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Instructions For Form 1040ez

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Instructions For Form 1040ez

Instructions for form 1040ez 5. Instructions for form 1040ez   Figuring Your Tax Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Tax Year Identification NumberF-1 and M-1 visa holders. Instructions for form 1040ez J-1 visa holders. Instructions for form 1040ez Filing StatusResident Aliens Nonresident Aliens Reporting Your Income DeductionsResident Aliens Nonresident Aliens ExemptionsResident Aliens Nonresident Aliens Itemized DeductionsResident Aliens Nonresident Aliens Tax Credits and PaymentsResident Aliens Nonresident Aliens Bona Fide Residents of American Samoa or Puerto Rico Introduction After you have determined your alien status, the source of your income, and if and how that income is taxed in the United States, your next step is to figure your tax. Instructions for form 1040ez The information in this chapter is not as comprehensive for resident aliens as it is for nonresident aliens. Instructions for form 1040ez Resident aliens should get publications, forms, and instructions for U. Instructions for form 1040ez S. Instructions for form 1040ez citizens, because the information for filing returns for resident aliens is generally the same as for U. Instructions for form 1040ez S. Instructions for form 1040ez citizens. Instructions for form 1040ez If you are both a nonresident alien and a resident alien in the same tax year, see chapter 6 for a discussion of dual-status aliens. Instructions for form 1040ez Topics - This chapter discusses: Identification numbers, Filing status, Deductions, Exemptions, Tax credits and payments, and Special rules for bona fide residents of American Samoa and Puerto Rico. Instructions for form 1040ez Useful Items - You may want to see: Publication 463 Travel, Entertainment, Gift, and Car Expenses 501 Exemptions, Standard Deduction, and Filing Information 521 Moving Expenses 526 Charitable Contributions 535 Business Expenses 597 Information on the United States–Canada Income Tax Treaty Form (and Instructions) W-7 Application for IRS Individual Taxpayer Identification Number 1040 U. Instructions for form 1040ez S. Instructions for form 1040ez Individual Income Tax Return 1040NR U. Instructions for form 1040ez S. Instructions for form 1040ez Nonresident Alien Income Tax Return 1040NR-EZ U. Instructions for form 1040ez S. Instructions for form 1040ez Income Tax Return for Certain Nonresident Aliens With No Dependents 2106 Employee Business Expenses 2106-EZ Unreimbursed Employee Business Expenses 3903 Moving Expenses 4563 Exclusion of Income for Bona Fide Residents of American Samoa 8959 Additional Medicare Tax See chapter 12 for information about getting these publications and forms. Instructions for form 1040ez Tax Year You must figure your income and file a tax return on the basis of an annual accounting period called a tax year. Instructions for form 1040ez If you have not previously established a fiscal tax year, your tax year is the calendar year. Instructions for form 1040ez A calendar year is 12 consecutive months ending on December 31. Instructions for form 1040ez If you have previously established a regular fiscal year (12 consecutive months ending on the last day of a month other than December or a 52–53 week year) and are considered to be a U. Instructions for form 1040ez S. Instructions for form 1040ez resident for any calendar year, you will be treated as a U. Instructions for form 1040ez S. Instructions for form 1040ez resident for any part of your fiscal year that falls within that calendar year. Instructions for form 1040ez Identification Number A taxpayer identification number must be furnished on returns, statements, and other tax-related documents. Instructions for form 1040ez For an individual, this is a social security number (SSN). Instructions for form 1040ez If you do not have and are not eligible to get an SSN, you must apply for an individual taxpayer identification number (ITIN). Instructions for form 1040ez An employer identification number (EIN) is required if you are engaged in a trade or business as a sole proprietor and have employees or a qualified retirement plan. Instructions for form 1040ez You must furnish a taxpayer identification number if you are: An alien who has income effectively connected with the conduct of a U. Instructions for form 1040ez S. Instructions for form 1040ez trade or business at any time during the year, An alien who has a U. Instructions for form 1040ez S. Instructions for form 1040ez office or place of business at any time during the year, A nonresident alien spouse treated as a resident, as discussed in chapter 1, or Any other alien who files a tax return, an amended return, or a refund claim (but not information returns). Instructions for form 1040ez Social security number (SSN). Instructions for form 1040ez   Generally, you can get an SSN if you have been lawfully admitted to the United States for permanent residence or under other immigration categories that authorize U. Instructions for form 1040ez S. Instructions for form 1040ez employment. Instructions for form 1040ez   To apply for this number, get Form SS-5, Application for a Social Security Card, from your local Social Security Administration (SSA) office or call the SSA at 1-800-772-1213. Instructions for form 1040ez You can also download Form SS-5 from the SSA's website at www. Instructions for form 1040ez socialsecurity. Instructions for form 1040ez gov/ssnumber/ss5. Instructions for form 1040ez htm. Instructions for form 1040ez You must visit an SSA office in person and submit your Form SS-5 along with original documentation showing your age, identity, immigration status, and authority to work in the United States. Instructions for form 1040ez Generally, you will receive your card about 2 weeks after the SSA has all of the necessary information. Instructions for form 1040ez F-1 and M-1 visa holders. Instructions for form 1040ez    If you are an F-1 or M-1 student, you must also show your Form I-20. Instructions for form 1040ez For more information, see SSA Publication 05-10181, International Students and Social Security Numbers, available online at www. Instructions for form 1040ez socialsecurity. Instructions for form 1040ez gov/pubs/10181. Instructions for form 1040ez html. Instructions for form 1040ez J-1 visa holders. Instructions for form 1040ez   If you are a J-1 exchange visitor, you will also need to show your Form DS-2019. Instructions for form 1040ez For more information, see SSA Publication 05-10107, Foreign Workers and Social Security Numbers, available online at www. Instructions for form 1040ez socialsecurity. Instructions for form 1040ez gov/pubs/10107. Instructions for form 1040ez html. Instructions for form 1040ez Individual taxpayer identification number (ITIN). Instructions for form 1040ez   If you do not have and are not eligible to get an SSN, you must apply for an ITIN. Instructions for form 1040ez For details on how to do so, see Form W-7 and its instructions. Instructions for form 1040ez Allow 6 to 10 weeks for the IRS to notify you of your ITIN. Instructions for form 1040ez If you already have an ITIN, enter it wherever an SSN is required on your tax return. Instructions for form 1040ez   An ITIN is for tax use only. Instructions for form 1040ez It does not entitle you to social security benefits or change your employment or immigration status under U. Instructions for form 1040ez S. Instructions for form 1040ez law. Instructions for form 1040ez   In addition to those aliens who are required to furnish a taxpayer identification number and are not eligible for an SSN, a Form W-7 must be filed for: Alien individuals who are claimed as dependents and are not eligible for an SSN, and Alien spouses who are claimed as exemptions and are not eligible for an SSN. Instructions for form 1040ez Employer identification number (EIN). Instructions for form 1040ez   An individual may use an SSN (or ITIN) for individual taxes and an EIN for business taxes. Instructions for form 1040ez To apply for an EIN, file Form SS-4, Application for Employer Identification Number, with the IRS. Instructions for form 1040ez Filing Status The amount of your tax depends on your filing status. Instructions for form 1040ez Your filing status is important in determining whether you can take certain deductions and credits. Instructions for form 1040ez The rules for determining your filing status are different for resident aliens and nonresident aliens. Instructions for form 1040ez Resident Aliens Resident aliens can use the same filing statuses available to U. Instructions for form 1040ez S. Instructions for form 1040ez citizens. Instructions for form 1040ez See your form instructions or Publication 501 for more information on filing status. Instructions for form 1040ez Married filing jointly. Instructions for form 1040ez   Generally, you can file as married filing jointly only if both you and your spouse were resident aliens for the entire tax year, or if you make one of the choices discussed in chapter 1 to treat your spouse as a resident alien for the entire tax year. Instructions for form 1040ez Qualifying widow(er). Instructions for form 1040ez   If your spouse died in 2011 or 2012, you did not remarry before the end of 2013, and you have a dependent child living with you, you may qualify to file as a qualifying widow(er) and use the joint return tax rates. Instructions for form 1040ez This applies only if you could have filed a joint return with your spouse for the year your spouse died. Instructions for form 1040ez Head of household. Instructions for form 1040ez   You can qualify as head of household if you are unmarried or considered unmarried on the last day of the year and you pay more than half the cost of keeping up a home for you and a qualifying person. Instructions for form 1040ez You must be a resident alien for the entire tax year. Instructions for form 1040ez   You are considered unmarried for this purpose if your spouse was a nonresident alien at any time during the year and you do not make one of the choices discussed in chapter 1 to treat your spouse as a resident alien for the entire tax year. Instructions for form 1040ez Note. Instructions for form 1040ez   Even if you are considered unmarried for head of household purposes because you are married to a nonresident alien, you may still be considered married for purposes of the earned income credit. Instructions for form 1040ez In that case, you will not be entitled to the credit. Instructions for form 1040ez See Publication 596 for more information. Instructions for form 1040ez Nonresident Aliens If you are a nonresident alien filing Form 1040NR, you may be able to use one of the filing statuses discussed later. Instructions for form 1040ez If you are filing Form 1040NR-EZ, you can only claim “Single nonresident alien” or “Married nonresident alien” as your filing status. Instructions for form 1040ez Married nonresident alien. Instructions for form 1040ez   Married nonresident aliens who are not married to U. Instructions for form 1040ez S. Instructions for form 1040ez citizens or residents generally must use the Tax Table column or the Tax Computation Worksheet for married filing separate returns when determining the tax on income effectively connected with a U. Instructions for form 1040ez S. Instructions for form 1040ez trade or business. Instructions for form 1040ez Exceptions. Instructions for form 1040ez   Married nonresident aliens normally cannot use the Tax Table column or the Tax Computation Worksheet for single individuals. Instructions for form 1040ez However, you may be able to file as single if you lived apart from your spouse during the last 6 months of the year and you are a married resident of Canada, Mexico, South Korea, or are a married U. Instructions for form 1040ez S. Instructions for form 1040ez national. Instructions for form 1040ez See the instructions for Form 1040NR or Form 1040NR-EZ to see if you qualify. Instructions for form 1040ez U. Instructions for form 1040ez S. Instructions for form 1040ez national is defined later in this section under Qualifying widow(er) . Instructions for form 1040ez   A nonresident alien generally cannot file as married filing jointly. Instructions for form 1040ez However, a nonresident alien who is married to a U. Instructions for form 1040ez S. Instructions for form 1040ez citizen or resident can choose to be treated as a resident and file a joint return on Form 1040, Form 1040A, or Form 1040EZ. Instructions for form 1040ez For information on these choices, see chapter 1. Instructions for form 1040ez If you do not make the choice to file jointly, file Form 1040NR or Form 1040NR-EZ and use the Tax Table column or the Tax Computation Worksheet for married individuals filing separately. Instructions for form 1040ez Qualifying widow(er). Instructions for form 1040ez   You may be eligible to file as a qualifying widow(er) and use the joint return tax rates if all of the following conditions apply. Instructions for form 1040ez You were a resident of Canada, Mexico, or South Korea, or a U. Instructions for form 1040ez S. Instructions for form 1040ez national (defined later). Instructions for form 1040ez Your spouse died in 2011 or 2012 and you did not remarry before the end of 2013. Instructions for form 1040ez You have a dependent child living with you. Instructions for form 1040ez See the instructions for Form 1040NR for the rules for filing as a qualifying widow(er) with a dependent child. Instructions for form 1040ez   A U. Instructions for form 1040ez S. Instructions for form 1040ez national is an individual who, although not a U. Instructions for form 1040ez S. Instructions for form 1040ez citizen, owes his or her allegiance to the United States. Instructions for form 1040ez U. Instructions for form 1040ez S. Instructions for form 1040ez nationals include American Samoans and Northern Mariana Islanders who chose to become U. Instructions for form 1040ez S. Instructions for form 1040ez nationals instead of U. Instructions for form 1040ez S. Instructions for form 1040ez citizens. Instructions for form 1040ez Head of household. Instructions for form 1040ez   You cannot file as head of household if you are a nonresident alien at any time during the tax year. Instructions for form 1040ez However, if you are married, your spouse can qualify as a head of household if: Your spouse is a resident alien or U. Instructions for form 1040ez S. Instructions for form 1040ez citizen for the entire tax year, You do not choose to be treated as a resident alien, and Your spouse meets the other requirements for this filing status, as discussed earlier under Resident Aliens . Instructions for form 1040ez Note. Instructions for form 1040ez   Even if your spouse is considered unmarried for head