work, and Provided in a common area or enclave that is not available to the general public for lodging or accommodations and that normally houses at least ten employees. Hrblockfree com Foreign Earned Income Exclusion If your tax home is in a foreign country and you meet the bona fide residence test or the physical presence test, you can choose to exclude from your income a limited amount of your foreign earned income. Hrblockfree com Foreign earned income was defined earlier in this chapter. Hrblockfree com You also can choose to exclude from your income a foreign housing amount. Hrblockfree com This is explained later under Foreign Housing Exclusion. Hrblockfree com If you choose to exclude a foreign housing amount, you must figure the foreign housing exclusion before you figure the foreign earned income exclusion. Hrblockfree com Your foreign earned income exclusion is limited to your foreign earned income minus your foreign housing exclusion. Hrblockfree com If you choose to exclude foreign earned income, you cannot deduct, exclude, or claim a credit for any item that can be allocated to or charged against the excluded amounts. Hrblockfree com This includes any expenses, losses, and other normally deductible items allocable to the excluded income. Hrblockfree com For more information about deductions and credits, see chapter 5 . Hrblockfree com Limit on Excludable Amount You may be able to exclude up to $97,600 of your foreign earned income in 2013. Hrblockfree com You cannot exclude more than the smaller of: $97,600, or Your foreign earned income (discussed earlier) for the tax year minus your foreign housing exclusion (discussed later). Hrblockfree com If both you and your spouse work abroad and each of you meets either the bona fide residence test or the physical presence test, you can each choose the foreign earned income exclusion. Hrblockfree com You do not both need to meet the same test. Hrblockfree com Together, you and your spouse can exclude as much as $195,200. Hrblockfree com Paid in year following work. Hrblockfree com   Generally, you are considered to have earned income in the year in which you do the work for which you receive the income, even if you work in one year but are not paid until the following year. Hrblockfree com If you report your income on a cash basis, you report the income on your return for the year you receive it. Hrblockfree com If you work one year, but are not paid for that work until the next year, the amount you can exclude in the year you are paid is the amount you could have excluded in the year you did the work if you had been paid in that year. Hrblockfree com For an exception to this general rule, see Year-end payroll period, later. Hrblockfree com Example. Hrblockfree com You were a bona fide resident of Brazil for all of 2012 and 2013. Hrblockfree com You report your income on the cash basis. Hrblockfree com In 2012, you were paid $84,200 for work you did in Brazil during that year. Hrblockfree com You excluded all of the $84,200 from your income in 2012. Hrblockfree com In 2013, you were paid $117,300 for your work in Brazil. Hrblockfree com $18,800 was for work you did in 2012 and $98,500 was for work you did in 2013. Hrblockfree com You can exclude $10,900 of the $18,800 from your income in 2013. Hrblockfree com This is the $95,100 maximum exclusion in 2012 minus the $84,200 actually excluded that year. Hrblockfree com You must include the remaining $7,900 in income in 2013 because you could not have excluded that income in 2012 if you had received it that year. Hrblockfree com You can exclude $97,600 of the $98,500 you were paid for work you did in 2013 from your 2013 income. Hrblockfree com Your total foreign earned income exclusion for 2013 is $108,500 ($10,900 for work you did in 2012 and $97,600 for work you did in 2013). Hrblockfree com You would include in your 2013 income $8,800 ($7,900 for the work you did in 2012 and $900 for the work you did in 2013). Hrblockfree com Year-end payroll period. Hrblockfree com   There is an exception to the general rule that income is considered earned in the year you do the work for which you receive the income. Hrblockfree com If you are a cash-basis taxpayer, any salary or wage payment you receive after the end of the year in which you do the work for which you receive the pay is considered earned entirely in the year you receive it if all four of the following apply. Hrblockfree com The period for which the payment is made is a normal payroll period of your employer that regularly applies to you. Hrblockfree com The payroll period includes the last day of your tax year (December 31 if you figure your taxes on a calendar-year basis). Hrblockfree com The payroll period is not longer than 16 days. Hrblockfree com The payday comes at the same time in relation to the payroll period that it would normally