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Tax Forms For Students

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Tax Forms For Students

Tax forms for students 9. Tax forms for students   Dispositions of Property Used in Farming Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Section 1231 Gains and LossesNonrecaptured section 1231 losses. Tax forms for students Depreciation RecaptureSection 1245 Property Section 1250 Property Installment Sale Other Dispositions Other GainsExceptions. Tax forms for students Amount to report as ordinary income. Tax forms for students Applicable percentage. Tax forms for students Amount to report as ordinary income. Tax forms for students Applicable percentage. Tax forms for students Introduction When you dispose of property used in your farm business, your taxable gain or loss is usually treated as ordinary income (which is taxed at the same rates as wages and interest income) or capital gain (which is generally taxed at lower rates) under the rules for section 1231 transactions. Tax forms for students When you dispose of depreciable property (section 1245 property or section 1250 property) at a gain, you may have to recognize all or part of the gain as ordinary income under the depreciation recapture rules. Tax forms for students Any gain remaining after applying the depreciation recapture rules is a section 1231 gain, which may be taxed as a capital gain. Tax forms for students Gains and losses from property used in farming are reported on Form 4797, Sales of Business Property. Tax forms for students Table 9-1 contains examples of items reported on Form 4797 and refers to the part of that form on which they first should be reported. Tax forms for students Topics - This chapter discusses: Section 1231 gains and losses Depreciation recapture Other gains Useful Items - You may want to see: Publication 544 Sales and Other Dispositions of Assets Form (and Instructions) 4797 Sales of Business Property See chapter 16 for information about getting publications and forms. Tax forms for students Section 1231 Gains and Losses Section 1231 gains and losses are the taxable gains and losses from section 1231 transactions (explained below). Tax forms for students Their treatment as ordinary or capital gains depends on whether you have a net gain or a net loss from all of your section 1231 transactions in the tax year. Tax forms for students Table 9-1. Tax forms for students Where to First Report Certain Items on Form 4797 Type of property Held 1 year  or less Held more than  1 year 1 Depreciable trade or business property:       a Sold or exchanged at a gain Part II Part III (1245, 1250)   b Sold or exchanged at a loss Part II Part I 2 Farmland held less than 10 years for which soil, water, or land clearing expenses were deducted:       a Sold at a gain Part II Part III (1252)   b Sold at a loss Part II Part I 3 All other farmland Part II Part I 4 Disposition of cost-sharing payment property described in section 126 Part II Part III (1255) 5 Cattle and horses used in a trade or business for draft, breeding, dairy, or sporting purposes: Held less  than 24 mos. Tax forms for students Held 24 mos. Tax forms for students  or more   a Sold at a gain Part II Part III (1245)   b Sold at a loss Part II Part I   c Raised cattle and horses sold at a gain Part II Part I 6 Livestock other than cattle and horses used in a trade or business for draft, breeding, dairy, or sporting purposes: Held less  than 12 mos. Tax forms for students Held 12 mos. Tax forms for students   or more   a Sold at a gain Part II Part III (1245)   b Sold at a loss Part II Part I   c Raised livestock sold at a gain Part II Part I If you have a gain from a section 1231 transaction, first determine whether any of the gain is ordinary income under the depreciation recapture rules (explained later). Tax forms for students Do not take that gain into account as section 1231 gain. Tax forms for students Section 1231 transactions. Tax forms for students   Gain or loss on the following transactions is subject to section 1231 treatment. Tax forms for students Sale or exchange of cattle and horses. Tax forms for students The cattle and horses must be held for draft, breeding, dairy, or sporting purposes and held for 24 months or longer. Tax forms for students Sale or exchange of other livestock. Tax forms for students This livestock must be held for draft, breeding, dairy, or sporting purposes and held for 12 months or longer. Tax forms for students Other livestock includes hogs, mules, sheep, goats, donkeys, and other fur-bearing animals. Tax forms for students Other livestock does not include poultry. Tax forms for students Sale or exchange of depreciable personal property. Tax forms for students This property must be used in your business and held longer than 1 year. Tax forms for students Generally, property held for the production of rents or royalties is considered to be used in a trade or business. Tax forms for students Examples of depreciable personal property include farm machinery and trucks. Tax forms for students It also includes amortizable section 197 intangibles. Tax forms for students Sale or exchange of real estate. Tax forms for students This property must be used in your business and held longer than 1 year. Tax forms for students Examples are your farm or ranch (including barns and sheds). Tax forms for students Sale or exchange of unharvested crops. Tax forms for students The crop and land must be sold, exchanged, or involuntarily converted at the same time and to the same person, and the land must have been held longer than 1 year. Tax forms for students You cannot keep any right or option to reacquire the land directly or indirectly (other than a right customarily incident to a mortgage or other security transaction). Tax forms for students Growing crops sold with a leasehold on the land, even if sold to the same person in a single transaction, are not included. Tax forms for students Distributive share of partnership gains and losses. Tax forms for students Your distributive share must be from the sale or exchange of property listed above and held longer than 1 year (or for the required period for certain livestock). Tax forms for students Cutting or disposal of timber. Tax forms for students Special rules apply if you owned the timber longer than 1 year and elect to treat timber cutting as a sale or exchange, or you enter into a cutting contract, as described in chapter 8 under Timber . Tax forms for students Condemnation. Tax forms for students The condemned property (defined in chapter 11) must have been held longer than 1 year. Tax forms for students It must be business property or a capital asset held in connection with a trade or business or a transaction entered into for profit, such as investment property. Tax forms for students It cannot be property held for personal use. Tax forms for students Casualty or theft. Tax forms for students The casualty or theft must have affected business property, property held for the production of rents or royalties, or investment property (such as notes and bonds). Tax forms for students You must have held the property longer than 1 year. Tax forms for students However, if your casualty or theft losses are more than your casualty or theft gains, neither the gains nor the losses are taken into account in the section 1231 computation. Tax forms for students Section 1231 does not apply to personal casualty gains and losses. Tax forms for students See chapter 11 for information on how to treat those gains and losses. Tax forms for students If the property is not held for the required holding period, the transaction is not subject to section 1231 treatment, and any gain or loss is ordinary income reported in Part II of Form 4797. Tax forms for students See Table 9-1. Tax forms for students Property for sale to customers. Tax forms for students   A sale, exchange, or involuntary conversion of property held mainly for sale to customers is not a section 1231 transaction. Tax forms for