of household purposes because you are a nonresident alien, your spouse may still be considered married for purposes of the earned income credit. Instructions for form 1040ez In that case, your spouse will not be entitled to the credit. Instructions for form 1040ez See Publication 596 for more information. Instructions for form 1040ez Estates and trusts. Instructions for form 1040ez   A nonresident alien estate or trust using Form 1040NR must use Tax Rate Schedule W in the Form 1040NR instructions when determining the tax on income effectively connected with a U. Instructions for form 1040ez S. Instructions for form 1040ez trade or business. Instructions for form 1040ez Special rules for aliens from certain U. Instructions for form 1040ez S. Instructions for form 1040ez possessions. Instructions for form 1040ez   A nonresident alien who is a bona fide resident of American Samoa or Puerto Rico for the entire tax year and who is temporarily working in the United States should read Bona Fide Residents of American Samoa or Puerto Rico, at the end of this chapter, for information about special rules. Instructions for form 1040ez Reporting Your Income You must report each item of income that is taxable according to the rules in chapters 2, 3, and 4. Instructions for form 1040ez For resident aliens, this includes income from sources both within and outside the United States. Instructions for form 1040ez For nonresident aliens, this includes both income that is effectively connected with a trade or business in the United States (subject to graduated tax rates) and income from U. Instructions for form 1040ez S. Instructions for form 1040ez sources that is not effectively connected (subject to a flat 30% tax rate or lower tax treaty rate). Instructions for form 1040ez Deductions Resident and nonresident aliens can claim similar deductions on their U. Instructions for form 1040ez S. Instructions for form 1040ez tax returns. Instructions for form 1040ez However, nonresident aliens generally can claim only deductions related to income that is effectively connected with their U. Instructions for form 1040ez S. Instructions for form 1040ez trade or business. Instructions for form 1040ez Resident Aliens You can claim the same deductions allowed to U. Instructions for form 1040ez S. Instructions for form 1040ez citizens if you are a resident alien for the entire tax year. Instructions for form 1040ez While the discussion that follows contains some of the same general rules and guidelines that apply to you, it is specifically directed toward nonresident aliens. Instructions for form 1040ez You should get Form 1040 and instructions for more information on how to claim your allowable deductions. Instructions for form 1040ez Nonresident Aliens You can claim deductions to figure your effectively connected taxable income. Instructions for form 1040ez You generally cannot claim deductions related to income that is not connected with your U. Instructions for form 1040ez S. Instructions for form 1040ez business activities. Instructions for form 1040ez Except for personal exemptions, and certain itemized deductions, discussed later, you can claim deductions only to the extent they are connected with your effectively connected income. Instructions for form 1040ez Ordinary and necessary business expenses. Instructions for form 1040ez   You can deduct all ordinary and necessary expenses in the operation of your U. Instructions for form 1040ez S. Instructions for form 1040ez trade or business to the extent they relate to income effectively connected with that trade or business. Instructions for form 1040ez The deduction for travel expenses while in the United States is discussed under Itemized Deductions, later. Instructions for form 1040ez For information about other business expenses, see Publication 535. Instructions for form 1040ez Losses. Instructions for form 1040ez   You can deduct losses resulting from transactions that you entered into for profit and that you were not reimbursed for by insurance, etc. Instructions for form 1040ez to the extent that they relate to income that is effectively connected with a trade or business in the United States. Instructions for form 1040ez Educator expenses. Instructions for form 1040ez   If you were an eligible educator in 2013, you can deduct as an adjustment to income up to $250 in unreimbursed qualified expenses you paid or incurred during 2013 for books, supplies (other than nonathletic supplies for courses of instruction in health or physical education), computer equipment, and other equipment and materials used in the classroom. Instructions for form 1040ez For more information, see your tax form instructions. Instructions for form 1040ez Individual retirement arrangement (IRA). Instructions for form 1040ez   If you made contributions to a traditional IRA for 2013, you may be able to take an IRA deduction. Instructions for form 1040ez But you must have taxable compensation effectively connected with a U. Instructions for form 1040ez S. Instructions for form 1040ez trade or business to do so. Instructions for form 1040ez A Form 5498 should be sent to you by May 31, 2014, that shows all contributions to your traditional IRA for 2013. Instructions for form 1040ez If you were covered by a retirement plan (qualified pension, profit-sharing (including 401(k)), annuity, SEP, SIMPLE, etc. Instructions for form 1040ez ) at work or through self-employment, your IRA deduction may be reduced or eliminated. Instructions for form 1040ez But you can still make contributions to a traditional IRA even if you cannot deduct them. Instructions for form 1040ez If you made nondeductible contributions to a traditional IRA for 2013, you must report them on Form 8606, Nondeductible IRAs. Instructions for form 1040ez   For more information, see Publication 590, Individual Retirement Arrangements (IRAs). Instructions for form 1040ez Moving expenses. Instructions for form 1040ez   If you are a nonresident alien temporarily in the United States earning taxable income for performing personal services, you can deduct moving expenses to the United States if you meet both of the following tests. Instructions for form 1040ez You are a full-time employee for at least 39 weeks during the 12 months right after you move, or if you are self-employed, you work full time for at least 39 weeks during the first 12 months and 78 weeks during the first 24 months right after you move. Instructions for form 1040ez Your new job location is at least 50 miles farther (by the shortest commonly traveled route) from your former home than your former job location was. Instructions for form 1040ez If you had no former job location, the new job location must be at least 50 miles from your former home. Instructions for form 1040ez   You cannot deduct the moving expense you have when returning to your home abroad or moving to a foreign job site. Instructions for form 1040ez   Figure your deductible moving expenses to the United States on Form 3903, and deduct them on line 26 of Form 1040NR. Instructions for form 1040ez   For more information on the moving expense deduction, see Publication 521. Instructions for form 1040ez Reimbursements. Instructions for form 1040ez   If your employer reimbursed you for allowable moving expenses under an accountable plan, your employer should have excluded these reimbursements from your income. Instructions for form 1040ez You can only deduct allowable moving expenses that were not reimbursed by your employer or that were reimbursed but the reimbursement was included in your income. Instructions for form 1040ez For more information, see Publication 521. Instructions for form 1040ez Moving expense or travel expense. Instructions for form 1040ez   If you deduct moving expenses to the United States, you cannot also deduct travel expenses (discussed later under Itemized Deductions) while temporarily away from your tax home in a foreign country. Instructions for form 1040ez Moving expenses are based on a change in your principal place of business while travel expenses are based on your temporary absence from your principal place of business. Instructions for form 1040ez Self-employed SEP, SIMPLE, and qualified retirement plans. Instructions for form 1040ez   If you are self-employed, you may be able to deduct contributions to a SEP, SIMPLE, or qualified retirement plan that provides retirement benefits for yourself and your common-law employees, if any. Instructions for form 1040ez To make deductible contributions for yourself, you must have net earnings from self-employment that are effectively connected with your U. Instructions for form 1040ez S. Instructions for form 1040ez trade or business. Instructions for form 1040ez   Get Publication 560, Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans), for further information. Instructions for form 1040ez Penalty on early withdrawal of savings. Instructions for form 1040ez   You must include in income all effectively connected interest income you receive or that is credited to your account during the year. Instructions for form 1040ez Do not reduce it by any penalty you must pay on an early withdrawal from a time savings account. Instructions for form 1040ez However, if the interest income is effectively connected with your U. Instructions for form 1040ez S. Instructions for form 1040ez trade or business during the year, you can deduct on line 30 of Form 1040NR the amount of the early withdrawal penalty that the banking institution charged. Instructions for form 1040ez Student loan interest expense. Instructions for form 1040ez   If you paid interest on a student loan in 2013, you may be able to deduct up to $2,500 of the interest you paid. Instructions for form 1040ez Generally, you can claim the deduction if all the following requirements are met. Instructions for form 1040ez Your filing status is any filing status except married filing separately. Instructions for form 1040ez Your modified adjusted gross income is less than $75,000. Instructions for form 1040ez No one else is claiming an exemption for you on his or her 2013 tax return. Instructions for form 1040ez You paid interest on a loan taken out only to pay tuition and other qualified higher education expenses for yourself, your spouse, someone who was your dependent when the loan was taken out, or someone you could have claimed as a dependent for the year the loan was taken out except that: The person filed a joint return, The person had gross income that was equal to or more than the exemption amount for that year ($3,900 for 2013), or You could be claimed as a dependent on someone else's return. Instructions for form 1040ez The loan is not from a related person or a person who borrowed the proceeds under a qualified employer plan or a contract purchased under such a plan. Instructions for form 1040ez The education expenses were paid or incurred within a reasonable period of time before or after the loan was taken out. Instructions for form 1040ez The person for whom the expenses were paid or incurred was an eligible student. Instructions for form 1040ez Use the worksheet in the Form 1040NR or Form 1040NR-EZ instructions to figure the deduction. Instructions for form 1040ez For more information, see Publication 970, Tax Benefits for Education. Instructions for form 1040ez Exemptions Resident aliens can claim personal exemptions and exemptions for dependents in the same way as U. Instructions for form 1040ez S. Instructions for form 1040ez citizens. Instructions for form 1040ez However, nonresident aliens generally can claim only a personal exemption for themselves on their U. Instructions for form 1040ez S. Instructions for form 1040ez tax return. Instructions for form 1040ez Resident Aliens You can claim personal exemptions and exemptions for dependents according to the dependency rules for U. Instructions for form 1040ez S. Instructions for form 1040ez citizens. Instructions for form 1040ez You can claim an exemption for your spouse on a separate return if your spouse had no gross income for U. Instructions for form 1040ez S. Instructions for form 1040ez tax purposes and was not the dependent of another taxpayer. Instructions for form 1040ez You can claim this exemption even if your spouse has not been a resident alien for a full tax year or is an alien who has not come to the United States. Instructions for form 1040ez You can claim an exemption for each person who qualifies as a dependent according to the rules for U. Instructions for form 1040ez S. Instructions for form 1040ez citizens. Instructions for form 1040ez The dependent must be a citizen or national (defined earlier) of the United States or be a resident of the United States, Canada, or Mexico for some part of the calendar year in which your tax year begins. Instructions for form 1040ez Get Publication 501 for more information. Instructions for form 1040ez Your spouse and each dependent for whom you claim an exemption must have either an SSN or an ITIN. Instructions for form 1040ez See Identification Number, earlier. Instructions for form 1040ez Nonresident Aliens Generally, if you are a nonresident alien engaged in a trade or business in the United States, you can claim only one personal exemption ($3,900 for 2013). Instructions for form 1040ez You may be able to claim an exemption for a spouse and a dependent if you are described in any of the following discussions. Instructions for form 1040ez Your spouse and each dependent for whom you claim an exemption must have either an SSN or an ITIN. Instructions for form 1040ez See Identification Number, earlier. Instructions for form 1040ez Residents of Mexico or Canada or U. Instructions for form 1040ez S. Instructions for form 1040ez nationals. Instructions for form 1040ez   If you are a resident of Mexico or Canada or a national of the United States (defined earlier), you can also claim a personal exemption for your spouse if your spouse had no gross income for U. Instructions for form 1040ez S. Instructions for form 1040ez tax purposes and cannot be claimed as the dependent on another U. Instructions for form 1040ez S. Instructions for form 1040ez taxpayer's return. Instructions for form 1040ez In addition, you can claim exemptions for your dependents who meet certain tests. Instructions for form 1040ez Residents of Mexico, Canada, or nationals of the United States must use the same rules as U. Instructions for form 1040ez S. Instructions for form 1040ez citizens to determine who is a dependent and for which dependents exemptions can be claimed. Instructions for form 1040ez See Publication 501 for these rules. Instructions for form 1040ez For purposes of these rules, dependents who are U. Instructions for form 1040ez S. Instructions for form 1040ez nationals meet the citizenship test discussed in Publication 501. Instructions for form 1040ez Residents of South Korea. Instructions for form 1040ez   