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Military Tax Free Zones

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Military Tax Free Zones

Military tax free zones Publication 551 - Introductory Material Table of Contents What's New Reminder IntroductionOrdering forms and publications. Military tax free zones Tax questions. Military tax free zones Useful Items - You may want to see: What's New Property acquired from a decedent who died in 2010. Military tax free zones  Property acquired from a decedent dying in 2010 will no longer have an automatic increase in basis. Military tax free zones See Publication 4895, Tax Treatment of Property Acquired From a Decedent Dying in 2010, for details. Military tax free zones Reminder Photographs of missing children. Military tax free zones  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Military tax free zones Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Military tax free zones You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. Military tax free zones Introduction Basis is the amount of your investment in property for tax purposes. Military tax free zones Use the basis of property to figure depreciation, amortization, depletion, and casualty losses. Military tax free zones Also use it to figure gain or loss on the sale or other disposition of property. Military tax free zones You must keep accurate records of all items that affect the basis of property so you can make these computations. Military tax free zones This publication is divided into the following sections. Military tax free zones Cost Basis Adjusted Basis Basis Other Than Cost The basis of property you buy is usually its cost. Military tax free zones You may also have to capitalize (add to basis) certain other costs related to buying or producing the property. Military tax free zones Your original basis in property is adjusted (increased or decreased) by certain events. Military tax free zones If you make improvements to the property, increase your basis. Military tax free zones If you take deductions for depreciation or casualty losses, reduce your basis. Military tax free zones You cannot determine your basis in some assets by cost. Military tax free zones This includes property you receive as a gift or inheritance. Military tax free zones It also applies to property received in an involuntary conversion and certain other circumstances. Military tax free zones Comments and suggestions. Military tax free zones   We welcome your comments about this publication and your suggestions for future editions. Military tax free zones   You can write to us at the following address: Internal Revenue Service Business Forms and Publications Branch SE:W:CAR:MP:T:B 1111 Constitution Ave. Military tax free zones NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Military tax free zones Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Military tax free zones   You can email us at taxforms@irs. Military tax free zones gov. Military tax free zones Please put “Publications Comment” on the subject line. Military tax free zones You can also send us comments from www. Military tax free zones irs. Military tax free zones gov/formspubs/, select “Comment on Tax Forms and Publications” under “Information about. Military tax free zones ”   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. Military tax free zones Ordering forms and publications. Military tax free zones   Visit www. Military tax free zones irs. Military tax free zones gov/formspubs to download forms and publications, call 1-800-829-3676, or write to the address below and receive a response within 10 business days after your request is received. Military tax free zones  Internal Revenue Service  1201 N. Military tax free zones Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Military tax free zones   If you have a tax question, visit IRS. Military tax free zones gov or call 1-800-829-1040. Military tax free zones We cannot answer tax questions sent to either of the above addresses. Military tax free zones Useful Items - You may want to see: Publication 463 Travel, Entertainment, Gift, and Car Expenses 523 Selling Your Home 525 Taxable and Nontaxable Income 527 Residential Rental Property 530 Tax Information for First-Time Homeowners 535 Business Expenses 537 Installment Sales 544 Sales and Other Dispositions of Assets 550 Investment Income and Expenses 559 Survivors, Executors, and Administrators 587 Business Use of Your Home 946 How To Depreciate Property Form (and Instructions) 706 United States Estate (and Generation-Skipping Transfer) Tax Return 706-A United States Additional Estate Tax Return 8594 Asset Acquisition Statement See How To Get Tax Help near the end of this publication for information about getting publications and forms. Military tax free zones Prev  Up  Next   Home   More Online Publications
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The Large Business and International (LB&I) Division serves corporations, subchapter S corporations, and partnerships with assets greater than $10 million.

LB&I Programs and Resources

Abusive Tax Shelters and Transactions
The Internal Revenue Service has a comprehensive strategy in place to combat abusive tax shelters and transactions.

Coordinated Issue Papers - LB&I
Effective January 21, 2014, all LB&I coordinated issue papers are decoordinated.  See 1/21/14 Directive from LB&I Commissioner Maloy for details.

e-file for Large and Mid-Size Corporations
For tax years ending on or after December 31, 2006, corporations that have assets of $10 Million or more are required to electronically file their 1120/1102S income tax returns.  For tax years ending on or after December 31, 2007, foreign corporations with assets of $10 Million or more are required to electronically file their 1120-F income tax returns.

Industry Issue Resolution Program
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LB&I Directives provide industry-related and administrative guidance to LB&I examiners to ensure consistent tax administration. The Directives do not establish Service position on legal issues and are not legal guidance.

Pre-Filing Agreement Program
The Pre-Filing Agreement Program is expected to reduce taxpayer burden and make more effective use of IRS resources by resolving or eliminating tax controversy earlier in the examination process.

Schedule M-3 for Reconciling Book to Tax Income
The Treasury Department and IRS are implementing Schedule M-3, “Net Income (Loss) Reconciliation for Corporations With Total Assets of $10 Million or More”.
 

Page Last Reviewed or Updated: 18-Mar-2014

The Military Tax Free Zones

Military tax free zones 8. Military tax free zones   Paying Tax Through Withholding or Estimated Tax Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Notification of Alien Status Withholding From CompensationWithholding on Wages Withholding on Pensions Withholding on Tip Income Independent Contractors Withholding From Other IncomeTax Withheld on Partnership Income Withholding on Scholarships and Fellowship Grants Income Entitled to Tax Treaty BenefitsStudents, teachers, and researchers. Military tax free zones Tax Withheld on Real Property Sales Social Security and Medicare TaxesStudents and Exchange Visitors Agricultural Workers Self-Employment Tax International Social Security Agreements Estimated Tax Form 1040-ES (NR)Fiscal year. Military tax free zones Introduction This chapter discusses how to pay your U. Military tax free zones S. Military tax free zones income tax as you earn or receive income during the year. Military tax free zones In general, the federal income tax is a pay as you go tax. Military tax free zones There are two ways to pay as you go. Military tax free zones Withholding. Military tax free zones If you are an employee, your employer probably withholds income tax from your pay. Military tax free zones Tax may also be withheld from certain other income—including pensions, bonuses, commissions, and gambling winnings. Military tax free zones In each case, the amount withheld is paid to the U. Military tax free zones S. Military tax free zones Treasury in your name. Military tax free zones Estimated tax. Military tax free zones If you do not pay your tax through withholding, or do not pay enough tax that way, you might have to pay estimated tax. Military tax free zones People who are in business for themselves generally will have to pay their tax this way. Military tax free zones You may have to pay estimated tax if you receive income such as dividends, interest, rent, and royalties. Military tax free zones Estimated tax is used to pay not only income tax, but self-employment tax and alternative minimum tax as well. Military tax free zones Topics - This chapter discusses: How to notify your employer of your alien status, Income subject to withholding of income tax, Exemptions from withholding, Social security and Medicare taxes, and Estimated tax rules. Military tax free zones Useful Items - You may want to see: Publication 515 Withholding of Tax on Nonresident Aliens and Foreign Entities 901 U. Military tax free zones S. Military tax free zones Tax Treaties Form (and Instructions) W-4 Employee's Withholding Allowance Certificate W-8BEN Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting (Individuals) W-8ECI Certificate of Foreign Person's Claim That Income Is Effectively Connected With the Conduct of a Trade or Business in the United States W-9 Request for Taxpayer Identification Number and Certification 1040-ES (NR) U. Military tax free zones S. Military tax free zones Estimated Tax for Nonresident Alien Individuals 8233 Exemption From Withholding on Compensation for Independent (and Certain Dependent) Personal Services of a Nonresident Alien Individual 8288-B Application for Withholding Certificate for Dispositions by Foreign Persons of U. Military tax free zones S. Military tax free zones Real Property Interests 13930 Application for Central Withholding Agreement See chapter 12 for information about getting these publications and forms. Military tax free zones Notification of Alien Status You must let your employer know whether you are a resident or a nonresident alien so your employer can withhold the correct amount of tax from your wages. Military tax free zones If you are a resident alien under the rules discussed in chapter 1, you must file Form W-9 or a similar statement with your employer. Military tax free zones If you are a nonresident