students If you will get back all, or nearly all, of your investment in the property by selling it rather than by using it up in your business, it is property held mainly for sale to customers. Tax forms for students Treatment as ordinary or capital. Tax forms for students   To determine the treatment of section 1231 gains and losses, combine all of your section 1231 gains and losses for the year. Tax forms for students If you have a net section 1231 loss, it is an ordinary loss. Tax forms for students If you have a net section 1231 gain, it is ordinary income up to your nonrecaptured section 1231 losses from previous years, explained next. Tax forms for students The rest, if any, is long-term capital gain. Tax forms for students Nonrecaptured section 1231 losses. Tax forms for students   Your nonrecaptured section 1231 losses are your net section 1231 losses for the previous 5 years that have not been applied against a net section 1231 gain by treating the gain as ordinary income. Tax forms for students These losses are applied against your net section 1231 gain beginning with the earliest loss in the 5-year period. Tax forms for students Example. Tax forms for students In 2013, Ben has a $2,000 net section 1231 gain. Tax forms for students To figure how much he has to report as ordinary income and long-term capital gain, he must first determine his section 1231 gains and losses from the previous 5-year period. Tax forms for students From 2008 through 2012 he had the following section 1231 gains and losses. Tax forms for students Year Amount 2008 -0- 2009 -0- 2010 ($2,500) 2011 -0- 2012 $1,800   Ben uses this information to figure how to report his net section 1231 gain for 2013 as shown below. Tax forms for students 1) Net section 1231 gain (2013) $2,000 2) Net section 1231 loss (2010) ($2,500)   3) Net section 1231 gain (2012) 1,800   4) Remaining net section 1231 loss from prior 5 years ($700)   5) Gain treated as  ordinary income $700 6) Gain treated as long-term  capital gain $1,300 His remaining net section 1231 loss from 2010 is completely recaptured in 2013. Tax forms for students Depreciation Recapture If you dispose of depreciable or amortizable property at a gain, you may have to treat all or part of the gain (even if it is otherwise nontaxable) as ordinary income. Tax forms for students To figure any gain that must be reported as ordinary income, you must keep permanent records of the facts necessary to figure the depreciation or amortization allowed or allowable on your property. Tax forms for students For more information, see chapter 3 of Publication 544. Tax forms for students Section 1245 Property A gain on the disposition of section 1245 property is treated as ordinary income to the extent of depreciation allowed or allowable. Tax forms for students Any recognized gain that is more than the part that is ordinary income is a section 1231 gain. Tax forms for students See Treatment as ordinary or capital under Section 1231 Gains and Losses , earlier. Tax forms for students Section 1245 property includes any property that is or has been subject to an allowance for depreciation or amortization and that is any of the following types of property. Tax forms for students Personal property (either tangible or intangible). Tax forms for students Other tangible property (except buildings and their structural components) used as any of the following. Tax forms for students See Buildings and structural components below. Tax forms for students An integral part of manufacturing, production, or extraction, or of furnishing certain services. Tax forms for students A research facility in any of the activities in (a). Tax forms for students A facility in any of the activities in (a) above, for the bulk storage of fungible commodities (discussed later). Tax forms for students That part of real property (not included in (2)) with an adjusted basis reduced by (but not limited to) the following. Tax forms for students Amortization of certified pollution control facilities. Tax forms for students The section 179 expense deduction. Tax forms for students Deduction for clean-fuel vehicles and certain refueling property. Tax forms for students Expenditures to remove architectural and transportation barriers to the handicapped and elderly. Tax forms for students Certain reforestation expenditures (as described under Reforestation Costs in chapter 7. Tax forms for students Single purpose agricultural (livestock) or horticultural structures. Tax forms for students Storage facilities (except buildings and their structural components) used in distributing petroleum or any primary product of petroleum. Tax forms for students Buildings and structural components. Tax forms for students   Section 1245 property does not include buildings and structural components. Tax forms for students The term building includes a house, barn, warehouse, or garage. Tax forms for students The term structural component includes walls, floors, windows, doors, central air conditioning systems, light fixtures, etc. Tax forms for students   Do not treat a structure that is essentially machinery or equipment as a building or structural component. Tax forms for students Also, do not treat a structure that houses property used as an integral part of an activity as a building or structural component if the structure's use is so closely related to the property's use that the structure can be expected to be replaced when the property it initially houses is replaced. Tax forms for students   The fact that the structure is specially designed to withstand the stress and other demands of the property and cannot be used economically for other purposes indicates it is closely related to the use of the property it houses. Tax forms for students Structures such as oil and gas storage tanks, grain storage bins, and silos are not treated as buildings, but as section 1245 property. Tax forms for students Facility for bulk storage of fungible commodities. Tax forms for students   This is a facility used mainly for the bulk storage of fungible commodities. Tax forms for students Bulk storage means storage of a commodity in a large mass before it is used. Tax forms for students For example, if a facility is used to store oranges that have been sorted and boxed, it is not used for bulk storage. Tax forms for students To be fungible, a commodity must be such that one part may be used in place of another. Tax forms for students Gain Treated as Ordinary Income The gain treated as ordinary income on the sale, exchange, or involuntary conversion of section 1245 property, including a sale and leaseback transaction, is the lesser of the following amounts. Tax forms for students The depreciation (which includes any section 179 deduction claimed) and amortization allowed or allowable on the property. Tax forms for students The gain realized on the disposition (the amount realized from the disposition minus the adjusted basis of the property). Tax forms for students For any other disposition of section 1245 property, ordinary income is the lesser of (1) above or the amount by which its fair market value (FMV) is more than its adjusted basis. Tax forms for students For details, see chapter 3 of Publication 544. Tax forms for students Use Part III of Form 4797 to figure the ordinary income part of the gain. Tax forms for students Depreciation claimed on other property or claimed by other taxpayers. Tax forms for students   Depreciation and amortization include the amounts you claimed on the section 1245 property as well as the following depreciation and amortization amounts. Tax forms for students Amounts you claimed on property you exchanged for, or converted to, your section 1245 property in a like-kind exchange or involuntary conversion. Tax forms for students For details on exchanges of property that are not taxable, see Like-Kind Exchanges in chapter 8. Tax forms for students Amounts a previous owner of the section 1245 property claimed if your basis is determined with reference to that person's adjusted