Nonresident aliens who are residents of South Korea may be able to claim exemptions for a spouse and children. Instructions for form 1040ez The income tax treaty with South Korea imposes two additional requirements on South Korean residents: The spouse and all children claimed must live with the alien in the United States at some time during the tax year, and The additional deduction for the exemptions must be prorated based on the ratio of the alien's U. Instructions for form 1040ez S. Instructions for form 1040ez source gross income effectively connected with a U. Instructions for form 1040ez S. Instructions for form 1040ez trade or business for the tax year to the alien's entire income from all sources during the tax year. Instructions for form 1040ez Example. Instructions for form 1040ez Mr. Instructions for form 1040ez Park, a nonresident alien who is a resident of South Korea, lives temporarily in the United States with his wife and two children. Instructions for form 1040ez During the tax year he receives U. Instructions for form 1040ez S. Instructions for form 1040ez compensation of $18,000. Instructions for form 1040ez He also receives $6,000 of income from sources outside the United States that is not effectively connected with his U. Instructions for form 1040ez S. Instructions for form 1040ez trade or business. Instructions for form 1040ez Thus, his total income for the year is $24,000. Instructions for form 1040ez Mr. Instructions for form 1040ez Park meets all requirements for claiming exemptions for his spouse and two children. Instructions for form 1040ez The additional deduction for 2013 is $8,775 figured as follows: $18,000 $24,000 × $11,700* = $8,775               *3 × $3,900 = $11,700   Students and business apprentices from India. Instructions for form 1040ez   Students and business apprentices who are eligible for the benefits of Article 21(2) of the United States–India Income Tax Treaty may be able to claim exemptions for their spouse and dependents. Instructions for form 1040ez   You can claim an exemption for your spouse if he or she had no gross income during the year and cannot be claimed as a dependent on another U. Instructions for form 1040ez S. Instructions for form 1040ez taxpayer's return. Instructions for form 1040ez   You can claim exemptions for each of your dependents not admitted to the United States on “F-2,” “J-2,” or “M-2” visas if they meet the same rules that apply to U. Instructions for form 1040ez S. Instructions for form 1040ez citizens. Instructions for form 1040ez See Publication 501 for these rules. Instructions for form 1040ez   List your spouse and dependents on line 7c of Form 1040NR. Instructions for form 1040ez Enter the total on the appropriate line to the right of line 7c. Instructions for form 1040ez Itemized Deductions Nonresident aliens can claim some of the same itemized deductions that resident aliens can claim. Instructions for form 1040ez However, nonresident aliens can claim itemized deductions only if they have income effectively connected with their U. Instructions for form 1040ez S. Instructions for form 1040ez trade or business. Instructions for form 1040ez Resident Aliens You can claim the same itemized deductions as U. Instructions for form 1040ez S. Instructions for form 1040ez citizens, using Schedule A of Form 1040. Instructions for form 1040ez These deductions include certain medical and dental expenses, state and local income taxes, real estate taxes, interest you paid on a home mortgage, charitable contributions, casualty and theft losses, and miscellaneous deductions. Instructions for form 1040ez If you do not itemize your deductions, you can claim the standard deduction for your particular filing status. Instructions for form 1040ez For further information, see Form 1040 and instructions. Instructions for form 1040ez Nonresident Aliens You can deduct certain itemized deductions if you receive income effectively connected with your U. Instructions for form 1040ez S. Instructions for form 1040ez trade or business. Instructions for form 1040ez These deductions include state and local income taxes, charitable contributions to U. Instructions for form 1040ez S. Instructions for form 1040ez organizations, casualty and theft losses, and miscellaneous deductions. Instructions for form 1040ez Use Schedule A of Form 1040NR to claim itemized deductions. Instructions for form 1040ez If you are filing Form 1040NR-EZ, you can only claim a deduction for state or local income taxes. Instructions for form 1040ez If you are claiming any other itemized deduction, you must file Form 1040NR. Instructions for form 1040ez Standard deduction. Instructions for form 1040ez   Nonresident aliens cannot claim the standard deduction. Instructions for form 1040ez However, see Students and business apprentices from India , next. Instructions for form 1040ez Students and business apprentices from India. Instructions for form 1040ez   A special rule applies to students and business apprentices who are eligible for the benefits of Article 21(2) of the United States–India Income Tax Treaty. Instructions for form 1040ez You can claim the standard deduction provided you do not claim itemized deductions. Instructions for form 1040ez   Use Worksheet 5-1 to figure your standard deduction. Instructions for form 1040ez If you are married and your spouse files a return and itemizes deductions, you cannot take the standard deduction. Instructions for form 1040ez State and local income taxes. Instructions for form 1040ez   You can deduct state and local income taxes you paid on income that is effectively connected with a trade or business in the United States. Instructions for form 1040ez If you received a refund or rebate in 2013 of taxes you paid in an earlier year, do not reduce your deduction by that amount. Instructions for form 1040ez Instead, you must include the refund or rebate in income if you deducted the taxes in the earlier year and the deduction reduced your tax. Instructions for form 1040ez See Recoveries in Publication 525 for details on how to figure the amount to include in income. Instructions for form 1040ez Charitable contributions. Instructions for form 1040ez   You can deduct your charitable contributions or gifts to qualified organizations subject to certain limits. Instructions for form 1040ez Qualified organizations include organizations that are religious, charitable, educational, scientific, or literary in nature, or that work to prevent cruelty to children or animals. Instructions for form 1040ez Certain organizations that promote national or international amateur sports competition are also qualified organizations. Instructions for form 1040ez Foreign organizations. Instructions for form 1040ez   Contributions made directly to a foreign organization are not deductible. Instructions for form 1040ez However, you can deduct contributions to a U. Instructions for form 1040ez S. Instructions for form 1040ez organization that transfers funds to a charitable foreign organization if the U. Instructions for form 1040ez S. Instructions for form 1040ez organization controls the use of the funds or if the foreign organization is only an administrative arm of the U. Instructions for form 1040ez S. Instructions for form 1040ez organization. Instructions for form 1040ez   For more information about organizations that qualify to receive charitable contributions, see Publication 526, Charitable Contributions. Instructions for form 1040ez Worksheet 5-1. Instructions for form 1040ez 2013 Standard Deduction Worksheet for Students and Business Apprentices From India Caution. Instructions for form 1040ez If you are married filing a separate return and your spouse itemizes deductions, do not complete this worksheet. Instructions for form 1040ez You cannot take the standard deduction even if you were born before January 2, 1949, or are blind. Instructions for form 1040ez 1 Enter the amount shown below for your filing status. Instructions for form 1040ez           Single or married filing separately—$6,100 Qualifying widow(er)—$12,200 1. Instructions for form 1040ez           2 Can you be claimed as a dependent on someone else's U. Instructions for form 1040ez S. Instructions for form 1040ez income tax return?  No. Instructions for form 1040ez Enter the amount from line 1 on line 4. Instructions for form 1040ez Skip line 3 and go to line 5. Instructions for form 1040ez   Yes. Instructions for form 1040ez Go to line 3. Instructions for form 1040ez         3 Is your earned income* more than $650?           Yes. Instructions for form 1040ez Add $350 to your earned income. Instructions for form 1040ez Enter the total. Instructions for form 1040ez           No. Instructions for form 1040ez Enter $1,000 3. Instructions for form 1040ez       4 Enter the smaller of line 1 or line 3 4. Instructions for form 1040ez   5 If born before January 2, 1949, OR blind, enter $1,200 ($1,500 if single). Instructions for form 1040ez If born before January 2, 1949, AND blind, enter $2,400 ($3,000 if single). Instructions for form 1040ez Otherwise, enter -0- 5. Instructions for form 1040ez   6 Add lines 4 and 5. Instructions for form 1040ez Enter the total here and on Form 1040NR, line 38 (or Form 1040NR-EZ, line 11). Instructions for form 1040ez Print “Standard Deduction Allowed Under U. Instructions for form 1040ez S. Instructions for form 1040ez –India Income Tax Treaty” in the space to the left of these lines. Instructions for form 1040ez This is your standard deduction for 2013. Instructions for form 1040ez 6. Instructions for form 1040ez   *Earned income includes wages, salaries, tips, professional fees, and other compensation received for personal services you performed. Instructions for form 1040ez It also includes any amount received as a scholarship that you must include in your income. Instructions for form 1040ez Generally, your earned income is the total of the amount(s) you reported on Form 1040NR, lines 8,12,13, and 19, minus amounts on lines 27 and 31 (or Form 1040NR-EZ, lines 3 and 5, minus any amount on line 8). Instructions for form 1040ez Contributions from which you benefit. Instructions for form 1040ez   If you receive a benefit as a result of making a contribution to a qualified organization, you can deduct only the amount of your contribution that is more than the value of the benefit you receive. Instructions for form 1040ez   If you pay more than the fair market value to a qualified organization for merchandise, goods, or services, the amount you pay that is more than the value of the item can be a charitable contribution. Instructions for form 1040ez For the excess amount to qualify, you must pay it with the intent to make a charitable contribution. Instructions for form 1040ez Cash contributions. Instructions for form 1040ez   You cannot deduct a cash contribution, regardless of the amount, unless you keep as a record of the contribution a bank record (such as a canceled check, a bank copy of a canceled check, or a bank statement containing the name of the charity, the date, and the amount) or a written record from the charity. Instructions for form 1040ez The written record must include the name of the charity, date of the contribution, and the amount of the contribution. Instructions for form 1040ez   You may deduct a cash contribution of $250 or more only if you have a written statement from the charitable organization showing: The amount of any money contributed, Whether the organization gave you any goods or services in return for your contribution, and A description and estimate of the value of any goods or services described in (2). Instructions for form 1040ez If you received only intangible religious benefits, the organization must state this, but it does not have to describe or value the benefit. Instructions for form 1040ez Noncash contributions. Instructions for form 1040ez   For contributions not made in cash, the records you must keep depend on the amount of your deduction. Instructions for form 1040ez See Publication 526 for details. Instructions for form 1040ez For example, if you make a noncash contribution and the amount of your deduction is more than $500, you must complete and attach to your tax return Form 8283, Noncash Charitable Contributions. Instructions for form 1040ez If you deduct more than $500 for a contribution of a motor vehicle, boat, or airplane, you must also attach a statement from the charitable organization to your return. Instructions for form 1040ez If your total deduction is over $5,000, you also may have to get appraisals of the values of the property. Instructions for form 1040ez If the donated property is valued at more than $5,000, you must obtain a qualified appraisal. Instructions for form 1040ez You generally must attach to your tax return an appraisal of any property if your deduction for the property is more than $500,000. Instructions for form 1040ez See Form 8283 and its instructions for details. Instructions for form 1040ez Contributions of appreciated property. Instructions for form 1040ez   If you contribute property to a qualified organization, the amount of your charitable contribution is generally the fair market value of the property at the time of the contribution. Instructions for form 1040ez However, if you contribute property with a fair market value that is more than your basis in it, you may have to reduce the fair market value by the amount of appreciation (increase in value) when you figure your deduction. Instructions for form 1040ez Your basis in the property is generally what you paid for it. Instructions for form 1040ez If you need more information about basis, get Publication 551, Basis of Assets. Instructions for form 1040ez   Different rules apply to figuring your deduction, depending on whether the property is: Ordinary income property, or Capital gain property. Instructions for form 1040ez For information about these rules, see Publication 526. Instructions for form 1040ez Limit. Instructions for form 1040ez   The amount you can deduct in a tax year is limited in the same way it is for a citizen or resident of the United States. Instructions for form 1040ez For a discussion of limits on charitable contributions and other information, get Publication 526. Instructions for form 1040ez Casualty and theft losses. Instructions for form 1040ez   You can deduct your loss from fire, storm, shipwreck, or other casualty, or theft of property even though your property is not connected with a U. Instructions for form 1040ez S. Instructions for form 1040ez trade or business. Instructions for form 1040ez The property can be personal use property or income-producing property not connected with a U. Instructions for form 1040ez S. Instructions for form 1040ez trade or business. Instructions for form 1040ez The property must be located in the United States at the time of the casualty or theft. Instructions