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Myfreetaxes. Myfreetaxes.com/everett com/everett 11. Myfreetaxes.com/everett How To Get Tax Help Table of Contents Whether it's help with a tax issue, preparing your tax return or a need for a free publication or form, get the help you need the way you want it: online, use a smart phone, call or walk in to an IRS office or volunteer site near you. Myfreetaxes.com/everett Free help with your tax return. Myfreetaxes.com/everett You can get free help preparing your return nationwide from IRS-certified volunteers. Myfreetaxes.com/everett The Volunteer Income Tax Assistance (VITA) program helps low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers. Myfreetaxes.com/everett The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. Myfreetaxes.com/everett Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. Myfreetaxes.com/everett In addition, some VITA and TCE sites provide taxpayers the opportunity to prepare their own return with help from an IRS-certified volunteer. Myfreetaxes.com/everett To find the nearest VITA or TCE site, you can use the VITA Locator Tool on IRS. Myfreetaxes.com/everett gov, download the IRS2Go app, or call 1-800-906-9887. Myfreetaxes.com/everett As part of the TCE program, AARP offers the Tax-Aide counseling program. Myfreetaxes.com/everett To find the nearest AARP Tax-Aide site, visit AARP's website at www. Myfreetaxes.com/everett aarp. Myfreetaxes.com/everett org/money/taxaide or call 1-888-227-7669. Myfreetaxes.com/everett For more information on these programs, go to IRS. Myfreetaxes.com/everett gov and enter “VITA” in the search box. Myfreetaxes.com/everett Internet. Myfreetaxes.com/everett IRS. Myfreetaxes.com/everett gov and IRS2Go are ready when you are —24 hours a day, 7 days a week. Myfreetaxes.com/everett Download the free IRS2Go app from the iTunes app store or from Google Play. Myfreetaxes.com/everett Use it to check your refund status, order transcripts of your tax returns or tax account, watch the IRS YouTube channel, get IRS news as soon as it's released to the public, subscribe to filing season updates or daily tax tips, and follow the IRS Twitter news feed, @IRSnews, to get the latest federal tax news, including information about tax law changes and important IRS programs. Myfreetaxes.com/everett Check the status of your 2013 refund with the Where's My Refund? application on IRS. Myfreetaxes.com/everett gov or download the IRS2Go app and select the Refund Status option. Myfreetaxes.com/everett The IRS issues more than 9 out of 10 refunds in less than 21 days. Myfreetaxes.com/everett Using these applications, you can start checking on the status of your return within 24 hours after we receive your e-filed return or 4 weeks after you mail a paper return. Myfreetaxes.com/everett You will also be given a personalized refund date as soon as the IRS processes your tax return and approves your refund. Myfreetaxes.com/everett The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. Myfreetaxes.com/everett Use the Interactive Tax Assistant (ITA) to research your tax questions. Myfreetaxes.com/everett No need to wait on the phone or stand in line. Myfreetaxes.com/everett The ITA is available 24 hours a day, 7 days a week, and provides you with a variety of tax information related to general filing topics, deductions, credits, and income. Myfreetaxes.com/everett When you reach the response screen, you can print the entire interview and the final response for your records. Myfreetaxes.com/everett New subject areas are added on a regular basis. Myfreetaxes.com/everett Answers not provided through ITA may be found in Tax Trails, one of the Tax Topics on IRS. Myfreetaxes.com/everett gov which contain general individual and business tax information or by searching the IRS Tax Map, which includes an international subject index. Myfreetaxes.com/everett You can use the IRS Tax Map, to search publications and instructions by topic or keyword. Myfreetaxes.com/everett The IRS Tax Map integrates forms and publications into one research tool and provides single-point access to tax law information by subject. Myfreetaxes.com/everett When the user searches the IRS Tax Map, they will be provided with links to related content in existing IRS publications, forms and instructions, questions and answers, and Tax Topics. Myfreetaxes.com/everett Coming this filing season, you can immediately view and print for free all 5 types of individual federal tax transcripts (tax returns, tax account, record of account, wage and income statement, and certification of non-filing) using Get Transcript. Myfreetaxes.com/everett You can also ask the IRS to mail a return or an account transcript to you. Myfreetaxes.com/everett Only the mail option is available by choosing the Tax Records option on the IRS2Go app by selecting Mail Transcript on IRS. Myfreetaxes.com/everett gov or by calling 1-800-908-9946. Myfreetaxes.com/everett Tax return and tax account transcripts are generally available for the current year and the past three years. Myfreetaxes.com/everett Determine if you are eligible for the EITC and estimate the amount of the credit with the Earned Income Tax Credit (EITC) Assistant. Myfreetaxes.com/everett Visit Understanding Your IRS Notice or Letter to get answers to questions about a notice or letter you received from the IRS. Myfreetaxes.com/everett If you received the First Time Homebuyer Credit, you can use the First Time Homebuyer Credit Account Look-up tool for information on your repayments and account balance. Myfreetaxes.com/everett Check the status of your amended return using Where's My Amended Return? Go to IRS. Myfreetaxes.com/everett gov and enter Where's My Amended Return? in the search box. Myfreetaxes.com/everett You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. Myfreetaxes.com/everett It can take up to 3 weeks from the date you mailed it to show up in our system. Myfreetaxes.com/everett Make a payment using one of several safe and convenient electronic payment options available on IRS. Myfreetaxes.com/everett gov. Myfreetaxes.com/everett Select the Payment tab on the front page of IRS. Myfreetaxes.com/everett gov for more information. Myfreetaxes.com/everett Determine if you are eligible