alien under those rules, you must furnish to your employer Form 8233 or Form W-8BEN, establishing that you are a foreign person, or Form W-4, establishing that your compensation is subject to graduated withholding at the same rates as resident aliens or U. Military tax free zones S. Military tax free zones citizens. Military tax free zones If you are a resident alien and you receive income other than wages (such as dividends and royalties) from sources within the United States, file Form W-9 or similar statement with the withholding agent (generally, the payer of the income) so the agent will not withhold tax on the income at the 30% (or lower treaty) rate. Military tax free zones If you receive this type of income as a nonresident alien, file Form W-8BEN with the withholding agent so that the agent will withhold tax at the 30% (or lower treaty) rate. Military tax free zones However, if the income is effectively connected with a U. Military tax free zones S. Military tax free zones trade or business, file Form W-8ECI instead. Military tax free zones Withholding From Compensation The following discussion generally applies only to nonresident aliens. Military tax free zones Tax is withheld from resident aliens in the same manner as U. Military tax free zones S. Military tax free zones citizens. Military tax free zones Wages and other compensation paid to a nonresident alien for services performed as an employee are usually subject to graduated withholding at the same rates as resident aliens and U. Military tax free zones S. Military tax free zones citizens. Military tax free zones Therefore, your compensation, unless it is specifically excluded from the term “wages” by law, or is exempt from tax by treaty, is subject to graduated withholding. Military tax free zones Withholding on Wages If you are an employee and you receive wages subject to graduated withholding, you will be required to fill out a Form W-4. Military tax free zones Also fill out Form W-4 for a scholarship or fellowship grant to the extent it represents payment for past, present, or future services and for which you are not claiming a tax treaty withholding exemption on Form 8233 (discussed later under Income Entitled to Tax Treaty Benefits). Military tax free zones These are services you are required to perform as an employee and as a condition of receiving the scholarship or fellowship (or tuition reduction). Military tax free zones Nonresident aliens should fill out Form W-4 using the following instructions instead of the instructions on the Form W-4. Military tax free zones This is because of the restrictions on a nonresident alien's filing status, the limited number of personal exemptions a nonresident alien is allowed, and because a nonresident alien cannot claim the standard deduction. Military tax free zones Enter your social security number (SSN) on line 2. Military tax free zones Do not enter an individual taxpayer identification number (ITIN). Military tax free zones Check only “Single” marital status on line 3 (regardless of your actual marital status). Military tax free zones Claim only one allowance on line 5, unless you are a resident of Canada, Mexico, or South Korea, or a U. Military tax free zones S. Military tax free zones national. Military tax free zones Write “Nonresident Alien” or “NRA” on the dotted line on line 6. Military tax free zones You can request additional withholding on line 6 at your option. Military tax free zones Do not claim “Exempt” withholding status on line 7. Military tax free zones A U. Military tax free zones S. Military tax free zones national is an individual who, although not a U. Military tax free zones S. Military tax free zones citizen, owes his or her allegiance to the United States. Military tax free zones U. Military tax free zones S. Military tax free zones nationals include American Samoans, and Northern Mariana Islanders who chose to become U. Military tax free zones S. Military tax free zones nationals instead of U. Military tax free zones S. Military tax free zones citizens. Military tax free zones See Withholding on Scholarships and Fellowship Grants later, for how to fill out Form W-4 if you receive a U. Military tax free zones S. Military tax free zones source scholarship or fellowship grant that is not a payment for services. Military tax free zones Students and business apprentices from India. Military tax free zones   If you are eligible for the benefits of Article 21(2) of the United States-India Income Tax Treaty, you may claim an additional withholding allowance for the standard deduction. Military tax free zones You can claim an additional withholding allowance for your spouse only if your spouse will have no gross income for 2013 and cannot be claimed as a dependent on another U. Military tax free zones S. Military tax free zones taxpayer's 2013 return. Military tax free zones You may also claim an additional withholding allowance 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. Military tax free zones S. Military tax free zones citizens. Military tax free zones Household employees. Military tax free zones   If you work as a household employee, your employer does not have to withhold income tax. Military tax free zones However, you may agree to voluntary income tax withholding by filing a Form W-4 with your employer. Military tax free zones The agreement goes into effect when your employer accepts the agreement by beginning the withholding. Military tax free zones You or your employer may end the agreement by letting the other know in writing. Military tax free zones Agricultural workers. Military tax free zones   If you are an agricultural worker on an H-2A visa, your employer does not have to withhold income tax. Military tax free zones However, your employer will withhold income tax only if you and your employer agree to withhold. Military tax free zones In that case, you must provide your employer with a properly completed Form W-4. Military tax free zones You can find more information about not having tax withheld at www. Military tax free zones irs. Military tax free zones gov/Individuals/International-Taxpayers/Foreign-Agricultural-Workers. Military tax free zones Wages Exempt From Withholding Wages that are exempt from U. Military tax free zones S. Military tax free zones income tax under an income tax treaty are generally exempt from withholding. Military tax free zones For information on how to claim this exemption from withholding, see Income Entitled to Tax Treaty Benefits , later. Military tax free zones Wages paid to aliens who are residents of American Samoa, Canada, Mexico, Puerto Rico, or the U. Military tax free zones S. Military tax free zones Virgin Islands may be exempt from withholding. Military tax free zones The following paragraphs explain these exemptions. Military tax free zones Residents of Canada or Mexico engaged in transportation-related employment. Military tax free zones   Certain residents of Canada or Mexico who enter or leave the United States at frequent intervals are not subject to withholding on their wages. Military tax free zones These persons either: Perform duties in transportation service between the United States and Canada or Mexico, or Perform duties connected to the construction, maintenance, or operation of a waterway, viaduct, dam, or bridge crossed by, or crossing, the boundary between the United States and Canada or the boundary between the United States and Mexico. Military tax free zones    This employment is subject to withholding of social security and Medicare taxes unless the services are performed for a railroad. Military tax free zones   To qualify for the exemption from withholding during a tax year, a Canadian or Mexican resident must give the employer a statement in duplicate with name, address, and identification number, certifying that the resident: Is not a U. Military tax free zones S. Military tax free zones citizen or resident, Is a resident of Canada or Mexico, whichever applies, and Expects to perform duties previously described during the tax year in question. Military tax free zones   The statement can be in any form, but it must be dated and signed by the employee and must include a written declaration that it is made under the penalties of perjury. Military tax free zones Residents of American Samoa and Puerto Rico. Military tax free zones   If you are a nonresident alien employee who is a resident of American Samoa or Puerto Rico, wages for services performed in American Samoa or Puerto Rico are generally not subject to withholding unless you are an employee of the United States or any of its agencies in American Samoa or Puerto Rico. Military tax free zones Residents of the U. Military tax free zones S. Military tax free zones Virgin Islands. Military tax free zones   Nonresident aliens who are bona fide residents of the U. Military tax free zones S Virgin Islands are not subject to withholding of U. Military tax free zones S. Military tax free zones tax on income earned while temporarily employed in the United States. Military tax free zones This is because those persons pay their income tax to the U. Military tax free zones S. Military tax free zones Virgin Islands. Military tax free zones To avoid having tax withheld on income earned in the United States, bona fide residents of the U. Military tax free zones S. Military tax free zones Virgin Islands should write a letter, in duplicate, to their employers, stating that they are bona fide residents of the U. Military tax free zones S. Military tax free zones Virgin Islands and expect to pay tax on all income to the U. Military tax free zones S. Military tax free zones Virgin Islands. Military tax free zones Withholding on Pensions If you receive a pension as a result of personal services performed in the United States, the pension income is subject to the 30% (or lower treaty) rate of withholding. Military tax free zones You may, however, have tax withheld at graduated rates on the portion of the pension that arises from the performance of services in the United States after December 31, 1986. Military tax free zones You must fill out Form W-8BEN and give it to the withholding agent or payer before the income is paid or credited to you. Military tax free zones Withholding on Tip Income Tips you receive during the year for services performed in the United States are subject to U. Military tax free zones S. Military tax free zones income tax. Military tax free