for form 1040ez You can deduct theft losses only in the year in which you discover the loss. Instructions for form 1040ez   The amount of the loss is the fair market value of the property immediately before the casualty or theft less its fair market value immediately after the casualty or theft (but not more than its cost or adjusted basis) less any insurance or other reimbursement. Instructions for form 1040ez The fair market value of property immediately after a theft is considered zero, because you no longer have the property. Instructions for form 1040ez   If your property is covered by insurance, you should file a timely insurance claim for reimbursement. Instructions for form 1040ez If you do not, you cannot deduct this loss as a casualty or theft loss. Instructions for form 1040ez   Figure your deductible casualty and theft losses on Form 4684, Casualties and Thefts. Instructions for form 1040ez Losses from personal use property. Instructions for form 1040ez    You cannot deduct the first $100 of each casualty or theft loss to property held for personal use. Instructions for form 1040ez You can deduct only the total of these losses for the year (reduced by the $100 limit) that is more than 10% of your adjusted gross income (line 37, Form 1040NR) for the year. Instructions for form 1040ez Losses from income-producing property. Instructions for form 1040ez   These losses are not subject to the limitations that apply to personal use property. Instructions for form 1040ez Use Section B of Form 4684 to figure your deduction for these losses. Instructions for form 1040ez Job expenses and other miscellaneous deductions. Instructions for form 1040ez   You can deduct job expenses, such as allowable unreimbursed travel expenses (discussed next), and other miscellaneous deductions. Instructions for form 1040ez Generally, the allowable deductions must be related to effectively connected income. Instructions for form 1040ez Deductible expenses include: Union dues, Safety equipment and small tools needed for your job, Dues to professional organizations, Subscriptions to professional journals, Tax return preparation fees, and Casualty and theft losses of property used in performing services as an employee (employee property). Instructions for form 1040ez   Most miscellaneous itemized deductions are deductible only if they are more than 2% of your adjusted gross income (line 37, Form 1040NR). Instructions for form 1040ez For more information on miscellaneous deductions, see the instructions for Form 1040NR. Instructions for form 1040ez Travel expenses. Instructions for form 1040ez   You may be able to deduct your ordinary and necessary travel expenses while you are temporarily performing personal services in the United States. Instructions for form 1040ez Generally, a temporary assignment in a single location is one that is realistically expected to last (and does in fact last) for one year or less. Instructions for form 1040ez You must be able to show you were present in the United States on an activity that required your temporary absence from your regular place of work. Instructions for form 1040ez   For example, if you have established a “tax home” through regular employment in a foreign country, and intend to return to similar employment in the same country at the end of your temporary stay in the United States, you can deduct reasonable travel expenses you paid. Instructions for form 1040ez You cannot deduct travel expenses for other members of your family or party. Instructions for form 1040ez Deductible travel expenses. Instructions for form 1040ez   If you qualify, you can deduct your expenses for: Transportation—airfare, local transportation, including train, bus, etc. Instructions for form 1040ez , Lodging—rent paid, utilities (do not include telephone), hotel or motel room expenses, and Meal expenses—actual expenses allowed if you keep records of the amounts, or, if you do not wish to keep detailed records, you are generally allowed a standard meal allowance amount depending on the date and area of your travel. Instructions for form 1040ez You generally can deduct only 50% of unreimbursed meal expenses. Instructions for form 1040ez The standard meal allowance rates for high-cost areas are available at www. Instructions for form 1040ez gsa. Instructions for form 1040ez gov/perdiem. Instructions for form 1040ez The rates for other areas are in Publication 463. Instructions for form 1040ez   Use Form 2106 or 2106-EZ to figure your allowable expenses that you claim on line 7 of Schedule A (Form 1040NR). Instructions for form 1040ez Expenses allocable to U. Instructions for form 1040ez S. Instructions for form 1040ez tax-exempt income. Instructions for form 1040ez   You cannot deduct an expense, or part of an expense, that is allocable to U. Instructions for form 1040ez S. Instructions for form 1040ez tax-exempt income, including income exempt by tax treaty. Instructions for form 1040ez Example. Instructions for form 1040ez Irina Oak, a citizen of Poland, resided in the United States for part of the year to acquire business experience from a U. Instructions for form 1040ez S. Instructions for form 1040ez company. Instructions for form 1040ez During her stay in the United States, she received a salary of $8,000 from her Polish employer. Instructions for form 1040ez She received no other U. Instructions for form 1040ez S. Instructions for form 1040ez source income. Instructions for form 1040ez She spent $3,000 on travel expenses, of which $1,000 were for meals. Instructions for form 1040ez None of these expenses were reimbursed. Instructions for form 1040ez Under the tax treaty with Poland, $5,000 of her salary is exempt from U. Instructions for form 1040ez S. Instructions for form 1040ez income tax. Instructions for form 1040ez In filling out Form 2106-EZ, she must reduce her deductible meal expenses by half ($500). Instructions for form 1040ez She must reduce the remaining $2,500 of travel expenses by 62. Instructions for form 1040ez 5% ($1,563) because 62. Instructions for form 1040ez 5% ($5,000 ÷ $8,000) of her salary is exempt from tax. Instructions for form 1040ez She enters the remaining total of $937 on line 7 of Schedule A (Form 1040NR). Instructions for form 1040ez She completes the remaining lines according to the instructions for Schedule A. Instructions for form 1040ez More information. Instructions for form 1040ez   For more information about deductible expenses, reimbursements, and recordkeeping, get Publication 463. Instructions for form 1040ez Tax Credits and Payments This discussion covers tax credits and payments for resident aliens, followed by a discussion of the credits and payments for nonresident aliens. Instructions for form 1040ez Resident Aliens Resident aliens generally claim tax credits and report tax payments, including withholding, using the same rules that apply to U. Instructions for form 1040ez S. Instructions for form 1040ez citizens. Instructions for form 1040ez The following items are some of the credits you may be able to claim. Instructions for form 1040ez Foreign tax credit. Instructions for form 1040ez   You can claim a credit, subject to certain limits, for income tax you paid or accrued to a foreign country on foreign source income. Instructions for form 1040ez You cannot claim a credit for taxes paid or accrued on excluded foreign earned income. Instructions for form 1040ez To claim a credit for income taxes paid or accrued to a foreign country, you generally will file Form 1116, Foreign Tax Credit (Individual, Estate, or Trust), with your Form 1040. Instructions for form 1040ez   For more information, get Publication 514, Foreign Tax Credit for Individuals. Instructions for form 1040ez Child and dependent care credit. Instructions for form 1040ez   You may be able to take this credit if you pay someone to care for your qualifying child who is under age 13, or your disabled dependent or disabled spouse, so that you can work or look for work. Instructions for form 1040ez Generally, you must be able to claim an exemption for your dependent. Instructions for form 1040ez   For more information, get Publication 503, Child and Dependent Care Expenses, and Form 2441, Child and Dependent Care Expenses. Instructions for form 1040ez Credit for the elderly or the disabled. Instructions for form 1040ez   You may qualify for this credit if you are 65 or older or if you retired on permanent and total disability. Instructions for form 1040ez For more information on this credit, get Publication 524, Credit for the Elderly or the Disabled, and Schedule R (Form 1040A or 1040). Instructions for form 1040ez Education credits. Instructions for form 1040ez   You may qualify for these credits if you paid qualified education expenses for yourself, your spouse, or your dependent. Instructions for form 1040ez There are two education credits: the American Opportunity Credit and the lifetime learning credit. Instructions for form 1040ez You cannot claim these credits if you are married filing separately. Instructions for form 1040ez Use Form 8863, Education Credits (American Opportunity and Lifetime Learning Credits), to figure the credit. Instructions for form 1040ez For more information, see Publication 970. Instructions for form 1040ez Retirement savings contributions credit. Instructions for form 1040ez   You may qualify for this credit (also known as the saver's credit) if you made eligible contributions to an employer-sponsored retirement plan or to an individual retirement arrangement (IRA) in 2013. Instructions for form 1040ez You cannot claim this credit if: You were born after January 1, 1996, You were a full-time student, Your exemption is claimed by someone else on his or her 2013 tax return, or Your adjusted gross income is more than: $59,000, if your filing status is married filing jointly, $44,250, if your filing status is head of household, or $29,500, if your filing status is single, married filing separately, or qualifying widow(er). Instructions for form 1040ez Use Form 8880, Credit for Qualified Retirement Savings Contributions, to figure the credit. Instructions for form 1040ez For more information, see Publication 590. Instructions for form 1040ez Child tax credit. Instructions for form 1040ez   You may be able to take this credit if you have a qualifying child. Instructions for form 1040ez   A qualifying child for purposes of the child tax credit is a child who: Was under age 17 at the end of 2013. Instructions for form 1040ez Is your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, half brother, half sister, or a descendant of any of them (for example, your grandchild, niece, or nephew). Instructions for form 1040ez Is a U. Instructions for form 1040ez S. Instructions for form 1040ez citizen, a U. Instructions for form 1040ez S. Instructions for form 1040ez national, or a resident alien. Instructions for form 1040ez Did not provide over half of his or her own support for 2013. Instructions for form 1040ez Lived with you more than half of 2013. Instructions for form 1040ez Temporary absences, such as for school, vacation, or medical care, count as time lived in the home. Instructions for form 1040ez Is claimed as a dependent on your return. Instructions for form 1040ez An adopted child is always treated as your own child. Instructions for form 1040ez An adopted child includes a child lawfully placed with you for legal adoption. Instructions for form 1040ez   See your form instructions for additional details. Instructions for form 1040ez Adoption credit. Instructions for form 1040ez   You may qualify to take a tax credit of up to $12,970 for qualifying expenses paid to adopt an eligible child. Instructions for form 1040ez This amount may be allowed for the adoption of a child with special needs regardless of whether you have qualifying expenses. Instructions for form 1040ez To claim the adoption credit, file Form 8839, Qualified Adoption Expenses, with your Form 1040. Instructions for form 1040ez Earned income credit. Instructions for form 1040ez   You may qualify for an earned income credit of up to $3,250 if a child lived with you in the United States and your earned income and adjusted gross income were each less than $37,870 ($43,210 if married filing jointly). Instructions for form 1040ez If two children lived with you in the United States and your earned income and adjusted gross income were each less than $43,038 ($48,378 if married filing jointly), your credit could be as much as $5,372. Instructions for form 1040ez If three or more children lived with you in the United States and your earned income and adjusted gross income were each less than $46,227 ($51,567 if married filing jointly), your credit could be as much as $6,044. Instructions for form 1040ez If you do not have a qualifying child and your earned income and adjusted gross income were each less than $14,340 ($19,680 if married filing jointly), your credit could be as much as $487. Instructions for form 1040ez You cannot claim the earned income credit if your filing status is married filing separately. Instructions for form 1040ez    You and your spouse (if filing a joint return) and any qualifying child must have valid SSNs to claim this credit. Instructions for form 1040ez You cannot claim the credit using an ITIN. Instructions for form 1040ez If a social security card has a legend that says Not Valid for Employment and the number was issued so that you (or your spouse or your qualifying child) could receive a federally funded benefit, you cannot claim the earned income credit. Instructions for form 1040ez An example of a federally funded benefit is Medicaid. Instructions for form 1040ez If a card has this legend and the individual's immigration status has changed so that the individual is now a U. Instructions for form 1040ez S. Instructions for form 1040ez citizen or lawful permanent resident, ask the SSA to issue a new social security card without the legend. Instructions for form 1040ez Other information. Instructions for form 1040ez   There are other eligibility rules that are not discussed here. Instructions for form 1040ez For more information, get Publication 596, Earned Income Credit. Instructions for form 1040ez Nonresident Aliens You can claim some of the same credits that resident aliens can claim. Instructions for form 1040ez You can also report certain taxes you paid, are considered to have paid, or that were withheld from your income. Instructions for form 1040ez Credits Credits are allowed only if you receive effectively connected income. Instructions for form 1040ez You may be able to claim some of the following credits. Instructions for form 1040ez Foreign tax credit. Instructions for form 1040ez   If you receive foreign source income that is effectively connected with a trade or business in the United States, you can claim a credit for any income taxes paid or accrued to any foreign