and apply for an online payment agreement, if you owe more tax than you can pay today. Myfreetaxes.com/everett Figure your income tax withholding with the IRS Withholding Calculator on IRS. Myfreetaxes.com/everett gov. Myfreetaxes.com/everett Use it if you've had too much or too little withheld, your personal situation has changed, you're starting a new job or you just want to see if you're having the right amount withheld. Myfreetaxes.com/everett Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. Myfreetaxes.com/everett gov. Myfreetaxes.com/everett Request an Electronic Filing PIN by going to IRS. Myfreetaxes.com/everett gov and entering Electronic Filing PIN in the search box. Myfreetaxes.com/everett Download forms, instructions and publications, including accessible versions for people with disabilities. Myfreetaxes.com/everett Locate the nearest Taxpayer Assistance Center (TAC) using the Office Locator tool on IRS. Myfreetaxes.com/everett gov, or choose the Contact Us option on the IRS2Go app and search Local Offices. Myfreetaxes.com/everett An employee can answer questions about your tax account or help you set up a payment plan. Myfreetaxes.com/everett Before you visit, check the Office Locator on IRS. Myfreetaxes.com/everett gov, or Local Offices under Contact Us on IRS2Go to confirm the address, phone number, days and hours of operation, and the services provided. Myfreetaxes.com/everett If you have a special need, such as a disability, you can request an appointment. Myfreetaxes.com/everett Call the local number listed in the Office Locator, or look in the phone book under United States Government, Internal Revenue Service. Myfreetaxes.com/everett Apply for an Employer Identification Number (EIN). Myfreetaxes.com/everett Go to IRS. Myfreetaxes.com/everett gov and enter Apply for an EIN in the search box. Myfreetaxes.com/everett Read the Internal Revenue Code, regulations, or other official guidance. Myfreetaxes.com/everett Read Internal Revenue Bulletins. Myfreetaxes.com/everett Sign up to receive local and national tax news and more by email. Myfreetaxes.com/everett Just click on “subscriptions” above the search box on IRS. Myfreetaxes.com/everett gov and choose from a variety of options. Myfreetaxes.com/everett Phone. Myfreetaxes.com/everett You can call the IRS, or you can carry it in your pocket with the IRS2Go app on your smart phone or tablet. Myfreetaxes.com/everett Download the free IRS2Go app from the iTunes app store or from Google Play. Myfreetaxes.com/everett Call to locate the nearest volunteer help site, 1-800-906-9887 or you can use the VITA Locator Tool on IRS. Myfreetaxes.com/everett gov, or download the IRS2Go app. Myfreetaxes.com/everett Low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. Myfreetaxes.com/everett The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. Myfreetaxes.com/everett Most VITA and TCE sites offer free electronic filing. Myfreetaxes.com/everett Some VITA and TCE sites provide IRS-certified volunteers who can help prepare your tax return. Myfreetaxes.com/everett Through the TCE program, AARP offers the Tax-Aide counseling program; call 1-888-227-7669 to find the nearest Tax-Aide location. Myfreetaxes.com/everett Call the automated Where's My Refund? information hotline to check the status of your 2013 refund 24 hours a day, 7 days a week at 1-800-829-1954. Myfreetaxes.com/everett If you e-file, you can start checking on the status of your return within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. Myfreetaxes.com/everett The IRS issues more than 9 out of 10 refunds in less than 21 days. Myfreetaxes.com/everett Where's My Refund? will give you a personalized refund date as soon as the IRS processes your tax return and approves your refund. Myfreetaxes.com/everett Before you call this automated hotline, have your 2013 tax return handy so you can enter your social security number, your filing status, and the exact whole dollar amount of your refund. Myfreetaxes.com/everett The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. Myfreetaxes.com/everett Note, the above information is for our automated hotline. Myfreetaxes.com/everett Our live phone and walk-in assistors can research the status of your refund only if it's been 21 days or more since you filed electronically or more than 6 weeks since you mailed your paper return. Myfreetaxes.com/everett Call the Amended Return Hotline, 1-866-464-2050, to check the status of your amended return. Myfreetaxes.com/everett You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. Myfreetaxes.com/everett It can take up to 3 weeks from the date you mailed it to show up in our system. Myfreetaxes.com/everett Call 1-800-TAX-FORM (1-800-829-3676) to order current-year forms, instructions, publications, and prior-year forms and instructions (limited to 5 years). Myfreetaxes.com/everett You should receive your order within 10 business days. Myfreetaxes.com/everett Call TeleTax, 1-800-829-4477, to listen to pre-recorded messages covering general and business tax information. Myfreetaxes.com/everett If, between January and April 15, you still have questions about the Form 1040, 1040A, or 1040EZ (like filing requirements, dependents, credits, Schedule D, pensions and IRAs or self-employment taxes), call 1-800-829-1040. Myfreetaxes.com/everett Call using TTY/TDD equipment, 1-800-829-4059 to ask tax questions or order forms and publications. Myfreetaxes.com/everett The TTY/TDD telephone number is for people who are deaf, hard of hearing, or have a speech disability. Myfreetaxes.com/everett These individuals can also contact the IRS through relay services such as the Federal Relay Service. Myfreetaxes.com/everett Walk-in. Myfreetaxes.com/everett You can find a selection of forms, publications and services — in-person. Myfreetaxes.com/everett Products. Myfreetaxes.com/everett You can walk in to some post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. Myfreetaxes.com/everett Some IRS offices, libraries, and city and county government offices have a collection of products available to photocopy from reproducible proofs. Myfreetaxes.com/everett Services. Myfreetaxes.com/everett You can walk in to your local TAC for face-to-face tax help. Myfreetaxes.com/everett An