zones Include them in taxable income. Military tax free zones In addition, tips received while working for one employer, amounting to $20 or more in a month, are subject to graduated withholding. Military tax free zones Independent Contractors If there is no employee-employer relationship between you and the person for whom you perform services, your compensation is subject to the 30% (or lower treaty) rate of withholding. Military tax free zones However, if you are engaged in a trade or business in the United States during the tax year, your compensation for personal services as an independent contractor (independent personal services) may be entirely or partly exempt from withholding if you reach an agreement with the Internal Revenue Service on the amount of withholding required. Military tax free zones An agreement that you reach with the IRS regarding withholding from your compensation for independent personal services is effective for payments covered by the agreement after it is agreed to by all parties. Military tax free zones You must agree to timely file an income tax return for the current tax year. Military tax free zones Central withholding agreements. Military tax free zones   If you are a nonresident alien entertainer or athlete performing or participating in athletic events in the United States, you may be able to enter into a withholding agreement with the IRS for reduced withholding provided certain requirements are met. Military tax free zones Under no circumstances will such a withholding agreement reduce taxes withheld to less than the anticipated amount of income tax liability. Military tax free zones   File Form 13930 and the required attachments with the IRS to request a central withholding agreement. Military tax free zones Either you or your authorized representative can file the form. Military tax free zones It should be sent to the IRS at least 45 days before the tour begins or the event occurs. Military tax free zones Exceptions will be considered on a case by case basis. Military tax free zones   For more information on the CWA program, go to www. Military tax free zones irs. Military tax free zones gov/Individuals/International-Taxpayers/Central-Withholding-Agreements. Military tax free zones Final payment exemption. Military tax free zones   Your final payment of compensation during the tax year for independent personal services may be entirely or partly exempt from withholding. Military tax free zones This exemption is available only once during your tax year and applies to a maximum of $5,000 of compensation. Military tax free zones To obtain this exemption, you or your agent must give the following statements and information to the Commissioner or his delegate. Military tax free zones A statement by each withholding agent from whom you have received gross income effectively connected with a trade or business in the United States during the tax year, showing the amount of income paid and the tax withheld. Military tax free zones Each statement must be signed by the withholding agent and verified by a declaration that it is made under penalties of perjury. Military tax free zones A statement by the withholding agent from whom you expect to receive the final payment of compensation, showing the amount of the payment and the amount of tax that would be withheld if a final payment exemption were not granted. Military tax free zones This statement must also be signed by the withholding agent and verified by a declaration that it is made under penalties of perjury. Military tax free zones A statement by you that you do not intend to receive any other income effectively connected with a trade or business in the United States during the current tax year. Military tax free zones The amount of tax that has been withheld or paid under any other provision of the Internal Revenue Code or regulations for any income effectively connected with your trade or business in the United States during the current tax year. Military tax free zones The amount of your outstanding tax liabilities, if any, including interest and penalties, from the current tax year or prior tax periods. Military tax free zones Any provision of an income tax treaty under which a partial or complete exemption from withholding may be claimed, the country of your residence, and a statement of sufficient facts to justify an exemption under the treaty. Military tax free zones A statement signed by you, and verified by a declaration that it is made under penalties of perjury, that all the information given is true and that to your knowledge no relevant information has been omitted. Military tax free zones   If satisfied with the information, the IRS will determine the amount of your tentative income tax for the tax year on gross income effectively connected with your trade or business in the United States. Military tax free zones Ordinary and necessary business expenses can be taken into account if proven to the satisfaction of the Commissioner or his delegate. Military tax free zones   The Commissioner or his delegate will send you a letter, directed to the withholding agent, showing the amount of the final payment of compensation that is exempt from withholding and the amount that can be paid to you because of the exemption. Military tax free zones You must give two copies of the letter to the withholding agent and must also attach a copy of the letter to your income tax return for the tax year for which the exemption is effective. Military tax free zones Allowance for Personal Exemption Withholding on payments for independent personal services is generally based on the amount of your compensation payment minus the value of one exemption ($3,950 for 2014). Military tax free zones To determine the income for independent personal services performed in the United States to which the 30% (or lower treaty) rate will apply, you are allowed one personal exemption if you are not a U. Military tax free zones S. Military tax free zones national and are not a resident of Canada, Mexico, or South Korea. Military tax free zones For purposes of 30% withholding, the exemption is prorated at $10. Military tax free zones 82 a day in 2014 for the period that labor or personal services are performed in the United States. Military tax free zones To claim an exemption from withholding on the personal exemption amount, fill out the applicable parts of Form 8233 and give it to the withholding agent. Military tax free zones Example. Military tax free zones Eric Johannsen, who is a resident of Country X worked under a contract with a U. Military tax free zones S. Military tax free zones firm (not as an employee) in the United States for 100 days during 2014 before returning to his country. Military tax free zones He earned $6,000 for the services performed (not considered wages) in the United States. Military tax free zones Eric is married and has three dependent children. Military tax free zones His wife is not employed and has no income subject to U. Military tax free zones S. Military tax free zones tax. Military tax free zones The amount of the personal exemption to be allowed against the income for his personal services performed within the United States in 2014 is $1,082 (100 days × $10. Military tax free zones 82), and withholding at 30% is applied against the balance. Military tax free zones Thus, $1,475. Military tax free zones 40 in tax is withheld from Eric's earnings (30% of $4,918 ($6,000 − $1,082). Military tax free zones U. Military tax free zones S. Military tax free zones nationals or residents of Canada, Mexico, or South Korea. Military tax free zones   If you are a nonresident alien who is a resident of Canada, Mexico, or South Korea, or who is a national of the United States, you are subject to the same 30% withholding on your compensation for independent personal services performed in the United States. Military tax free zones However, if you are a U. Military tax free zones S. Military tax free zones national or a resident of Canada or Mexico, you are allowed the same personal exemptions as U. Military tax free zones S. Military tax free zones citizens. Military tax free zones For the 30% (or lower treaty) rate withholding, you can take $10. Military tax free zones 82 per day for each allowable exemption in 2014. Military tax free zones If you are a resident of South Korea, you are allowed personal exemptions for yourself and for your spouse and children who live with you in the United States at any time during the tax year. Military tax free zones However, the additional exemptions for your spouse and children must be further prorated as explained in chapter 5 under Exemptions . Military tax free zones Students and business apprentices from India. Military tax free zones   If you are eligible for the benefits of Article 21(2) of the United States-India Income Tax Treaty, you are allowed an exemption for your spouse only if your spouse will have no gross income for 2014 and cannot be claimed as a dependent on another U. Military tax free zones S. Military tax free zones taxpayer's 2014 return. Military tax free zones You are also allowed an exemption for each dependent 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. Military tax free zones S. Military tax free zones citizens. Military tax free zones For the 30% (or lower treaty rate) withholding on compensation for independent personal services performed in the United States, you are allowed $10. Military tax free zones 82 per day for each allowable exemption in 2014. Military tax free zones Refund of Taxes Withheld in Error Multi-level marketing. Military tax free zones   If you are a distributor for a multi-level marketing company who had taxes withheld in error, file a U. Military tax free zones S. Military tax free zones income tax return (Form 1040NR, Form 1040NR-EZ, or Form 1120-F) or, if a tax return has already been filed, a claim for refund (Form 1040X or amended Form 1120-F) to recover the amount withheld in error. Military tax free zones You must also attach to the U. Military tax free zones S. Military tax free zones income tax return or claim for refund supporting information that includes, but is not limited to, the following items. Military tax free zones A copy of your Form W-2, Form 1042-S, or Form 1099 to prove the amount of taxes withheld. Military tax free zones A statement explaining why income reported on your Form W-2, Form 1042-S, or Form 1099 is not subject