country or U. Instructions for form 1040ez S. Instructions for form 1040ez possession on that income. Instructions for form 1040ez   If you do not have foreign source income effectively connected with a U. Instructions for form 1040ez S. Instructions for form 1040ez trade or business, you cannot claim credits against your U. Instructions for form 1040ez S. Instructions for form 1040ez tax for taxes paid or accrued to a foreign country or U. Instructions for form 1040ez S. Instructions for form 1040ez possession. Instructions for form 1040ez   You cannot take any credit for taxes imposed by a foreign country or U. Instructions for form 1040ez S. Instructions for form 1040ez possession on your U. Instructions for form 1040ez S. Instructions for form 1040ez source income if those taxes were imposed only because you are a citizen or resident of the foreign country or possession. Instructions for form 1040ez   If you claim a foreign tax credit, you generally will have to attach to your return a Form 1116. Instructions for form 1040ez See Publication 514 for more information. Instructions for form 1040ez Child and dependent care credit. Instructions for form 1040ez   You may qualify for this credit if you pay someone to care for your qualifying child who is under age 13, or your disabled dependent or disabled spouse, so that you can work or look for work. Instructions for form 1040ez Generally, you must be able to claim an exemption for your dependent. Instructions for form 1040ez   Married nonresident aliens can claim the credit only if they choose to file a joint return with a U. Instructions for form 1040ez S. Instructions for form 1040ez citizen or resident spouse as discussed in chapter 1, or if they qualify as certain married individuals living apart (see Joint Return Test in Publication 503). Instructions for form 1040ez   The amount of your child and dependent care expense that qualifies for the credit in any tax year cannot be more than your earned income from the United States for that tax year. Instructions for form 1040ez Earned income generally means wages, salaries, and professional fees for personal services performed. Instructions for form 1040ez   For more information, get Publication 503. Instructions for form 1040ez Education credits. Instructions for form 1040ez   If you are a nonresident alien for any part of the year, you generally cannot claim the education credits. Instructions for form 1040ez However, if you are married and choose to file a joint return with a U. Instructions for form 1040ez S. Instructions for form 1040ez citizen or resident spouse as discussed in chapter 1, you may be eligible for these credits. Instructions for form 1040ez Retirement savings contributions credit. Instructions for form 1040ez   You may qualify for this credit (also known as the saver's credit) if you made eligible contributions to an employer-sponsored retirement plan or to an individual retirement arrangement (IRA) in 2013. Instructions for form 1040ez You cannot claim this credit if: You were born after January 1, 1996, You were a full-time student, Your exemption is claimed by someone else on his or her 2013 tax return, or Your adjusted gross income is more than $29,500. Instructions for form 1040ez Use Form 8880 to figure the credit. Instructions for form 1040ez For more information, see Publication 590. Instructions for form 1040ez Child tax credit. Instructions for form 1040ez   You may be able to take this credit if you have a qualifying child. Instructions for form 1040ez   A qualifying child for purposes of the child tax credit is a child who: Was under age 17 at the end of 2013. Instructions for form 1040ez Is your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, half brother, half sister, or a descendant of any of them (for example, your grandchild, niece, or nephew). Instructions for form 1040ez Is a U. Instructions for form 1040ez S. Instructions for form 1040ez citizen, a U. Instructions for form 1040ez S. Instructions for form 1040ez national, or a resident alien. Instructions for form 1040ez Did not provide over half of his or her own support for 2013. Instructions for form 1040ez Lived with you more than half of 2013. Instructions for form 1040ez Temporary absences, such as for school, vacation, or medical care, count as time lived in the home. Instructions for form 1040ez Is claimed as a dependent on your return. Instructions for form 1040ez An adopted child is always treated as your own child. Instructions for form 1040ez An adopted child includes a child lawfully placed with you for legal adoption. Instructions for form 1040ez   See your form instructions for additional details. Instructions for form 1040ez Adoption credit. Instructions for form 1040ez   You may qualify to take a tax credit of up to $12,970 for qualifying expenses paid to adopt an eligible child. Instructions for form 1040ez This amount may be allowed for the adoption of a child with special needs regardless of whether you have qualifying expenses. Instructions for form 1040ez To claim the adoption credit, file Form 8839 with your Form 1040NR. Instructions for form 1040ez   Married nonresident aliens can claim the credit only if they choose to file a joint return with a U. Instructions for form 1040ez S. Instructions for form 1040ez citizen or resident spouse as discussed in chapter 1, or if they qualify as certain married individuals living apart (see Married Persons Not Filing Jointly in the Form 8839 instructions). Instructions for form 1040ez Credit for prior year minimum tax. Instructions for form 1040ez   If you paid alternative minimum tax in a prior year, get Form 8801, Credit for Prior Year Minimum Tax—Individuals, Estates, and Trusts, to see if you qualify for this credit. Instructions for form 1040ez Earned income credit. Instructions for form 1040ez   If you are a nonresident alien for any part of the tax year, you generally cannot get the earned income credit. Instructions for form 1040ez However, if you are married and choose to file a joint return with a U. Instructions for form 1040ez S. Instructions for form 1040ez citizen or resident spouse as discussed in chapter 1, you may be eligible for the credit. Instructions for form 1040ez    You, your spouse, and any qualifying child must have valid SSNs to claim this credit. Instructions for form 1040ez You cannot claim the credit using an ITIN. Instructions for form 1040ez If a social security card has a legend that says Not Valid for Employment and the number was issued so that you (or your spouse or your qualifying child) could receive a federally funded benefit, you cannot claim the earned income credit. Instructions for form 1040ez An example of a federally funded benefit is Medicaid. Instructions for form 1040ez If a card has this legend and the individual's immigration status has changed so that the individual is now a U. Instructions for form 1040ez S. Instructions for form 1040ez citizen or lawful permanent resident, ask the SSA to issue a new social security card without the legend. Instructions for form 1040ez   See Publication 596 for more information on the credit. Instructions for form 1040ez Tax Withheld You can claim the tax withheld during the year as a payment against your U. Instructions for form 1040ez S. Instructions for form 1040ez tax. Instructions for form 1040ez You claim it on line 61 of Form 1040NR or on line 18 of Form 1040NR-EZ. Instructions for form 1040ez The tax withheld reduces any tax you owe with Form 1040NR or Form 1040NR-EZ. Instructions for form 1040ez Withholding from wages. Instructions for form 1040ez   Any federal income tax withheld from your wages during the tax year while you were a nonresident alien is allowed as a payment against your U. Instructions for form 1040ez S. Instructions for form 1040ez income tax liability for the same year. Instructions for form 1040ez You can claim the income tax withheld whether or not you were engaged in a trade or business in the United States during the year, and whether or not the wages (or any other income) were connected with a trade or business in the United States. Instructions for form 1040ez Excess social security tax withheld. Instructions for form 1040ez   If you have two or more employers, you may be able to claim a credit against your U. Instructions for form 1040ez S. Instructions for form 1040ez income tax liability for social security tax withheld in excess of the maximum required. Instructions for form 1040ez See Social Security and Medicare Taxes in chapter 8 for more information. Instructions for form 1040ez Additional Medicare Tax. Instructions for form 1040ez   Your employer is responsible for withholding the 0. Instructions for form 1040ez 9% Additional Medicare Tax on Medicare wages or RRTA compensation it pays to you in excess of $200,000 in 2013. Instructions for form 1040ez If you do not owe Additional Medicare Tax, you can claim a credit for any withheld Additional Medicare Tax against the total tax liability shown on your tax return by filing Form 8959. Instructions for form 1040ez Tax paid on undistributed long-term capital gains. Instructions for form 1040ez   If you are a shareholder in a mutual fund (or other regulated investment company) or real estate investment trust, you can claim a credit for your share of any taxes paid by the company on its undistributed long-term capital gains. Instructions for form 1040ez You will receive information on Form 2439, Notice to Shareholder of Undistributed Long-Term Capital Gains, which you must attach to your return. Instructions for form 1040ez Tax withheld at the source. Instructions for form 1040ez   You can claim as a payment any tax withheld at the source on investment and other fixed or determinable annual or periodic income paid to you. Instructions for form 1040ez Fixed or determinable income includes interest, dividend, rental, and royalty income that you do not claim to be effectively connected income. Instructions for form 1040ez Wage or salary payments can be fixed or determinable income to you, but usually are subject to withholding as discussed above. Instructions for form 1040ez Taxes on fixed or determinable income are withheld at a 30% rate or at a lower treaty rate. Instructions for form 1040ez Tax withheld on partnership income. Instructions for form 1040ez   If you are a foreign partner in a partnership, the partnership will withhold tax on your share of effectively connected taxable income from the partnership. Instructions for form 1040ez The partnership will give you a statement on Form 8805, Foreign Partner's Information Statement of Section 1446 Withholding Tax, showing the tax withheld. Instructions for form 1040ez A partnership that is publicly traded may withhold on your actual distributions of effectively connected income. Instructions for form 1040ez In this case, the partnership will give you a statement on Form 1042-S. Instructions for form 1040ez Claim the tax withheld as a payment on line 61b or 61d of Form 1040NR, as appropriate. Instructions for form 1040ez Claiming tax withheld on your return. Instructions for form 1040ez   When you fill out your tax return, take extra care to enter the correct amount of any tax withheld shown on your information documents. Instructions for form 1040ez The following table lists some of the more common information documents and shows where to find the amount of tax withheld. Instructions for form 1040ez Form number Location  of tax  withheld RRB-1042S Box 12 SSA-1042S Box 9 W-2 Box 2 W-2c Box 2 1042-S Box 9 8805 Line 10 8288-A Box 2 Bona Fide Residents of American Samoa or Puerto Rico If you are a nonresident alien who is a bona fide resident of American Samoa or Puerto Rico for the entire tax year, you generally are taxed the same as resident aliens. Instructions for form 1040ez You should file Form 1040 and report all income from sources both in and outside the United States. Instructions for form 1040ez However, you can exclude the income discussed in the following paragraphs. Instructions for form 1040ez For tax purposes other than reporting income, however, you will be treated as a nonresident alien. Instructions for form 1040ez For example, you are not allowed the standard deduction, you cannot file a joint return, and you are not allowed a deduction for a dependent unless that person is a citizen or national of the United States. Instructions for form 1040ez There are also limits on what deductions and credits are allowed. Instructions for form 1040ez See Nonresident Aliens under Deductions , Itemized Deductions , and Tax Credits and Payments in this chapter. Instructions for form 1040ez Residents of Puerto Rico. Instructions for form 1040ez   If you are a bona fide resident of Puerto Rico for the entire year, you can exclude from gross income all income from sources in Puerto Rico (other than amounts for services performed as an employee of the United States or any of its agencies). Instructions for form 1040ez   If you report income on a calendar year basis and you do not have wages subject to withholding, file your return and pay your tax by June 15. Instructions for form 1040ez You must also make your first payment of estimated tax by June 15. Instructions for form 1040ez You cannot file a joint income tax return or make joint payments of estimated tax. Instructions for form 1040ez However, if you are married to a U. Instructions for form 1040ez S. Instructions for form 1040ez citizen or resident, see Nonresident Spouse Treated as a Resident in chapter 1. Instructions for form 1040ez   If you earn wages subject to withholding, your U. Instructions for form 1040ez S. Instructions for form 1040ez income tax return is due by April 15. Instructions for form 1040ez Your first payment of estimated tax is also due by April 15. Instructions for form 1040ez For information on withholding and estimated tax, see chapter 8 . Instructions for form 1040ez Residents of American Samoa. Instructions for form 1040ez   If you are a bona fide resident of American Samoa for the entire year, you can exclude from gross income all income from sources in American Samoa (other than amounts for services performed as an employee of the U. Instructions for form 1040ez S. Instructions for form 1040ez government or any of its agencies). Instructions for form 1040ez An employee of the American Samoan government is not considered an employee of the U. Instructions for form 1040ez S. Instructions for form 1040ez government or any of its agencies for purposes of the exclusion. Instructions for form 1040ez For more information about this exclusion, get Form 4563 and Publication 570, Tax Guide for Individuals With Income From U. Instructions for form 1040ez S. Instructions for form 1040ez Possessions. Instructions for form 1040ez Prev  Up  Next   Home   More Online Publications
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Understanding Your CP254 Notice