basis (for example, the donor's depreciation deductions on property you received as a gift and part of the transfer is a sale or exchange). Tax forms for students Example. Tax forms for students Jeff Free paid $120,000 for a tractor in 2012. Tax forms for students On February 23, 2013, he traded it for a chopper and paid an additional $30,000. Tax forms for students To figure his depreciation deduction on the chopper for the current year, Jeff continues to use the basis of the tractor as he would have before the trade. Tax forms for students Jeff can also depreciate the additional $30,000 for the chopper. Tax forms for students Depreciation and amortization. Tax forms for students   Depreciation and amortization deductions that must be recaptured as ordinary income include (but are not limited to) the following items. Tax forms for students See Depreciation Recapture in chapter 3 of Publication 544 for more details. Tax forms for students Ordinary depreciation deductions. Tax forms for students Section 179 deduction (see chapter 7). Tax forms for students Any special depreciation allowance. Tax forms for students Amortization deductions for all the following costs. Tax forms for students Acquiring a lease. Tax forms for students Lessee improvements. Tax forms for students Pollution control facilities. Tax forms for students Reforestation expenses. Tax forms for students Section 197 intangibles. Tax forms for students Qualified disaster expenses. Tax forms for students Franchises, trademarks, and trade names acquired before August 11, 1993. Tax forms for students Example. Tax forms for students You file your returns on a calendar year basis. Tax forms for students In February 2011, you bought and placed in service for 100% use in your farming business a light-duty truck (5-year property) that cost $10,000. Tax forms for students You used the half-year convention and your MACRS deductions for the truck were $1,500 in 2011 and $2,550 in 2012. Tax forms for students You did not claim the section 179 expense deduction for the truck. Tax forms for students You sold it in May 2013 for $7,000. Tax forms for students The MACRS deduction in 2013, the year of sale, is $893 (½ of $1,785). Tax forms for students Figure the gain treated as ordinary income as follows. Tax forms for students 1) Amount realized $7,000 2) Cost (February 2011) $10,000   3) Depreciation allowed or allowable (MACRS deductions: $1,500 + $2,550 + $893) 4,943   4) Adjusted basis (subtract line 3 from line 2) $5,057 5) Gain realized (subtract line 4 from line 1) 1,943 6) Gain treated as ordinary income (lesser of line 3 or line 5) $1,943 Depreciation allowed or allowable. Tax forms for students   You generally use the greater of the depreciation allowed or allowable when figuring the part of gain to report as ordinary income. Tax forms for students If, in prior years, you have consistently taken proper deductions under one method, the amount allowed for your prior years will not be increased even though a greater amount would have been allowed under another proper method. Tax forms for students If you did not take any deduction at all for depreciation, your adjustments to basis for depreciation allowable are figured by using the straight line method. Tax forms for students This treatment applies only when figuring what part of the gain is treated as ordinary income under the rules for section 1245 depreciation recapture. Tax forms for students Disposition of plants and animals. Tax forms for students   If you elect not to use the uniform capitalization rules (see chapter 6), you must treat any plant you produce as section 1245 property. Tax forms for students If you have a gain on the property's disposition, you must recapture the pre-productive expenses you would have capitalized if you had not made the election by treating the gain, up to the amount of these expenses, as ordinary income. Tax forms for students For section 1231 transactions, show these expenses as depreciation on Form 4797, Part III, line 22. Tax forms for students For plant sales that are reported on Schedule F (1040), Profit or Loss From Farming, this recapture rule does not change the reporting of income because the gain is already ordinary income. Tax forms for students You can use the farm-price method or the unit-livestock-price method discussed in  chapter 2 to figure these expenses. Tax forms for students Example. Tax forms for students Janet Maple sold her apple orchard in 2013 for $80,000. Tax forms for students Her adjusted basis at the time of sale was $60,000. Tax forms for students She bought the orchard in 2006, but the trees did not produce a crop until 2009. Tax forms for students Her pre-productive expenses were $6,000. Tax forms for students She elected not to use the uniform capitalization rules. Tax forms for students Janet must treat $6,000 of the gain as ordinary income. Tax forms for students Section 1250 Property Section 1250 property includes all real property subject to an allowance for depreciation that is not and never has been section 1245 property. Tax forms for students It includes buildings and structural components that are not section 1245 property (discussed earlier). Tax forms for students It includes a leasehold of land or section 1250 property subject to an allowance for depreciation. Tax forms for students A fee simple interest in land is not section 1250 property because, like land, it is not depreciable. Tax forms for students Gain on the disposition of section 1250 property is treated as ordinary income to the extent of additional depreciation allowed or allowable. Tax forms for students To determine the additional depreciation on section 1250 property, see Depreciation Recapture in chapter 3 of Publication 544. Tax forms for students You will not have additional depreciation if any of the following apply to the property disposed of. Tax forms for students You figured depreciation for the property using the straight line method or any other method that does not result in depreciation that is more than the amount figured by the straight line method and you have held the property longer than 1 year. Tax forms for students You chose the alternate ACRS (straight line) method for the property, which was a type of 15-, 18-, or 19-year real property covered by the section 1250 rules. Tax forms for students The property was nonresidential real property placed in service after 1986 (or after July 31, 1986, if the choice to use MACRS was made) and you held it longer than 1 year. Tax forms for students These properties are depreciated using the straight line method. Tax forms for students Installment Sale If you report the sale of property under the installment method, any depreciation recapture under section 1245 or 1250 is taxable as ordinary income in the year of sale. Tax forms for students This applies even if no payments are received in that year. Tax forms for students If the gain is more than the depreciation recapture income, report the rest of the gain using the rules of the installment method. Tax forms for students For this purpose, include the recapture income in your installment sale basis to determine your gross profit on the installment sale. Tax forms for students If you dispose of more than one asset in a single transaction, you must separately figure the gain on each asset so that it may be properly reported. Tax forms for students To do this, allocate the selling price and the payments you receive in the year of sale to each asset. Tax forms for students Report any depreciation recapture income in the year of sale before using the installment method for any remaining gain. Tax forms for students For more information on installment sales, see chapter 10. Tax forms for students Other Dispositions Chapter 3 of Publication 544 discusses the tax treatment of the following transfers of depreciable property. Tax forms for students By gift. Tax forms for students At death. Tax forms for students In like-kind exchanges. Tax forms for students In involuntary conversions. Tax