to U. Military tax free zones S. Military tax free zones taxation. Military tax free zones A statement listing all the dates you entered and left the United States during the taxable year. Military tax free zones If the compensation is multi-year compensation, the statement must list all the dates you entered and left the United States during each of the taxable years to which the compensation is attributable. Military tax free zones A copy of any documents or records that show the number of days you actually were present in the United States during the years listed. Military tax free zones A statement providing: (a) the number of days (or unit of time less than a day, if appropriate) that personal services were performed in the United States in connection with recruiting, training, and supporting your lower-tier distributors; and (b) the total number of days (or unit of time less than a day, if appropriate) that personal services were performed globally in connection with recruiting, training, and supporting your lower-tier distributors. Military tax free zones Any further relevant document or record supporting your claim that the taxes were withheld in error. Military tax free zones Withholding From Other Income Other income subject to 30% withholding generally includes fixed or determinable income such as interest (other than portfolio interest), dividends, pensions and annuities, and gains from certain sales and exchanges, discussed in chapter 4. Military tax free zones It also includes 85% of social security benefits paid to nonresident aliens. Military tax free zones Refund of taxes withheld in error on social security benefits paid to resident aliens. Military tax free zones   Social security benefits paid to a lawful permanent resident (green card holder) are not subject to 30% withholding. Military tax free zones For U. Military tax free zones S. Military tax free zones income tax purposes, green card holders continue to be resident aliens until their lawful permanent resident status under immigration laws is either taken away or is administratively or judicially determined to have been abandoned. Military tax free zones See Green Card Test in chapter 1. Military tax free zones If you are a green card holder and tax was withheld in error on your social security benefits because you have a foreign address, the withholding tax is refundable by the Social Security Administration (SSA) or the IRS. Military tax free zones SSA will refund taxes erroneously withheld if the refund can be processed during the same calendar year in which the tax was withheld. Military tax free zones If SSA cannot refund the taxes withheld, you must file a Form 1040 or 1040A with the Department of the Treasury, Internal Revenue Service Center, Austin, TX 73301 to determine if you are entitled to a refund. Military tax free zones You must also attach the following to your Form 1040 or 1040A. Military tax free zones A copy of Form SSA-1042S, Social Security Benefit Statement. Military tax free zones A copy of the “green card. Military tax free zones ” A signed declaration that includes the following statements: The SSA should not have withheld income tax from my social security benefits because I am a U. Military tax free zones S. Military tax free zones lawful permanent resident and my green card has been neither revoked nor administratively or judicially determined to have been abandoned. Military tax free zones I am filing a U. Military tax free zones S. Military tax free zones income tax return for the tax year as a resident alien reporting all of my worldwide income. Military tax free zones I have not claimed benefits for the tax year under an income tax treaty as the resident of a country other than the United States. Military tax free zones Other income not subject to withholding of 30% (or lower treaty) rate. Military tax free zones   The following income is not subject to withholding at the 30% (or lower treaty) rate if you file Form W-8ECI with the payer of the income. Military tax free zones Income (other than compensation) that is effectively connected with your U. Military tax free zones S. Military tax free zones trade or business. Military tax free zones Income from real property that you choose to treat as effectively connected with a U. Military tax free zones S. Military tax free zones trade or business. Military tax free zones See Income From Real Property in chapter 4 for details about this choice. Military tax free zones   Special rules for withholding on partnership income, scholarships, and fellowships are explained next. Military tax free zones Tax Withheld on Partnership Income If you are a foreign partner in a U. Military tax free zones S. Military tax free zones or foreign partnership, the partnership will withhold tax on your share of effectively connected taxable income (ECTI) from the partnership. Military tax free zones You may be able to reduce your ECTI subject to withholding by certain partner-level deductions. Military tax free zones Generally, you must use Form 8804-C for this purpose. Military tax free zones See the Instructions for Form 8804-C for more information. Military tax free zones The withholding rate on your share of effectively connected income is generally the highest rate of tax specified under section 1 of the Code (39. Military tax free zones 6% for 2014). Military tax free zones However, the partnership may withhold at the highest rate that applies to a particular type of income allocable to you if you gave the partnership the appropriate documentation. Military tax free zones Long-term capital gain is an example of a particular type of income to which the highest tax rate applies. Military tax free zones Claim the tax withheld as a credit on your 2014 Form 1040NR. Military tax free zones The partnership will give you a statement on Form 8805, Foreign Partner's Information Statement of Section 1446 Withholding Tax, showing the tax withheld. Military tax free zones A partnership that is publicly traded will withhold tax on your actual distributions of effectively connected income. Military tax free zones In this case the partnership will give you a statement on Form 1042-S, Foreign Person's U. Military tax free zones S. Military tax free zones Source Income Subject to Withholding. Military tax free zones Withholding on Scholarships and Fellowship Grants There is no withholding on a qualified scholarship received by a candidate for a degree. Military tax free zones See chapter 3. Military tax free zones If you are a nonresident alien student or grantee with an “F,” “J,” “M,” or “Q” visa and you receive a U. Military tax free zones S. Military tax free zones source grant or scholarship that is not fully exempt, the withholding agent (usually the payer of the scholarship) withholds tax at 14% (or lower treaty rate) of the taxable part of the grant or scholarship that is not a payment for services. Military tax free zones However, if you are not a candidate for a degree and the grant does not meet certain requirements, tax will be withheld at the 30% (or lower treaty) rate. Military tax free zones Any part of a scholarship or fellowship grant that is a payment for services is subject to graduated withholding as discussed earlier under Withholding on Wages. Military tax free zones Alternate Withholding Procedure Your withholding agent may choose to use an alternate procedure by asking you to fill out Form W-4 and the Personal Allowances Worksheet (attached to Form W-4). Military tax free zones Use the following instructions instead of the Form W-4 instructions to complete the worksheet. Military tax free zones Line A. Military tax free zones   Enter the total of the following amounts on line A. Military tax free zones Personal exemption. Military tax free zones   Include the prorated part of your allowable personal exemption. Military tax free zones Figure the amount by multiplying the number of days you expect to be in the United States in 2014 by the daily exemption amount ($10. Military tax free zones 82). Military tax free zones Expenses. Military tax free zones   Include expenses that will be deductible on your return. Military tax free zones These include away-from-home expenses (meals, lodging, and transportation), certain state and local income taxes, charitable contributions, and casualty losses, discussed earlier under Itemized Deductions in chapter 5. Military tax free zones They also include business expenses, moving expenses, and the IRA deduction discussed under Deductions in chapter 5. Military tax free zones Nontaxable grant or scholarship. Military tax free zones   Include the part of your grant or scholarship that is not taxable under U. Military tax free zones S. Military tax free zones law or under a tax treaty. Military tax free zones Line B. Military tax free zones   Enter -0- unless the following paragraph applies to you. Military tax free zones   If you are a student who qualifies under Article 21(2) of the United States-India Income Tax Treaty, and you are not claiming deductions for away-from-home expenses or other itemized deductions (discussed earlier), enter the standard deduction on line B. Military tax free zones The standard deduction amount for 2013 is $6,100. Military tax free zones Lines C and D. Military tax free zones   Enter -0- on both lines unless the following paragraphs apply to you. Military tax free zones   If you are a resident of Canada, Mexico, South Korea, or a U. Military tax free zones S. Military tax free zones national, an additional daily exemption amount may be allowed for your spouse and each of your dependents. Military tax free zones   If you are a resident of India who is eligible for the benefits of Article 21(2) of the United States-India Income Tax Treaty, you can claim an additional daily exemption amount for your spouse only if your spouse will have no gross income for 2014 and cannot be claimed as a dependent on another U. Military tax free zones S. Military tax free zones taxpayer's 2014 return. Military tax free zones You can also claim an additional amount 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. Military tax free zones S. Military tax free zones citizens. Military tax free zones   Enter any additional amount for your spouse on line C. Military tax free zones Enter any additional amount for your dependents on line D. Military tax free zones Lines E, F, and G. Military tax free zones   No entries should be made on