employee can answer questions about your tax account or help you set up a payment plan. Myfreetaxes.com/everett Before visiting, use the Office Locator tool on IRS. Myfreetaxes.com/everett gov, or choose the Contact Us option on the IRS2Go app and search Local Offices for days and hours of operation, and services provided. Myfreetaxes.com/everett Mail. Myfreetaxes.com/everett You can send your order for forms, instructions, and publications to the address below. Myfreetaxes.com/everett You should receive a response within 10 business days after your request is received. Myfreetaxes.com/everett Internal Revenue Service 1201 N. Myfreetaxes.com/everett Mitsubishi Motorway Bloomington, IL 61705-6613 The Taxpayer Advocate Service Is Here to Help You. Myfreetaxes.com/everett The Taxpayer Advocate Service (TAS) is your voice at the IRS. Myfreetaxes.com/everett Our job is to ensure that every taxpayer is treated fairly and that you know and understand your rights. Myfreetaxes.com/everett What can TAS do for you? We can offer you free help with IRS problems that you can't resolve on your own. Myfreetaxes.com/everett We know this process can be confusing, but the worst thing you can do is nothing at all! TAS can help if you can't resolve your tax problem and: Your problem is causing financial difficulties for you, your family, or your business. Myfreetaxes.com/everett You face (or your business is facing) an immediate threat of adverse action. Myfreetaxes.com/everett You've tried repeatedly to contact the IRS but no one has responded, or the IRS hasn't responded by the date promised. Myfreetaxes.com/everett If you qualify for our help, you'll be assigned to one advocate who'll be with you at every turn and will do everything possible to resolve your problem. Myfreetaxes.com/everett Here's why we can help: TAS is an independent organization within the IRS. Myfreetaxes.com/everett Our advocates know how to work with the IRS. Myfreetaxes.com/everett Our services are free and tailored to meet your needs. Myfreetaxes.com/everett We have offices in every state, the District of Columbia, and Puerto Rico. Myfreetaxes.com/everett How can you reach us? If you think TAS can help you, call your local advocate, whose number is in your local directory and at Taxpayer Advocate, or call us toll-free at 1-877-777-4778. Myfreetaxes.com/everett How else does TAS help taxpayers? TAS also works to resolve large-scale, systemic problems that affect many taxpayers. Myfreetaxes.com/everett If you know of one of these broad issues, please report it to us through our Systemic Advocacy Management System. Myfreetaxes.com/everett Low Income Taxpayer Clinics. Myfreetaxes.com/everett Low Income Taxpayer Clinics (LITCs) serve individuals whose income is below a certain level and need to resolve tax problems such as audits, appeals and tax collection disputes. Myfreetaxes.com/everett Some clinics can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. Myfreetaxes.com/everett Visit Taxpayer Advocate or see IRS Publication 4134, Low Income Taxpayer Clinic List. Myfreetaxes.com/everett Prev Up Next Home More Online Publications
Drugs and Nutrition Supplements: What Can You Believe?
Beware of Fraudulent 'Dietary Supplements'
Federal regulators continue to warn consumers about tainted, dangerous products that are marketed as dietary supplements. These fraudulent products can cause serious injury or even death. The Food and Drug Administration (FDA) has found nearly 300 fraudulent products, promoted mainly for weight loss, sexual enhancement, and bodybuilding that contain hidden or deceptively labeled ingredients. Remember, FDA cannot test all products on the market to identify those that contain potentially harmful hidden ingredients. Consumers must also be aware of these dangerous products and learn how to identify and avoid them using the warning signs described in this article.
Court Orders Internet Marketers of Acai Berry Weight-Loss Pills and 'Colon Cleansers' to Stop Deceptive Advertising and Unfair Billing Practices
At the request of the Federal Trade Commission, a U.S. district court has ordered the marketers of acai berry supplements, 'colon cleansers,' and other products to temporarily halt an Internet sales scheme that allegedly scammed consumers out of $30 million or more in 2009 alone through deceptive advertising and unfair billing practices. The FTC will seek a permanent prohibition. Since 2007, victimized consumers have flooded law enforcement agencies and the Better Business Bureau with more than 2,800 complaints about the company.
Don't Put Your Health in the Hands of Crooks
It couldn't be easier ordering prescription drugs online with a few clicks of the mouse and having them delivered right to your door, without ever having to see a doctor. But is it safe? Is it legal?
FDA Operation Reveals Many Drugs Promoted as 'Canadian' Products Really Originate From Other Countries
An FDA operation found that nearly half of the imported drugs FDA intercepted from four selected countries were shipped to fill orders that consumers believed they were placing with "Canadian" pharmacies. Of the drugs being promoted as "Canadian," based on accompanying documentation, 85 percent actually came from 27 countries around the globe. A number of these products also origin, safety, and efficacy. We believe that these 'bait and switch' tactics-offering patients one thing and then giving them something else- are misleading to patients and potentially harmful to the public health."
FDA Warns Public of Continued Extortion Scam by FDA Impersonators
The U.S. Food and Drug Administration is warning the public about criminals posing as FDA special agents and other law enforcement personnel as part of a continued international extortion scam. The criminals call the victims who in most cases previously purchased drugs over the Internet or via "telepharmacies" and identify themselves as FDA special agents or other law enforcement officials. The criminals inform the victims that purchasing drugs over the Internet or the telephone is illegal, and that law enforcement action will be pursued unless a fine or fee ranging from $100 to $250,000 is paid. Victims often also have fraudulent transactions placed against their credit cards.