come and it comes before the end of the next payroll period. Hrblockfree com Example. Hrblockfree com You are paid twice a month. Hrblockfree com For the normal payroll period that begins on the first of the month and ends on the fifteenth of the month, you are paid on the sixteenth day of the month. Hrblockfree com For the normal payroll period that begins on the sixteenth of the month and ends on the last day of the month, you are paid on the first day of the following month. Hrblockfree com Because all of the above conditions are met, the pay you received on January 1, 2013, is considered earned in 2013. Hrblockfree com Income earned over more than 1 year. Hrblockfree com   Regardless of when you actually receive income, you must apply it to the year in which you earned it in figuring your excludable amount for that year. Hrblockfree com For example, a bonus may be based on work you did over several years. Hrblockfree com You determine the amount of the bonus that is considered earned in a particular year in two steps. Hrblockfree com Divide the bonus by the number of calendar months in the period when you did the work that resulted in the bonus. Hrblockfree com Multiply the result of (1) by the number of months you did the work during the year. Hrblockfree com This is the amount that is subject to the exclusion limit for that tax year. Hrblockfree com Income received more than 1 year after it was earned. Hrblockfree com   You cannot exclude income you receive after the end of the year following the year you do the work to earn it. Hrblockfree com Example. Hrblockfree com   You were a bona fide resident of Sweden for 2011, 2012, and 2013. Hrblockfree com You report your income on the cash basis. Hrblockfree com In 2011, you were paid $69,000 for work you did in Sweden that year and in 2012 you were paid $74,000 for that year's work in Sweden. Hrblockfree com You excluded all the income on your 2011 and 2012 returns. Hrblockfree com   In 2013, you were paid $92,000; $82,000 for your work in Sweden during 2013, and $10,000 for work you did in Sweden in 2011. Hrblockfree com You cannot exclude any of the $10,000 for work done in 2011 because you received it after the end of the year following the year in which you earned it. Hrblockfree com You must include the $10,000 in income. Hrblockfree com You can exclude all of the $82,000 received for work you did in 2013. Hrblockfree com Community income. Hrblockfree com   The maximum exclusion applies separately to the earnings of spouses. Hrblockfree com Ignore any community property laws when you figure your limit on the foreign earned income exclusion. Hrblockfree com Part-year exclusion. Hrblockfree com   If the period for which you qualify for the foreign earned income exclusion includes only part of the year, you must adjust the maximum limit based on the number of qualifying days in the year. Hrblockfree com The number of qualifying days is the number of days in the year within the period on which you both: Have your tax home in a foreign country, and Meet either the bona fide residence test or the physical presence test. Hrblockfree com   For this purpose, you can count as qualifying days all days within a period of 12 consecutive months once you are physically present and have your tax home in a foreign country for 330 full days. Hrblockfree com To figure your maximum exclusion, multiply the maximum excludable amount for the year by the number of your qualifying days in the year, and then divide the result by the number of days in the year. Hrblockfree com Example. Hrblockfree com You report your income on the calendar-year basis and you qualified for the foreign earned income exclusion under the bona fide residence test for 75 days in 2013. Hrblockfree com You can exclude a maximum of 75/365 of $97,600, or $20,055, of your foreign earned income for 2013. Hrblockfree com If you qualify under the bona fide residence test for all of 2014, you can exclude your foreign earned income up to the 2014 limit. Hrblockfree com Physical presence test. Hrblockfree com   Under the physical presence test, a 12-month period can be any period of 12 consecutive months that includes 330 full days. Hrblockfree com If you qualify for the foreign earned income exclusion under the physical presence test for part of a year, it is important to carefully choose the 12-month period that will allow the maximum exclusion for that year. Hrblockfree com Example. Hrblockfree com You are physically present and have your tax home in a foreign country for a 16-month period from June 1, 2012, through September 30, 2013, except for 16 days in December 2012 when you were on vacation in the United States. Hrblockfree com You figure the maximum exclusion for 2012 as follows. Hrblockfree com Beginning with June 1, 2012, count forward 330 full days. Hrblockfree com Do not count