Your organization submitted a paper return for the tax period in question. Because our records show that you must file electronically, the paper return doesn’t satisfy your filing obligation.


What you need to do

Determine if your organization has total assets of $10 million or more and files 250 returns in a calendar year.

  • If yes, file the electronic return as soon as possible. If you fail to do so, you may be subject to a failure to file penalty.
  • If no, respond to the CP254 notice explaining why you aren’t required to file electronically.

Answers to Common Questions

Which returns are included in the 250-return requirement?
You must count all information and tax returns, including, but not limited to:

  • Form W-2
  • Form 1099
  • Form 720
  • Form 941
  • Form 944
  • Form 990
  • Form 990-EZ
  • Form 990-N
  • Form 990-PF
  • Form 990-T

We can’t file electronically because our organization’s name changed, we filed for the first time, or we filed a short period return. What do we do now?
Respond to the notice with an explanation of the situation that kept you from filing electronically.

Our software won’t allow us to file electronically for the year indicated on the notice. What do we do now?
Call the phone number on the notice (1-877-767-2501) to determine what action you must take.

We tried to file electronically, but received a rejection notice. What do we do now?
Review the rejection notice to determine the reason the system couldn’t accept the return. Correct the return and resubmit it electronically.


Understanding your notice

Your notice may look different from the sample because the information contained in your notice is tailored to your situation.

Notice CP254, Page 1

Notice CP254, Page 2

Notice CP254, Page 3

Notice CP254, Page 4

Page Last Reviewed or Updated: 09-Dec-2013

Printable samples of this notice (PDF)

 

 

How to get help

  • Call the 1-800 number listed on the top right corner of your notice.
  • Authorize someone (e.g., accountant) to contact the IRS on your behalf using Form 2848.
  • See if you qualify for help from a Low Income Taxpayer Clinic.
     

