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Tax Return 1040nr

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Tax Return 1040nr

Tax return 1040nr Publication 531 - Main Content Table of Contents Keeping a Daily Tip RecordElectronic tip record. Tax return 1040nr Reporting Tips to Your EmployerElectronic tip statement. Tax return 1040nr Final report. Tax return 1040nr Tip Rate Determination and Education Program Reporting Tips on Your Tax Return Allocated Tips How To Get Tax Help Keeping a Daily Tip Record Why keep a daily tip record. Tax return 1040nr   You must keep a daily tip record so you can: Report your tips accurately to your employer, Report your tips accurately on your tax return, and Prove your tip income if your return is ever questioned. Tax return 1040nr How to keep a daily tip record. Tax return 1040nr   There are two ways to keep a daily tip record. Tax return 1040nr You can either: Write information about your tips in a tip diary, or Keep copies of documents that show your tips, such as restaurant bills and credit or debit card charge slips. Tax return 1040nr You should keep your daily tip record with your tax or other personal records. Tax return 1040nr You must keep your records for as long as they are important for administration of the federal tax law. Tax return 1040nr For information on how long to keep records, see How Long to Keep Records in chapter 1 of Publication 17, Your Federal Income Tax. Tax return 1040nr    If you keep a tip diary, you can use Form 4070A, Employee's Daily Record of Tips. Tax return 1040nr To get Form 4070A, ask the Internal Revenue Service (IRS) or your employer for Publication 1244, Employee's Daily Record of Tips and Report to Employer. Tax return 1040nr Publication 1244 is also available at www. Tax return 1040nr irs. Tax return 1040nr gov/pub1244. Tax return 1040nr Publication 1244 includes a 1-year supply of Form 4070A. Tax return 1040nr Each day, write in the information asked for on the form. Tax return 1040nr A filled-in Form 4070A is shown on the following page. Tax return 1040nr   In addition to the information asked for on Form 4070A, you also need to keep a record of the date and value of any noncash tips you get, such as tickets, passes, or other items of value. Tax return 1040nr Although you do not report these tips to your employer, you must report them on your tax return. Tax return 1040nr   If you do not use Form 4070A, start your records by writing your name, your employer's name, and the name of the business (if it is different from your employer's name). Tax return 1040nr Then, each workday, write the date and the following information. Tax return 1040nr Cash tips you get directly from customers or from other employees. Tax return 1040nr Tips from credit and debit card charge customers that your employer pays you. Tax return 1040nr The value of any noncash tips you get, such as tickets, passes, or other items of value. Tax return 1040nr The amount of tips you paid out to other employees through tip pools or tip splitting, or other arrangements, and the names of the employees to whom you paid the tips. Tax return 1040nr Please click here for the text description of the image. Tax return 1040nr Sample Filled-in Form 4070A from Publication 1244 Electronic tip record. Tax return 1040nr   You can use an electronic system provided by your employer to record your daily tips. Tax return 1040nr If you do, you must receive and keep a paper copy of this record. Tax return 1040nr Service charges. Tax return 1040nr    Do not write in your tip diary the amount of any service charge that your employer adds to a customer's bill and then pays to you and treats as wages. Tax return 1040nr This is part of your wages, not a tip. Tax return 1040nr The following factors determine if you have a tip or service charge: The payment is made free from compulsion; The customer has the right to determine the amount of payment; The payment is not subject to negotiation or dictated by employer policy; and The customer generally has the right to determine who receives the payment. Tax return 1040nr See examples below. Tax return 1040nr Example 1. Tax return 1040nr Good Food Restaurant adds an 18% charge to the bill for parties of 6 or more customers. Tax return 1040nr Jane's bill for food and beverages for her party of 8 includes an amount on the tip line equal to 18% of the charges for food and beverages, and the total includes this amount. Tax return 1040nr Because Jane did not have an unrestricted right to determine the amount on the “tip line,” the 18% charge is considered a service charge. Tax return 1040nr Do not include the 18% charge in your tip diary. Tax return 1040nr Service charges that are paid to you are considered wages, not tips. Tax return 1040nr Example 2. Tax return 1040nr Good Food Restaurant includes sample calculations of tip amounts at the bottom of its bills for food and beverages provided to customers. Tax return 1040nr David's bill includes a blank “tip line,” with sample tip calculations of 15%, 18%, and 20% of the charges for food and beverages at the bottom of the bill beneath the signature line. Tax return 1040nr Because David is free to enter any amount on the “tip line” or leave it blank, any amount he includes is considered a tip. Tax return 1040nr Be sure to include this amount in your tip diary. Tax return 1040nr Sample Filled-in Form 4070 from Publication 1244 Please click here for the text description of the image. Tax return 1040nr Filled-in Form 4070 Reporting Tips to Your Employer Why report tips to your employer. Tax return 1040nr   You must report tips to your employer so that: Your employer can withhold federal income tax and social security, Medicare, Additional Medicare, or railroad retirement taxes, Your employer can report the correct amount of your earnings to the Social Security Administration or Railroad Retirement Board (which affects your benefits when you retire or if you become disabled, or your family's benefits if you die), and You can avoid the penalty for not reporting tips to your employer (explained later). Tax return 1040nr What tips to report. Tax return 1040nr   Report to your employer only cash, check, and debit and credit card tips you receive. Tax return 1040nr   If your total tips for any 1 month from any one job are less than $20, do not report the tips for that month to that employer. Tax return 1040nr   If you participate in a tip-splitting or tip-pooling arrangement, report only the tips you receive and retain. Tax return 1040nr Do not report to your employer any portion of the tips you receive that you pass on to other employees. Tax return 1040nr However, you must report tips you receive from other employees. Tax return 1040nr   Do not report the value of any noncash tips, such as tickets or passes, to your employer. Tax return 1040nr You do not pay social security, Medicare, Additional Medicare, or railroad retirement taxes on these tips. Tax return 1040nr How to report. Tax return 1040nr   If your employer does not give you any other way to report your tips, you can use Form 4070, Employee's Report of Tips to Employer. Tax return 1040nr Fill in the information asked for on the form, sign and date the form, and give it to your employer. Tax return 1040nr A sample filled-in Form 4070 is shown above. Tax return 1040nr To get a 1-year supply of the form, ask the IRS or your employer for Publication 1244. Tax return 1040nr   If you do not use Form 4070, give your employer a statement with the following information. Tax return 1040nr Your name, address, and social security number. Tax return 1040nr Your employer's name, address, and business name (if it is different from your employer's name). Tax return 1040nr The month (or the dates of any shorter period) in which you received tips. Tax return 1040nr The total tips required to be reported for that period. Tax return 1040nr You must sign and date the statement. Tax return 1040nr Be sure to keep a copy with your tax or other personal records. Tax return 1040nr   Your employer may require you to report your tips more than once a month. Tax return 1040nr However, the statement cannot cover a period of more than 1 calendar month. Tax return 1040nr Electronic tip statement. Tax return 1040nr   Your employer can have you furnish your tip statements electronically. Tax return 1040nr When to report. Tax return 1040nr   Give your report for each month to your employer by the 10th of the next month. Tax return 1040nr If the 10th falls on a Saturday, Sunday, or legal holiday, give your employer the report by the next day that is not a Saturday, Sunday, or legal holiday. Tax return 1040nr Example. Tax return 1040nr You must report your tips received in September 2014 by October 10, 2014. Tax return 1040nr Final report. Tax return 1040nr   If your employment ends during the month, you can report your tips when your employment ends. Tax return 1040nr Penalty for not reporting tips. Tax return 1040nr   If you do not report tips to your employer as required, you may be subject to a penalty equal to 50% of the social security, Medicare, Additional Medicare, or railroad retirement taxes you owe on the unreported tips. Tax return 1040nr (For information about these taxes, see Reporting social security, Medicare, Additional Medicare, or railroad retirement taxes on tips not reported to your employer under Reporting Tips on Your Tax Return, later. Tax return 1040nr ) The penalty amount is in addition to the taxes you owe. Tax return 1040nr   You can avoid this penalty if you can show reasonable cause for not reporting the tips to your employer. Tax return 1040nr To do so, attach a statement to your return explaining why you did not report them. Tax return 1040nr Giving your employer money for taxes. Tax return 1040nr   Your regular pay may not be enough for your employer to withhold all the taxes you owe on your regular pay plus your reported tips. Tax return 1040nr If this happens, you can give your employer money until the close of the calendar year to pay the rest of the taxes. Tax return 1040nr   If you do not give your employer enough money, your employer will apply your regular pay and any money you give to the taxes, in the following order. Tax return 1040nr All taxes on your regular pay. Tax return 1040nr Social security, Medicare, Additional Medicare, or railroad retirement taxes on your reported tips. Tax return 1040nr Federal, state, and local income taxes on your reported tips. Tax return 1040nr    Any taxes that remain unpaid can be collected by your employer from your next paycheck. Tax return 1040nr If withholding taxes remain uncollected at the end of the year, you may be subject to a penalty for underpayment of estimated taxes. Tax return 1040nr See Publication 505, Tax Withholding and Estimated Tax, for more information. Tax return 1040nr    Uncollected taxes. Tax return 1040nr You must report on your tax return any social security and Medicare taxes, or railroad retirement taxes that remained uncollected at the end of 2013. Tax return 1040nr These uncollected taxes will be shown on your 2013 Form W-2. Tax return 1040nr See Reporting uncollected social security, Medicare, Additional Medicare, or railroad retirement taxes on tips reported to your employer under Reporting Tips on Your Tax Return, later. Tax return 1040nr Tip Rate Determination and Education Program Your employer may participate in the Tip Rate Determination and Education Program. Tax return 1040nr The program was developed to help employees and employers understand and meet their tip reporting responsibilities. Tax return 1040nr There are two agreements under the program: the Tip Rate Determination Agreement (TRDA) and the Tip Reporting Alternative Commitment (TRAC). Tax return 1040nr A variation of the TRAC program, the Employer Tip Reporting Alternative Commitment, (EmTRAC) was designed to allow employers in the food and beverage industry to design and receive approval for their own TRAC programs. Tax return 1040nr For information on the EmTRAC program, see Notice 2001-1, which is on page 261 of Internal Revenue Bulletin 2001-2 at www. Tax return 1040nr irs. Tax return 1040nr gov/pub/irs-irbs/irb01-02. Tax return 1040nr pdf. Tax return 1040nr If you are employed in the gaming industry, your employer may participate in the Gaming Industry Tip Compliance Agreement Program. Tax return 1040nr See Revenue Procedure 2007-32, 2007-22 I. Tax return 1040nr R. Tax return 1040nr B. Tax return 1040nr 1322, available at www. Tax return 1040nr irs. Tax return 1040nr gov/pub/irs-irbs/irb07_22. Tax return 1040nr pdf. Tax return 1040nr Your employer can provide you with a copy of any applicable agreement. Tax return 1040nr To find out more about these agreements, visit IRS. Tax return 1040nr gov and enter “restaurant tip reporting” in the search box. Tax return 1040nr You may also call 1-800-829-4933, visit www. Tax return 1040nr irs. Tax return 1040nr gov/localcontacts for the IRS Taxpayer Assistance Center in your area, or send an email to Tip. Tax return 1040nr Program@irs. Tax return 1040nr gov and request information on this program. Tax return 1040nr Reporting Tips on Your Tax Return How to report tips. Tax return 1040nr   Report your tips with your wages on Form 1040, line 7; Form 1040A, line 7; Form 1040EZ, line 1; Form 1040NR, line 8; or Form 1040NR-EZ, line 3. Tax return 1040nr What tips to report. Tax return 1040nr   Generally, you must report all tips you received in 2013 on your tax return, including both cash tips and noncash tips. Tax return 1040nr Any tips you reported to your employer as required in 2013 are included in the wages shown in box 1 of your Form W-2. Tax return 1040nr Add to the amount in box 1 only the tips you did not report to your employer. Tax return 1040nr   However, any tips you received in 2013 that you reported to your employer as required after 2013 but before January 11, 2014, are not included in the wages shown in box 1 of your 2013 Form W-2. Tax return 1040nr Do not include the amount of these tips on your 2013 tax return. Tax return 1040nr Instead, include them on your 2014 tax return. Tax return 1040nr Tips you received in 2012 that you reported to your employer as required after 2012 but before January 11, 2013, are included in the wages shown in box 1 of your 2013 Form W-2. Tax return 1040nr Although these tips were received in 2012, you must report them on your 2013 tax return. Tax return 1040nr   If you participate in a tip-splitting or tip-pooling arrangement, report only the tips you receive and retain. Tax return 1040nr Do not report on your income tax return any portion of the tips you receive that you pass on to other employees. Tax return 1040nr However, you must report tips you receive from other employees. Tax return 1040nr    If you received $20 or more in cash and charge tips in a month and did not report all of those tips to your employer, see Reporting social security, Medicare, Additional Medicare, or railroad retirement taxes on tips not reported to your employer, later. Tax return 1040nr    If you did not keep a daily tip record as required and an amount is shown in box 8 of your Form W-2, see Allocated Tips, later. Tax return 1040nr   If you kept a daily tip record and reported tips to your employer as required under the rules explained earlier, add the following tips to the amount in box 1 of your Form W-2. Tax return 1040nr Cash and charge tips you received that totaled less than $20 for any month. Tax return 1040nr The value of noncash tips, such as tickets, passes, or other items of value. Tax return 1040nr Example. Tax return 1040nr Ben Smith began working at the Blue Ocean Restaurant (his only employer in 2013) on June 30 and received $10,000 in wages during the year. Tax return 1040nr Ben kept a daily tip record showing that his tips for June were $18 and his tips for the rest of the year totaled $7,000. Tax return 1040nr He was not required to report his June tips to his employer, but he reported all of the rest of his tips to his employer as required. Tax return 1040nr Ben's Form W-2 from Blue Ocean Restaurant shows $17,000 ($10,000 wages + $7,000 reported tips) in box 1. Tax return 1040nr He adds the $18 unreported tips to that amount and reports $17,018 as wages on his tax return. Tax return 1040nr Reporting social security, Medicare, Additional Medicare, or railroad retirement taxes on tips not reported to your employer. Tax return 1040nr    If you received $20 or more in cash and charge tips in a month from any one job and did not report all of those tips to your employer, you must report the social security, Medicare, and Additional Medicare taxes on the unreported tips as additional tax on your return. Tax return 1040nr To report these taxes, you must file a return even if you would not otherwise have to file. Tax return 1040nr You must use Form 1040, Form 1040NR, Form 1040NR-EZ, Form 1040-SS, or 1040-PR (as appropriate) for this purpose. Tax return 1040nr (You cannot file Form 1040EZ or Form 1040A. Tax return 1040nr )    Use Form 4137, Social Security and Medicare Tax on Unreported Tip Income, to figure social security and Medicare taxes. Tax return 1040nr Enter the tax on your return as instructed, and attach the completed Form 4137 to your return. Tax return 1040nr Use Form 8959 to figure Additional Medicare Tax. Tax return 1040nr If you are subject to the Railroad Retirement Tax Act, you cannot use Form 4137 to pay railroad retirement tax on unreported tips. Tax return 1040nr To get railroad retirement credit, you must report tips to your employer. Tax return 1040nr Reporting uncollected social security, Medicare, Additional Medicare, or railroad retirement taxes on tips reported to your employer. Tax return 1040nr    You may have uncollected taxes if your regular pay was not enough for your employer to withhold all the taxes you owe and you did not give your employer enough money to pay the rest of the taxes. Tax return 1040nr For more information, see Giving your employer money for taxes , under Reporting Tips to Your Employer, earlier. Tax return 1040nr   If your employer could not collect all the social security and Medicare taxes, or railroad retirement taxes you owe on tips reported for 2013, the uncollected taxes will be shown in box 12 of your Form W-2 (codes A and B). Tax return 1040nr You must report these amounts as additional tax on your return. Tax return 1040nr   If you worked in the U. Tax return 1040nr S. Tax return 1040nr possessions and received Form W-2AS, Form W-2CM, Form W-2GU, or Form W-2VI, any uncollected taxes on tips will be shown in box 12 with codes A and B. Tax return 1040nr If you received Form 499R-2/W-2PR, any uncollected taxes will be shown in boxes 22 and 23. Tax return 1040nr Unlike the uncollected portion of the regular (1. Tax return 1040nr 45%) Medicare tax, the uncollected Additional