the 16 days you spent in the United States. Hrblockfree com The 330th day, May 12, 2013, is the last day of a 12-month period. Hrblockfree com Count backward 12 months from May 11, 2013, to find the first day of this 12-month period, May 12, 2012. Hrblockfree com This 12-month period runs from May 12, 2012, through May 11, 2013. Hrblockfree com Count the total days during 2012 that fall within this 12-month period. Hrblockfree com This is 234 days (May 12, 2012 – December 31, 2012). Hrblockfree com Multiply $95,100 (the maximum exclusion for 2012) by the fraction 234/366 to find your maximum exclusion for 2012 ($60,802). Hrblockfree com You figure the maximum exclusion for 2013 in the opposite manner. Hrblockfree com Beginning with your last full day, September 30, 2013, count backward 330 full days. Hrblockfree com Do not count the 16 days you spent in the United States. Hrblockfree com That day, October 20, 2012, is the first day of a 12-month period. Hrblockfree com Count forward 12 months from October 20, 2012, to find the last day of this 12-month period, October 19, 2013. Hrblockfree com This 12-month period runs from October 20, 2012, through October 19, 2013. Hrblockfree com Count the total days during 2013 that fall within this 12-month period. Hrblockfree com This is 292 days (January 1, 2013 – October 19, 2013). Hrblockfree com Multiply $97,600, the maximum limit, by the fraction 292/365 to find your maximum exclusion for 2013 ($78,080). Hrblockfree com Choosing the Exclusion The foreign earned income exclusion is voluntary. Hrblockfree com You can choose the exclusion by completing the appropriate parts of Form 2555. Hrblockfree com When You Can Choose the Exclusion Your initial choice of the exclusion on Form 2555 or Form 2555-EZ generally must be made with one of the following returns. Hrblockfree com A return filed by the due date (including any extensions). Hrblockfree com A return amending a timely-filed return. Hrblockfree com Amended returns generally must be filed by the later of 3 years after the filing date of the original return or 2 years after the tax is paid. Hrblockfree com A return filed within 1 year from the original due date of the return (determined without regard to any extensions). Hrblockfree com Filing after the above periods. Hrblockfree com   You can choose the exclusion on a return filed after the periods described above if you owe no federal income tax after taking into account the exclusion. Hrblockfree com If you owe federal income tax after taking into account the exclusion, you can choose the exclusion on a return filed after the periods described earlier if you file before the IRS discovers that you failed to choose the exclusion. Hrblockfree com Whether or not you owe federal income tax after taking the exclusion into account, if you file your return after the periods described earlier, you must type or legibly print at the top of the first page of the Form 1040 “Filed pursuant to section 1. Hrblockfree com 911-7(a)(2)(i)(D). Hrblockfree com ” If you owe federal income tax after taking into account the foreign earned income exclusion and the IRS discovered that you failed to choose the exclusion, you may still be able to choose the exclusion. Hrblockfree com You must request a private letter ruling under Income Tax Regulation 301. Hrblockfree com 9100-3 and Revenue Procedure 2013-1, 2013-1 I. Hrblockfree com R. Hrblockfree com B. Hrblockfree com 1, available at www. Hrblockfree com irs. Hrblockfree com gov/irb/2013-01_IRB/ar06. Hrblockfree com html. Hrblockfree com Effect of Choosing the Exclusion Once you choose to exclude your foreign earned income, that choice remains in effect for that year and all later years unless you revoke it. Hrblockfree com Foreign tax credit or deduction. Hrblockfree com  
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Hrblockfree com Index Symbols 10% additional tax, Early Distributions Tax, Age 59½ Rule, Additional 10% tax 2-year rule SIMPLE IRAs, Two-year rule. Hrblockfree com 20% withholding, Other withholding rules. Hrblockfree com 5-year rule, 5-year rule. Hrblockfree com , Death before required beginning date. Hrblockfree com 6% excise tax on excess contributions to Roth IRAs, What if You Contribute Too Much? 60-day period for rollovers, Time Limit for Making a Rollover Contribution A Account balance, IRA account balance. Hrblockfree com Additional taxes, What Acts Result in Penalties or Additional Taxes?, Additional 10% tax (see also Penalties) Reporting, Reporting Additional Taxes Adjusted gross income (AGI), Modified adjusted gross income (AGI). Hrblockfree com , Modified AGI. Hrblockfree com (see also Modified adjusted gross income (AGI)) Retirement savings contributions credit, Adjusted gross income. Hrblockfree com Age 50 Contributions, General Limit Age 59 1/2 rule, Age 59½ Rule Age 70 1/2 rule, Age 