The Instructions For Form 1040ez

Instructions for form 1040ez Depreciation Table of Contents Introduction Special Depreciation AllowanceQualified Property Election Not To Claim the Allowance Rules for Returns Filed Before June 1, 2002 Passenger Automobiles New York Liberty Zone BenefitsSpecial Liberty Zone Depreciation Allowance Increased Section 179 Deduction Liberty Zone Leasehold Improvement Property If you depreciate business property that you acquired and placed in service after September 10, 2001, new law contains provisions that may affect your depreciation deduction for that property. Instructions for form 1040ez Publication 946, How To Depreciate Property, contains information on depreciation. Instructions for form 1040ez However, Publication 946 does not contain the new provisions because it was printed before the law was enacted. Instructions for form 1040ez The new provisions are in the Supplement to Publication 946, which is reprinted below. Instructions for form 1040ez Supplement to Publication 946 How To Depreciate Property   Introduction After Publication 946 was printed, the Job Creation and Worker Assistance Act of 2002 was signed into law by the President. Instructions for form 1040ez The new law made several changes in the tax rules explained in the publication. Instructions for form 1040ez Some of the changes apply to property placed in service during 2001. Instructions for form 1040ez This supplemental publication describes those changes and explains what you should do if you are affected by them. Instructions for form 1040ez The situations and examples in Publication 946 do not reflect any of the changes made by the Job Creation and Worker Assistance Act of 2002. Instructions for form 1040ez The new law contains the following provisions. Instructions for form 1040ez 30% depreciation deductions (special depreciation allowance and special New York Liberty Zone (Liberty Zone) depreciation allowance) for the year qualified property is placed in service after September 10, 2001. Instructions for form 1040ez An increased dollar limit on the section 179 deduction for qualified Liberty Zone property purchased after September 10, 2001. Instructions for form 1040ez A shorter recovery period for qualified Liberty Zone leasehold improvement property placed in service after September 10, 2001. Instructions for form 1040ez An increase in the maximum depreciation deduction for 2001 for a qualified passenger automobile placed in service after September 10, 2001. Instructions for form 1040ez If you believe you qualify for an increased deduction under any of these new rules, you must file the revised 2001 Form 4562 (dated March 2002) for 2001 calendar or fiscal years and 2000 fiscal years ending after September 10, 2001. Instructions for form 1040ez If you have already filed a tax return, this supplemental publication explains how to claim these benefits and how to elect not to claim the special depreciation allowance or special Liberty Zone depreciation allowance. Instructions for form 1040ez See Table 2 at the end of the supplement for an overview of the rules that apply if you filed your return before June 1, 2002. Instructions for form 1040ez Special Depreciation Allowance You can take a special depreciation allowance for qualified property you place in service after September 10, 2001. Instructions for form 1040ez The allowance is an additional deduction of 30% of the property's depreciable basis. Instructions for form 1040ez To figure the depreciable basis, you must first multiply the property's cost or other basis by the percentage of business/investment use and then reduce that amount by any section 179 deduction and certain other deductions and credits for the property. Instructions for form 1040ez See What Is the Basis for Depreciation? on page 23 in Publication 946 for more information on figuring depreciable basis. Instructions for form 1040ez The allowance is deductible for both regular tax and alternative minimum tax (AMT) purposes. Instructions for form 1040ez There is no AMT adjustment required for any depreciation figured on the remaining basis of the property. Instructions for form 1040ez In the year you claim the allowance (generally the year you place the property in service), you must reduce the depreciable basis of the property by the allowance before figuring your regular depreciation deduction. Instructions for form 1040ez Example 1. Instructions for form 1040ez On November 1, 2001, you bought and placed in service in your business qualified property that cost $100,000. Instructions for form 1040ez You did not elect to claim a section 179 deduction. Instructions for form 1040ez You can deduct 30% of the cost ($30,000) as a special depreciation allowance for 2001. Instructions for form 1040ez You use the remaining $70,000 of cost to figure your regular depreciation deduction for 2001 and later years. Instructions for form 1040ez Example 2. Instructions for form 1040ez The facts are the same as in Example 1, except that you choose to deduct $24,000 of the property's cost as a section 179 deduction. Instructions for form 1040ez You use the remaining $76,000 of cost to figure your special depreciation allowance of $22,800 ($76,000 × 30%). Instructions for form 1040ez You use the remaining $53,200 of cost to figure your regular depreciation deduction for 2001 and later years. Instructions for form 1040ez Qualified Property To qualify for the special depreciation allowance, your property must meet the following requirements. Instructions for form 1040ez It is new property of one of the following types. Instructions for form 1040ez Property depreciated under the modified accelerated cost recovery system (MACRS) with a recovery period of 20 years or less. Instructions for form 1040ez See Can You Use MACRS To Depreciate Your Property and Which Recovery Period Applies? on pages 7 and 23, respectively, in Publication 946. Instructions for form 1040ez Water utility property. Instructions for form 1040ez See 25-year property on page 22 in Publication 946. Instructions for form 1040ez Computer software that is not a section 197 intangible as described in Computer software on page 5 in Publication 946. Instructions for form 1040ez (The cost of some computer software is treated as part of the cost of hardware and is depreciated under MACRS. Instructions for form 1040ez ) Qualified leasehold improvement property (defined later). Instructions for form 1040ez It meets the following tests (explained later under Tests To Be Met). Instructions for form 1040ez Acquisition date test. Instructions for form 1040ez Placed in service date test. Instructions for form 1040ez Original use test. Instructions for form 1040ez It is not excepted property (explained later under Excepted Property). Instructions for form 1040ez Qualified leasehold improvement property. Instructions for form 1040ez    Generally, this is any improvement to an interior part of a building that is nonresidential real property, provided all of the following requirements are met. Instructions for form 1040ez The improvement is made under or pursuant to a lease by the lessee (or any sublessee) or the lessor of that part of the building. Instructions for form 1040ez That part of the building is to be occupied exclusively by the lessee (or any sublessee) of that part. Instructions for form 1040ez The improvement is placed in service more than 3 years after the date the building was first placed in service. Instructions for form 1040ez   However, a qualified leasehold improvement does not include any improvement for which the expenditure is attributable to any of the following. Instructions for form 1040ez The enlargement of the building. Instructions for form 1040ez Any elevator or escalator. Instructions for form 1040ez Any structural component benefiting a common area. Instructions for form 1040ez The internal structural framework of the building. Instructions for form 1040ez   Generally, a binding commitment to enter into a lease is treated as a lease and the parties to the commitment are treated as the lessor and lessee. Instructions for form 1040ez However, a binding commitment between related persons is not treated as a lease. Instructions for form 1040ez Related persons. Instructions for form 1040ez   For this purpose, the following are related persons. Instructions for form 1040ez Members of an affiliated group. Instructions for form 1040ez The persons listed in items (1) through (9) under Related persons on page 8 of Publication 946 (except that “80% or more” should be substituted for “more than 10%” each place it appears). Instructions for form 1040ez An executor and a beneficiary of the same estate. Instructions for form 1040ez Tests To Be Met To qualify for the special depreciation allowance, the property must meet all of the following tests. Instructions for form 1040ez Acquisition date test. Instructions for form 1040ez    Generally, you must have acquired the property either: After September 10, 2001, and before September 11, 2004, but only if no written binding contract for the acquisition was in effect before September 11, 2001, or Pursuant to a written binding contract entered into after September 10, 2001, and before September 11, 2004. Instructions for form 1040ez   Property you manufacture, construct, or produce for your own use meets this test if you began the manufacture, construction, or production of the property after September 10, 2001, and before September 11, 2004. Instructions for form 1040ez Placed in service date test. Instructions for form 1040ez   Generally, the property must be placed in service for use in your trade or business or for the production of income after September 10, 2001, and before January 1, 2005. Instructions for form 1040ez   If you sold property you placed in service after September 10, 2001, and you leased it back within 3 months after the property was originally placed in service, the property is treated as placed in service no earlier than the date it is used under the leaseback. Instructions for form 1040ez Original use test. Instructions for form 1040ez   The original use of the property must have begun with you after September 10, 2001. Instructions for form 1040ez “Original use” means the first use to which the property is put, whether or not by you. Instructions for form 1040ez Additional capital expenditures you incurred after September 10, 2001, to recondition or rebuild your property meet the original use test. Instructions for form 1040ez Excepted Property The following property does not qualify for the special depreciation allowance. Instructions for form 1040ez Property used by any person before September 11, 2001. Instructions for form 1040ez Property required to be depreciated using ADS. Instructions for form 1040ez This includes listed property used 50% or less in a qualified business use. Instructions for form 1040ez Qualified New York Liberty Zone leasehold improvement property (defined next). Instructions for form 1040ez Qualified New York Liberty Zone leasehold improvement property. Instructions for form 1040ez   This is any qualified leasehold improvement property (as defined earlier) if all of the following requirements are met. Instructions for form 1040ez The improvement is to a building located in the New York Liberty Zone (defined later under New York Liberty Zone Benefits). Instructions for form 1040ez The improvement is placed in service after September 10, 2001, and before January 1, 2007. Instructions for form 1040ez No written binding contract for the improvement was in effect before September 11, 2001. Instructions for form 1040ez Election Not To Claim the Allowance You can elect not to claim the special depreciation allowance for qualified property. Instructions for form 1040ez If you make this election for any property, it applies to all property in the same property class placed in service during the year. Instructions for form 1040ez To make this election, attach a statement to your return indicating you elect not to claim the allowance and the class of property for which you are making the election. Instructions for form 1040ez When to make election. Instructions for form 1040ez   Generally, you must make the election on a timely filed tax return (including extensions) for the year in which you place the property in service. Instructions for form 1040ez   However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the original return (not including extensions). Instructions for form 1040ez Attach the election statement to the amended return. Instructions for form 1040ez At the top of the election statement, write “Filed pursuant to section 301. Instructions for form 1040ez 9100–2. Instructions for form 1040ez ” Revoking an election. Instructions for form 1040ez   Once you elect not to deduct the special depreciation allowance for a class of property, you cannot revoke the election without IRS consent. Instructions for form 1040ez A request to revoke the election is subject to a user fee. Instructions for form 1040ez Rules for Returns Filed Before June 1, 2002 The following rules apply if you placed qualified property in service after September 10, 2001, and filed your return before June 1, 2002. Instructions for form 1040ez The rules apply to returns for the following years. Instructions for form 1040ez 2000 fiscal years that end after September 10, 2001. Instructions for form 1040ez 2001 calendar and fiscal years. Instructions for form 1040ez Claiming the allowance. Instructions for form 1040ez   If you did not claim the allowance on your return and did not make the election not to claim the allowance, you can do either of the following to claim the allowance. Instructions for form 1040ez File an amended return by the due date (not including extensions) of your return for the year following the year the property was placed in service. Instructions for form 1040ez Write “Filed Pursuant to Rev. Instructions for form 1040ez Proc. Instructions for form 1040ez 2002–33” at the top of the amended return. Instructions for form 1040ez File Form 3115, Application for Change in Accounting Method, with your return for the year following the year the property was placed in service. Instructions for form 1040ez Your return must be filed by the due date (including extensions). Instructions for form 1040ez Write “Automatic Change Filed Under Rev. Instructions for form 1040ez Proc. Instructions for form 1040ez 2002–33” on the appropriate line of Form 3115. Instructions for form 1040ez You must also file a copy (with signature) of the completed Form 3115 with the IRS National Office no later than when you file the original with your return. Instructions for form 1040ez For more information about filing Form 3115, including the address to send it to, see Revenue Procedure 2002–9, Revenue Procedure 2002–19, and Revenue Procedure 2002–33. Instructions for form 1040ez Example 1. Instructions for form 1040ez You are an individual and you use the calendar year. Instructions for form 1040ez You placed qualified property in service for your business in December 2001. Instructions for form 1040ez You filed your 2001 income tax return before April 15, 2002. Instructions for form 1040ez You did not claim the special depreciation allowance for the property and did not make the election not to claim the allowance. Instructions for form 1040ez You can claim the special allowance by filing an amended 2001 return by April 15, 2003, with “Filed Pursuant to Rev. Instructions for form 1040ez Proc. Instructions for form 1040ez 2002–33” at the top of the amended return. Instructions for form 1040ez You must file an amended return by April 15, 2003, even if you get an extension of time to file your 2002 tax return. Instructions for form 1040ez Example 2. Instructions for form 1040ez The facts concerning your 2001 return are the same as in Example 1. Instructions for form 1040ez In addition, you got an automatic 4-month extension of time (to August 15, 2003) to file your 2002 return. Instructions for form 1040ez You can claim the special allowance by filing a Form 3115 (with “Filed Pursuant to Rev. Instructions for form 1040ez Proc. Instructions for form 1040ez 2002–33” on the appropriate line) with your 2002 return by August 15, 2003. Instructions for form 1040ez You must also file a copy of this Form 3115 with the IRS National Office no later than when you file your 2002 return. Instructions for form 1040ez Electing not to claim the allowance. Instructions for form 1040ez   Generally, you have elected not to claim the special depreciation allowance for a class of property if you: Filed your return timely (including extensions) for the year you placed qualified property in service and indicated on a statement with the return that you are not claiming the allowance, or Filed your return timely and filed an amended return within 6 months of the due date of the original return (not including extensions) and indicated on a statement with the amended return that you are not claiming the allowance. Instructions for form 1040ez The statement must indicate that you are not deducting the special depreciation allowance and the class of property to which the election applies. Instructions for form 1040ez The statement can be either attached to or written on the return. Instructions for form 1040ez You can, for example, write “not deducting 30%” on Form 4562. Instructions for form 1040ez Deemed election. Instructions for form 1040ez   If you have not followed either of the procedures described above to elect not to claim the allowance, you may still be treated as making the election. Instructions for form 1040ez You will be treated as making the election if you meet both of the following conditions. Instructions for form 1040ez You filed your return for the year you placed the property in service and claimed depreciation, but not the special allowance, for any class of property. Instructions for form 1040ez You do not file an amended return or a Form 3115 within the time prescribed for claiming the special allowance. Instructions for form 1040ez See Claiming the allowance, earlier. Instructions for form 1040ez Passenger Automobiles The limit on your depreciation deduction (including any section 179 deduction) for any passenger automobile that is qualified property (defined earlier) placed in service after September 10, 2001, and for which you claim the special depreciation allowance is increased. Instructions for form 1040ez Generally, the limit is increased from $3,060 to $7,660. Instructions for form 1040ez However, if the automobile is a qualified electric car, the limit is increased from $9,280 to $23,080 ($22,980 if placed in service in 2002). Instructions for form 1040ez Table 1 shows the maximum deduction amounts for 2001. Instructions for form 1040ez Table 1. Instructions for form 1040ez Maximum Deduction for 2001 Qualified Vehicle Placed in Service Before Sept. Instructions for form 1040ez 11 Placed in Service After Sept. Instructions for form 1040ez 10 Passenger automobile $3,060 $7,660 Electric car 9,280 23,080 1 1$22,980 if you place an electric car in service in 2002. Instructions for form 1040ez Election not to claim the allowance. Instructions for form 1040ez   The increased maximum depreciation deduction does not apply if you elected not to claim the special depreciation allowance as explained earlier under Election Not To Claim the Allowance and Rules for Returns Filed Before June 1, 2002. Instructions for form 1040ez New York Liberty Zone Benefits Several benefits are available for property you place in service in the New York Liberty Zone (Liberty Zone). Instructions for form 1040ez They include a special depreciation allowance for the year you place the property in service, an increased section 179 deduction, and the classification of certain leasehold improvement property as 5-year property. Instructions for form 1040ez Area defined. Instructions for form 1040ez   The New York Liberty Zone is the area located on or south of Canal Street, East Broadway (east of its intersection with Canal Street), or Grand Street (east of its intersection with East Broadway) in