Medicare Tax is not reported on Form W-2. Tax return 1040nr   To report these uncollected taxes, you must file a return even if you would not otherwise have to file. Tax return 1040nr You can report these taxes on Form 1040, in the space next to line 60; Form 1040NR, line 59; Form 1040-SS, Part I, line 6; or Form 1040-PR, Part I, line 6. Tax return 1040nr See the instructions for the appropriate form and line number indicated, and Form 8959. Tax return 1040nr (You cannot file Form 1040A, Form 1040EZ, or Form 1040NR-EZ. Tax return 1040nr ) Self-employed persons. Tax return 1040nr    If you receive tips as a self-employed person, you should report these tips as income on Schedule C or C-EZ. Tax return 1040nr See Publication 334, Tax Guide for Small Business, for more information on reporting business income. Tax return 1040nr Allocated Tips If your employer allocated tips to you, they are shown separately in box 8 of your Form W-2. Tax return 1040nr They are not included in box 1 with your wages and reported tips. Tax return 1040nr If box 8 is blank, this discussion does not apply to you. Tax return 1040nr What are allocated tips. Tax return 1040nr   These are tips that your employer assigned to you in addition to the tips you reported to your employer for the year. Tax return 1040nr Your employer will have done this only if: You worked in an establishment (restaurant, cocktail lounge, or similar business) that must allocate tips to employees, and The tips you reported to your employer were less than your share of 8% of food and drink sales. Tax return 1040nr No income, social security, Medicare, Additional Medicare, or railroad retirement taxes are withheld on allocated tips. Tax return 1040nr How were your allocated tips figured. Tax return 1040nr   The tips allocated to you are your share of an amount figured by subtracting the reported tips of all employees from 8% (or an approved lower rate) of food and drink sales (other than carryout sales and sales with a service charge of 10% or more). Tax return 1040nr Your share of that amount was figured using either a method provided by an employer-employee agreement or a method provided by IRS regulations based on employees' sales or hours worked. Tax return 1040nr For information about the exact allocation method used, ask your employer. Tax return 1040nr Must you report your allocated tips on your tax return. Tax return 1040nr   You must report tips you received in 2013 (including both cash and noncash tips) on your tax return as explained in What tips to report , earlier. Tax return 1040nr Any tips you reported to your employer in 2013 as required (explained under Reporting Tips to Your Employer , earlier) are included in the wages shown in box 1 of your Form W-2. Tax return 1040nr Add to the amount in box 1 only the tips you did not report to your employer as required. Tax return 1040nr This should include any allocated tips shown in box 8 on your Form(s) W-2, unless you have adequate records to show that you received less tips in the year than the allocated amount. Tax return 1040nr   See What tips to report under Reporting Tips on Your Tax Return, and Keeping a Daily Tip Record , earlier. Tax return 1040nr How to report allocated tips. Tax return 1040nr   If you received any tips in 2013 that you did not report to your employer as required (including allocated tips that you are required to report on your tax return), add these tips to the amount in box 1 of your Form(s) W-2 and report this amount as wages on Form 1040, line 7; Form 1040NR, line 8; or Form 1040NR-EZ, line 3. Tax return 1040nr (You cannot file Form 1040A or Form 1040EZ). Tax return 1040nr    Because social security, Medicare, or Additional Medicare taxes were not withheld from the allocated tips, you must report those taxes as additional tax on your return. Tax return 1040nr Complete Form 4137 and include the allocated tips on line 1 of the form as provided in its instructions. Tax return 1040nr See Reporting social security, Medicare, Additional Medicare, or railroad retirement taxes on tips not reported to your employer under Reporting Tips on Your Tax Return, earlier. Tax return 1040nr How to request an approved lower rate. Tax return 1040nr   Your employer can use a tip rate lower than 8% (but not lower than 2%) to figure allocated tips only if the IRS approves the lower rate. Tax return 1040nr Either the employer or the employees can request approval of a lower rate by filing a petition with the IRS. Tax return 1040nr The petition must include specific information about the establishment that will justify the lower rate. Tax return 1040nr A user fee must be paid with the petition. Tax return 1040nr    An employee petition can be filed only with the consent of a majority of the directly tipped employees (waiters, bartenders, and others who receive tips directly from customers). Tax return 1040nr The petition must state the total number of directly tipped employees and the number of employees consenting to the petition. Tax return 1040nr Employees filing the petition must promptly notify the employer, and the employer must promptly give the IRS a copy of all Forms 8027, Employer's Annual Information Return of Tip Income and Allocated Tips, filed for the establishment for the previous 3 years. Tax return 1040nr   For more information about how to file a petition and what information to include, see Allocation of Tips in the Instructions for Form 8027. Tax return 1040nr How To Get Tax Help Go online, use a smart phone, call or walk in to an office near you. Tax return 1040nr Whether it's help with a tax issue, preparing your tax return or picking up a free publication or form, get the help you need the way you want it. Tax return 1040nr Free help with your tax return. Tax return 1040nr   Free help in preparing your return is available nationwide from IRS-certified volunteers. Tax return 1040nr The Volunteer Income Tax Assistance (VITA) program is designed to help low-to-moderate income, elderly, persons with disabilities, and limited English proficient taxpayers. Tax return 1040nr The Tax Counseling for the Elderly (TCE) program is designed to assist taxpayers age 60 and older with their tax returns. Tax return 1040nr 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. Tax return 1040nr Some VITA and TCE sites provide taxpayers the opportunity to prepare their return with the assistance of an IRS-certified volunteer. Tax return 1040nr To find the nearest VITA or TCE site, visit IRS. Tax return 1040nr gov or call 1-800-906-9887. Tax return 1040nr   As part of the TCE program, AARP offers the Tax-Aide counseling program. Tax return 1040nr To find the nearest AARP Tax-Aide site, visit AARP's website at www. Tax return 1040nr aarp. Tax return 1040nr org/money/taxaide or call 1-888-227-7669. Tax return 1040nr   For more information on these programs, go to IRS. Tax return 1040nr gov and enter “VITA” in the search box. Tax return 1040nr Internet. Tax return 1040nr IRS. Tax return 1040nr gov and IRS2Go are ready when you are — every day, every night, 24 hours a day, 7 days a week. Tax return 1040nr Apply for an Employer Identification Number (EIN). Tax return 1040nr Go to IRS. Tax return 1040nr gov and enter Apply for an EIN in the search box. Tax return 1040nr Request an Electronic Filing PIN by going to IRS. Tax return 1040nr gov and entering Electronic Filing PIN in the search box. Tax return 1040nr Check the status of your 2013 refund with Where's My Refund? Go to IRS. Tax return 1040nr gov or the IRS2Go app, and click on Where's My Refund? You'll get a personalized refund date as soon as the IRS processes your tax return and approves your refund. Tax return 1040nr If you e-file, your refund status is usually available within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. Tax return 1040nr Check the status of your amended return. Tax return 1040nr Go to IRS. Tax return 1040nr gov and enter Where's My Amended Return in the search box. Tax return 1040nr Download forms, instructions, and publications, including some accessible versions. Tax return 1040nr Order free transcripts of your tax returns or tax account using the Order a Transcript tool on IRS. Tax return 1040nr gov or IRS2Go. Tax return 1040nr Tax return and tax account transcripts are generally available for the current year and past three years. Tax return 1040nr Figure your income tax withholding with the IRS Withholding Calculator on IRS. Tax return 1040nr gov. Tax return 1040nr 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. Tax return 1040nr Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. Tax return 1040nr gov. Tax return 1040nr Locate the nearest Taxpayer Assistance Center using the Office Locator tool on IRS. Tax return 1040nr gov or IRS2Go. Tax return 1040nr Stop by most business days for face-to-face tax help, no appointment necessary — just walk in. Tax return 1040nr An employee can explain IRS letters, request adjustments to your tax account or help you set up a payment plan. Tax return 1040nr Before you visit, check the Office Locator for the address, phone number, hours of operation and the services provided. Tax return 1040nr If you have an ongoing tax account problem or a special need, such as a disability, you can request an appointment. Tax return 1040nr Call the local number listed in the Office Locator, or look in the phone book under United States Government, Internal Revenue Service. Tax return 1040nr