70½ rule. Hrblockfree com Required minimum distributions, Distributions after the required beginning date. Hrblockfree com Age limit Traditional IRA, When Can Contributions Be Made? Airline payments, Rollover of Airline Payments Alimony, Alimony and separate maintenance. Hrblockfree com Annuity contracts, Annuity or endowment contracts. Hrblockfree com Borrowing on, Borrowing on an annuity contract. Hrblockfree com Distribution from insurance company, Annuity distributions from an insurance company. Hrblockfree com Distribution from IRA account, Distribution of an annuity contract from your IRA account. Hrblockfree com Early distributions, Annuity. Hrblockfree com Assistance (see Tax help) B Basis Inherited IRAs, IRA with basis. Hrblockfree com Roth IRAs, Basis of distributed property. Hrblockfree com Traditional IRAs, Cost basis. Hrblockfree com Beginning date, required, Distributions after the required beginning date. Hrblockfree com Beneficiaries, IRA Beneficiaries, Death before required beginning date. Hrblockfree com Change of, Change of beneficiary. Hrblockfree com Death of beneficiary, Death of a beneficiary. Hrblockfree com Early distributions to, Beneficiary. Hrblockfree com Individual as, Beneficiary an individual. Hrblockfree com More than one, More than one beneficiary. Hrblockfree com , Multiple individual beneficiaries. Hrblockfree com Not an individual, Beneficiary not an individual. Hrblockfree com Roth IRAs, Distributions to beneficiaries. Hrblockfree com Sole beneficiary spouse more than 10 years younger, Sole beneficiary spouse who is more than 10 years younger. Hrblockfree com Bond purchase plans Rollovers from, Rollover from bond purchase plan. Hrblockfree com Bonds, retirement (see Individual retirement bonds) Broker's commissions, Brokers' commissions. Hrblockfree com , Brokers' commissions. Hrblockfree com C Change in marital status, Change in marital status. Hrblockfree com Change of beneficiary, Change of beneficiary. Hrblockfree com Charitable distributions, qualified, Qualified charitable distributions. Hrblockfree com Collectibles, Investment in Collectibles, Collectibles. Hrblockfree com Community property, Community property laws. Hrblockfree com Compensation Alimony, Alimony and separate maintenance. Hrblockfree com Defined, What Is Compensation? Nontaxable combat pay, Nontaxable combat pay. Hrblockfree com Self-employment, Self-employment loss. Hrblockfree com Wages, salaries, etc. Hrblockfree com , Wages, salaries, etc. Hrblockfree com Conduit IRAs, IRA as a holding account (conduit IRA) for rollovers to other eligible plans. Hrblockfree com Contribution limits More than one IRA, More than one IRA. Hrblockfree com Contributions Designating the year, Designating year for which contribution is made. Hrblockfree com Distributions in same year as, Both contributions for 2013 and distributions in 2013. Hrblockfree com Excess (see Excess contributions) Less than maximum, Less Than Maximum Contributions Matching (SIMPLE), Matching contributions. Hrblockfree com Nondeductible (see Nondeductible contributions) Not required, Contributions not required. Hrblockfree com Qualified reservist repayments, Qualified reservist repayments. Hrblockfree com Recharacterizing (see Recharacterization) Retirement savings contributions credit, Eligible contributions. Hrblockfree com Roth IRAs, Can You Contribute to a Roth IRA?, Applying excess contributions. Hrblockfree com SIMPLE plans, How Are Contributions Made?, How Much Can Be Contributed on Your Behalf? Traditional IRAs, How Much Can Be Contributed?, More Than Maximum Contributions When to contribute, When Can Contributions Be Made? Withdrawing before due date of return, Contributions Returned Before Due Date of Return Conversions From SIMPLE IRAs, Converting from a SIMPLE IRA. Hrblockfree com To Roth IRAs, Conversions Credits Retirement savings contributions credit, Retirement Savings Contributions Credit (Saver's Credit), How to figure and report the credit. Hrblockfree com D Death of beneficiary, Death of a beneficiary. Hrblockfree com Deductions Figuring reduced IRA deduction, How To Figure Your Reduced IRA Deduction Phaseout, Deduction Phaseout Traditional IRAs, How Much Can You Deduct?, Examples — Worksheet for Reduced IRA Deduction for 2013 Deemed IRAs, Reminders, Reminders Defined benefit plans, Defined benefit plan. Hrblockfree com Defined contribution plans, Defined contribution plan. Hrblockfree com Disabilities, persons with Early distributions to, Disabled. Hrblockfree com Distributions After required beginning date, Distributions after the required beginning date. Hrblockfree com Age 59 1/2 rule, Age 59½ Rule Beneficiaries (see Beneficiaries) Contributions in same year as, Both contributions for 2013 and distributions in 2013. Hrblockfree com Delivered outside U. Hrblockfree com S. Hrblockfree com , IRA distributions