lines E, F, and G. Military tax free zones Line H. Military tax free zones   Add the amounts on lines A through D and enter the total on line H. Military tax free zones Form W-4. Military tax free zones   Complete lines 1 through 4 of Form W-4. Military tax free zones Sign and date the form and give it with the Personal Allowances Worksheet to your withholding agent. Military tax free zones   If you file a Form W-4 to reduce or eliminate the withholding on your scholarship or grant, you must file an annual U. Military tax free zones S. Military tax free zones income tax return to be allowed the exemptions and deductions you claimed on that form. Military tax free zones If you are in the United States during more than one tax year, you must attach a statement to your yearly Form W-4 indicating that you have filed a U. Military tax free zones S. Military tax free zones income tax return for the previous year. Military tax free zones If you have not been in the United States long enough to be required to file a return, you must attach a statement to your Form W-4 saying you will file a U. Military tax free zones S. Military tax free zones income tax return when required. Military tax free zones After the withholding agent has accepted your Form W-4, tax will be withheld on your scholarship or grant at the graduated rates that apply to wages. Military tax free zones The gross amount of the income is reduced by the amount on line H of the worksheet and the withholding tax is figured on the remainder. Military tax free zones You will receive a Form 1042-S from the withholding agent (usually the payer of your grant) showing the gross amount of your taxable scholarship or fellowship grant less the withholding allowance amount, the tax rate, and the amount of tax withheld. Military tax free zones Use this form to prepare your annual U. Military tax free zones S. Military tax free zones income tax return. Military tax free zones Income Entitled to Tax Treaty Benefits If a tax treaty between the United States and your country provides an exemption from, or a reduced rate of, tax for certain items of income, you should notify the payor of the income (the withholding agent) of your foreign status to claim a tax treaty withholding exemption. Military tax free zones Generally, you do this by filing either Form W-8BEN or Form 8233 with the withholding agent. Military tax free zones File Form W-8BEN for income that is not personal services income. Military tax free zones File Form 8233 for personal services income as discussed next. Military tax free zones Employees and independent contractors. Military tax free zones   If you perform personal services as an employee or as an independent contractor and you can claim an exemption from withholding on that personal service income because of a tax treaty, give Form 8233 to each withholding agent from whom amounts will be received. Military tax free zones   Even if you submit Form 8233, the withholding agent may have to withhold tax from your income. Military tax free zones This is because the factors on which the treaty exemption is based may not be determinable until after the close of the tax year. Military tax free zones In this case, you must file Form 1040NR (or Form 1040NR-EZ if you qualify) to recover any overwithheld tax and to provide the IRS with proof that you are entitled to the treaty exemption. Military tax free zones Students, teachers, and researchers. Military tax free zones   Students, teachers, and researchers must attach the appropriate statement shown in Appendix A (for students) or Appendix B (for teachers and researchers) at the end of this publication to the Form 8233 and give it to the withholding agent. Military tax free zones For treaties not listed in the appendices, attach a statement in a format similar to those for other treaties. Military tax free zones   If you received a scholarship or fellowship and personal services income from the same withholding agent, use Form 8233 to claim an exemption from withholding based on a tax treaty for both types of income. Military tax free zones Special events and promotions. Military tax free zones   Withholding at the full 30% rate is required for payments made to a nonresident alien or foreign corporation for gate receipts (or television or other receipts) from rock music festivals, boxing promotions, and other entertainment or sporting events, unless the withholding agent has been specifically advised otherwise by letter from the IRS. Military tax free zones Form 13930 is used to request a reduction in withholding. Military tax free zones Withholding may be required even if the income may be exempt from taxation by provisions of a tax treaty. Military tax free zones One reason for this is that the partial or complete exemption is usually based on factors that cannot be determined until after the close of the tax year. Military tax free zones You will be required to pay U. Military tax free zones S. Military tax free zones tax, at the time of your departure from the United States, on any income for which you incorrectly claimed a treaty exemption. Military tax free zones For more details on treaty provisions that apply to compensation, see Publication 901. Military tax free zones Tax Withheld on Real Property Sales If you are a nonresident alien and you dispose of a U. Military tax free zones S. Military tax free zones real property interest, the transferee (buyer) of the property generally must withhold a tax equal to 10% of the amount realized on the disposition. Military tax free zones A distribution by a qualified investment entity to a nonresident alien shareholder that is treated as gain from the sale or exchange of a U. Military tax free zones S. Military tax free zones real property interest by the shareholder is subject to withholding at 35%. Military tax free zones Withholding is also required on certain distributions and other transactions by domestic or foreign corporations, partnerships, trusts, and estates. Military tax free zones These rules are covered in Publication 515. Military tax free zones For information on the tax treatment of dispositions of U. Military tax free zones S. Military tax free zones real property interests, see Real Property Gain or Loss in chapter 4. Military tax free zones If you are a partner in a domestic partnership, and the partnership disposes of a U. Military tax free zones S. Military tax free zones real property interest at a gain, the partnership will withhold tax on the amount of gain allocable to its foreign partners. Military tax free zones Your share of the income and tax withheld will be reported to you on Form 8805, Foreign Partner's Information Statement of Section 1446 Withholding Tax, or Form 1042-S, Foreign Person's U. Military tax free zones S. Military tax free zones Source Income Subject to Withholding (in the case of a publicly traded partnership). Military tax free zones Withholding is not required in the following situations. Military tax free zones The property is acquired by the buyer for use as a residence and the amount realized (sales price) is not more than $300,000. Military tax free zones The property disposed of is an interest in a domestic corporation if any class of stock of the corporation is regularly traded on an established securities market. Military tax free zones However, this exception does not apply to certain dispositions of substantial amounts of non-publicly traded interests in publicly traded corporations. Military tax free zones The property disposed of is an interest in a U. Military tax free zones S. Military tax free zones corporation that is not regularly traded on an established market and you (the seller) give the buyer a copy of a statement issued by the corporation certifying that the interest is not a U. Military tax free zones S. Military tax free zones real property interest. Military tax free zones You (the seller) give the buyer a certification stating, under penalties of perjury, that you are not a foreign person, and containing your name, U. Military tax free zones S. Military tax free zones taxpayer identification number, and home address. Military tax free zones You can give the certification to a qualified substitute. Military tax free zones The qualified substitute gives the buyer a statement, under penalties of perjury, that the certification is in the possession of the qualified substitute. Military tax free zones For this purpose, a qualified substitute is (a) the person (including any attorney or title company) responsible for closing the transaction, other than your agent, and (b) the buyer's agent. Military tax free zones The buyer receives a withholding certificate from the Internal Revenue Service. Military tax free zones You give the buyer written notice that you are not required to recognize any gain or loss on the transfer because of a nonrecognition provision in the Internal Revenue Code or a provision in a U. Military tax free zones S. Military tax free zones tax treaty. Military tax free zones The buyer must file a copy of the notice with the Ogden Service Center, P. Military tax free zones O. Military tax free zones Box 409101, Ogden, UT 84409. Military tax free zones You must verify the notice as true and sign it under penalties of perjury. Military tax free zones The notice must contain the following information. Military tax free zones A statement that the notice is a notice of nonrecognition under regulation section 1. Military tax free zones 1445-2(d)(2). Military tax free zones Your name, taxpayer identification number, and home address. Military tax free zones A statement that you are not required to recognize any gain or loss on the transfer. Military tax free zones A brief description of the transfer. Military tax free zones A brief summary of the law and facts supporting your claim that recognition of gain or loss is not required. Military tax free zones You may not give the buyer a written notice for any of the following transfers: the sale of your main home on which you exclude gain, a like-kind exchange that does not qualify for nonrecognition treatment in its entirety, or a deferred like-kind exchange that has not been completed at the time the buyer must file Form 8288. Military tax free zones Instead, a withholding certificate (described next) must be obtained. Military tax free zones The amount you realize on the transfer of a U. Military tax free zones S. Military tax free zones