FTC Warns Consumers About Scam Artists' Pitch for Potassium Iodide Treatment
Recent reports of events in Japan are causing scam artists to try to convince consumers that they need potassium iodide pills and drops to protect themselves. Potassium iodide, or KI, can help prevent thyroid cancer, which is one of the biggest risks from contamination with radioactive iodine. However, public health experts agree that U.S. residents should not buy or take potassium iodide unless specifically notified or instructed by public health officials.
Medicare Beneficiaries Urged to Be on the Look-out for Phone Scams
Seniors and people with disabilities should be aware of a scheme that asks Medicare beneficiaries for money and checking account information to help them enroll in a Medicare Prescription Drug Plan. NO Medicare drug plan can ask a person with Medicare for bank account or other personal information over the telephone.
VA Warns Veterans of Telephone Prescription Scam
The Department of Veterans Affairs (VA) is warning Veterans not to give credit card numbers over the phone to callers claiming to update VA prescription information. Veteran Service Organizations have brought to VA's attention that callers are misrepresenting the VA to gain personal information over the phone. They say VA recently changed procedures for dispensing prescriptions and ask for the Veteran's credit card number.
Myfreetaxes. Myfreetaxes.com/everett com/everett 2. Myfreetaxes.com/everett Possession Source Income Table of Contents Types of IncomeCompensation for Labor or Personal Services Investment Income Sales or Other Dispositions of Property Scholarships, Fellowships, Grants, Prizes, and Awards Effectively Connected Income In order to determine where to file your return and which form(s) you need to complete, you must determine the source of each item of income you received during the tax year. Myfreetaxes.com/everett Income you received from sources within, or that was effectively connected with the conduct of a trade or business within, the relevant possession must be identified separately from U. Myfreetaxes.com/everett S. Myfreetaxes.com/everett or foreign source income. Myfreetaxes.com/everett This chapter discusses the rules for determining if the source of your income is from: American Samoa, The Commonwealth of the Northern Mariana Islands (CNMI), The Commonwealth of Puerto Rico (Puerto Rico), Guam, or The U. Myfreetaxes.com/everett S. Myfreetaxes.com/everett Virgin Islands (USVI). Myfreetaxes.com/everett Generally, the same rules that apply for determining U. Myfreetaxes.com/everett S. Myfreetaxes.com/everett source income also apply for determining possession source income. Myfreetaxes.com/everett However, there are some important exceptions to these rules. Myfreetaxes.com/everett Both the general rules and the exceptions are discussed in this chapter. Myfreetaxes.com/everett U. Myfreetaxes.com/everett S. Myfreetaxes.com/everett income rule. Myfreetaxes.com/everett This rule states that income is not possession source income if, under the rules of Internal Revenue Code sections 861–865, it is treated as income: From sources within the United States, or Effectively connected with the conduct of a trade or business within the United States. Myfreetaxes.com/everett Table 2-1 shows the general rules for determining whether income is from sources within the United States. Myfreetaxes.com/everett Table 2-1. Myfreetaxes.com/everett General Rules for Determining U. Myfreetaxes.com/everett S. Myfreetaxes.com/everett Source of Income Item of Income Factor Determining Source Salaries, wages, and other compensation for labor or personal services Where labor or services performed Pensions Contributions: Where services were performed that earned the pension Investment earnings: Where pension trust is located Interest Residence of payer Dividends Where corporation created or organized Rents Location of property Royalties: Natural resources Location of property Patents, copyrights, etc. Myfreetaxes.com/everett Where property is used Sale of business inventory—purchased Where sold Sale of business inventory—produced Allocation if produced and sold in different locations Sale of real property Location of property Sale of personal property Seller's tax home (but see Special Rules for Gains From Dispositions of Certain Property , later, for exceptions) Sale of natural resources Allocation based on fair market value of product at export terminal. Myfreetaxes.com/everett For more information, see Regulations section 1. Myfreetaxes.com/everett 863-1(b). Myfreetaxes.com/everett Types of Income This section looks at the most common types of income received by individuals, and the rules for determining the source of the income. Myfreetaxes.com/everett Generally, the same rules shown in Table 2-1 are used to determine if you have possession source income. Myfreetaxes.com/everett Compensation for Labor or Personal Services Income from labor or personal services includes wages, salaries, commissions, fees, per diem allowances, employee allowances and bonuses, and fringe benefits. Myfreetaxes.com/everett It also includes income earned by sole proprietors and general partners from providing personal services in the course of their trade or business. Myfreetaxes.com/everett Services performed wholly within a relevant possession. Myfreetaxes.com/everett Generally, all pay you receive for services performed in a relevant possession is considered to be from sources within that possession. Myfreetaxes.com/everett However, there is an exception for income earned as a member of the U. Myfreetaxes.com/everett S. Myfreetaxes.com/everett Armed Forces or a civilian spouse. Myfreetaxes.com/everett U. Myfreetaxes.com/everett S. Myfreetaxes.com/everett Armed Forces. Myfreetaxes.com/everett If you are a bona fide resident of a relevant possession, your military service pay will be sourced in that possession even if you perform the services in the United States or another possession. Myfreetaxes.com/everett However, if you are not a bona fide resident of a possession, your military service pay will be income from the United States even if you perform services in a possession. Myfreetaxes.com/everett Civilian spouse of active