forms for students Publication 544 also explains how to handle a single transaction involving multiple properties. Tax forms for students Other Gains This section discusses gain on the disposition of farmland for which you were allowed either of the following. Tax forms for students Deductions for soil and water conservation expenditures (section 1252 property). Tax forms for students Exclusions from income for certain cost sharing payments (section 1255 property). Tax forms for students Section 1252 property. Tax forms for students   If you disposed of farmland you held more than 1 year and less than 10 years at a gain and you were allowed deductions for soil and water conservation expenses for the land, as discussed in chapter 5, you must treat part of the gain as ordinary income and treat the balance as section 1231 gain. Tax forms for students Exceptions. Tax forms for students   Do not treat gain on the following transactions as gain on section 1252 property. Tax forms for students Disposition of farmland by gift. Tax forms for students Transfer of farm property at death (except for income in respect of a decedent). Tax forms for students For more information, see Regulations section 1. Tax forms for students 1252-2. Tax forms for students Amount to report as ordinary income. Tax forms for students   You report as ordinary income the lesser of the following amounts. Tax forms for students Your gain (determined by subtracting the adjusted basis from the amount realized from a sale, exchange, or involuntary conversion, or the FMV for all other dispositions). Tax forms for students The total deductions allowed for soil and water conservation expenses multiplied by the applicable percentage, discussed next. Tax forms for students Applicable percentage. Tax forms for students   The applicable percentage is based on the length of time you held the land. Tax forms for students If you dispose of your farmland within 5 years after the date you acquired it, the percentage is 100%. Tax forms for students If you dispose of the land within the 6th through 9th year after you acquired it, the applicable percentage is reduced by 20% a year for each year or part of a year you hold the land after the 5th year. Tax forms for students If you dispose of the land 10 or more years after you acquired it, the percentage is 0%, and the entire gain is a section 1231 gain. Tax forms for students Example. Tax forms for students You acquired farmland on January 19, 2005. Tax forms for students On October 3, 2013, you sold the land at a $30,000 gain. Tax forms for students Between January 1 and October 3, 2013, you incur soil and water conservation expenditures of $15,000 for the land that are fully deductible in 2013. Tax forms for students The applicable percentage is 40% since you sold the land within the 8th year after you acquired it. Tax forms for students You treat $6,000 (40% of $15,000) of the $30,000 gain as ordinary income and the $24,000 balance as a section 1231 gain. Tax forms for students Section 1255 property. Tax forms for students   If you receive certain cost-sharing payments on property and you exclude those payments from income (as discussed in chapter 3), you may have to treat part of any gain as ordinary income and treat the balance as a section 1231 gain. Tax forms for students If you chose not to exclude these payments, you will not have to recognize ordinary income under this provision. Tax forms for students Amount to report as ordinary income. Tax forms for students   You report as ordinary income the lesser of the following amounts. Tax forms for students The applicable percentage of the total excluded cost-sharing payments. Tax forms for students The gain on the disposition of the property. Tax forms for students You do not report ordinary income under this rule to the extent the gain is recognized as ordinary income under sections 1231 through 1254, 1256, and 1257. Tax forms for students However, if applicable, gain reported under this rule must be reported regardless of any contrary provisions (including nonrecognition provisions) under any other section. Tax forms for students Applicable percentage. Tax forms for students   The applicable percentage of the excluded cost-sharing payments to be reported as ordinary income is based on the length of time you hold the property after receiving the payments. Tax forms for students If the property is held less than 10 years after you receive the payments, the percentage is 100%. Tax forms for students After 10 years, the percentage is reduced by 10% a year, or part of a year, until the rate is 0%. Tax forms for students Form 4797, Part III. Tax forms for students   Use Form 4797, Part III, to figure the ordinary income part of a gain from the sale, exchange, or involuntary conversion of section 1252 property and section 1255 property. Tax forms for students Prev  Up  Next   Home   More Online Publications
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Medical advances have resulted in an increased need for nursing home care and assisted living. Most health insurance plans and Medicare severely limit or exclude long-term care. You should consider these costs as you plan for retirement. Here are some questions to ask when considering a separate long-term care insurance policy.

  • What qualifies you for benefits? Some insurers say you must be unable to perform a specific number of the following activities of daily living: eating, walking, getting from bed to a chair, dressing, bathing, using a toilet and remaining continent.
  • What type of care is covered? Does the policy cover nursing home care? What about coverage for assisted living facilities that provide less client care than a nursing home? If you want to stay in your home, will it pay for care provided by visiting nurses and therapists? What about help with food preparation and housecleaning?
  • What will the benefit amount be? Most plans are written to provide a specific dollar benefit per day. The benefit for home care is usually about half the nursing-home benefit. But some policies pay the same for both forms of care. Other plans pay only for your actual expenses.
  • What is the benefit period? It is possible to get a policy with lifetime benefits but this can be very expensive. Other options for coverage are from one to six years. The average nursing home stay is about 2.5 years.
  • Is the benefit adjusted for inflation? If you buy a policy prior to age 60, you face the risk that a fixed daily benefit will not be enough by the time you need it.
  • Is there a waiting period before benefits begin? A 20 to 100 day period is not unusual.

Other Insurance

  • Travel Insurance. There are four kinds of travel insurance: Travel Cancellation Insurance, Baggage or Personal Effects Coverage, Emergency Medical Coverage and Accidental Death. One helpful website is insuremytrip.com.
  • Identity Theft Insurance. This type of insurance provides reimbursement to crime victims for the cost of restoring their identity and repairing credit reports. Some companies now include this as part of their homeowner's insurance policy. Others sell it as a stand-alone policy. Ask your homeowner policy company for information.
  • International Healthcare Insurance. A policy that provides health coverage no matter where you are in the world. The policy term is flexible so you can purchase only for the time you will be out of the country. Contact your current healthcare provider for coverage information.
  • Catastrophic Health Care Insurance. A health plan that only cover certain types of expensive care, like hospitalizations.
  • Liability Insurance. Insurance for what the policyholder is legally obligated to pay because of bodily injury or property damage caused to another person. Search online or ask your personal insurance agent for more information.
  • Umbrella insurance A policy that supplements the insurance you already have for home, auto, and other personal property. can help cover costs that exceed the limits of other policies.