Locate the nearest volunteer help site with the VITA Locator Tool on IRS. Tax return 1040nr gov. Tax return 1040nr Low-to-moderate income, elderly, persons with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. Tax return 1040nr The Tax Counseling for the Elderly (TCE) program helps taxpayers 60 and older with their tax returns. Tax return 1040nr Most VITA and TCE sites offer free electronic filing and some provide IRS-certified volunteers who can help prepare your tax return. Tax return 1040nr AARP offers the Tax-Aide counseling program as part of the TCE program. Tax return 1040nr Visit AARP's website to find the nearest Tax-Aide location. Tax return 1040nr Research your tax questions. Tax return 1040nr Search publications and instructions by topic or keyword. Tax return 1040nr Read the Internal Revenue Code, regulations, or other official guidance. Tax return 1040nr Read Internal Revenue Bulletins. Tax return 1040nr Sign up to receive local and national tax news by email. Tax return 1040nr Phone. Tax return 1040nr You can call the IRS, or you can carry it in your pocket with the IRS2Go app on your smart phone or tablet. Tax return 1040nr Download the free IRS2Go mobile app from the iTunes app store or from Google Play. Tax return 1040nr Use it to watch the IRS YouTube channel, get IRS news as soon as it's released to the public, order transcripts of your tax returns or tax account, check your refund status, 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. Tax return 1040nr Call to locate the nearest volunteer help site, 1-800-906-9887. Tax return 1040nr Low-to-moderate income, elderly, persons with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. Tax return 1040nr The Tax Counseling for the Elderly (TCE) program helps taxpayers 60 and older with their tax returns. Tax return 1040nr Most VITA and TCE sites offer free electronic filing. Tax return 1040nr Some VITA and TCE sites provide IRS-certified volunteers who can help prepare your tax return. Tax return 1040nr Through the TCE program, AARP offers the Tax-Aide counseling program; call 1-888-227-7669 to find the nearest Tax-Aide location. Tax return 1040nr Call to check the status of your 2013 refund, 1-800-829-1954 or 1-800-829-4477. Tax return 1040nr The automated Where's My Refund? information is available 24 hours a day, 7 days a week. Tax return 1040nr If you e-file, your refund status is usually available within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. Tax return 1040nr Before you call, have your 2013 tax return handy so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund. Tax return 1040nr Where's My Refund? can give you a personalized refund date as soon as the IRS processes your tax return and approves your refund. Tax return 1040nr Where's My Refund? includes information for the most recent return filed in the current year and does not include information about amended returns. Tax return 1040nr Call the Amended Return Hotline, 1-866-464-2050, to check the status of your amended return. Tax return 1040nr Call to order forms, instructions and publications, 1-800-TAX-FORM (1-800-829-3676) to order current-year forms, instructions and publications, and prior-year forms and instructions (limited to 5 years). Tax return 1040nr You should receive your order within 10 business days. Tax return 1040nr Call to order transcripts of your tax returns or tax account, 1-800-908-9946. Tax return 1040nr Follow the prompts to provide your Social Security Number or Individual Taxpayer Identification Number, date of birth, street address and ZIP code. Tax return 1040nr Call for TeleTax topics, 1-800-829-4477, to listen to pre-recorded messages covering various tax topics. Tax return 1040nr Call to ask tax questions, 1-800-829-1040. Tax return 1040nr Call using TTY/TDD equipment, 1-800-829-4059 to ask tax questions or order forms and publications. Tax return 1040nr The TTY/TDD telephone number is for people who are deaf, hard of hearing, or have a speech disability. Tax return 1040nr These individuals can also contact the IRS through relay services such as the Federal Relay Service available at www. Tax return 1040nr gsa. Tax return 1040nr gov/fedrelay. Tax return 1040nr Walk-in. Tax return 1040nr You can find a selection of forms, publications and services — in-person, face-to-face. Tax return 1040nr Products. Tax return 1040nr You can walk in to some post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. Tax return 1040nr Some IRS offices, libraries, and city and county government offices have a collection of products available to photocopy from reproducible proofs. Tax return 1040nr Services. Tax return 1040nr You can walk in to your local TAC most business days for personal, face-to-face tax help. Tax return 1040nr An employee can explain IRS letters, request adjustments to your tax account, or help you set up a payment plan. Tax return 1040nr If you need to resolve a tax problem, have questions about how the tax law applies to your individual tax return, or you are more comfortable talking with someone in person, visit your local TAC where you can talk with an IRS representative face-to-face. Tax return 1040nr No appointment is necessary—just walk in. Tax return 1040nr Before visiting, check www. Tax return 1040nr irs. Tax return 1040nr gov/localcontacts for hours of operation and services provided. Tax return 1040nr Mail. Tax return 1040nr You can send your order for forms, instructions, and publications to the address below. Tax return 1040nr You should receive a response within 10 business days after your request is received. Tax return 1040nr  Internal Revenue Service 1201 N. Tax return 1040nr Mitsubishi Motorway Bloomington, IL 61705-6613 The Taxpayer Advocate Service Is Here to Help You. Tax return 1040nr   The Taxpayer Advocate Service (TAS) is your voice at the IRS. Tax return 1040nr Our job is to ensure that every taxpayer is treated fairly and that you know and understand your rights. Tax return 1040nr What can TAS do for you?   We can offer you free help with IRS problems that you can't resolve on your own. Tax return 1040nr 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. Tax return 1040nr You face (or your business is facing) an immediate threat of adverse action. Tax return 1040nr You've tried repeatedly to contact the IRS but no one has responded, or the IRS hasn't responded by the date promised. Tax return 1040nr   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. Tax return 1040nr Here's why we can help: TAS is an independent organization within the IRS. Tax return 1040nr Our advocates know how to work with the IRS. Tax return 1040nr Our services are free and tailored to meet your needs. Tax return 1040nr We have offices in every state, the District of Columbia, and Puerto Rico. Tax return 1040nr 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 www. Tax return 1040nr irs. Tax return 1040nr gov/advocate, or call us toll-free at 1-877-777-4778. Tax return 1040nr How else does TAS help taxpayers?   TAS also works to resolve large-scale, systemic problems that affect many taxpayers. Tax return 1040nr If you know of one of these broad issues, please report it to us through our Systemic Advocacy Management System at www. Tax return 1040nr irs. Tax return 1040nr gov/sams. Tax return 1040nr Low Income Taxpayer Clinics. Tax return 1040nr   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. Tax return 1040nr Some clinics can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. Tax return 1040nr Visit www. Tax return 1040nr TaxpayerAdvocate. Tax return 1040nr irs. Tax return 1040nr gov or see IRS Publication 4134, Low Income Taxpayer Clinic List. Tax return 1040nr Prev  Up  Next   Home   More Online Publications
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The Tax Return 1040nr

Tax return 1040nr 22. Tax return 1040nr   Taxes Table of Contents IntroductionIndian tribal government. Tax return 1040nr Useful Items - You may want to see: Tests To Deduct Any Tax Income TaxesState and Local Income Taxes Foreign Income Taxes General Sales TaxesMotor vehicles. Tax return 1040nr Real Estate TaxesReal estate taxes for prior years. Tax return 1040nr Examples. Tax return 1040nr Form 1099-S. Tax return 1040nr Real Estate-Related Items You Cannot Deduct Personal Property Taxes Taxes and Fees You Cannot Deduct Where To Deduct Introduction This chapter discusses which taxes you can deduct if you itemize deductions on Schedule A (Form 1040). Tax return 1040nr It also explains which taxes you can deduct on other schedules or forms and which taxes you cannot deduct. Tax return 1040nr This chapter covers the following topics. Tax return 1040nr Income taxes (federal, state, local, and foreign). Tax return 1040nr General sales taxes (state and local). Tax return 1040nr Real estate taxes (state, local, and foreign). Tax return 1040nr Personal property taxes (state and local). Tax return 1040nr Taxes and fees you cannot deduct. Tax return 1040nr Use Table 22-1 as a guide to determine which taxes you can deduct. Tax return 1040nr The end of the chapter contains a section that explains which forms you use to deduct different types of taxes. Tax return 1040nr Business taxes. Tax return 1040nr   You can deduct certain taxes only if they are ordinary and necessary expenses of your trade or business or of producing income. Tax return 1040nr For information on these taxes, see Publication 535, Business Expenses. Tax return 