duty member of the U. Myfreetaxes.com/everett S. Myfreetaxes.com/everett Armed Forces. Myfreetaxes.com/everett If you are a bona fide resident of a U. Myfreetaxes.com/everett S. Myfreetaxes.com/everett possession and choose to keep that possession as your tax residence under MSRRA when relocating with your servicemember spouse under military orders, the source of income for your labor or personal services is considered to be that possession. Myfreetaxes.com/everett Likewise, if your tax residence is in one of the 50 states or the District of Columbia before relocating and you choose to keep it as your tax residence, the source of income for services performed in any of the U. Myfreetaxes.com/everett S. Myfreetaxes.com/everett possessions is considered to be the United States and, specifically, your state of residence or the District of Columbia. Myfreetaxes.com/everett Services performed partly inside and partly outside a relevant possession. Myfreetaxes.com/everett If you are an employee and receive compensation for labor or personal services performed both inside and outside the relevant possession, special rules apply in determining the source of the compensation. Myfreetaxes.com/everett Compensation (other than certain fringe benefits) is sourced on a time basis. Myfreetaxes.com/everett Certain fringe benefits (such as housing and education) are sourced on a geographical basis. Myfreetaxes.com/everett Or, you may be permitted to use an alternative basis to determine the source of compensation. Myfreetaxes.com/everett See Alternative basis , later. Myfreetaxes.com/everett If you are self-employed, determine the source of your income for labor or personal services from self-employment on the basis that most correctly reflects the proper source of that income under the facts and circumstances of your particular case. Myfreetaxes.com/everett In many cases, the facts and circumstances will call for an apportionment on a time basis as explained next. Myfreetaxes.com/everett Time basis. Myfreetaxes.com/everett Use a time basis to figure your compensation for labor or personal services from the relevant possession (other than the fringe benefits discussed later). Myfreetaxes.com/everett Do this by multiplying your total compensation (other than the fringe benefits discussed later) by the following fraction: Number of days you performed services in the relevant possession during the year Total number of days you performed services during the year You can use a unit of time less than a day in the above fraction, if appropriate. Myfreetaxes.com/everett The time period for which the income is made does not have to be a year. Myfreetaxes.com/everett Instead, you can use another distinct, separate, and continuous time period if you can establish to the satisfaction of the IRS that this other period is more appropriate. Myfreetaxes.com/everett Example. Myfreetaxes.com/everett In 2013, you worked in your employer's office in the United States for 60 days and in the Puerto Rico office for 180 days, earning a total of $80,000 for the year. Myfreetaxes.com/everett Your Puerto Rico source income is $60,000, figured as follows. Myfreetaxes.com/everett 180 days 240 days × $80,000 = $60,000 Multi-year compensation. Myfreetaxes.com/everett The source of multi-year compensation is generally determined on a time basis over the period to which the compensation is attributable. Myfreetaxes.com/everett Multi-year compensation is compensation that is included in your income in 1 tax year but is attributable to a period that includes 2 or more tax years. Myfreetaxes.com/everett You determine the period to which the income is attributable based on the facts and circumstances of your case. Myfreetaxes.com/everett For more information on multi-year compensation, see Treasury Decision (T. Myfreetaxes.com/everett D. Myfreetaxes.com/everett ) 9212 and Regulations section 1. Myfreetaxes.com/everett 861-4, 2005-35 I. Myfreetaxes.com/everett R. Myfreetaxes.com/everett B. Myfreetaxes.com/everett 429, available at www. Myfreetaxes.com/everett irs. Myfreetaxes.com/everett gov/irb/2005-35_IRB/ar14. Myfreetaxes.com/everett html. Myfreetaxes.com/everett Certain fringe benefits sourced on a geographical basis. Myfreetaxes.com/everett If you received any of the following fringe benefits as compensation for labor or services performed as an employee partly inside and partly outside a relevant possession, you must source that income on a geographical basis. Myfreetaxes.com/everett Housing. Myfreetaxes.com/everett Education. Myfreetaxes.com/everett Local transportation. Myfreetaxes.com/everett Tax reimbursement. Myfreetaxes.com/everett Hazardous or hardship duty pay. Myfreetaxes.com/everett Moving expense reimbursement. Myfreetaxes.com/everett For information on determining the source of the fringe benefits listed above, see Regulations section 1. Myfreetaxes.com/everett 861-4. Myfreetaxes.com/everett Alternative basis. Myfreetaxes.com/everett You can determine the source of your compensation under an alternative basis if you establish to the satisfaction of the IRS that, under the facts and circumstances of your case, the alternative basis more properly determines the source of your income than the time or geographical basis. Myfreetaxes.com/everett If you use an alternative basis, you must keep (and have available for inspection) records to document why the alternative basis more properly determines the source of your income. Myfreetaxes.com/everett De minimis exception. Myfreetaxes.com/everett There is an exception to the rule for determining the source of income earned in a possession. Myfreetaxes.com/everett Generally, you will not have income from a possession if during a tax year you: Are a U. Myfreetaxes.com/everett S. Myfreetaxes.com/everett citizen or resident, Are not a bona fide resident of that possession, Are not employed by or under contract with an individual, partnership, or corporation that is engaged in a trade or business in that possession, Temporarily perform services in that possession for 90 days or less, and Earned $3,000 or less from such services. Myfreetaxes.com/everett This exception began with income earned during your 2008 tax year. Myfreetaxes.com/everett