The Tax Forms For Students

Tax forms for students 1. Tax forms for students   Bona Fide Residence Table of Contents Presence TestDays of Presence in the United States or Relevant Possession Significant Connection Tax HomeExceptions Closer ConnectionException for Year of Move Special Rules in the Year of a MoveYear of Moving to a Possession Year of Moving From a Possession Reporting a Change in Bona Fide ResidenceWho Must File Penalty for Not Filing Form 8898 In order to qualify for certain tax benefits (see chapter 3), you must be a bona fide resident of American Samoa, the CNMI, Guam, Puerto Rico, or the USVI for the entire tax year. Tax forms for students Generally, you are a bona fide resident of one of these possessions (the relevant possession) if, during the tax year, you: Meet the presence test, Do not have a tax home outside the relevant possession, and Do not have a closer connection to the United States or to a foreign country than to the relevant possession. Tax forms for students Special rule for members of the U. Tax forms for students S. Tax forms for students Armed Forces. Tax forms for students   If you are a member of the U. Tax forms for students S. Tax forms for students Armed Forces who qualified as a bona fide resident of the relevant possession in an earlier tax year, your absence from that possession during the current tax year in compliance with military orders will not affect your status as a bona fide resident. Tax forms for students Likewise, being in a possession solely in compliance with military orders will not qualify you for bona fide residency. Tax forms for students Also see the special income source rule for members of the U. Tax forms for students S. Tax forms for students Armed Forces in chapter 2, under Compensation for Labor or Personal Services . Tax forms for students Special rule for civilian spouse of active duty member of the U. Tax forms for students S. Tax forms for students Armed Forces. Tax forms for students   If you are the civilian spouse of an active duty servicemember, under Military Spouses Residency Relief Act (MSRRA) you can choose to keep your prior residence or domicile for tax purposes (tax residence) when accompanying the servicemember spouse, who is relocating under military orders, to a new military duty station in one of the 50 states, the District of Columbia, or a U. Tax forms for students S. Tax forms for students possession. Tax forms for students Before relocating, you and your spouse must have the same tax residence. Tax forms for students If you are a civilian spouse and choose to keep your prior tax residence after such relocation, the source of income for services performed (for example, wages, salaries, tips, or self-employment) by you is considered to be (the jurisdiction of) the prior tax residence. Tax forms for students As a result, the amount of income tax withholding (from Form(s) W-2, Wage and Tax Statement) that you are able to claim on your federal return, as well as the need to file a state or U. Tax forms for students S. Tax forms for students possession return, may be affected. Tax forms for students For more information, consult with state, local, or U. Tax forms for students S. Tax forms for students possession tax authorities regarding your tax obligations under MSRRA. Tax forms for students Presence Test If you are a U. Tax forms for students S. Tax forms for students citizen or resident alien, you will satisfy the presence test for the entire tax year if you meet one of the following conditions. Tax forms for students You were present in the relevant possession for at least 183 days during the tax year. Tax forms for students You were present in the relevant possession for at least 549 days during the 3-year period that includes the current tax year and the 2 immediately preceding tax years. Tax forms for students During each year of the 3-year period, you must be present in the relevant possession for at least 60 days. Tax forms for students You were present in the United States for no more than 90 days during the tax year. Tax forms for students You had earned income in the United States of no more than a total of $3,000 and were present for more days in the relevant possession than in the United States during the tax year. Tax forms for students Earned income is pay for personal services performed, such as wages, salaries, or professional fees. Tax forms for students You had no significant connection to the United States during the tax year. Tax forms for students Special rule for nonresident aliens. Tax forms for students   Conditions (1) through (5) above do not apply to nonresident aliens of the United States. Tax forms for students Instead, nonresident aliens must meet the substantial presence test discussed in chapter 1 of Publication 519. Tax forms for students In that discussion, substitute the name of the possession for “United States” and “U. Tax forms for students S. Tax forms for students ” wherever they appear. Tax forms for students Disregard the discussion in that chapter about a Closer Connection to a Foreign Country. Tax forms for students Days of Presence in the United States or Relevant Possession Generally, you are treated as being present in the United States or in the relevant possession on any day that you are physically present in that location at any time during the day. Tax forms for students Days of presence in a possession. Tax forms for students   You are considered to be present in the relevant possession on any of the following days. Tax forms for students Any day you are physically present in that possession at any time during the day. Tax forms for students Any day you are outside of the relevant possession in order to receive, or to accompany any of the following family members to receive, qualifying medical treatment (see Qualifying Medical Treatment , later). Tax forms for students Your parent. Tax forms for students Your spouse. Tax forms for students Your child, who is your son, daughter, stepson, or stepdaughter. Tax forms for students This includes an adopted child or child lawfully placed with you for legal adoption. Tax forms for students This also includes a foster child who is placed with you by an authorized placement agency or by judgment, decree, or other order of any court of competent jurisdiction. Tax forms for students Any day you are outside the relevant possession because you leave or are unable to return to the relevant possession during any: 14-day period within which a major disaster occurs in the relevant possession for which a Federal Emergency Management Agency (FEMA) notice of a federal declaration of a major disaster is issued in the Federal Register, or Period for which a mandatory evacuation order is in effect for the geographic area in the relevant possession in which your main home is located. Tax forms for students   If, during a single day, you are physically present: In the United States and in the relevant possession, that day is considered a day of presence in the relevant possession; or In two possessions, that day is considered a day of presence in the possession where your tax home is located (see Tax Home , later). Tax forms for students Days of presence in the United States. Tax forms for students   You are considered to be present in the United States on any day that you are physically present in the United States at any time during the day. Tax forms for students However, do not count the following days as days of presence in the United States. Tax forms for students Any day you are temporarily present in the United States in order to receive, or to accompany a parent, spouse, or child who is receiving, qualifying medical treatment. Tax forms for students “Child” is defined under item 2c earlier. Tax forms for students “Qualifying medical treatment” is defined later. Tax forms for students Any day you are temporarily present in the United States because you leave or are unable to return to the relevant possession during any: 14-day period within which a major disaster occurs in the relevant possession for which a Federal Emergency Management Agency (FEMA) notice of a federal declaration of a major disaster is issued in the Federal Register, or Period for which a mandatory evacuation order is in effect for the geographic area in the relevant possession in which your main home is located. Tax forms for students Any day you are in the United States for less than 24 hours when you are traveling between two places outside the United States. Tax forms for students Any day you are temporarily present in the United States as a professional athlete to compete in a charitable sports event (defined later). Tax forms for students Any day you are temporarily in the United States as a student (defined later). Tax forms for students Any day you are in the United States serving as an elected representative of the relevant possession, or serving full time as an elected or appointed official or employee of the government of that possession (or any of its political subdivisions). Tax forms for students