the Borough of Manhattan in the City of New York, New York. Instructions for form 1040ez Special Liberty Zone Depreciation Allowance You can take a special depreciation allowance for qualified Liberty Zone property you place in service after September 10, 2001. Instructions for form 1040ez The allowance is an additional deduction of 30% of the property's depreciable basis. Instructions for form 1040ez To figure the depreciable basis, you must first multiply the property's cost or other basis by the percentage of business/investment use and then reduce that amount by any section 179 deduction and certain other deductions and credits for the property. Instructions for form 1040ez See What Is the Basis for Depreciation? on page 23 in Publication 946 for more information on figuring depreciable basis. Instructions for form 1040ez The allowance is deductible for both regular tax and alternative minimum tax (AMT) purposes. Instructions for form 1040ez There is no AMT adjustment required for any depreciation figured on the remaining basis of the property. Instructions for form 1040ez In the year you claim the allowance (generally the year you place the property in service), you must reduce the depreciable basis of the property by the allowance before figuring your regular depreciation deduction. Instructions for form 1040ez You cannot claim the special Liberty Zone depreciation allowance for property eligible for the special depreciation allowance explained earlier in Qualified Property under Special Depreciation Allowance. Instructions for form 1040ez Qualified property is eligible for only one special depreciation allowance. Instructions for form 1040ez Example 1. Instructions for form 1040ez On November 1, 2001, you bought and placed in service in your business, which is in the Liberty Zone, qualified Liberty Zone property that cost $200,000. Instructions for form 1040ez You did not elect to claim a section 179 deduction. Instructions for form 1040ez You can deduct 30% of the cost ($60,000) as a special Liberty Zone depreciation allowance for 2001. Instructions for form 1040ez You use the remaining $140,000 of cost to figure your regular depreciation deduction for 2001 and later years. Instructions for form 1040ez Example 2. Instructions for form 1040ez The facts are the same as in Example 1, except that you choose to deduct $59,000 of the property's cost as a section 179 deduction. Instructions for form 1040ez (See Increased Section 179 Deduction, later, for information concerning how this section 179 deduction amount is figured). Instructions for form 1040ez You use the remaining $141,000 of cost to figure your special Liberty Zone depreciation allowance of $42,300 ($141,000 × 30%). Instructions for form 1040ez You use the remaining $98,700 of cost to figure your regular depreciation deduction for 2001 and later years. Instructions for form 1040ez Qualified Liberty Zone Property For a 2001 calendar or fiscal year and a 2000 fiscal year that ends after September 10, 2001, property qualifies for the special Liberty Zone depreciation allowance if it meets the following requirements. Instructions for form 1040ez It is one of the following types of property. Instructions for form 1040ez Used property depreciated under MACRS with a recovery period of 20 years or less. Instructions for form 1040ez See Can You Use MACRS To Depreciate Your Property and Which Recovery Period Applies? on pages 7 and 23, respectively, in Publication 946. Instructions for form 1040ez Used water utility property. Instructions for form 1040ez See 25-year property on page 22 in Publication 946. Instructions for form 1040ez Used computer software that is not a section 197 intangible as described in Computer software on page 5 in Publication 946. Instructions for form 1040ez (The cost of some computer software is treated as part of the cost of hardware and is depreciated under MACRS. Instructions for form 1040ez ) Certain nonresidential real property and residential rental property (defined later). Instructions for form 1040ez It meets the following tests (explained later under Tests to be met). Instructions for form 1040ez Acquisition date test. Instructions for form 1040ez Placed in service date test. Instructions for form 1040ez Substantial use test. Instructions for form 1040ez Original use test. Instructions for form 1040ez It is not excepted property (explained later under Excepted property). Instructions for form 1040ez Nonresidential real property and residential rental property. Instructions for form 1040ez   This property is qualifying property only to the extent it rehabilitates real property damaged, or replaces real property destroyed or condemned, as a result of the terrorist attack of September 11, 2001. Instructions for form 1040ez Property is treated as replacing destroyed or condemned property if, as part of an integrated plan, such property replaces real property included in a continuous area that includes real property destroyed or condemned. Instructions for form 1040ez   For these purposes, real property is considered destroyed (or condemned) only if an entire building or structure was destroyed (or condemned) as a result of the terrorist attack. Instructions for form 1040ez Otherwise, the property is considered damaged real property. Instructions for form 1040ez For example, if certain structural components of a building (such as walls, floors, or plumbing fixtures) are damaged or destroyed as a result of the terrorist attack, but the building is not destroyed (or condemned), then only costs related to replacing the damaged or destroyed structural components qualify for the special Liberty Zone depreciation allowance. Instructions for form 1040ez Tests to be met. Instructions for form 1040ez   To qualify for the special Liberty Zone depreciation allowance, your property must meet all of the following tests. Instructions for form 1040ez Acquisition date test. Instructions for form 1040ez   You must have acquired the property by purchase after September 10, 2001, and there must not have been a binding written contract for the acquisition in effect before September 11, 2001. Instructions for form 1040ez   For information on the acquisition of property by purchase, see Property Acquired by Purchase on page 15 of Publication 946. Instructions for form 1040ez   Property you manufacture, construct, or produce for your own use meets this test if you began the manufacture, construction, or production of the property after September 10, 2001. Instructions for form 1040ez Placed in service date test. Instructions for form 1040ez   Generally, the property must be placed in service for use in your trade or business or for the production of income before January 1, 2007 (January 1, 2010, in the case of qualifying nonresidential real property and residential rental property). Instructions for form 1040ez   If you sold property you placed in service after September 10, 2001, and you leased it back within 3 months after the property was originally placed in service, the property is treated as placed in service no earlier than the date it is used under the leaseback. Instructions for form 1040ez Substantial use test. Instructions for form 1040ez   Substantially all use of the property must be in the Liberty Zone and in the active conduct of your trade or business in the Liberty Zone. Instructions for form 1040ez Original use test. Instructions for form 1040ez   The original use of the property in the Liberty Zone must have begun with you after September 10, 2001. Instructions for form 1040ez   Used property can be qualified Liberty Zone property if it has not previously been used within the Liberty Zone. Instructions for form 1040ez Also, additional capital expenditures you incurred after September 10, 2001, to recondition or rebuild your property meet the original use test if the original use of the property in the Liberty Zone began with you. Instructions for form 1040ez Excepted property. Instructions for form 1040ez   The following property does not qualify for the special Liberty Zone depreciation allowance. Instructions for form 1040ez Property eligible for the special depreciation allowance explained earlier in Qualified Property under Special Depreciation Allowance. Instructions for form 1040ez Property required to be depreciated using ADS. Instructions for form 1040ez This includes listed property used 50% or less in a qualified business use. Instructions for form 1040ez Qualified New York Liberty Zone leasehold improvement property (defined earlier in Excepted Property under Special Depreciation Allowance). Instructions for form 1040ez Example. Instructions for form 1040ez In December 2001, you bought and placed in service in your business in the Liberty Zone the following property. Instructions for form 1040ez New office furniture with a MACRS recovery period of 7 years. Instructions for form 1040ez A used computer with a MACRS recovery period of 5 years. Instructions for form 1040ez The computer had not previously been used within the Liberty Zone. Instructions for form 1040ez Because the office furniture is new property, it qualifies for the special depreciation allowance, but not the special Liberty Zone depreciation allowance. Instructions for form 1040ez Because the computer is used property that had not previously been used in the Liberty Zone, it qualifies for the special Liberty Zone depreciation allowance, but not the special depreciation allowance. Instructions for form 1040ez Election Not To Claim the Liberty Zone Allowance You can elect not to claim the special Liberty Zone depreciation allowance for qualified property. Instructions for form 1040ez If you make this election for any property, it applies to all property in the same property class placed in service during the year. Instructions for form 1040ez To make this election, attach a statement to your return indicating you elect not to claim the allowance and the class of property for which you are making the election. Instructions for form 1040ez When to make the election. Instructions for form 1040ez   Generally, you must make the election on a timely filed tax return (including extensions) for the year in which you place the property in service. Instructions for form 1040ez   However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the original return (not including extensions). Instructions for form 1040ez Attach the election statement to the amended return. Instructions for form 1040ez At the top of the election statement, write “Filed pursuant to section 301. Instructions for form 1040ez 9100–2. Instructions for form 1040ez ” Revoking an election. Instructions for form 1040ez   Once you elect not to deduct the special Liberty Zone depreciation allowance for a class of property, you cannot revoke the election without IRS consent. Instructions for form 1040ez A request to revoke the election is subject to a user fee. Instructions for form 1040ez Returns filed before June 1, 2002. Instructions for form 1040ez   The rules that apply to the special depreciation allowance discussed earlier in Rules for Returns Filed Before June 1, 2002 under Special Depreciation Allowance also apply to the special Liberty Zone depreciation allowance. Instructions for form 1040ez Increased Section 179 Deduction Under section 179 of the Internal Revenue Code, you can choose to recover all or part of the cost of certain qualifying property, up to a limit, by deducting it in the year you place the property in service. Instructions for form 1040ez For tax years beginning in 2000, that limit was $20,000. Instructions for form 1040ez For tax years beginning in 2001 and 2002, that limit is generally $24,000. Instructions for form 1040ez If the cost of qualifying section 179 property placed in service in a year is over $200,000, you must reduce the dollar limit (but not below zero) by the amount of the cost over $200,000. Instructions for form 1040ez Increased Dollar Limit The dollar limit on the section 179 deduction is increased for certain property placed in service in the Liberty Zone. Instructions for form 1040ez The increase is the smaller of the following amounts. Instructions for form 1040ez $35,000. Instructions for form 1040ez The cost of section 179 property that is qualified Liberty Zone property placed in service during the year. Instructions for form 1040ez If you use the revised 2001 Form 4562 (dated March 2002) for a tax year beginning in 2000, you must reduce the section 179 dollar limit to $20,000 before adding the additional amount for qualified property. Instructions for form 1040ez Qualified property. Instructions for form 1040ez   To qualify for the increased section 179 deduction, your property must be section 179 property that is either: Qualified Liberty Zone property, or Property that would be qualified Liberty Zone property except that it is eligible for the special depreciation allowance. Instructions for form 1040ez Qualified Liberty Zone property is explained earlier in Qualified Liberty Zone Property under Special Liberty Zone Depreciation Allowance. Instructions for form 1040ez Property eligible for the special depreciation allowance is explained earlier in Qualified Property under Special Depreciation Allowance. Instructions for form 1040ez For information on the requirements that must be met for property to qualify for the section 179 deduction, see What Property Qualifies? on page 14 of Publication 946. Instructions for form 1040ez Example 1. Instructions for form 1040ez In 2002, you place in service in your business, which is in the Liberty Zone, qualified property (defined earlier) costing $25,000. Instructions for form 1040ez Because this cost is less than $35,000, the dollar limit on the section 179 deduction is increased by $25,000 to $49,000 ($24,000 + $25,000). Instructions for form 1040ez Example 2. Instructions for form 1040ez In 2002, you place in service in your business, which is in the Liberty Zone, qualified property (defined earlier) costing $75,000. Instructions for form 1040ez Because $35,000 is less than the cost of the property you place in service, the dollar limit on the section 179 deduction you can claim is increased by $35,000 to $59,000 ($24,000 + $35,000). Instructions for form 1040ez Reduced Dollar Limit Generally, you must reduce the dollar limit for a year by the cost of qualifying section 179 property placed in service in the year that is more than $200,000. Instructions for form 1040ez However, if the cost of your Liberty Zone property exceeds $200,000, you take into account only 50% (instead of 100%) of the cost of qualified property placed in service in a year. Instructions for form 1040ez Example. Instructions for form 1040ez In 2002, you place in service in your business, which is in the Liberty Zone, qualified property costing $460,000. Instructions for form 1040ez Your increased dollar limit is $59,000 ($35,000 + $24,000). Instructions for form 1040ez Because 50% of the cost of the property you place in service ($230,000) is $30,000 more than $200,000, you must reduce your $59,000 dollar limit to $29,000 ($59,000 - $30,000). Instructions for form 1040ez Recapture Rules Rules similar to those explained on page 20 of Publication 946 under When Must You Recapture the Deduction? apply with respect to any qualified property you stop using in the Liberty Zone. Instructions for form 1040ez Returns Filed Before June 1, 2002 If you filed a return before June 1, 2002, and did not deduct the increased section 179 amount for qualified property placed in service after September 10, 2001, you can deduct the increased amount by filing an amended return by the due date (not including extensions) of the return for the year after the year the property was placed in service. Instructions for form 1040ez This rule applies to returns for the following years. Instructions for form 1040ez 2000 fiscal years that end after September 10, 2001. Instructions for form 1040ez 2001 calendar and fiscal years. Instructions for form 1040ez On the amended return, write “Filed Pursuant to Rev. Instructions for form 1040ez Proc. Instructions for form 1040ez 2002–33. Instructions for form 1040ez ” Liberty Zone Leasehold Improvement Property Qualified Liberty Zone leasehold improvement property (described earlier in Qualified Property under Special Depreciation Allowance) is 5-year property. Instructions for form 1040ez This means that it is depreciated over a recovery period of 5 years. Instructions for form 1040ez For information about recovery periods, see Which Recovery Period Applies? on page 23 of Publication 946. Instructions for form 1040ez The straight-line method must be used with respect to qualified Liberty Zone leasehold improvement property. Instructions for form 1040ez Under ADS, the recovery period for qualified Liberty Zone leasehold improvement property is 9 years. Instructions for form 1040ez Returns Filed Before June 1, 2002 If you filed either of the following returns before June 1, 2002, and did not depreciate qualified Liberty Zone leasehold improvement property placed in service during the tax year as 5-year property using the straight line method, you should file an amended return before you file your return for the year after the year the property was placed in service. Instructions for form 1040ez Your 2000 fiscal year return (for a 2000 fiscal year that ends after September 10, 2001). Instructions for form 1040ez Your 2001 calendar or fiscal year return. Instructions for form 1040ez On the amended return, write “Filed Pursuant to Rev. Instructions for form 1040ez Proc. Instructions for form 1040ez 2002–33. Instructions for form 1040ez ” Table 2. Instructions for form 1040ez Rules for Returns Filed Before June 1, 2002 Note:This chart highlights the rules for returns affected by the Job Creation and Worker Assistance Act of 2002 that were filed before June 1, 2002, without accounting for any of the new benefits under the law. Instructions for form 1040ez See the text for definitions and examples. Instructions for form 1040ez Do not rely on this chart alone. Instructions for form 1040ez IF you want to. Instructions for form 1040ez . Instructions for form 1040ez . Instructions for form 1040ez THEN you. Instructions for form 1040ez . Instructions for form 1040ez . Instructions for form 1040ez BY. Instructions for form 1040ez . Instructions for form 1040ez . Instructions for form 1040ez claim the special depreciation allowance or special Liberty Zone depreciation allowance • must file an amended return • the due date (not including extensions) of your return for the year after the year the property was placed in service, or • must file Form 3115, Application for Change in Accounting Method, with your return for the year after the year the property was placed in service • the due date (including extensions) of your return for the year after the year the property was placed in service, and • must file a copy of your completed Form 3115 with the IRS National Office • the date you file the original Form 3115 with your return for the year after the year the property was placed in service. Instructions for form 1040ez elect not to claim the special depreciation allowance or the special Liberty Zone depreciation allowance 1 • must have filed your return timely for the year the property was placed in service, and   • must file an amended return stating you are not claiming the allowance • the date that is 6 months after the due date of the original return (not including extensions). Instructions for form 1040ez deduct the increased section 179 amount • must file an amended return • the due date (not including extensions) of your return for the year after the year the property was placed in service. Instructions for form 1040ez use a 5-year recovery period for depreciating qualified Liberty Zone leasehold improvement property • should file an amended return • the date you file your return for the year after the year the property was placed in service. Instructions for form 1040ez 1See also Deemed election under Rules for Returns Filed Before June 1, 2002, earlier. 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