Pensions. Myfreetaxes.com/everett Generally, pension income has two components: contributions to the pension plan and the earnings accrued from investing those contributions. Myfreetaxes.com/everett The contribution portion is sourced according to where services were performed that earned the pension. Myfreetaxes.com/everett The investment earnings portion is sourced according to the location of the pension trust. Myfreetaxes.com/everett Example. Myfreetaxes.com/everett You are a U. Myfreetaxes.com/everett S. Myfreetaxes.com/everett citizen who worked in Puerto Rico for a U. Myfreetaxes.com/everett S. Myfreetaxes.com/everett company. Myfreetaxes.com/everett All services were performed in Puerto Rico. Myfreetaxes.com/everett Upon retirement you remained in Puerto Rico and began receiving your pension from the U. Myfreetaxes.com/everett S. Myfreetaxes.com/everett pension trust of your employer. Myfreetaxes.com/everett Distributions from the U. Myfreetaxes.com/everett S. Myfreetaxes.com/everett pension trust must be allocated between (1) contributions, which are Puerto Rico source income, and (2) investment earnings, which are U. Myfreetaxes.com/everett S. Myfreetaxes.com/everett source income. Myfreetaxes.com/everett Investment Income This category includes such income as interest, dividends, rents, and royalties. Myfreetaxes.com/everett Interest income. Myfreetaxes.com/everett The source of interest income is generally determined by the residence of the payer. Myfreetaxes.com/everett Interest paid by corporations created or organized in a relevant possession (possession corporation) or by individuals who are bona fide residents of a relevant possession is considered income from sources within that possession. Myfreetaxes.com/everett However, there is an exception to this rule if you are a bona fide resident of a relevant possession, receive interest from a corporation created or organized in that possession, and are a shareholder of that corporation who owns, directly or indirectly, at least 10% of the total voting stock of the corporation. Myfreetaxes.com/everett See Regulations section 1. Myfreetaxes.com/everett 937-2(i) for more information. Myfreetaxes.com/everett Dividends. Myfreetaxes.com/everett Generally, dividends paid by a corporation created or organized in a relevant possession will be considered income from sources within that possession. Myfreetaxes.com/everett There are additional rules for bona fide residents of a relevant possession who receive dividend income from possession corporations, and who own, directly or indirectly, at least 10% of the voting stock of the corporation. Myfreetaxes.com/everett For more information, see Regulations section 1. Myfreetaxes.com/everett 937-2(g). Myfreetaxes.com/everett Rental income. Myfreetaxes.com/everett Rents from property located in a relevant possession are treated as income from sources within that possession. Myfreetaxes.com/everett Royalties. Myfreetaxes.com/everett Royalties from natural resources located in a relevant possession are considered income from sources within that possession. Myfreetaxes.com/everett Also considered possession source income are royalties received for the use of, or for the privilege of using, in a relevant possession, patents, copyrights, secret processes and formulas, goodwill, trademarks, trade brands, franchises, and other like property. Myfreetaxes.com/everett Sales or Other Dispositions of Property The source rules for sales or other dispositions of property are varied. Myfreetaxes.com/everett The most common situations are discussed below. Myfreetaxes.com/everett Real property. Myfreetaxes.com/everett Real property includes land and buildings, and generally anything built on, growing on, or attached to land. Myfreetaxes.com/everett The location of the property generally determines the source of income from the sale. Myfreetaxes.com/everett For example, if you are a bona fide resident of Guam and sell your home that is located in Guam, the gain on the sale is sourced in Guam. Myfreetaxes.com/everett If, however, the home you sold was located in the United States, the gain is U. Myfreetaxes.com/everett S. Myfreetaxes.com/everett source income. Myfreetaxes.com/everett Personal property. Myfreetaxes.com/everett The term “personal property” refers to property (such as machinery, equipment, or furniture) that is not real property. Myfreetaxes.com/everett Generally, gain (or loss) from the sale or other disposition is sourced according to the seller's tax home. Myfreetaxes.com/everett If personal property is sold by a bona fide resident of a relevant possession, the gain (or loss) from the sale is treated as sourced within that possession. Myfreetaxes.com/everett This rule does not apply to the sale of inventory, intangible property, depreciable personal property, or property sold through a foreign office or fixed place of business. Myfreetaxes.com/everett The rules applying to sales of inventory are discussed below. Myfreetaxes.com/everett For information on sales of the other types of property mentioned, see Internal Revenue Code section 865. Myfreetaxes.com/everett Inventory. Myfreetaxes.com/everett Your inventory is personal property that is stock in trade or that is held primarily for sale to customers in the ordinary course of your trade or business. Myfreetaxes.com/everett The source of income from the sale of inventory depends on whether the inventory was purchased or produced. Myfreetaxes.com/everett Purchased. Myfreetaxes.com/everett Income from the sale of inventory that you purchased is sourced where you sell the property. Myfreetaxes.com/everett Generally, this is where title to the property passes to the buyer. Myfreetaxes.com/everett Produced. Myfreetaxes.com/everett Income from the sale of inventory that you produced in a relevant possession and sold outside that possession (or vice versa) is sourced based on an allocation. Myfreetaxes.com/everett For information on making the allocation, see Regulations section 1. Myfreetaxes.com/everett 863-3(f). Myfreetaxes.com/everett Special Rules for Gains From Dispositions of Certain Property There are special rules for gains from dispositions of certain investment property (for example, stocks, bonds, debt instruments, diamonds, and