1040nr State or local taxes. Tax return 1040nr   These are taxes imposed by the 50 states, U. Tax return 1040nr S. Tax return 1040nr possessions, or any of their political subdivisions (such as a county or city), or by the District of Columbia. Tax return 1040nr Indian tribal government. Tax return 1040nr   An Indian tribal government recognized by the Secretary of the Treasury as performing substantial government functions will be treated as a state for purposes of claiming a deduction for taxes. Tax return 1040nr Income taxes, real estate taxes, and personal property taxes imposed by that Indian tribal government (or by any of its subdivisions that are treated as political subdivisions of a state) are deductible. Tax return 1040nr General sales taxes. Tax return 1040nr   These are taxes imposed at one rate on retail sales of a broad range of classes of items. Tax return 1040nr Foreign taxes. Tax return 1040nr   These are taxes imposed by a foreign country or any of its political subdivisions. Tax return 1040nr Useful Items - You may want to see: Publication 514 Foreign Tax Credit for Individuals 530 Tax Information for Homeowners Form (and Instructions) Schedule A (Form 1040) Itemized Deductions Schedule E (Form 1040) Supplemental Income and Loss 1116 Foreign Tax Credit Tests To Deduct Any Tax The following two tests must be met for you to deduct any tax. Tax return 1040nr The tax must be imposed on you. Tax return 1040nr You must pay the tax during your tax year. Tax return 1040nr The tax must be imposed on you. Tax return 1040nr   In general, you can deduct only taxes imposed on you. Tax return 1040nr   Generally, you can deduct property taxes only if you are an owner of the property. Tax return 1040nr If your spouse owns the property and pays the real estate taxes, the taxes are deductible on your spouse's separate return or on your joint return. Tax return 1040nr You must pay the tax during your tax year. Tax return 1040nr   If you are a cash basis taxpayer, you can deduct only those taxes you actually paid during your tax year. Tax return 1040nr If you pay your taxes by check, the day you mail or deliver the check is the date of payment, provided the check is honored by the financial institution. Tax return 1040nr If you use a pay-by-phone account (such as a credit card or electronic funds withdrawal), the date reported on the statement of the financial institution showing when payment was made is the date of payment. Tax return 1040nr If you contest a tax liability and are a cash basis taxpayer, you can deduct the tax only in the year you actually pay it (or transfer money or other property to provide for satisfaction of the contested liability). Tax return 1040nr See Publication 538, Accounting Periods and Methods, for details. Tax return 1040nr    If you use an accrual method of accounting, see Publication 538 for more information. Tax return 1040nr Income Taxes This section discusses the deductibility of state and local income taxes (including employee contributions to state benefit funds) and foreign income taxes. Tax return 1040nr State and Local Income Taxes You can deduct state and local income taxes. Tax return 1040nr However, you can elect to deduct state and local general sales taxes instead of state and local income taxes. Tax return 1040nr See General Sales Taxes , later. Tax return 1040nr Exception. Tax return 1040nr    You cannot deduct state and local income taxes you pay on income that is exempt from federal income tax, unless the exempt income is interest income. Tax return 1040nr For example, you cannot deduct the part of a state's income tax that is on a cost-of-living allowance exempt from federal income tax. Tax return 1040nr What To Deduct Your deduction may be for withheld taxes, estimated tax payments, or other tax payments as follows. Tax return 1040nr Withheld taxes. Tax return 1040nr   You can deduct state and local income taxes withheld from your salary in the year they are withheld. Tax return 1040nr Your Form(s) W-2 will show these amounts. Tax return 1040nr Forms W-2G, 1099-G, 1099-R, and 1099-MISC may also show state and local income taxes withheld. Tax return 1040nr Estimated tax payments. Tax return 1040nr   You can deduct estimated tax payments you made during the year to a state or local government. Tax return 1040nr However, you must have a reasonable basis for making the estimated tax payments. Tax return 1040nr Any estimated state or local tax payments that are not made in good faith at the time of payment are not deductible. Tax return 1040nr For example, you made an estimated state income tax payment. Tax return 1040nr However, the estimate of your state tax liability shows that you will get a refund of the full amount of your estimated payment. Tax return 1040nr You had no reasonable basis to believe you had any additional liability for state income taxes and you cannot deduct the estimated tax payment. Tax return 1040nr Refund applied to taxes. Tax return 1040nr   You can deduct any part of a refund of prior-year state or local income taxes that you chose to have credited to your 2013 estimated state or local income taxes. Tax return 1040nr    Do not reduce your deduction by either of the following items. Tax return 1040nr Any state or local income tax refund (or credit) you expect to receive for 2013. Tax return 1040nr Any refund of (or credit for) prior-year state and local income taxes you actually received in 2013. Tax return 1040nr   However, part or all of this refund (or credit) may be taxable. Tax return 1040nr See Refund (or credit) of state or local income taxes , later. Tax return 1040nr Separate federal returns. Tax return 1040nr   If you and your spouse file separate state, local, and federal income tax returns, you each can deduct on your federal return only the amount of your own state and local income tax that you paid during the tax year. Tax return 1040nr Joint state and local returns. Tax return 1040nr   If you and your spouse file joint state and local returns and separate federal returns, each of you can deduct on your separate federal return a part of the total state and local income taxes paid during the tax year. Tax return 1040nr You can deduct only the amount of the total taxes that is proportionate to your gross income compared to the combined gross income of you and your spouse. Tax return 1040nr However, you cannot deduct more than the amount you actually paid during the year. Tax return 1040nr You can avoid this calculation if you and your spouse are jointly and individually liable for the full amount of the state and local income taxes. Tax return 1040nr If so, you and your spouse can deduct on your separate federal returns the amount you each actually paid. Tax return 1040nr Joint federal return. Tax return 1040nr   If you file a joint federal return, you can deduct the total of the state and local income taxes both of you paid. Tax return 1040nr Contributions to state benefit funds. Tax return 1040nr    As an employee, you can deduct mandatory contributions to state benefit funds withheld from your wages that provide protection against loss of wages. Tax return 1040nr For example, certain states require employees to make contributions to state funds providing disability or unemployment insurance benefits. Tax return 1040nr Mandatory payments made to the following state benefit funds are deductible as state income taxes on Schedule A (Form 1040), line 5. Tax return 1040nr Alaska Unemployment Compensation Fund. Tax return 1040nr California Nonoccupational Disability Benefit Fund. Tax return 1040nr New Jersey Nonoccupational Disability Benefit Fund. Tax return 1040nr New Jersey Unemployment Compensation Fund. Tax return 1040nr New York Nonoccupational Disability Benefit Fund. Tax return 1040nr Pennsylvania Unemployment Compensation Fund. Tax return 1040nr Rhode Island Temporary Disability Benefit Fund. Tax return 1040nr Washington State Supplemental Workmen's Compensation Fund. Tax return 1040nr    Employee contributions to private or voluntary disability plans are not deductible. Tax return 1040nr Refund (or credit) of state or local income taxes. Tax return 1040nr   If you receive a refund of (or credit for) state or local income taxes in a year after the year in which you paid them, you may have to include the refund in income on Form 1040, line 10, in the year you receive it. Tax return 1040nr This includes refunds resulting from taxes that were overwithheld, applied from a prior year return, not figured correctly, or figured again because of an amended return. Tax return 1040nr If you did not itemize your deductions in the previous year, do not include the refund in income. Tax return 1040nr If you deducted the taxes in the previous year, include all or part of the refund on Form 1040, line 10, in the year you receive the refund. Tax return 1040nr For a discussion of how much to include, see Recoveries in chapter 12. Tax return 1040nr Foreign Income Taxes Generally, you can take either a deduction or a credit for income taxes imposed on you by a foreign country or a U. Tax return 1040nr S. Tax return 1040nr possession. Tax return 1040nr However, you cannot take a deduction or credit for foreign income taxes paid on income that is exempt from U. Tax return 1040nr S. Tax return 1040nr tax under the foreign earned income exclusion or the foreign housing exclusion. Tax return 1040nr For information on these exclusions, see Publication 