real property interest is zero. Military tax free zones The property is acquired by the United States, a U. Military tax free zones S. Military tax free zones state or possession, a political subdivision, or the District of Columbia. Military tax free zones The distribution is from a domestically controlled qualified investment entity (QIE) and is treated as a distribution of a U. Military tax free zones S. Military tax free zones real property interest only because an interest in the entity was disposed of in an applicable wash sale transaction. Military tax free zones For the definition of a QIE, see Qualified investment entities under Real Property Gain or Loss, earlier. Military tax free zones See Wash sale under Real Property Gain or Loss in chapter 4. Military tax free zones The certifications in (3) and (4) must be disregarded by the buyer if the buyer or qualified substitute has actual knowledge, or receives notice from a seller's or buyer's agent (or substitute), that they are false. Military tax free zones This also applies to the qualified substitute's statement under (4). Military tax free zones Withholding certificates. Military tax free zones   The tax required to be withheld on a disposition can be reduced or eliminated under a withholding certificate issued by the IRS. Military tax free zones Either you or the buyer can request a withholding certificate. Military tax free zones   A withholding certificate can be issued due to any of the following. Military tax free zones The IRS determines that reduced withholding is appropriate because either: The amount required to be withheld would be more than your maximum tax liability, or Withholding of the reduced amount would not jeopardize collection of the tax. Military tax free zones All of your realized gain is exempt from U. Military tax free zones S. Military tax free zones tax. Military tax free zones You or the buyer enters into an agreement for the payment of tax providing security for the tax liability. Military tax free zones   Get Publication 515 and Form 8288-B for information on procedures to request a withholding certificate. Military tax free zones Credit for tax withheld. Military tax free zones   The buyer must report and pay over the withheld tax within 20 days after the transfer using Form 8288, U. Military tax free zones S. Military tax free zones Withholding Tax Return for Dispositions by Foreign Persons of U. Military tax free zones S. Military tax free zones Real Property Interests. Military tax free zones This form is filed with the IRS with copies A and B of Form 8288-A, Statement of Withholding on Dispositions by Foreign Persons of U. Military tax free zones S. Military tax free zones Real Property Interests. Military tax free zones Copy B of this statement will be stamped received by the IRS and returned to you (the seller) if the statement is complete and includes your taxpayer identification number (TIN). Military tax free zones You must file Copy B with your tax return to take credit for the tax withheld. Military tax free zones   A stamped copy of Form 8288-A will not be provided to you if your TIN is not included on that form. Military tax free zones The IRS will send you a letter requesting the TIN and providing instructions for how to get a TIN. Military tax free zones When you provide the IRS with a TIN, the IRS will provide you with a stamped Copy B of Form 8288-A. Military tax free zones Social Security and Medicare Taxes If you work as an employee in the United States, you must pay social security and Medicare taxes in most cases. Military tax free zones Your payments of these taxes contribute to your coverage under the U. Military tax free zones S. Military tax free zones social security system. Military tax free zones Social security coverage provides retirement benefits, survivors and disability benefits, and medical insurance (Medicare) benefits to individuals who meet certain eligibility requirements. Military tax free zones In most cases, the first $113,700 of taxable wages received in 2013 for services performed in the United States is subject to social security tax. Military tax free zones All taxable wages are subject to Medicare tax. Military tax free zones Your employer deducts these taxes from each wage payment. Military tax free zones Your employer must deduct these taxes even if you do not expect to qualify for social security or Medicare benefits. Military tax free zones You can claim a credit for excess social security tax on your income tax return if you have more than one employer and the amount deducted from your combined wages for 2013 is more than $7,049. Military tax free zones 40. Military tax free zones Use the appropriate worksheet in chapter 3 of Publication 505, Tax Withholding and Estimated Tax, to figure your credit. Military tax free zones If any one employer deducted more than $7,049. Military tax free zones 40, you cannot claim a credit for that amount. Military tax free zones Ask your employer to refund the excess. Military tax free zones If your employer does not refund the excess, you can file a claim for refund using Form 843. Military tax free zones In general, U. Military tax free zones S. Military tax free zones social security and Medicare taxes apply to payments of wages for services performed as an employee in the United States, regardless of the citizenship or residence of either the employee or the employer. Military tax free zones In limited situations, these taxes apply to wages for services performed outside the United States. Military tax free zones Your employer should be able to tell you if social security and Medicare taxes apply to your wages. Military tax free zones You cannot make voluntary payments if no taxes are due. Military tax free zones Additional Medicare Tax. Military tax free zones   Beginning in 2013, in addition to the Medicare tax, a 0. Military tax free zones 9% Additional Medicare Tax applies to Medicare wages, Railroad Retirement Tax Act (RRTA) compensation, and self-employment income that are more than: $250,000 if married filing jointly, $125,000 if married filing separately, or $200,000 for any other filing status. Military tax free zones   There are no special rules for nonresident aliens for purposes of Additional Medicare Tax. Military tax free zones Wages, RRTA compensation, and self-employment income that are subject to Medicare tax will also be subject to Additional Medicare Tax if in excess of the applicable threshold. Military tax free zones   Your employer is responsible for withholding the 0. Military tax free zones 9% Additional Medicare Tax on Medicare wages or RRTA compensation it pays to you in excess of $200,000 in the calendar year. Military tax free zones If you intend to file a joint return and you anticipate that you and your spouse's individual wages are not going to be more than $200,000 but your combined wages and self-employment income are going to be more than $250,000, you may want to request additional withholding on Form W-4 and/or make estimated tax payments. Military tax free zones   If you file Form 1040NR, you must pay Additional Medicare Tax if the total of your wages and your self-employment income was more than $125,000 if married (Box 3, 4, or 5 on page 1 of Form 1040NR), or $200,000 if single or qualifying widow(er) (Box 1, 2, or 6 on page 1 of Form 1040NR). Military tax free zones    See Form 8959, Additional Medicare Tax, and the Instructions for Form 8959 to determine whether you are required to pay Additional Medicare Tax. Military tax free zones For more information on Additional Medicare Tax, go to IRS. Military tax free zones gov and enter “Additional Medicare Tax” in the search box. Military tax free zones   Self-employed individuals may also be required to pay Additional Medicare Tax. Military tax free zones See Self-Employment Tax , later. Military tax free zones Students and Exchange Visitors Generally, services performed by you as a nonresident alien temporarily in the United States as a nonimmigrant under subparagraph (F), (J), (M), or (Q) of section 101(a)(15) of the Immigration and Nationality Act are not covered under the social security program if the services are performed to carry out the purpose for which you were admitted to the United States. Military tax free zones This means that there will be no withholding of social security or Medicare taxes from the pay you receive for these services. Military tax free zones These types of services are very limited, and generally include only on-campus work, practical training, and economic hardship employment. Military tax free zones Social security and Medicare taxes will be withheld from your pay for these services if you are considered a resident alien as discussed in chapter 1, even though your nonimmigrant classification (“F,” “J,” “M,” or “Q”) remains the same. Military tax free zones Services performed by a spouse or minor child of nonimmigrant aliens with the classification of “F-2,” “J-2,” “M-2,” and “Q-3” are covered under social security. Military tax free zones Nonresident Alien Students If you are a nonresident alien temporarily admitted to the United States as a student, you generally are not permitted to work for a wage or salary or to engage in business while you are in the United States. Military tax free zones In some cases, a student admitted to the United States in “F-1,” “M-1,” or “J-1” status is granted permission to work. Military tax free zones Social security and Medicare taxes are not withheld from pay for the work unless the student is considered a resident alien. Military tax free zones Any student who is enrolled and regularly attending classes at a school may be exempt from social security and Medicare taxes on pay for services performed for that school. Military tax free zones The U. Military tax free zones S. Military tax free zones Citizenship and Immigration Services (USCIS) permits on-campus work for students in “F-1” status if it does not displace a U. Military tax free zones S. Military tax free zones resident. Military tax free zones On-campus work means work performed on the school's premises. Military tax free zones On-campus work includes work performed at an off-campus location that is educationally affiliated with the school. Military tax free zones On-campus work under the terms of a scholarship, fellowship, or assistantship is considered part of the academic program of a student taking a full course of study and