gold) owned by a U. Myfreetaxes.com/everett S. Myfreetaxes.com/everett citizen or resident alien prior to becoming a bona fide resident of a possession. Myfreetaxes.com/everett You are subject to these special rules if you meet both of the following conditions. Myfreetaxes.com/everett For the tax year for which the source of the gain must be determined, you are a bona fide resident of the relevant possession. Myfreetaxes.com/everett For any of the 10 years preceding that year, you were a citizen or resident alien of the United States (other than a bona fide resident of the relevant possession). Myfreetaxes.com/everett If you meet these conditions, gains from the disposition of this property will not be treated as income from sources within the relevant possession for purposes of the Internal Revenue Code. Myfreetaxes.com/everett Accordingly, bona fide residents of American Samoa and Puerto Rico, for example, may not exclude the gain on their U. Myfreetaxes.com/everett S. Myfreetaxes.com/everett tax return. Myfreetaxes.com/everett (See chapter 3 for additional filing information. Myfreetaxes.com/everett ) With respect to the CNMI, Guam, and the USVI, the gain from the disposition of this property will not meet the requirements for certain tax rules that may allow bona fide residents of those possessions to reduce or obtain a rebate of taxes on income from sources within the relevant possessions. Myfreetaxes.com/everett These rules apply to dispositions after April 11, 2005. Myfreetaxes.com/everett For details, see Regulations section 1. Myfreetaxes.com/everett 937-2(f)(1) and Examples 1 and 2 of section 1. Myfreetaxes.com/everett 937-2(k). Myfreetaxes.com/everett Example 1. Myfreetaxes.com/everett In 2007, Cheryl Jones, a U. Myfreetaxes.com/everett S. Myfreetaxes.com/everett citizen, lived in the United States and paid $1,000 for 100 shares of stock in the Rose Corporation, a U. Myfreetaxes.com/everett S. Myfreetaxes.com/everett corporation listed on the New York Stock Exchange. Myfreetaxes.com/everett On March 1, 2010, she moved to Puerto Rico and changed her tax home to Puerto Rico on the same date. Myfreetaxes.com/everett Cheryl satisfied the presence test in 2010 and, under the year-of-move exception, she was considered a bona fide resident of Puerto Rico for the rest of 2010. Myfreetaxes.com/everett On March 1, 2010, the closing value of Cheryl's stock in the Rose Corporation was $2,000. Myfreetaxes.com/everett On January 5, 2013, while still a bona fide resident of Puerto Rico, Cheryl sold all her Rose Corporation stock for $7,000. Myfreetaxes.com/everett Under the earlier rules, none of Cheryl's $6,000 gain will be treated as income from sources within Puerto Rico. Myfreetaxes.com/everett The source rules discussed in the preceding paragraphs supplement, and may apply in conjunction with, an existing special rule. Myfreetaxes.com/everett This existing special rule applies if you are a U. Myfreetaxes.com/everett S. Myfreetaxes.com/everett citizen or resident alien who becomes a bona fide resident of American Samoa, the CNMI, or Guam, and who has gain from the disposition of certain U. Myfreetaxes.com/everett S. Myfreetaxes.com/everett assets during the 10-year period beginning when you became a bona fide resident. Myfreetaxes.com/everett The gain is U. Myfreetaxes.com/everett S. Myfreetaxes.com/everett source income that generally is subject to U. Myfreetaxes.com/everett S. Myfreetaxes.com/everett tax if the property is either (1) located in the United States; (2) stock issued by a U. Myfreetaxes.com/everett S. Myfreetaxes.com/everett corporation or a debt obligation of a U. Myfreetaxes.com/everett S. Myfreetaxes.com/everett person or of the United States, a state (or political subdivision), or the District of Columbia; or (3) property that has a basis in whole or in part by reference to property described in (1) or (2). Myfreetaxes.com/everett See chapter 3 for filing information. Myfreetaxes.com/everett Special election. Myfreetaxes.com/everett For dispositions after April 11, 2005, you can choose to treat the part of gain (or loss) attributable to the time you held the property while a bona fide resident of the relevant possession (the possession holding period) as gain (or loss) from sources within that possession. Myfreetaxes.com/everett Make the election by reporting the gain attributable to the possession holding period on your income tax return for the year of disposition. Myfreetaxes.com/everett This election overrides both of the special rules discussed earlier. Myfreetaxes.com/everett There are two methods for figuring the gain for the possession holding period, one for marketable securities and another for other types of investment property. Myfreetaxes.com/everett Marketable securities. Myfreetaxes.com/everett Marketable securities are those actively traded on an established financial market, such as stock in a publicly held corporation. Myfreetaxes.com/everett Under the special election, allocate the gain (or loss) by figuring the appreciation separately for your possession and U. Myfreetaxes.com/everett S. Myfreetaxes.com/everett holding periods. Myfreetaxes.com/everett Your possession holding period begins on the first day you do not have a tax home outside the relevant possession. Myfreetaxes.com/everett The gain (or loss) attributable to the possession holding period is the difference in fair market value of the security at the close of the market on the first and last days of this holding period. Myfreetaxes.com/everett This is your gain (or loss) that is treated as being from sources within the relevant possession. Myfreetaxes.com/everett If you were a bona fide resident of the relevant possession for more than one continuous period, combine the gains (or losses) from each possession holding period. Myfreetaxes.com/everett Example 2. Myfreetaxes.com/everett Assume the same facts as in Example 1, except that Cheryl makes the special election to allocate the gain between her U. Myfreetaxes.com/everett S. Myfreetaxes.com/everett and possession holding periods. Myfreetaxes.com/everett Cheryl's possession holding period began March 1, 2010, the date her tax home changed to Puerto Rico. Myfreetaxes.com/everett Therefore, the portion