54, Tax Guide for U. Tax return 1040nr S. Tax return 1040nr Citizens and Resident Aliens Abroad. Tax return 1040nr For information on the foreign tax credit, see Publication 514. Tax return 1040nr General Sales Taxes You can elect to deduct state and local general sales taxes, instead of state and local income taxes, as an itemized deduction on Schedule A (Form 1040), line 5b. Tax return 1040nr You can use either your actual expenses or the state and local sales tax tables to figure your sales tax deduction. Tax return 1040nr Actual expenses. Tax return 1040nr   Generally, you can deduct the actual state and local general sales taxes (including compensating use taxes) if the tax rate was the same as the general sales tax rate. Tax return 1040nr However, sales taxes on food, clothing, medical supplies, and motor vehicles are deductible as a general sales tax even if the tax rate was less than the general sales tax rate. Tax return 1040nr If you paid sales tax on a motor vehicle at a rate higher than the general sales tax rate, you can deduct only the amount of tax that you would have paid at the general sales tax rate on that vehicle. Tax return 1040nr If you use the actual expenses method, you must have receipts to show the general sales taxes paid. Tax return 1040nr Do not include sales taxes paid on items used in your trade or business. Tax return 1040nr Motor vehicles. Tax return 1040nr   For purposes of this section, motor vehicles include cars, motorcycles, motor homes, recreational vehicles, sport utility vehicles, trucks, vans, and off-road vehicles. Tax return 1040nr This also includes sales taxes on a leased motor vehicle, but not on vehicles used in your trade or business. Tax return 1040nr Optional sales tax tables. Tax return 1040nr   Instead of using your actual expenses, you can figure your state and local general sales tax deduction using the state and local sales tax tables in the Instructions for Schedule A (Form 1040). Tax return 1040nr You may also be able to add the state and local general sales taxes paid on certain specified items. Tax return 1040nr   Your applicable table amount is based on the state where you live, your income, and the number of exemptions claimed on your tax return. Tax return 1040nr Your income is your adjusted gross income plus any nontaxable items such as the following. Tax return 1040nr Tax-exempt interest. Tax return 1040nr Veterans' benefits. Tax return 1040nr Nontaxable combat pay. Tax return 1040nr Workers' compensation. Tax return 1040nr Nontaxable part of social security and railroad retirement benefits. Tax return 1040nr Nontaxable part of IRA, pension, or annuity distributions, excluding rollovers. Tax return 1040nr Public assistance payments. Tax return 1040nr If you lived in different states during the same tax year, you must prorate your applicable table amount for each state based on the days you lived in each state. Tax return 1040nr See the Instructions for Schedule A (Form 1040), line 5, for details. Tax return 1040nr Real Estate Taxes Deductible real estate taxes are any state, local, or foreign taxes on real property levied for the general public welfare. Tax return 1040nr You can deduct these taxes only if they are based on the assessed value of the real property and charged uniformly against all property under the jurisdiction of the taxing authority. Tax return 1040nr Deductible real estate taxes generally do not include taxes charged for local benefits and improvements that increase the value of the property. Tax return 1040nr They also do not include itemized charges for services (such as trash collection) assessed against specific property or certain people, even if the charge is paid to the taxing authority. Tax return 1040nr For more information about taxes and charges that are not deductible, see Real Estate-Related Items You Cannot Deduct , later. Tax return 1040nr Tenant-shareholders in a cooperative housing corporation. Tax return 1040nr   Generally, if you are a tenant-stockholder in a cooperative housing corporation, you can deduct the amount paid to the corporation that represents your share of the real estate taxes the corporation paid or incurred for your dwelling unit. Tax return 1040nr The corporation should provide you with a statement showing your share of the taxes. Tax return 1040nr For more information, see Special Rules for Cooperatives in Publication 530. Tax return 1040nr Division of real estate taxes between buyers and sellers. Tax return 1040nr   If you bought or sold real estate during the year, the real estate taxes must be divided between the buyer and the seller. Tax return 1040nr   The buyer and the seller must divide the real estate taxes according to the number of days in the real property tax year (the period to which the tax is imposed relates) that each owned the property. Tax return 1040nr The seller is treated as paying the taxes up to, but not including, the date of sale. Tax return 1040nr The buyer is treated as paying the taxes beginning with the date of sale. Tax return 1040nr This applies regardless of the lien dates under local law. Tax return 1040nr Generally, this information is included on the settlement statement provided at the closing. Tax return 1040nr    If you (the seller) cannot deduct taxes until they are paid because you use the cash method of accounting, and the buyer of your property is personally liable for the tax, you are considered to have paid your part of the tax at the time of the sale. Tax return 1040nr This lets you deduct the part of the tax to the date of sale even though you did not actually pay it. Tax return 1040nr However, you must also include the amount of that tax in the selling price of the property. Tax return 1040nr The buyer must include the same amount in his or her cost of the property. Tax return 1040nr   You figure your deduction for taxes on each property bought or sold during the real property tax year as follows. Tax return 1040nr Worksheet 22-1. Tax return 1040nr Figuring Your Real Estate Tax Deduction 1. Tax return 1040nr Enter the total real estate taxes for the real property tax year   2. Tax return 1040nr Enter the number of days in the real property tax year that you owned the property   3. Tax return 1040nr Divide line 2 by 365 (for leap years, divide line 2 by 366) . Tax return 1040nr 4. Tax return 1040nr Multiply line 1 by line 3. Tax return 1040nr This is your deduction. Tax return 1040nr Enter it on Schedule A (Form 1040), line 6   Note. Tax return 1040nr Repeat steps 1 through 4 for each property you bought or sold during the real property tax year. Tax return 1040nr Your total deduction is the sum of the line 4 amounts for all of the properties. Tax return 1040nr Real estate taxes for prior years. Tax return 1040nr   Do not divide delinquent taxes between the buyer and seller if the taxes are for any real property tax year before the one in which the property is sold. Tax return 1040nr Even if the buyer agrees to pay the delinquent taxes, the buyer cannot deduct them. Tax return 1040nr The buyer must add them to the cost of the property. Tax return 1040nr The seller can deduct these taxes paid by the buyer. Tax return 1040nr However, the seller must include them in the selling price. Tax return 1040nr Examples. Tax return 1040nr   The following examples illustrate how real estate taxes are divided between buyer and seller. Tax return 1040nr Example 1. Tax return 1040nr Dennis and Beth White's real property tax year for both their old home and their new home is the calendar year, with payment due August 1. Tax return 1040nr The tax on their old home, sold on May 7, was $620. Tax return 1040nr The tax on their new home, bought on May 3, was $732. Tax return 1040nr Dennis and Beth are considered to have paid a proportionate share of the real estate taxes on the old home even though they did not actually pay them to the taxing authority. Tax return 1040nr On the other hand, they can claim only a proportionate share of the taxes they paid on their new property even though they paid the entire amount. Tax return 1040nr Dennis and Beth owned their old home during the real property tax year for 126 days (January 1 to May 6, the day before the sale). Tax return 1040nr They figure their deduction for taxes on their old home as follows. Tax return 1040nr Worksheet 22-1. Tax return 1040nr Figuring Your Real Estate Tax Deduction — Taxes on Old Home 1. Tax return 1040nr Enter the total real estate taxes for the real property tax year $620 2. Tax return 1040nr Enter the number of days in the real property tax year that you owned the property 126 3. Tax return 1040nr Divide line 2 by 365 (for leap years, divide line 2 by 366) . Tax return 1040nr 3452 4. Tax return 1040nr Multiply line 1 by line 3. Tax return 1040nr This is your deduction. Tax return 1040nr Enter it on Schedule A (Form 1040), line 6 $214 Since the buyers of their old home paid all of the taxes, Dennis and Beth also include the $214 in the selling price of the old home. Tax return 1040nr (The buyers add the $214 to their cost of the home. Tax return 1040nr ) Dennis and Beth owned their new home during the real property tax year for 243 days (May 3 to December 31, including their date of purchase). Tax return 1040nr They figure their deduction for taxes on their new home as follows. Tax return 1040nr Worksheet 22-1. Tax return 1040nr Figuring Your Real Estate Tax Deduction — Taxes on New Home 1. Tax