Qualifying Medical Treatment Such treatment is generally provided by (or under the supervision of) a physician for an illness, injury, impairment, or physical or mental condition. Tax forms for students The treatment generally involves: Any period of inpatient care that requires an overnight stay in a hospital or hospice, and any period immediately before or after that inpatient care to the extent it is medically necessary, or Any temporary period of inpatient care in a residential medical care facility for medically necessary rehabilitation services. Tax forms for students With respect to each qualifying medical treatment, you must prepare (or obtain) and maintain documentation supporting your claim that such treatment meets the criteria to be considered days of presence in the relevant possession. Tax forms for students You must be able to produce this documentation within 30 days if requested by the IRS or tax administrator for the relevant possession. Tax forms for students You must keep the following documentation. Tax forms for students Records that provide: The patient's name and relationship to you (if the medical treatment is provided to a person you accompany); The name and address of the hospital, hospice, or residential medical care facility where the medical treatment was provided; The name, address, and telephone number of the physician who provided the medical treatment; The date(s) on which the medical treatment was provided; and Receipt(s) of payment for the medical treatment. Tax forms for students Signed certification by the providing or supervising physician that the medical treatment met the requirements for being qualified medical treatment, and setting forth: The patient's name, A reasonably detailed description of the medical treatment provided by (or under the supervision of) the physician, The dates on which the medical treatment was provided, and The medical facts that support the physician's certification and determination that the treatment was medically necessary. Tax forms for students Charitable Sports Event A charitable sports event is one that meets all of the following conditions. Tax forms for students The main purpose is to benefit a qualified charitable organization. Tax forms for students The entire net proceeds go to charity. Tax forms for students Volunteers perform substantially all the work. Tax forms for students In figuring the days of presence in the United States, you can exclude only the days on which you actually competed in the charitable sports event. Tax forms for students You cannot exclude the days on which you were in the United States to practice for the event, to perform promotional or other activities related to the event, or to travel between events. Tax forms for students Student To qualify as a student, you must be, during some part of each of any 5 calendar months during the calendar year: A full-time student at a school that has a regular teaching staff, course of study, and regularly enrolled body of students in attendance, or A student taking a full-time, on-farm training course given by a school described in (1) above or by a state, county, or local government agency. Tax forms for students The 5 calendar months do not have to be consecutive. Tax forms for students Full-time student. Tax forms for students   A full-time student is a person who is enrolled for the number of hours or courses the school considers to be full-time attendance. Tax forms for students However, school attendance exclusively at night is not considered full-time attendance. Tax forms for students School. Tax forms for students   The term “school” includes elementary schools, middle schools, junior and senior high schools, colleges, universities, and technical, trade, and mechanical schools. Tax forms for students It does not include on-the-job training courses, correspondence schools, and schools offering courses only through the Internet. Tax forms for students Significant Connection One way in which you can meet the presence test is to have no significant connection to the United States during the tax year. Tax forms for students This section looks at the factors that determine if a significant connection exists. Tax forms for students You are treated as having a significant connection to the United States if you: Have a permanent home in the United States, Are currently registered to vote in any political subdivision of the United States, or Have a spouse or child (see item 2c under Days of presence in a possession , earlier) who is under age 18 whose main home is in the United States, other than: A child who is in the United States because he or she is the child of divorced or legally separated parents and is living with a custodial parent under a custodial decree or multiple support agreement, or A child who is in the United States as a student. Tax forms for students For the purpose of determining if you have a significant connection to the United States, the term “spouse” does not include a spouse from whom you are legally separated under a decree of divorce or separate maintenance. Tax forms for students Permanent home. Tax forms for students   A permanent home generally includes an accommodation such as a house, an apartment, or a furnished room that is either owned or rented by you or your spouse. Tax forms for students The dwelling unit must be available at all times, continuously, not only for short stays. Tax forms for students Exception for rental property. Tax forms for students   If you or your spouse own the dwelling unit and at any time during the tax year it is rented to someone else at fair rental value, it will be considered your permanent home only if you or your spouse use that property for personal purposes for more than the greater of: 14 days, or 10% of the number of days during that tax year that the property is rented to others at a fair rental value. Tax forms for students   You are treated as using rental property for personal purposes on any day the property is not being rented to someone else at fair rental value for the entire day. Tax forms for students   A day of personal use of a dwelling unit is also any day that the unit is used by any of the following persons. Tax forms for students You or any other person who has an interest in it, unless you rent it to another owner as his or her main home under a shared equity financing agreement. Tax forms for students A member of your family or a member of the family of any other person who has an interest in it, unless the family member uses the dwelling unit as his or her main home and pays a fair rental price. Tax forms for students Family includes only brothers and sisters, half-brothers and half-sisters, spouses, ancestors (parents, grandparents, etc. Tax forms for students ), and lineal descendants (children, grandchildren, etc. Tax forms for students ). Tax forms for students Anyone under an arrangement that lets you use some other dwelling unit. Tax forms for students Anyone at less than a fair rental price. Tax forms for students   However, any day you spend working substantially full time repairing and maintaining (not improving) your property is not counted as a day of personal use. Tax forms for students Whether your property is used mainly for this purpose is determined in light of all the facts and circumstances, such as: The amount of time you devote to repair and maintenance work, How often during the tax year you perform repair and maintenance work on this property, and The presence and activities of companions. Tax forms for students   See Publication 527, Residential Rental Property, for more information about personal use of a dwelling unit. Tax forms for students Example—significant connection. Tax forms for students Ann Green, a U. Tax forms for students S. Tax forms for students citizen, is a sales representative for a company based in Guam. Tax forms for students Ann lives with her spouse and young children in their house in Guam, where she is also registered to vote. Tax forms for students Her business travel requires her to spend 120 days in the United States and another 120 days in foreign countries. Tax forms for students When traveling on business, Ann generally stays at hotels but sometimes stays with her brother, who lives in the United States. Tax forms for students Ann's stays are always of short duration and she asks her brother's permission to stay with him. Tax forms for students Her brother's house is not her permanent home, nor does she have any other accommodations in the United States that would be considered her permanent home. Tax forms for students Ann satisfies the presence test because she has no significant connection to the United States. Tax forms for students Example—presence test. Tax forms for students Eric and Wanda Brown live for part of the year in a condominium, which they own, in the CNMI. Tax forms for students They also own a house in Maine where they live for 120 days every year to be near their grown children and grandchildren. Tax forms for students The Browns are retired and their only