is permitted by the USCIS. Military tax free zones Social security and Medicare taxes are not withheld from pay for this work unless the student is considered a resident alien. Military tax free zones If services performed by a nonresident alien student are not considered as performed to carry out the purpose for which the student was admitted to the United States, social security and Medicare taxes will be withheld from pay for the services unless the pay is exempt under the Internal Revenue Code. Military tax free zones Exchange Visitors Exchange visitors are temporarily admitted to the United States under section 101(a)(15)(J) of the Immigration and Nationality Act. Military tax free zones Social security and Medicare taxes are not withheld on pay for services of an exchange visitor who has been given permission to work and who possesses or obtains a letter of authorization from the sponsor unless the exchange visitor is considered a resident alien. Military tax free zones If services performed by an exchange visitor are not considered as performed to carry out the purpose for which the visitor was admitted to the United States, social security and Medicare taxes are withheld from pay for the services unless the pay is exempt under the Internal Revenue Code. Military tax free zones Nonresident aliens temporarily admitted to the United States as participants in international cultural exchange programs under section 101(a)(15)(Q) of the Immigration and Nationality Act may be exempt from social security and Medicare taxes. Military tax free zones The employer must be the petitioner through whom the alien obtained the “Q” visa. Military tax free zones Social security and Medicare taxes are not withheld from pay for this work unless the alien is considered a resident alien. Military tax free zones Refund of Taxes Withheld in Error If social security or Medicare taxes were withheld in error from pay that is not subject to these taxes, contact the employer who withheld the taxes for a refund. Military tax free zones If you are unable to get a full refund of the amount from your employer, file a claim for refund with the Internal Revenue Service on Form 843, Claim for Refund and Request for Abatement. Military tax free zones Attach the following items to Form 843. Military tax free zones A copy of your Form W-2 to prove the amount of social security and Medicare taxes withheld. Military tax free zones A copy of your visa. Military tax free zones Form I-94 (or other documentation showing your dates of arrival or departure). Military tax free zones If you have an F-1 visa, documentation showing permission to work in the U. Military tax free zones S. Military tax free zones If you have a J-1 visa, documentation showing permission to work in the U. Military tax free zones S. Military tax free zones If you are engaged in optional practical training or employment due to severe economic necessity, documentation showing permission to work in the U. Military tax free zones S. Military tax free zones A statement from your employer indicating the amount of the reimbursement your employer provided and the amount of the credit or refund your employer claimed or you authorized your employer to claim. Military tax free zones If you cannot obtain this statement from your employer, you must provide this information on your own statement and explain why you are not attaching a statement from your employer or on Form 8316 claiming your employer will not issue the refund. Military tax free zones If you were exempt from social security and Medicare tax for only part of the year, pay statements showing the tax paid during the period you were exempt. Military tax free zones File Form 843 (with attachments) with the Department of the Treasury, Internal Revenue Service Center, Ogden, UT 84201-0038. Military tax free zones Do not use Form 843 to request a refund of Additional Medicare Tax. Military tax free zones If Additional Medicare Tax was withheld from your pay in error, 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 with Form 1040 or 1040NR. Military tax free zones If Additional Medicare Tax was withheld in error in a prior year for which you already filed Form 1040 or 1040NR, you must file Form 1040X, Amended U. Military tax free zones S. Military tax free zones Individual Income Tax Return, for the prior year in which the wages or compensation were originally received to recover the Additional Medicare Tax withheld in error. Military tax free zones See the Instructions for Form 1040X. Military tax free zones Agricultural Workers Agricultural workers temporarily admitted into the United States on H-2A visas are exempt from social security and Medicare taxes on compensation paid to them for services performed in connection with the H-2A visa. Military tax free zones You can find more information about not having tax withheld at www. Military tax free zones irs. Military tax free zones gov/Individuals/International-Taxpayers/Foreign-Agricultural-Workers. Military tax free zones Self-Employment Tax Self-employment tax is the social security and Medicare taxes for individuals who are self-employed. Military tax free zones Nonresident aliens are not subject to self-employment tax unless an international social security agreement in effect determines that they are covered under the U. Military tax free zones S. Military tax free zones social security system. Military tax free zones Residents of the U. Military tax free zones S. Military tax free zones Virgin Islands, Puerto Rico, Guam, the Commonwealth of the Northern Mariana Islands, or American Samoa are considered U. Military tax free zones S. Military tax free zones residents for this purpose and are subject to the self-employment tax. Military tax free zones Resident aliens must pay self-employment tax under the same rules that apply to U. Military tax free zones S. Military tax free zones citizens. Military tax free zones However, a resident alien employed by an international organization, a foreign government, or a wholly-owned instrumentality of a foreign government is not subject to the self-employment tax on income earned in the United States. Military tax free zones Self-employment income you receive while you are a resident alien is subject to self-employment tax even if it was paid for services you performed as a nonresident alien. Military tax free zones Example. Military tax free zones Bill Jones is an author engaged in the business of writing books. Military tax free zones Bill had several books published in a foreign country while he was a citizen and resident of that country. Military tax free zones During 2013, Bill entered the United States as a resident alien. Military tax free zones After becoming a U. Military tax free zones S. Military tax free zones resident, he continued to receive royalties from his foreign publisher. Military tax free zones Bill reports his income and expenses on the cash basis (he reports income on his tax return when received and deducts expenses when paid). Military tax free zones Bill's 2013 self-employment income includes the royalties received after he became a U. Military tax free zones S. Military tax free zones resident even though the books were published while he was a nonresident alien. Military tax free zones This royalty income is subject to self-employment tax. Military tax free zones Reporting self-employment tax. Military tax free zones   Use Schedule SE (Form 1040) to report and figure your self-employment tax. Military tax free zones Then enter the tax on Form 1040, line 56, or Form 1040NR, line 54. Military tax free zones Attach Schedule SE to Form 1040 or Form 1040NR. Military tax free zones Additional Medicare Tax. Military tax free zones   Self-employed individuals must pay a 0. Military tax free zones 9% Additional Medicare Tax on self-employment income that exceeds one of the following threshold amounts (based on your filing status): Married filing jointly — $250,000; Married filing separately — $125,000; Single, Head of household, or Qualifying widow(er) — $200,000. Military tax free zones   If you have both wages and self-employment income, the threshold amount for applying the Additional Medicare Tax on the self-employment income is reduced (but not below zero) by the amount of wages subject to Additional Medicare Tax. Military tax free zones A self-employment loss should not be considered for purposes of this tax   If you file Form 1040NR, you must pay Additional Medicare Tax if the total of your wages and your self-employment income was more than $125,000 if married (Box 3, 4, or 5 on page 1 of Form 1040NR), or $200,000 if single or qualifying widow(er) (Box 1, 2, or 6 on page 1 of Form 1040NR). Military tax free zones   See Form 8959, Additional Medicare Tax, and the Instructions for Form 8959 to determine whether you are required to pay Additional Medicare Tax. Military tax free zones For more information on Additional Medicare Tax, go to IRS. Military tax free zones gov and enter “Additional Medicare Tax” in the search box. Military tax free zones Deduction for employer-equivalent portion of self-employment tax. Military tax free zones   If you must pay self-employment tax, you can deduct a portion of the self-employment tax paid in figuring your adjusted gross income. Military tax free zones This deduction is figured on Schedule SE (Form 1040). Military tax free zones Note. Military tax free zones No portion of the Additional Medicare Tax is deductible for self-employment tax. Military tax free zones More information. Military tax free zones   Get Publication 334, Tax Guide for Small Business, for more information about self-employment tax. Military tax free zones International Social Security Agreements The United States has entered into social security agreements with foreign countries to coordinate social security coverage and taxation of workers employed for part or all of their working careers in one of the countries. Military tax free zones These agreements are commonly referred to as totalization agreements. Military tax free zones Under these agreements, dual coverage and dual contributions (taxes) for the same work are eliminated. Military tax free zones The agreements generally make sure that social security taxes (including self-employment tax) are paid only to one country. Military tax free zones Agreements are in effect with the following countries. Military tax free zones Australia. Military tax free