return 1040nr Enter the total real estate taxes for the real property tax year $732 2. Tax return 1040nr Enter the number of days in the real property tax year that you owned the property 243 3. Tax return 1040nr Divide line 2 by 365 (for leap years, divide line 2 by 366) . Tax return 1040nr 6658 4. Tax return 1040nr Multiply line 1 by line 3. Tax return 1040nr This is your deduction. Tax return 1040nr Enter it on Schedule A (Form 1040), line 6 $487 Since Dennis and Beth paid all of the taxes on the new home, they add $245 ($732 paid less $487 deduction) to their cost of the new home. Tax return 1040nr (The sellers add this $245 to their selling price and deduct the $245 as a real estate tax. Tax return 1040nr ) Dennis and Beth's real estate tax deduction for their old and new homes is the sum of $214 and $487, or $701. Tax return 1040nr They will enter this amount on Schedule A (Form 1040), line 6. Tax return 1040nr Example 2. Tax return 1040nr George and Helen Brown bought a new home on May 3, 2013. Tax return 1040nr Their real property tax year for the new home is the calendar year. Tax return 1040nr Real estate taxes for 2012 were assessed in their state on January 1, 2013. Tax return 1040nr The taxes became due on May 31, 2013, and October 31, 2013. Tax return 1040nr The Browns agreed to pay all taxes due after the date of purchase. Tax return 1040nr Real estate taxes for 2012 were $680. Tax return 1040nr They paid $340 on May 31, 2013, and $340 on October 31, 2013. Tax return 1040nr These taxes were for the 2012 real property tax year. Tax return 1040nr The Browns cannot deduct them since they did not own the property until 2013. Tax return 1040nr Instead, they must add $680 to the cost of their new home. Tax return 1040nr In January 2014, the Browns receive their 2013 property tax statement for $752, which they will pay in 2014. Tax return 1040nr The Browns owned their new home during the 2013 real property tax year for 243 days (May 3 to December 31). Tax return 1040nr They will figure their 2014 deduction for taxes as follows. Tax return 1040nr Worksheet 22-1. Tax return 1040nr Figuring Your Real Estate Tax Deduction — Taxes on New Home 1. Tax return 1040nr Enter the total real estate taxes for the real property tax year $752 2. Tax return 1040nr Enter the number of days in the real property tax year that you owned the property 243 3. Tax return 1040nr Divide line 2 by 365 (for leap years, divide line 2 by 366) . Tax return 1040nr 6658 4. Tax return 1040nr Multiply line 1 by line 3. Tax return 1040nr This is your deduction. Tax return 1040nr Claim it on Schedule A (Form 1040), line 6 $501 The remaining $251 ($752 paid less $501 deduction) of taxes paid in 2014, along with the $680 paid in 2013, is added to the cost of their new home. Tax return 1040nr Because the taxes up to the date of sale are considered paid by the seller on the date of sale, the seller is entitled to a 2013 tax deduction of $931. Tax return 1040nr This is the sum of the $680 for 2012 and the $251 for the 122 days the seller owned the home in 2013. Tax return 1040nr The seller must also include the $931 in the selling price when he or she figures the gain or loss on the sale. Tax return 1040nr The seller should contact the Browns in January 2014 to find out how much real estate tax is due for 2013. Tax return 1040nr Form 1099-S. Tax return 1040nr   For certain sales or exchanges of real estate, the person responsible for closing the sale (generally the settlement agent) prepares Form 1099-S, Proceeds From Real Estate Transactions, to report certain information to the IRS and to the seller of the property. Tax return 1040nr Box 2 of Form 1099-S is for the gross proceeds from the sale and should include the portion of the seller's real estate tax liability that the buyer will pay after the date of sale. Tax return 1040nr The buyer includes these taxes in the cost basis of the property, and the seller both deducts this amount as a tax paid and includes it in the sales price of the property. Tax return 1040nr   For a real estate transaction that involves a home, any real estate tax the seller paid in advance but that is the liability of the buyer appears on Form 1099-S, box 5. Tax return 1040nr The buyer deducts this amount as a real estate tax, and the seller reduces his or her real estate tax deduction (or includes it in income) by the same amount. Tax return 1040nr See Refund (or rebate) , later. Tax return 1040nr Taxes placed in escrow. Tax return 1040nr   If your monthly mortgage payment includes an amount placed in escrow (put in the care of a third party) for real estate taxes, you may not be able to deduct the total amount placed in escrow. Tax return 1040nr You can deduct only the real estate tax that the third party actually paid to the taxing authority. Tax return 1040nr If the third party does not notify you of the amount of real estate tax that was paid for you, contact the third party or the taxing authority to find the proper amount to show on your return. Tax return 1040nr Tenants by the entirety. Tax return 1040nr   If you and your spouse held property as tenants by the entirety and you file separate federal returns, each of you can deduct only the taxes each of you paid on the property. Tax return 1040nr Divorced individuals. Tax return 1040nr   If your divorce or separation agreement states that you must pay the real estate taxes for a home owned by you and your spouse, part of your payments may be deductible as alimony and part as real estate taxes. Tax return 1040nr See Taxes and insurance in chapter 18 for more information. Tax return 1040nr Ministers' and military housing allowances. Tax return 1040nr   If you are a minister or a member of the uniformed services and receive a housing allowance that you can exclude from income, you still can deduct all of the real estate taxes you pay on your home. Tax return 1040nr Refund (or rebate). Tax return 1040nr   If you received a refund or rebate in 2013 of real estate taxes you paid in 2013, you must reduce your deduction by the amount refunded to you. Tax return 1040nr If you received a refund or rebate in 2013 of real estate taxes you deducted in an earlier year (either as an itemized deduction or an increase to your standard deduction), you generally must include the refund or rebate in income in the year you receive it. Tax return 1040nr However, the amount you include in income is limited to the amount of the deduction that reduced your tax in the earlier year. Tax return 1040nr For more information, see Recoveries in chapter 12. Tax return 1040nr Table 22-1. Tax return 1040nr Which Taxes Can You Deduct? Type of Tax You Can Deduct You Cannot Deduct Fees and Charges Fees and charges that are expenses of your trade or business or of producing income. Tax return 1040nr Fees and charges that are not expenses of your trade or business or of producing income, such as fees for driver's licenses, car inspections, parking, or charges for water bills (see Taxes and Fees You Cannot Deduct ). Tax return 1040nr     Fines and penalties. Tax return 1040nr Income Taxes State and local income taxes. Tax return 1040nr Federal income taxes. Tax return 1040nr   Foreign income taxes. Tax return 1040nr     Employee contributions to state funds listed under Contributions to state benefit funds . Tax return 1040nr Employee contributions to private or voluntary disability plans. Tax return 1040nr     State and local general sales taxes if you choose to deduct state and local income taxes. Tax return 1040nr General Sales Taxes State and local general sales taxes, including compensating use taxes. Tax return 1040nr State and local income taxes if you choose to deduct state and local general sales taxes. Tax return 1040nr Other Taxes Taxes that are expenses of your trade or business. Tax return 1040nr Federal excise taxes, such as tax on gasoline, that are not expenses of your trade or business or of producing income. Tax return 1040nr   Taxes on property producing rent or royalty income. Tax return 1040nr Per capita taxes. Tax return 1040nr   Occupational taxes. Tax return 1040nr See chapter 28. Tax return 1040nr     One-half of self-employment tax paid. Tax return 1040nr   Personal Property Taxes State and local personal property taxes. Tax return 1040nr Customs duties that are not expenses of your trade or business or of producing income. Tax return 1040nr Real Estate Taxes State and local real estate taxes. Tax return 1040nr Real estate taxes that are treated as imposed on someone else (see Division of real estate taxes between buyers and sellers ). Tax return 1040nr   Foreign real estate taxes. Tax return 1040nr Taxes for local benefits (with exceptions). Tax return 1040nr See Real Estate-Related Items You Cannot Deduct . Tax return 1040nr   Tenant's share of real estate taxes paid by  cooperative housing corporation. Tax return 1040nr Trash and garbage pickup fees (with exceptions). Tax return 1040nr See Real Estate-Related Items You Cannot Deduct . Tax return 1040nr     Rent increase due to higher real estate taxes. Tax return 1040nr     Homeowners' association charges. Tax return 1040nr Real Estate-Related Items You Cannot Deduct Payments for the following items generally are not deductible as real estate taxes. Tax return 1040nr Taxes for local benefits. Tax return 1040nr Itemized charges for services (such as trash and garbage pickup fees). Tax return 1040nr Transfer taxes (or stamp taxes). Tax