of gain attributable to her possession holding period is $5,000 ($7,000 sale price – $2,000 closing value on first day of the possession holding period). Myfreetaxes.com/everett By reporting $5,000 of her $6,000 gain as Puerto Rico source income on her 2013 Puerto Rico tax return (and the remainder as non-Puerto Rico source income), Cheryl elects to treat that amount as Puerto Rico source income. Myfreetaxes.com/everett Other personal property. Myfreetaxes.com/everett For personal property other than marketable securities, use a time-based allocation. Myfreetaxes.com/everett Figure the gain (or loss) attributable to the possession holding period by multiplying your total gain (or loss) by the following fraction. Myfreetaxes.com/everett Number of days in the possession holding period Total number of days in your holding period The result is your gain (or loss) that is treated as being from sources within the relevant possession. Myfreetaxes.com/everett Example 3. Myfreetaxes.com/everett In addition to the stock in Rose Corporation, Cheryl acquired a 5% interest in the Alder Partnership on January 1, 2009. Myfreetaxes.com/everett On March 1, 2010, when she established bona fide residency in Puerto Rico, her partnership interest was not considered a marketable security. Myfreetaxes.com/everett On September 16, 2013, while still a bona fide resident of Puerto Rico, Cheryl sold her interest in Alder Partnership for a $100,000 gain. Myfreetaxes.com/everett She had owned the interest for a total of 1,720 days. Myfreetaxes.com/everett Cheryl's possession holding period (from March 1, 2010, through September 16, 2013) is 1,296 days. Myfreetaxes.com/everett The portion of her gain attributable to Puerto Rico is $75,349 ($100,000 x (1,296 Puerto Rico days ÷ 1,720 total days)). Myfreetaxes.com/everett By reporting $75,349 of her $100,000 gain as Puerto Rico source income on her 2013 Puerto Rico tax return (and the remainder as non-Puerto Rico source income), Cheryl elects to treat that amount as Puerto Rico source income. Myfreetaxes.com/everett Scholarships, Fellowships, Grants, Prizes, and Awards The source of these types of income is generally the residence of the payer, regardless of who actually disburses the funds. Myfreetaxes.com/everett Therefore, in order to be possession source income, the payer must be a resident of the relevant possession, such as an individual who is a bona fide resident or a corporation created or organized in that possession. Myfreetaxes.com/everett These rules do not apply to amounts paid as salary or other compensation for services. Myfreetaxes.com/everett See Compensation for Labor or Personal Services, earlier in this chapter, for the source rules that apply. Myfreetaxes.com/everett Effectively Connected Income In limited circumstances, some kinds of income from sources outside the relevant possession must be treated as effectively connected with a trade or business in that possession. Myfreetaxes.com/everett These circumstances are listed below. Myfreetaxes.com/everett You have an office or other fixed place of business in the relevant possession to which the income can be attributed. Myfreetaxes.com/everett That office or place of business is a material factor in producing the income. Myfreetaxes.com/everett The income is produced in the ordinary course of the trade or business carried on through that office or other fixed place of business. Myfreetaxes.com/everett An office or other fixed place of business is a material factor if it significantly contributes to, and is an essential economic element in, the earning of the income. Myfreetaxes.com/everett The three kinds of income from sources outside the relevant possession to which these rules apply are the following. Myfreetaxes.com/everett Rents and royalties for the use of, or for the privilege of using, intangible personal property located outside the relevant possession or from any interest in such property. Myfreetaxes.com/everett Included are rents or royalties for the use of, or for the privilege of using, outside the relevant possession, patents, copyrights, secret processes and formulas, goodwill, trademarks, trade brands, franchises, and similar properties if the rents or royalties are from the active conduct of a trade or business in the relevant possession. Myfreetaxes.com/everett Dividends or interest from the active conduct of a banking, financing, or similar business in the relevant possession. Myfreetaxes.com/everett Income, gain, or loss from the sale or exchange outside the relevant possession, through the office or other fixed place of business in the relevant possession, of: Stock in trade, Property that would be included in inventory if on hand at the end of the tax year, or Property held primarily for sale to customers in the ordinary course of business. Myfreetaxes.com/everett Item (3) will not apply if you sold the property for use, consumption, or disposition outside the relevant possession and an office or other fixed place of business in a foreign country was a material factor in the sale. Myfreetaxes.com/everett Example. Myfreetaxes.com/everett Marcy Jackson is a bona fide resident of American Samoa. Myfreetaxes.com/everett Her business, which she conducts from an office in American Samoa, is developing and selling specialized computer software. Myfreetaxes.com/everett A software purchaser will frequently pay Marcy an additional amount to install the software on the purchaser's operating system and to ensure that the software is functioning properly. Myfreetaxes.com/everett Marcy installs the software at the purchaser's place of business, which may be in American Samoa, in the United States, or in another country. Myfreetaxes.com/everett The income from selling the software is effectively connected with the conduct of Marcy's business in American Samoa, even though the product's destination may be outside the possession. Myfreetaxes.com/everett However, the compensation she receives for installing the software (personal services) outside of American Samoa is not effectively connected with the conduct of her business in the possession—the income is sourced where she performs the services. Myfreetaxes.com/everett Prev Up Next Home More Online Publications