zones Austria. Military tax free zones Belgium. Military tax free zones Canada. Military tax free zones Chile. Military tax free zones Czech Republic. Military tax free zones Denmark. Military tax free zones Finland. Military tax free zones France. Military tax free zones Germany. Military tax free zones Greece. Military tax free zones Ireland. Military tax free zones Italy. Military tax free zones Japan. Military tax free zones Korea, South. Military tax free zones Luxembourg. Military tax free zones The Netherlands. Military tax free zones Norway. Military tax free zones Poland. Military tax free zones Portugal. Military tax free zones Spain. Military tax free zones Sweden. Military tax free zones Switzerland. Military tax free zones The United Kingdom. Military tax free zones Agreements with other countries are expected to enter into force in the future. Military tax free zones Employees. Military tax free zones   Generally, under these agreements, you are subject to social security taxes only in the country where you are working. Military tax free zones However, if you are temporarily sent to work for the same employer in the United States and your pay would normally be subject to social security taxes in both countries, most agreements provide that you remain covered only by the social security system of the country from which you were sent. Military tax free zones You can get more information on any agreement by contacting the U. Military tax free zones S. Military tax free zones Social Security Administration at the address given later. Military tax free zones If you have access to the Internet, you can get more information at www. Military tax free zones socialsecurity. Military tax free zones gov/international. Military tax free zones   To establish that your pay is subject only to foreign social security taxes and is exempt from U. Military tax free zones S. Military tax free zones social security taxes (including the Medicare tax) under an agreement, you or your employer should request a certificate of coverage from the appropriate agency of the foreign country. Military tax free zones This will usually be the same agency to which you or your employer pays your foreign social security taxes. Military tax free zones The foreign agency will be able to tell you what information is needed for them to issue the certificate. Military tax free zones Your employer should keep a copy of the certificate because it may be needed to show why you are exempt from U. Military tax free zones S. Military tax free zones social security taxes. Military tax free zones Only wages paid on or after the effective date of the agreement can be exempt from U. Military tax free zones S. Military tax free zones social security taxes. Military tax free zones    Some of the countries with which the United States has agreements will not issue certificates of coverage. Military tax free zones In this case, either you or your employer should request a statement that your wages are not covered by the U. Military tax free zones S. Military tax free zones social security system. Military tax free zones Request the statement from the following address. Military tax free zones U. Military tax free zones S. Military tax free zones Social Security Administration Office of International Programs P. Military tax free zones O. Military tax free zones Box 17741 Baltimore, MD 21235-7741 Self-employed individuals. Military tax free zones   Under most agreements, self-employed individuals are covered by the social security system of the country where they reside. Military tax free zones However, under some agreements, you may be exempt from U. Military tax free zones S. Military tax free zones self-employment tax if you temporarily transfer your business activity to or from the United States. Military tax free zones   If you believe that your self-employment income is subject only to U. Military tax free zones S. Military tax free zones self-employment tax and is exempt from foreign social security taxes, request a certificate of coverage from the U. Military tax free zones S. Military tax free zones Social Security Administration at the address given earlier. Military tax free zones This certificate will establish your exemption from foreign social security taxes. Military tax free zones   To establish that your self-employment income is subject only to foreign social security taxes and is exempt from U. Military tax free zones S. Military tax free zones self-employment tax, request a certificate of coverage from the appropriate agency of the foreign country. Military tax free zones If the foreign country will not issue the certificate, you should request a statement that your income is not covered by the U. Military tax free zones S. Military tax free zones social security system. Military tax free zones Request it from the U. Military tax free zones S. Military tax free zones Social Security Administration at the address given earlier. Military tax free zones Attach a photocopy of either statement to Form 1040 each year you are exempt. Military tax free zones Also print “Exempt, see attached statement” on the line for self-employment tax. Military tax free zones Estimated Tax Form 1040-ES (NR) You may have income from which no U. Military tax free zones S. Military tax free zones income tax is withheld. Military tax free zones Or the amount of tax withheld may be less than the income tax you estimate you will owe at the end of the year. Military tax free zones If so, you may have to pay estimated tax. Military tax free zones Generally, you must make estimated tax payments for 2014 if you expect to owe at least $1,000 in tax and you expect your withholding and certain refundable credits to be less than the smaller of: 90% of the tax to be shown on your 2014 income tax return, or 100% of the tax shown on your 2013 income tax return (if your 2013 return covered all 12 months of the year). Military tax free zones If your adjusted gross income for 2013 was more than $150,000 ($75,000 if your filing status for 2014 is married filing separately), substitute 110% for 100% in (2) above if you are not a farmer or fisherman. Military tax free zones Item (2) does not apply if you did not file a 2013 return. Military tax free zones A nonresident alien should use Form 1040-ES (NR) to figure and pay estimated tax. Military tax free zones If you pay by check, make it payable to the "United States Treasury. Military tax free zones " How to estimate your tax for 2014. Military tax free zones   If you filed a 2013 return on Form 1040NR or Form 1040NR-EZ and expect your income, number of exemptions, and total deductions for 2014 to be nearly the same, you should use your 2013 return as a guide to complete the Estimated Tax Worksheet in the Form 1040-ES (NR) instructions. Military tax free zones If you did not file a return for 2013, or if your income, exemptions, deductions, or credits will be different for 2014, you must estimate these amounts. Military tax free zones Figure your estimated tax liability using the Tax Rate Schedule in the 2014 Form 1040-ES (NR) instructions for your filing status. Military tax free zones Note. Military tax free zones If you expect to be a resident of Puerto Rico during the entire year, use Form 1040-ES or Formulario 1040-ES (PR). Military tax free zones When to pay estimated tax. Military tax free zones   Make your first estimated tax payment by the due date for filing the previous year's Form 1040NR or Form 1040NR-EZ. Military tax free zones If you have wages subject to the same withholding rules that apply to U. Military tax free zones S. Military tax free zones citizens, you must file Form 1040NR or Form 1040NR-EZ and make your first estimated tax payment by April 15, 2014. Military tax free zones If you do not have wages subject to withholding, file your income tax return and make your first estimated tax payment by June 16, 2014. Military tax free zones   If your first estimated tax payment is due April 15, 2014, you can pay your estimated tax in full at that time or in four equal installments by the dates shown next. Military tax free zones 1st installment April 15, 2014 2nd installment June 16, 2014 3rd installment Sept. Military tax free zones 15, 2014 4th installment Jan. Military tax free zones 15, 2015 If your first payment is not due until June 16, 2014, you can pay your estimated tax in full at that time or: ½ of your estimated tax by June 16, 2014, 1/4 of the tax by September 15, 2014, and 1/4 by January 15, 2015. Military tax free zones    You do not have to make the payment due January 15, 2015, if you file your 2014 Form 1040NR or 1040NR-EZ by February 2, 2015, and pay the entire balance due with your return. Military tax free zones Fiscal year. Military tax free zones   If your return is not on a calendar year basis, your due dates are the 15th day of the 4th, 6th, and 9th months of your fiscal year, and the 1st month of the following fiscal year. Military tax free zones If any date falls on a Saturday, Sunday, or legal holiday, use the next day that is not a Saturday, Sunday, or legal holiday. Military tax free zones Changes in income, deductions, or exemptions. Military tax free zones   Even if you are not required to make an estimated tax payment in April or June, your circumstances may change so that you will have to make estimated tax payments later. Military tax free zones This can happen if you receive additional income or if any of your deductions are reduced or eliminated. Military tax free zones If so, see the instructions for Form 1040-ES (NR) and Publication 505 for information on figuring your estimated tax. Military tax free zones Amended estimated tax. Military tax free zones   If, after you have made estimated tax payments, you find your estimated tax is substantially increased or decreased because of a change in your income or exemptions, you should adjust your remaining estimated tax payments. Military tax free zones To do this, see the instructions for Form 1040-ES (NR) and Publication 505. Military tax free zones Penalty for failure to pay estimated income tax. Military tax free zones   You will be subject to a penalty for underpayment of installments of estimated tax except in certain situations. Military tax free zones These situations are explained on Form 2210, Underpayment of Estimated Tax by Individuals, Estates, and Trusts. Military tax free zones Prev  Up  Next   Home   More Online Publications