delivered outside the United States. Hrblockfree com Figuring nontaxable and taxable amounts, Figuring the Nontaxable and Taxable Amounts From individual retirement accounts, Distributions from individual retirement account. Hrblockfree com From individual retirement annuities, Distributions from individual retirement annuities. Hrblockfree com Fully or partly taxable, Distributions Fully or Partly Taxable Income from, Income from IRA distributions. Hrblockfree com Inherited IRAs (see Inherited IRAs) Insufficient, Excess Accumulations (Insufficient Distributions) Qualified charitable, Qualified charitable distributions. Hrblockfree com Qualified HSA funding, One-time qualified HSA funding distribution. Hrblockfree com Qualified reservist, Qualified reservist distributions. Hrblockfree com Roth IRAs, Are Distributions Taxable?, How Do You Figure the Taxable Part? Ordering rules for, Ordering Rules for Distributions Recapture amount, Figuring your recapture amount. Hrblockfree com SIMPLE IRAs, Are Distributions Taxable? Taxable status of, Are Distributions Taxable? Divorce Rollovers by former spouse, Distributions under divorce or similar proceedings (alternate payees). Hrblockfree com Transfers incident to, Transfers Incident To Divorce E Early distributions, What Acts Result in Penalties or Additional Taxes?, Early Distributions, Nondeductible contributions. Hrblockfree com (see also Penalties) Age 59 1/2 rule, Age 59½ Rule Defined, Early distributions defined. Hrblockfree com Disability exception, Disabled. Hrblockfree com First-time homebuyers, exception, First home. Hrblockfree com Higher education expenses, exception, Higher education expenses. Hrblockfree com Medical insurance, exception, Medical insurance. Hrblockfree com Roth IRAs, Additional Tax on Early Distributions SIMPLE IRAs, Additional Tax on Early Distributions Tax, Early Distributions Tax Unreimbursed medical expenses, exception, Unreimbursed medical expenses. Hrblockfree com Education expenses, Higher education expenses. Hrblockfree com Employer and employee association trust accounts, Employer and Employee Association Trust Accounts Employer plans Covered by, Covered by an employer retirement plan. Hrblockfree com Year(s) covered, For Which Year(s) Are You Covered? Employer retirement plans, Are You Covered by an Employer Plan? Defined benefit plans, Defined benefit plan. Hrblockfree com Defined contribution plans, Defined contribution plan. Hrblockfree com Effect of modified AGI on deduction (Table 1-2), Table 1-2. Hrblockfree com Effect of Modified AGI1 on Deduction if You Are Covered by a Retirement Plan at Work Limit if covered by, Limit if Covered by Employer Plan Prohibited transactions, Trust account set up by an employer or an employee association. Hrblockfree com Endowment contracts (see Annuity contracts) Estate tax, Estate tax. Hrblockfree com Deduction for inherited IRAs, Federal estate tax deduction. Hrblockfree com Excess accumulations, Excess Accumulations (Insufficient Distributions), Make up of shortfall in distribution. Hrblockfree com Roth IRAs, Distributions After Owner's Death Excess contributions, Excess Contributions Closed tax year, Closed tax year. Hrblockfree com Deducted in earlier year, Excess contribution deducted in an earlier year. Hrblockfree com Deducting in a later year, Deducting an Excess Contribution in a Later Year Due to incorrect rollover information, Excess due to incorrect rollover information. Hrblockfree com Recharacterizing, Recharacterizing excess contributions. Hrblockfree com Roth IRAs, What if You Contribute Too Much? Tax, Excess Contributions Tax Withdrawn after due date of return, Excess Contributions Withdrawn After Due Date of Return Withdrawn by due date of return, Excess Contributions Withdrawn by Due Date of Return Exempt transactions, Exempt Transactions Exxon Valdez settlement income, Rollover of Exxon Valdez Settlement Income , Rollover of Exxon Valdez Settlement Income F Failed financial institutions, Failed financial institutions. Hrblockfree com Federal judges, Federal judges. Hrblockfree com Fiduciaries Prohibited transactions, Fiduciary. Hrblockfree com Filing before IRA contribution is made, Filing before a contribution is made. Hrblockfree com Filing status, Filing Status Deduction phaseout and, Filing status. Hrblockfree com Firefighters, volunteer, Volunteer firefighters. Hrblockfree com First-time homebuyers, First home. Hrblockfree com Five-year rule (see 5-year rule) Form 1040 Modified AGI calculation from, Form 1040. Hrblockfree com , Form 1040NR. Hrblockfree com Form 1040A Modified AGI calculation from, Form 1040A. Hrblockfree com Form 1099-R, Reporting and Withholding Requirements for Taxable Amounts Distribution code 1 used on, Form 5329 not required. Hrblockfree com Letter codes used on, Letter codes. Hrblockfree com Number codes used on, Number