income is from pension payments, dividends, interest, and social security benefits. Tax forms for students In 2013, they spent only 175 days in the CNMI because of a 70-day vacation to Europe and Asia. Tax forms for students Thus, in 2013, the Browns were not present in the CNMI for at least 183 days, were present in the United States for more than 90 days, and had a significant connection to the United States because of their permanent home. Tax forms for students However, the Browns still satisfied the presence test with respect to the CNMI because they had no earned income in the United States and were physically present for more days in the CNMI than in the United States. Tax forms for students Tax Home You will have met the tax home test if you did not have a tax home outside the relevant possession during any part of the tax year. Tax forms for students Your tax home is your regular or main place of business, employment, or post of duty regardless of where you maintain your family home. Tax forms for students If you do not have a regular or main place of business because of the nature of your work, then your tax home is the place where you regularly live. Tax forms for students If you do not fit either of these categories, you are considered an itinerant and your tax home is wherever you work. Tax forms for students Exceptions There are some special rules regarding tax home that provide exceptions to the general rule stated above. Tax forms for students Students and Government Officials Disregard the following days when determining whether you have a tax home outside the relevant possession. Tax forms for students Days you were temporarily in the United States as a student (see Student under Days of Presence in the United States or Relevant Possession, earlier). Tax forms for students Days you were in the United States serving as an elected representative of the relevant possession, or serving full time as an elected or appointed official or employee of the government of that possession (or any of its political subdivisions). Tax forms for students Seafarers You will not be considered to have a tax home outside the relevant possession solely because you are employed on a ship or other seafaring vessel that is predominantly used in local and international waters. Tax forms for students For this purpose, a vessel is considered to be predominantly used in local and international waters if, during the tax year, the total amount of time it is used in international waters and in the waters within 3 miles of the relevant possession exceeds the total amount of time it is used in the territorial waters of the United States, another possession, or any foreign country. Tax forms for students Example. Tax forms for students In 2013, Sean Silverman, a U. Tax forms for students S. Tax forms for students citizen, was employed by a fishery and spent 250 days at sea on a fishing vessel. Tax forms for students When not at sea, Sean lived with his spouse at a house they own in American Samoa. Tax forms for students The fishing vessel on which Sean works departs and arrives at various ports in American Samoa, other possessions, and foreign countries, but was in international or American Samoa's local waters for 225 days. Tax forms for students For purposes of determining bona fide residency of American Samoa, Sean will not be considered to have a tax home outside that possession solely because of his employment on board the fishing vessel. Tax forms for students Year of Move If you are moving to or from a possession during the year, you may still be able to meet the tax home test for that year. Tax forms for students See Special Rules in the Year of a Move , later in this chapter. Tax forms for students Closer Connection You will have met the closer connection test if, during any part of the tax year, you do not have a closer connection to the United States or a foreign country than to the relevant U. Tax forms for students S. Tax forms for students possession. Tax forms for students You will be considered to have a closer connection to a possession than to the United States or to a foreign country if you have maintained more significant contacts with the possession(s) than with the United States or foreign country. Tax forms for students In determining if you have maintained more significant contacts with the relevant possession, the facts and circumstances to be considered include, but are not limited to, the following. Tax forms for students The location of your permanent home. Tax forms for students The location of your family. Tax forms for students The location of personal belongings, such as automobiles, furniture, clothing, and jewelry owned by you and your family. Tax forms for students The location of social, political, cultural, professional, or religious organizations with which you have a current relationship. Tax forms for students The location where you conduct your routine personal banking activities. Tax forms for students The location where you conduct business activities (other than those that go into determining your tax home). Tax forms for students The location of the jurisdiction in which you hold a driver's license. Tax forms for students The location of the jurisdiction in which you vote. Tax forms for students The location of charitable organizations to which you contribute. Tax forms for students The country of residence you designate on forms and documents. Tax forms for students The types of official forms and documents you file, such as Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting (Individuals), or Form W-9, Request for Taxpayer Identification Number and Certification. Tax forms for students Your connections to the relevant possession will be compared to the total of your connections with the United States and foreign countries. Tax forms for students Your answers to the questions on Form 8898, Part III, will help establish the jurisdiction to which you have a closer connection. Tax forms for students Example—closer connection to the United States. Tax forms for students Marcos Reyes, a U. Tax forms for students S. Tax forms for students citizen, moved to Puerto Rico in 2013 to start an investment consulting and venture capital business. Tax forms for students His spouse and two teenage children remained in California to allow the children to complete high school. Tax forms for students He traveled back to the United States regularly to see his spouse and children, to engage in business activities, and to take vacations. Tax forms for students Marcos had an apartment available for his full-time use in Puerto Rico, but remained a joint owner of the residence in California where his spouse and children lived. Tax forms for students Marcos and his family had automobiles and personal belongings such as furniture, clothing, and jewelry located at both residences. Tax forms for students Although Marcos was a member of the Puerto Rico Chamber of Commerce, he also belonged to and had current relationships with social, political, cultural, and religious organizations in California. Tax forms for students Marcos received mail in California, including bank and brokerage statements and credit card bills. Tax forms for students He conducted his personal banking activities in California. Tax forms for students He held a California driver's license and was also registered to vote there. Tax forms for students Based on all of the particular facts and circumstances pertaining to Marcos, he was not a bona fide resident of Puerto Rico in 2013 because he had a closer connection to the United States than to Puerto Rico. Tax forms for students Closer connection to another possession. Tax forms for students   Generally, possessions are not treated as foreign countries. Tax forms for students Therefore, a closer connection to a possession other than the relevant possession will not be treated as a closer connection to a foreign country. Tax forms for students Example—tax home and closer connection to possession. Tax forms for students Pearl Blackmon, a U. Tax forms for students S. Tax forms for students citizen, is a permanent employee of a hotel in Guam, but works only during the tourist season. Tax forms for students For the remainder of each year, Pearl lives with her spouse and children in the CNMI, where she has no outside employment. Tax forms for students Most of Pearl's personal belongings, including her automobile, are located in the CNMI. Tax forms for students She is registered to vote in, and has a driver's license issued by, the CNMI. Tax forms for students She does her personal banking in the CNMI and routinely lists her CNMI address as her permanent address on forms and documents. Tax forms for students Pearl satisfies the presence test with respect to both Guam and the CNMI. Tax forms for students She satisfies the tax home test with respect to Guam, because her regular place of business is in Guam. Tax forms for students Pearl satisfies the closer connection test with respect to both Guam and the CNMI, because she does not have a closer