return 1040nr Rent increases due to higher real estate taxes. Tax return 1040nr Homeowners' association charges. Tax return 1040nr Taxes for local benefits. Tax return 1040nr   Deductible real estate taxes generally do not include taxes charged for local benefits and improvements tending to increase the value of your property. Tax return 1040nr These include assessments for streets, sidewalks, water mains, sewer lines, public parking facilities, and similar improvements. Tax return 1040nr You should increase the basis of your property by the amount of the assessment. Tax return 1040nr   Local benefit taxes are deductible only if they are for maintenance, repair, or interest charges related to those benefits. Tax return 1040nr If only a part of the taxes is for maintenance, repair, or interest, you must be able to show the amount of that part to claim the deduction. Tax return 1040nr If you cannot determine what part of the tax is for maintenance, repair, or interest, none of it is deductible. Tax return 1040nr    Taxes for local benefits may be included in your real estate tax bill. Tax return 1040nr If your taxing authority (or mortgage lender) does not furnish you a copy of your real estate tax bill, ask for it. Tax return 1040nr You should use the rules above to determine if the local benefit tax is deductible. Tax return 1040nr Contact the taxing authority if you need additional information about a specific charge on your real estate tax bill. Tax return 1040nr Itemized charges for services. Tax return 1040nr    An itemized charge for services assessed against specific property or certain people is not a tax, even if the charge is paid to the taxing authority. Tax return 1040nr For example, you cannot deduct the charge as a real estate tax if it is: A unit fee for the delivery of a service (such as a $5 fee charged for every 1,000 gallons of water you use), A periodic charge for a residential service (such as a $20 per month or $240 annual fee charged to each homeowner for trash collection), or A flat fee charged for a single service provided by your government (such as a $30 charge for mowing your lawn because it was allowed to grow higher than permitted under your local ordinance). Tax return 1040nr    You must look at your real estate tax bill to determine if any nondeductible itemized charges, such as those listed above, are included in the bill. Tax return 1040nr If your taxing authority (or mortgage lender) does not furnish you a copy of your real estate tax bill, ask for it. Tax return 1040nr Exception. Tax return 1040nr   Service charges used to maintain or improve services (such as trash collection or police and fire protection) are deductible as real estate taxes if: The fees or charges are imposed at a like rate against all property in the taxing jurisdiction, The funds collected are not earmarked; instead, they are commingled with general revenue funds, and Funds used to maintain or improve services are not limited to or determined by the amount of these fees or charges collected. Tax return 1040nr Transfer taxes (or stamp taxes). Tax return 1040nr   Transfer taxes and similar taxes and charges on the sale of a personal home are not deductible. Tax return 1040nr If they are paid by the seller, they are expenses of the sale and reduce the amount realized on the sale. Tax return 1040nr If paid by the buyer, they are included in the cost basis of the property. Tax return 1040nr Rent increase due to higher real estate taxes. Tax return 1040nr   If your landlord increases your rent in the form of a tax surcharge because of increased real estate taxes, you cannot deduct the increase as taxes. Tax return 1040nr Homeowners' association charges. Tax return 1040nr   These charges are not deductible because they are imposed by the homeowners' association, rather than the state or local government. Tax return 1040nr Personal Property Taxes Personal property tax is deductible if it is a state or local tax that is: Charged on personal property, Based only on the value of the personal property, and Charged on a yearly basis, even if it is collected more or less than once a year. Tax return 1040nr A tax that meets the above requirements can be considered charged on personal property even if it is for the exercise of a privilege. Tax return 1040nr For example, a yearly tax based on value qualifies as a personal property tax even if it is called a registration fee and is for the privilege of registering motor vehicles or using them on the highways. Tax return 1040nr If the tax is partly based on value and partly based on other criteria, it may qualify in part. Tax return 1040nr Example. Tax return 1040nr Your state charges a yearly motor vehicle registration tax of 1% of value plus 50 cents per hundredweight. Tax return 1040nr You paid $32 based on the value ($1,500) and weight (3,400 lbs. Tax return 1040nr ) of your car. Tax return 1040nr You can deduct $15 (1% × $1,500) as a personal property tax because it is based on the value. Tax return 1040nr The remaining $17 ($. Tax return 1040nr 50 × 34), based on the weight, is not deductible. Tax return 1040nr Taxes and Fees You Cannot Deduct Many federal, state, and local government taxes are not deductible because they do not fall within the categories discussed earlier. Tax return 1040nr Other taxes and fees, such as federal income taxes, are not deductible because the tax law specifically prohibits a deduction for them. Tax return 1040nr See Table 22-1. Tax return 1040nr Taxes and fees that are generally not deductible include the following items. Tax return 1040nr Employment taxes. Tax return 1040nr This includes social security, Medicare, and railroad retirement taxes withheld from your pay. Tax return 1040nr However, one-half of self-employment tax you pay is deductible. Tax return 1040nr In addition, the social security and other employment taxes you pay on the wages of a household worker may be included in medical expenses that you can deduct or child care expenses that allow you to claim the child and dependent care credit. Tax return 1040nr For more information, see chapters 21 and 32. Tax return 1040nr Estate, inheritance, legacy, or succession taxes. Tax return 1040nr However, you can deduct the estate tax attributable to income in respect of a decedent if you, as a beneficiary, must include that income in your gross income. Tax return 1040nr In that case, deduct the estate tax as a miscellaneous deduction that is not subject to the 2%-of-adjusted-gross-income limit. Tax return 1040nr For more information, see Publication 559, Survivors, Executors, and Administrators. Tax return 1040nr Federal income taxes. Tax return 1040nr This includes income taxes withheld from your pay. Tax return 1040nr Fines and penalties. Tax return 1040nr You cannot deduct fines and penalties paid to a government for violation of any law, including related amounts forfeited as collateral deposits. Tax return 1040nr Gift taxes. Tax return 1040nr License fees. Tax return 1040nr You cannot deduct license fees for personal purposes (such as marriage, driver's, and dog license fees). Tax return 1040nr Per capita taxes. Tax return 1040nr You cannot deduct state or local per capita taxes. Tax return 1040nr Many taxes and fees other than those listed above are also nondeductible, unless they are ordinary and necessary expenses of a business or income producing activity. Tax return 1040nr For other nondeductible items, see Real Estate-Related Items You Cannot Deduct , earlier. Tax return 1040nr Where To Deduct You deduct taxes on the following schedules. Tax return 1040nr State and local income taxes. Tax return 1040nr    These taxes are deducted on Schedule A (Form 1040), line 5, even if your only source of income is from business, rents, or royalties. Tax return 1040nr Check box a on line 5. Tax return 1040nr General sales taxes. Tax return 1040nr   Sales taxes are deducted on Schedule A (Form 1040), line 5. Tax return 1040nr You must check box b on line 5. Tax return 1040nr If you elect to deduct sales taxes, you cannot deduct state and local income taxes on Schedule A (Form 1040), line 5, box a. Tax return 1040nr Foreign income taxes. Tax return 1040nr   Generally, income taxes you pay to a foreign country or U. Tax return 1040nr S. Tax return 1040nr possession can be claimed as an itemized deduction on Schedule A (Form 1040), line 8, or as a credit against your U. Tax return 1040nr S. Tax return 1040nr income tax on Form 1040, line 47. Tax return 1040nr To claim the credit, you may have to complete and attach Form 1116. Tax return 1040nr For more information, see chapter 37, the Form 1040 instructions, or Publication 514. Tax return 1040nr Real estate taxes and personal property taxes. Tax return 1040nr    Real estate and personal property taxes are deducted on Schedule A (Form 1040), lines 6 and 7, respectively, unless they are paid on property used in your business, in which case they are deducted on Schedule C, Schedule C-EZ, or Schedule F (Form 1040). Tax return 1040nr Taxes on property that produces rent or royalty income are deducted on Schedule E (Form 1040). Tax return 1040nr Self-employment tax. Tax return 1040nr    Deduct one-half of your self-employment tax on Form 1040, line 27. Tax return 1040nr Other taxes. Tax return 1040nr    All other deductible taxes are deducted on Schedule A (Form 1040), line 8. Tax return 1040nr Prev  Up  Next   Home   More Online Publications