codes. Hrblockfree com Withdrawal of excess contribution, Form 1099-R. Hrblockfree com Form 5329, Additional 10% tax, Reporting the tax. Hrblockfree com , Reporting Additional Taxes Recapture tax, Recapture tax for changes in distribution method under equal payment exception. Hrblockfree com Form 8606, Form 8606. Hrblockfree com , Form 8606. Hrblockfree com , Reporting your nontaxable distribution on Form 8606. Hrblockfree com , Figuring the Nontaxable and Taxable Amounts Failure to file, penalty, Penalty for failure to file Form 8606. Hrblockfree com Form 8880, How to figure and report the credit. Hrblockfree com Form W-2 Employer retirement plans, Are You Covered by an Employer Plan? Free tax services, Free help with your tax return. Hrblockfree com Frozen deposits, Frozen deposit. Hrblockfree com Full-time student Retirement savings contributions credit, Full-time student. Hrblockfree com H Help (see Tax help) Higher education expenses, Higher education expenses. Hrblockfree com How to Set up an IRA, How Can a Traditional IRA Be Opened? Treat withdrawn contributions, How to treat withdrawn contributions. Hrblockfree com HSA funding distributions, qualified, One-time qualified HSA funding distribution. Hrblockfree com I Individual retirement accounts, Individual Retirement Account Distributions from, Distributions from individual retirement account. Hrblockfree com Individual retirement annuities, Individual Retirement Annuity Distributions from, Distributions from individual retirement annuities. Hrblockfree com Individual retirement arrangements (IRAs) How to set up, How Can a Traditional IRA Be Opened? When to set up, When Can a Traditional IRA Be Opened? Individual retirement bonds, Individual Retirement Bonds Cashing in, Cashing in retirement bonds. Hrblockfree com Inherited IRAs, What if You Inherit an IRA?, More information. Hrblockfree com Rollovers, Inherited IRAs. Hrblockfree com Insufficient distributions, Excess Accumulations (Insufficient Distributions) Interest on IRA, Reminders Investment in collectibles Collectibles defined, Collectibles. Hrblockfree com Exception, Exception. Hrblockfree com K Kay Bailey Hutchison Spousal IRAs Contribution limits, Kay Bailey Hutchison Spousal IRA Limit Deductions, Kay Bailey Hutchison Spousal IRA. Hrblockfree com Roth IRA contribution limits, Can you contribute to a Roth IRA for your spouse? Keogh plans Rollovers from, Keogh plans and rollovers. Hrblockfree com L Last-in first-out rule, Last-in first-out rule. Hrblockfree com Life expectancy, Life expectancy. Hrblockfree com Life insurance, Life insurance contract. Hrblockfree com Losses Roth IRAs, Recognizing Losses on Investments Traditional IRAs, Recognizing Losses on Traditional IRA Investments M Marital status, change in, Change in marital status. Hrblockfree com Matching contributions (SIMPLE), Matching contributions. Hrblockfree com Medical expenses, unreimbursed, Unreimbursed medical expenses. Hrblockfree com Medical insurance, Medical insurance. Hrblockfree com Military death gratuities, Military Death Gratuities and Servicemembers' Group Life Insurance (SGLI) Payments Minimum distribution (see Required minimum distribution) Missing children, photographs of, Reminders Modified adjusted gross income (AGI) Employer retirement plan coverage and deduction (Table 1-2), Table 1-2. Hrblockfree com Effect of Modified AGI1 on Deduction if You Are Covered by a Retirement Plan at Work Figuring (Worksheet 1-1), Worksheet 1-1. Hrblockfree com Figuring Your Modified AGI No employer retirement plan coverage and deduction (Table 1-3), Table 1-3. Hrblockfree com Effect of Modified AGI1 on Deduction if You Are NOT Covered by a Retirement Plan at Work Roth IRAs, Modified AGI. Hrblockfree com Effect on contribution amount (Table 2-1), Table 2-1. Hrblockfree com Effect of Modified AGI on Roth IRA Contribution More than one beneficiary, More than one beneficiary. Hrblockfree com More than one IRA, More than one IRA. Hrblockfree com Recharacterization, More than one IRA. Hrblockfree com Required minimum distribution, More than one IRA. Hrblockfree com N Nondeductible contributions, Nondeductible Contributions, Nondeductible contributions. Hrblockfree com Failure to report, Failure to report nondeductible contributions. Hrblockfree com Overstatement penalty, Penalty for overstatement. Hrblockfree com Notice Qualified employer plan to provide prior to rollover distribution, Written explanation to recipients. Hrblockfree com Rollovers, Rollover notice. Hrblockfree com P Partial rollovers, Partial rollovers. Hrblockfree com , Partial rollover. Hrblockfree com Penalties, What Acts Result in Penalties or Additional Taxes?, Form 5329 not required. Hrblockfree com Early distributions, Early Distributions, Nondeductible contributions. Hrblockfree com Excess accumulations, Excess Accumulations (Insufficient Distributions), Make