connection to the United States or to any foreign country. Tax forms for students Pearl is considered a bona fide resident of Guam, the location of her tax home. Tax forms for students Exception for Year of Move If you are moving to or from a possession during the year, you may still be able to meet the closer connection test for that year. Tax forms for students See Special Rules in the Year of a Move , next. Tax forms for students Special Rules in the Year of a Move If you are moving to or from a possession during the year, you may still be able to meet the tax home and closer connection tests for that year. Tax forms for students Year of Moving to a Possession You will satisfy the tax home and closer connection tests in the tax year of changing your residence to the relevant possession if you meet all of the following. Tax forms for students You have not been a bona fide resident of the relevant possession in any of the 3 tax years immediately preceding your move. Tax forms for students In the year of the move, you do not have a tax home outside the relevant possession or a closer connection to the United States or a foreign country than to the relevant possession during any of the last 183 days of the tax year. Tax forms for students You are a bona fide resident of the relevant possession for each of the 3 tax years immediately following your move. Tax forms for students Example. Tax forms for students Dwight Wood, a U. Tax forms for students S. Tax forms for students citizen, files returns on a calendar year basis. Tax forms for students He lived in the United States from January 2007 through May 2013. Tax forms for students In June 2013 he moved to the USVI, purchased a house, and accepted a permanent job with a local employer. Tax forms for students From July 1 through December 31, 2013 (more than 183 days), Dwight's principal place of business was in the USVI and, during that time, he did not have a closer connection to the United States or a foreign country than to the USVI. Tax forms for students If he is a bona fide resident of the USVI during all of 2014 through 2016, he will satisfy the tax home and closer connection tests for 2013. Tax forms for students If Dwight also satisfies the presence test in 2013, he will be considered a bona fide resident of the USVI for the entire 2013 tax year. Tax forms for students Year of Moving From a Possession In the year you cease to be a bona fide resident of American Samoa, the CNMI, Guam, or the USVI, you will satisfy the tax home and closer connection tests with respect to the relevant possession if you meet all of the following. Tax forms for students You have been a bona fide resident of the relevant possession for each of the 3 tax years immediately preceding your change of residence. Tax forms for students In the year of the move, you do not have a tax home outside the relevant possession or a closer connection to the United States or a foreign country than to the relevant possession during any of the first 183 days of the tax year. Tax forms for students You are not a bona fide resident of the relevant possession for any of the 3 tax years immediately following your move. Tax forms for students Example. Tax forms for students Jean Aspen, a U. Tax forms for students S. Tax forms for students citizen, files returns on a calendar year basis. Tax forms for students From January 2010 through December 2012, Jean was a bona fide resident of American Samoa. Tax forms for students Jean continued to live there until September 6, 2013, when she accepted new employment and moved to Hawaii. Tax forms for students Jean's principal place of business from January 1 through September 5, 2013 (more than 183 days), was in American Samoa, and during that period Jean did not have a closer connection to the United States or a foreign country than to American Samoa. Tax forms for students If Jean continues to live and work in Hawaii for the rest of 2013 and throughout years 2014 through 2016, she will satisfy the tax home and closer connection tests for 2013 with respect to American Samoa. Tax forms for students If Jean also satisfies the presence test in 2013, she will be considered a bona fide resident for the entire 2013 tax year. Tax forms for students Puerto Rico You will be considered a bona fide resident of Puerto Rico for the part of the tax year preceding the date on which you move if you: Are a U. Tax forms for students S. Tax forms for students citizen, Are a bona fide resident of Puerto Rico for at least 2 tax years immediately preceding the tax year of the move, Cease to be a bona fide resident of Puerto Rico during the tax year, Cease to have a tax home in Puerto Rico during the tax year, and Have a closer connection to Puerto Rico than to the United States or a foreign country throughout the part of the tax year preceding the date on which you cease to have a tax home in Puerto Rico. Tax forms for students Example. Tax forms for students Randy White, a U. Tax forms for students S. Tax forms for students citizen, files returns on a calendar year basis. Tax forms for students For all of 2011 and 2012, Randy was a bona fide resident of Puerto Rico. Tax forms for students From January through April 2013, Randy continued to reside and maintain his principal place of business in and closer connection to Puerto Rico. Tax forms for students On May 5, 2013, Randy moved and changed his tax home to Nevada. Tax forms for students Later that year he established a closer connection to the United States than to Puerto Rico. Tax forms for students Randy did not satisfy the presence test for 2013 with respect to Puerto Rico, nor the tax home or closer connection tests. Tax forms for students However, because Randy was a bona fide resident of Puerto Rico for at least 2 tax years before he moved to Nevada in 2013, he was a bona fide resident of Puerto Rico from January 1 through May 4, 2013. Tax forms for students Reporting a Change in Bona Fide Residence If you became or ceased to be a bona fide resident of a U. Tax forms for students S. Tax forms for students possession, you may need to file Form 8898. Tax forms for students This applies to the U. Tax forms for students S. Tax forms for students possessions of American Samoa, the CNMI, Guam, Puerto Rico, and the USVI. Tax forms for students Who Must File You must file Form 8898 for the tax year in which you meet both of the following conditions. Tax forms for students Your worldwide gross income (defined below) in that tax year is more than $75,000. Tax forms for students You meet one of the following. Tax forms for students You take a position for U. Tax forms for students S. Tax forms for students tax purposes that you became a bona fide resident of a U. Tax forms for students S. Tax forms for students possession after a tax year for which you filed a U. Tax forms for students S. Tax forms for students income tax return as a citizen or resident alien of the United States but not as a bona fide resident of the possession. Tax forms for students You are a citizen or resident alien of the United States who takes the position for U. Tax forms for students S. Tax forms for students tax purposes that you ceased to be a bona fide resident of a U. Tax forms for students S. Tax forms for students possession after a tax year for which you filed an income tax return (with the IRS, the possession tax authority, or both) as a bona fide resident of the possession. Tax forms for students You take the position for U. Tax forms for students S. Tax forms for students tax purposes that you became a bona fide resident of Puerto Rico or American Samoa after a tax year for which you were required to file an income tax return as a bona fide resident of the CNMI, Guam, or the USVI. Tax forms for students Worldwide gross income. Tax forms for students   Worldwide gross income means all income you received in the form of money, goods, property, and services, including any income from sources outside the United States (even if you can exclude part or all of it) and before any deductions, credits, or rebates. Tax forms for students Example. Tax forms for students You are a U. Tax forms for students S. Tax forms for students citizen who moved to the CNMI in December 2012, but did not become a bona fide resident of that possession until the 2013 tax year. Tax forms for students You must file Form 8898 for the 2013 tax year if your worldwide gross income for that year was more than $75,000. Tax forms for students Penalty for Not Filing Form 8898 If you are required to file Form 8898 for any tax year and you fail to file it, you may owe a penalty of $1,000. Tax forms for students You may also owe this penalty if you do not include all the information required by the form or the form includes incorrect information. Tax forms for students In either case, you will not owe this penalty if you can show that such failure is due to reasonable cause and not willful neglect. Tax forms for students This is in addition to any criminal penalty that may be imposed. 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