up of shortfall in distribution. Hrblockfree com Excess contributions, Excess Contributions Roth IRAs, What if You Contribute Too Much? Exempt transactions, Exempt Transactions, Services received at reduced or no cost. Hrblockfree com Failure to file Form 8606, Penalty for failure to file Form 8606. Hrblockfree com Overstatement of nondeductible contributions, Penalty for overstatement. Hrblockfree com Prohibited transactions, Prohibited Transactions, Services received at reduced or no cost. Hrblockfree com Reporting, Reporting Additional Taxes SIMPLE IRAs, Additional Tax on Early Distributions Phaseout of deduction, Deduction Phaseout Pledging account as security, Pledging an account as security. Hrblockfree com Prohibited transactions, Prohibited Transactions, Services received at reduced or no cost. Hrblockfree com Taxes on, Taxes on prohibited transactions. Hrblockfree com Publications (see Tax help) Q Qualified charitable distributions, Qualified charitable distributions. Hrblockfree com Qualified domestic relations orders (QDROs), Qualified domestic relations order. Hrblockfree com Qualified settlement income, Rollover of Exxon Valdez Settlement Income , Rollover of Exxon Valdez Settlement Income R Recapture tax Changes in distribution method, Recapture tax for changes in distribution method under equal payment exception. Hrblockfree com Receivership distributions, Receivership distributions. Hrblockfree com Recharacterization, Recharacterizations, More than one IRA. Hrblockfree com Determining amount of net income due to contribution and total amount to be recharacterized (Worksheet 1-3), Worksheet 1-3. Hrblockfree com Determining the Amount of Net Income Due To an IRA Contribution and Total Amount To Be Recharacterized Reporting, Reporting a Recharacterization SIMPLE employer contributions, Recharacterizing employer contributions. Hrblockfree com Timing of, Timing. Hrblockfree com Reconversion, Reconversions Recordkeeping requirements Traditional IRAs, Nondeductible Contributions Reporting Additional taxes, Reporting Additional Taxes Deductible contributions, Reporting Deductible Contributions Nontaxable distribution on Form 8606, Reporting your nontaxable distribution on Form 8606. Hrblockfree com Recharacterization, Reporting a Recharacterization Rollovers From employer plans, Reporting rollovers from employer plans. Hrblockfree com From IRAs, Reporting rollovers from IRAs. Hrblockfree com Taxable amounts, Reporting and Withholding Requirements for Taxable Amounts Taxable distributions, Reporting taxable distributions on your return. Hrblockfree com Required beginning date, Distributions after the required beginning date. Hrblockfree com Required minimum distribution, Reminders, When Must You Withdraw Assets? (Required Minimum Distributions), Annuity distributions from an insurance company. Hrblockfree com Distribution period, Distribution period. Hrblockfree com During lifetime, Distributions during your lifetime. Hrblockfree com Figuring, Figuring the Owner's Required Minimum Distribution For beneficiary, Figuring the Beneficiary's Required Minimum Distribution Table to use, Which Table Do You Use To Determine Your Required Minimum Distribution? In year of owner's death, Distributions in the year of the owner's death. Hrblockfree com Installments allowed, Installments allowed. Hrblockfree com More than one IRA, More than one IRA. Hrblockfree com Sole beneficiary spouse who is more than 10 years younger, Sole beneficiary spouse who is more than 10 years younger. Hrblockfree com Reservists, Reservists. Hrblockfree com Qualified reservist distribution, Qualified reservist distributions. Hrblockfree com Qualified reservist repayments, Qualified reservist repayments. Hrblockfree com Retirement bonds (see Individual retirement bonds) Retirement savings contributions credit, Retirement Savings Contributions Credit (Saver's Credit), How to figure and report the credit. Hrblockfree com Rollovers, Rollovers, Reporting rollovers from employer plans. Hrblockfree com Airline payments, Rollover of Airline Payments Amount, Amount. Hrblockfree com Choosing an option (Table 1-5), Table 1-5. Hrblockfree com Comparison of Payment to You Versus Direct Rollover Completed after 60-day period, Rollovers completed after the 60-day period. Hrblockfree com Conduit IRAs, IRA as a holding account (conduit IRA) for rollovers to other eligible plans. Hrblockfree com Direct rollover option, Direct rollover option. Hrblockfree com Extension of period, Extension of rollover period. Hrblockfree com From bond purchase plan, Rollover from bond purchase plan. Hrblockfree com From employer's plan into a Roth IRA, Rollover From Employer's Plan Into a Roth IRA From employer's plan into an IRA, Rollover From Employer's Plan Into an IRA From Keogh plans, Keogh plans and rollovers. Hrblockfree com From one IRA into another, Rollover From One IRA Into Another From Roth IRAs, Rollover From a Roth IRA From traditional IRA, Kinds of rollovers from a traditional IRA. Hrblockfree com Inherited IRAs, Inherited IRAs. Hrblockfree com Nonspouse beneficiary, Rollover by nonspouse beneficiary. Hrblockfree com Notice, Rollover notice. Hrblockfree com Partial, Partial rollovers. Hrblockfree com , Partial rollover. Hrblockfree com SIMPLE IRAs, Rollovers and Transfers Exception Tax treatment of rollover from traditional IRA to eligible retirement plan other than an IRA, Tax treatment of a rollover from a traditional IRA to an eligible retirement plan other than an IRA. Hrblockfree com Time limit, Time Limit for Making a Rollover Contribution To Roth IRAs, Conversion methods. Hrblockfree com To traditional IRA, Kinds of rollovers to a traditional IRA. Hrblockfree com Waiting period between, Waiting period between rollovers. Hrblockfree com , No waiting period between rollovers. Hrblockfree com Withholding (see Withholding) Roth IRAs, Roth IRAs, Distributions After Owner's Death Age limit, Is there an age limit for contributions? Contribution limit reduced, Contribution limit reduced. Hrblockfree com Contributions, Can You Contribute to a Roth IRA?, Applying excess contributions. Hrblockfree com Timing of, When Can You Make Contributions? To traditional IRAs and to Roth IRAs, Roth IRAs and traditional IRAs. Hrblockfree com Conversion, Converting From Any Traditional IRA Into a Roth IRA, Conversion by rollover from traditional to Roth IRA. Hrblockfree com , Recharacterizing to a SEP IRA or SIMPLE IRA. Hrblockfree com , Conversions Defined, What Is a Roth IRA? Distributions, Are Distributions Taxable?, How Do You Figure the Taxable Part? After death of owner, Distributions After Owner's Death Insufficient, Distributions After Owner's Death Ordering rules for, Ordering Rules for Distributions Early distributions, Additional Tax on Early Distributions Excess accumulations, Distributions After Owner's Death Excess contributions, What if You Contribute Too Much? Figuring taxable part, How Do You Figure the Taxable Part? Losses, Recognizing Losses on Investments Modified AGI Effect on contribution amount (Table 2-1), Table 2-1. Hrblockfree com Effect of Modified AGI on Roth IRA Contribution Figuring (Worksheet 2-1), Worksheet 2-1. Hrblockfree com Modified Adjusted Gross Income for Roth IRA Purposes Rollovers from, Rollover From a Roth IRA Setting up, When Can a Roth IRA Be Opened? Spouse, Can you contribute to a Roth IRA for your spouse? Traditional IRAs converted into, Converting From Any Traditional IRA Into a Roth IRA Withdrawing or using assets, Must You Withdraw or Use Assets? S Salary reduction arrangement, What Is a SIMPLE Plan? Savings Incentive Match Plans for Employees (see SIMPLE IRAs) Section 501(c)(18) plan, General Limit, Kay Bailey Hutchison Spousal IRA Limit Self-employed persons Deductible contributions, Self-employed. Hrblockfree com Income of, Self-employment income. Hrblockfree com SIMPLE plans, Self-employed individual. Hrblockfree com SEP IRAs Recharacterizing to, Recharacterizing to a SEP IRA or SIMPLE IRA. Hrblockfree com Separated taxpayers Filing status of, Lived apart from spouse. 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Hrblockfree com Effect of Modified AGI1 on Deduction if You Are Covered by a Retirement Plan at Work No employer retirement plan coverage and deduction (Table 1-3), Table 1-3. Hrblockfree com Effect of Modified AGI1 on Deduction if You Are NOT Covered by a Retirement Plan at Work Roth IRAs, effect on contribution (Table 2-1), Table 2-1. Hrblockfree com Effect of Modified AGI on Roth IRA Contribution Rollover vs. Hrblockfree com direct payment to taxpayer (Table 1-5), Table 1-5. Hrblockfree com Comparison of Payment to You Versus Direct Rollover Using this publication (Table I-1), Table I-1. Hrblockfree com Using This Publication Tax advantages of IRAs, What are some tax advantages of an IRA? Tax credits Retirement savings contributions credit, Retirement Savings Contributions Credit (Saver's Credit), How to figure and report the credit. Hrblockfree com Tax help, How To Get Tax Help Tax year, Tax year. 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Hrblockfree com Eligible rollover distribution paid to taxpayer, Withholding requirement. Hrblockfree com Worksheets Figuring amount of net income due to IRA contribution and total amount to be recharacterized (Worksheet 1-3), Worksheet 1-3. Hrblockfree com Determining the Amount of Net Income Due To an IRA Contribution and Total Amount To Be Recharacterized Figuring modified AGI (Worksheet 1-1), Worksheet 1-1. Hrblockfree com Figuring Your Modified AGI Roth IRAs Figuring modified AGI (Worksheet 2-1), Worksheet 2-1. Hrblockfree com Modified Adjusted Gross Income for Roth IRA Purposes Prev  Up     Home   More Online Publications